Hierarchies suck. In so many respects: They are slow-moving, suppress Innovation, promote siloed thinking and largely fail to give most people a sense of life – of vocation – at work.
The trouble is: Hierarchies work. They are efficient, tried, tested and well understood. They solve very complicated problems, like assembling cars or providing all kinds of food and things to the consumer day by day. Simply put: The shortcomings of todays hierarchy model of running most businesses are acceptable. There is no better alternative organizational model in the world to achieve consistent outputs at high productivity – given predictable in- and outputs in a stable environment.
Here comes the thing: In a digitalized world, there simply is less of what a well performing hierarchy needs:
- less predictability of inputs
- less predictability of outputs
- less stability
In a rapidly shifting environment the traditional economic dictum to maximize the ratio between out- and inputs is still a major concern, but not the only one. It is simply not efficient to invest in maximizing a specific in- output relation if that relation might be no longer relevant to the market tomorrow.
Is there a better organizational model for those parts in the business facing a VUCA (volatile, unstable, complex, ambiguous) environment? In a VUCA environment is quest is for effectiveness, not efficiency. Think of Moores four management zones (see last post): Efficiency is the central paradigm of the productivity zone. Effectiveness is the central paradigm of the revenue zone. There is a point, when the disturbances of the revenue zone become to much to handle by an hierarchical organization form. A more effective one is needed.
What is the most effective organizational form in the world?
It is the team. If we want to achieve great things, innovations, breakthrough performance or solve critical problems, we get together in a team to think and work interactively and collaboratively. With engagement and good team work even hierarchies solve their most critical problems effectively.
But teams do not scale. Once a team is too big, it becomes a conference where a single voice is not heard, political dynamics take over and the team dissolves into a gathering of individuals, a “conference herd”.
What if it would be possible to transfer the effectiveness of teams to the organizational level, to scale this effectiveness to thousands of coworkers?
Team of teams: How to establish an effective organization
An efficient, Taylor based organization relying on the division of labour, is often portrayed as a “mechanical” organization. A factory, imposing order on processes and humans alike. In contrast to this, an effective organization can be pictured as an organism.
An organism is still employing specialization in functions (organs) but each part is connected through metabolism and a nervous system to the whole. In such a system, individuals are not as easily replaceable as within a mechanistic organization, as an organism reconfigures itself once an individual part changes. In fact this reconfiguring is ever-present, as the organism itself and the environment changes.
This organism metaphor may appear to be far fetched. It has the air to be “metaphysical” or even esoteric. But look at this list of organizations who have employed these metaphor to shape their organization:
- Boeing, in building the very successful B 777 plane series
- Southwest airline, outperforming the industry for years
- Ford after its 2006 crisis under Allan Mulally (who was responsible for the 777 series at Boeing prior to his position at Ford)
- NASA in the Apollo program, neglecting this approach in the aftermath during the shuttle years, and readopting is in recent years
- the US military in Irak and Afghanistan during Stanley McChrystal’s command starting 2003 to 2010
- Buutzorg, a Dutch Healthcare company which went from a start-up to the largest healthcare provider in the Netherlands within a few years (see F. Laloux in sources)
Each of these organizations provide excellent case studies in itself on the principles of what Stanley McChrystal calls “team of teams” management, Adam Mulally calls “Working together” or Frederick Laloux calls “Teal”. All these approaches do have strict focus on effectiveness, and are therefore fundamentally different to Taylor’s sole focus on efficiency.
Still, Taylor’s scientific management approach is not obsolete. Its still the optimal organizational form for stable, predictable challenges where efficient is what matters most. But, it is time to recognize that there is a better organization form in non stable, non predictable environment. In environments created by digitalization, for example.
Does this mean an organization should become a team based organization in all its parts? No. There are parts of the organization which needs efficiency, see Moore’s “Productivity zone”. But for most organizations the biggest and decisive zone, the revenue zone, should – depending on the degree of instability of the environment – really be organized according to the principles of team management.
This need for a new organizational model is recognized in established, rather traditional management literature as well. Fredmund Malik, an university professor and disciple of Peter Drucker, has contributed a lot to central european managers view of seeing management as a craft, which can be learned and perfected. While this view remain valid, he has extended his work in his recent book (see sources) to include team based principles. As business environment has changed, so need managerial solutions in order to cope with complex environments.
In the next post let’s explore this highly effective management style by digging deeper into the factors of “team of team” management. For now, I will leave you with an interesting primer, comprehensive panel discussion about “Team of Teams” at c-span from 29th of May 2015.