Organizational Design for the Social Enterprise
Many companies have already embarked on their social enterprise journey but are realizing that past that first stage of experimentation and initial adoption challenges still persist.

Sharing lessons learned, as well as discussing over the persisting questions, has recently animated the always lively and useful conversations between practitioners from different geographies and companies -- interactions which happen both online and on the social side of conferences when restoring caffeine levels and tasting local dishes is frequently seasoned with extraordinary food for thought.

Transformation and Organizational Design

One such recurring conversation topic has been how do we transform businesses and organize for the social enterprise. It can be divided into three main challenges:

  • The transformation aspect: how do we truly guarantee that we are transforming our companies into businesses prepared for the complexity, challenges but also opportunities of the 21st century?
  • The support aspect: what is the organizational design that best supports the social enterprise?
  • The transition aspect: how do companies move to a new organizational design if the existing one proves to be, as it is often the case, inadequate? What resistance will be found inside companies when it comes to making that transition and how to best deal with it?

The transformation aspect is deeply related to a company’s strategy and purpose. Companies are not transformed simply because they deploy social tools. A social enterprise is one that purposefully wants to transform itself into a business that systematically connects and co-creates both internally and externally and thus will use social tools as (one of the) instruments to facilitate that change.

But many companies are realizing that the traditional hierarchical command-and-control organization with rigid divisions between departments is not the best organizational design for the social enterprise, hence the support aspect.

Discussions about networks versus hierarchies abound for some time now and some venture to suggest new ways of organizing businesses. Jon Husband proposes the concept of the Wirearchy. Initiatives such as Gary Hamel’s MIX Management are challenging our assumptions over what leadership, management and organizational design mean for companies today, and in the future, through stories and management “hacks.” Dave Gray has written extensively about the Connected Company and the concept of pods with examples of companies organizing in a different way and being successful, both financially and in terms of employees’ engagement.

Still, for most practitioners the examples of companies that organize differently like Valve or Morning Star feel like rare exceptions to a norm rather than something they could easily replicate in their own companies. So the question many times heard during the Q&A at conferences is “how do we move from the existing design, deeply ingrained into our company’s way of working and its business processes, to a new way of organizing and decision-making?” which leads us to the transition aspect.

A Transition Strategy

In a recent article John Kotter, renowned thought leader on leadership and change, stated that the “hierarchical structures and organizational processes we have used for decades to run and improve our enterprises are no longer up to the task of winning in this faster-moving world.” He addresses the transition aspect by proposing a dual organizational design whereby an agile and network-like structure, running in parallel to the traditional hierarchical model, dedicates itself to the design and implementation of the strategy (leadership) leaving the existing structure to optimize for the day-to-day business (management).

While the new networked structure might start small, it will grow over time seeded by an internal “army” of change agents that accelerate action and build momentum. This dual model, in Kotter’s view, is a more adequate way of changing organizations and equipping them with the agility and flexibility needed to thrive in this fast-paced world.

Power Inside Organizations

While Kotter’s dual model strategy avoids direct confrontation with the existing organizational model, often cited as a recipe for business transformation disaster, we should not undermine the importance of existing power structures inside companies.

As Cecil Dijoux explored recently the social status that currently exists in many companies, usually granted by how high you are in the hierarchical ladder, can be a source of fierce resistance to change and is in stark contrast to the power by influence normally conquered in networks. Gordon Ross, drawing inspiration from sociology and the work of Manuel Castells, also insightfully explored not long ago the different aspects of power, counter power and networks inside organizations.

How does Kotter’s dual model organization address the power shifts that occur on the journey to the social enterprise? Could it be an adequate approach for most businesses? Even if the network-like structure starts smalls and at the edge, reminiscent to the recommendations of John Hagel and John Seely Brown’s work around the Big Shift and the “Power of Pull,” how long before the installed status quo dismisses it as irrelevant to try to undermine the network’s influence?

The challenge ahead can be both thrilling and intimidating for practitioners as we are still left with far more questions than answers and no clear map of the road ahead. Further research on the topic of organizational design in the 21st century, additional sharing of stories of how companies ventured to changed, and further discussions over how-to strategies for making the transition are needed. But the only strategy that may prove successful, though daunting for executives used to applying prescribed frameworks and roadmaps, could well be that of purposeful experimentation and constant iteration.

We’ll pave the way as we do the journey.

Title image courtesy of Lonely (Shutterstock)

Editor's Note: This is the second in our month long focus on what's next for the social enterprise. For more, read Harold Jarche's Social Business Needs Social Management which kicked off the topic.