This publication is broken up into three sections:
TL;DR - For those wanting a quick take
Summary - For those wanting a bit more context and high level points
Article - Main body of work containing full detailed article and explanations that you might want to consume over several readings
TL;DR
Things we thought were solid are fluid and things we thought were ambiguous are presented as though they are ‘black and white’. Some could say we are in a VUCA world where VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity.
One of the previous ‘certainties’ from the era of mass production is the notion of top down control of organisations by leaders and managers (i.e., Hierarchies of Authority).
With the advent of the computer and the internet, large organisation pyramids appear rigid and clumsy. Progressive organisations are beginning to adopt decentralised flexible network structures (i.e., Hierarchies of Competence) with a strategic core (Hierarchies of Authority) providing direction and rapid communication systems for communicating priorities (e.g. Objectives and Key Results).
Organisations need to move from centralised hierarchical top down pyramid structures towards more decentralised, flexible and adaptable network structures aligned to organisational purpose and specific mission objectives and goals/key results.
Summary
Things we thought were solid are fluid and things we thought were ambiguous are presented as though they are ‘black and white’. It is becoming harder to discern truth from falsehood especially in the light of the increasing pervasiveness of ‘Fake News’ and the use of bot-driven accounts to stir up emotions and reactions on digital and social media channels
Some could say we are in a VUCA world where VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity which from the perspective of Bob Johannsen requires Vision, Understanding, Clarity and Agility to deal with.
Technology adoption for bits is accelerating at an increasing rate. What is quite apparent is that it is much easier to adopt Bits (overlaying digital) than it is to implement Atoms (building physical product and infrastructure).
As useful sounding, the technology leapfrogging argument is, when ‘Bits’ meetup against ‘Atoms’ there are some realities that ‘Bits’ cannot easily overcome like chronic energy famines or a lack of terrestrial logistics or telecommmunications infrastructure which dramatically increases the costs of doing business in African countries for example.
Technological Revolutions and Financial Capital written circa 2002 by Carlota Perez mentions 5 technological revolutions and associated techno-economic paradigms: Industrial Revolution, Age of Steam and Railways, Age of Steel, Electricity and Heavy Engineering, Age of Oil, the Automobile and Mass Production and Age of Information and Telecommunications
One thing to point out is that in each of the above techno-economic paradigms you can generally point to what is referred to as a General Purpose Technology (GPT) that has capabilities that are applicable across a variety of industry verticals or functional organisational horizontals.
One of the previous ‘certainties’ from the era of mass production is the notion of top down control of organisations by leaders and managers (i.e., Hierarchies of Authority). The former management and leadership paradigm is in the process of shifting to allowing for greater individual employee empowerment through: Autonomy, Mastery and Purpose.
With the advent of the computer and the internet, large organisation pyramids appear rigid and clumsy. Progressive organisations are beginning to adopt decentralised flexible network structures (i.e., Hierarchies of Competence) with a strategic core (Hierarchies of Authority) providing direction and rapid communication systems for communicating priorities.
Top-down control may be suitable within certain contexts and environments mainly in situations where the environment is stable and at equilibrium with not much changing and there is no positive or negative feedback loops. Though when feedback loops exist which is pretty much the world we live in then we start getting complex behaviours emerging requiring adaptive behavioural responses.
To deal with the challenges before your organisation, employees can no longer wait to be given top-down commands of what needs to be done. Organisations need to move from centralised hierarchical top down pyramid structures towards more decentralised flexible and adaptable network structures aligned to organisational purpose and specific mission objectives and goals/key results.
Article
The world is in a state of flux.
Things we thought were solid are fluid and things we thought were ambiguous are presented as though they are ‘black and white’. It is becoming harder to discern truth from falsehood especially in the light of the increasing pervasiveness of ‘Fake News’ and the use of bot-driven accounts to stir up emotions and reactions on digital and social media channels. Social media can be used for good or for ill, it just depends on the intent of the individual or organisation behind a position and message.
Sovereign Nation State actors are increasingly playing a role in influencing and disrupting the social mood of whole countries and global society through misinformation or disinformation campaigns. With our increased understanding of human behaviour and understanding of key leverage points it becomes harder to draw the line between ‘positive’ influencing and outright ‘negative’ manipulation.
Some could say we are in a VUCA world where VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity which from the perspective of Bob Johannsen requires Vision, Understanding, Clarity and Agility to deal with.
Where was the VUCA term first documented in official documents? According to the US Army and Heritage & Education Center at Carlisle Barracks website, the VUCA term has been in usage in US military documents from 1987.
Some background on VUCA:
Is the time we are in really different?
Technology adoption for bits is accelerating at an increasing rate. The last statement needs to be taken with a pinch of salt though.
What is quite apparent is that it is much easier to adopt Bits (overlaying digital) than it is to adopt Atoms (building physical product and infrastructure).
The main implication is that countries with well maintained existing physical infrastructure and growing their infrastructure endowments are at a relative advantage to countries without this legacy.
Despite infrastructure having a significant economic multiplier, the associated development costs and deferred benefits of both ‘hard’ and ‘soft’ infrastructure mean that in general most governments would rather prioritise consumption (e.g. paying public servant wage bills, and social welfare transfers) over gross capital formation despite the long-term benefits of building economically viable, feasible and income producing or facilitating infrastructure assets.
As useful sounding, the technology leapfrogging argument is, when ‘Bits’ meetup against ‘Atoms’ there are some realities that ‘Bits’ can not easily overcome like chronic energy famines or a lack of terrestrial logistics or telecommmunications infrastructure which dramatically increases the costs of doing business in African countries for example. Trying to build an Amazon retail like business is no easy feat in Africa given the diversity of countries, levels of economic development, political, cultural and economic practices across the continent. This is a fact that Start-ups, Scale-ups and established Enterprises, have to pay serious attention to if they wish to scale their ventures across African countries.
Despite these hard realities it is fascinating to get perspectives on where we are heading as a global civilisation from key luminaries.
It is claimed we are in the 4th Industrial revolution by Klaus Schwab of the World Economic Forum. This age is characterised by a shift into Artificial Intelligence, Bioengineering, Robotics, the Internet of Things, Autonomous Vehicles, 3-D Printing, Nanotechnology, Biotechnology, Materials Science, Energy Storage, Quantum Computing and potentially Blockchain Technology.
In the words of Klaus Schwab this is where we are:
“The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.
There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact. The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.”
Who can disagree with such heady stuff but it is interesting to read the well researched book called Technological Revolutions and Financial Capital written circa 2002 by Carlota Perez as a complement.
In her book from 2002 she mentions 5 technological revolutions and associated techno-economic paradigms:
First Revolution - The ‘Industrial Revolution’ initiated in Great Britain characterised by factory production techniques, mechanisation and beginning formalisation of productivity and time keeping techniques.
Second Revolution - The second major revolution was focused on the ‘Age of Steam and Railways’ was characterised by economies of agglomeration as viewed by Industrial Cities and National Markets, formation of power centers with national networks and use of standard parts/machine-made machines
Third Revolution - The third major revolution was the ‘Age of Steel, Electricity and Heavy Engineering’ where large structures formed from steel started going up, vertical integration and economies of scale within a factory become prevalent. Science was leveraged to drive production forward and the use of cost accounting for management control and efficiency; existence of world wide empires and cartels
Fourth Revolution - The Fourth major revolution centred on the ‘Age of Oil, the Automobile and Mass Production’ was characterised by mass production/mass markets, economies of scale through horizontal integration, standardisation of products, high energy intensity (e.g., oil energy usage), formation of functional specialisation and hierarchical pyramids, centralisation of people in metropolitan centers and was a period of great National Powers centred on confrontation and the imposition of international agreements
Fifth Revolution - The Fifth revolution, which according to Carlota Perez, we are currently in focuses on the ‘Age of Information and Telecommunications’ is characterised by high information intensity, decentralised integration and network structures, knowledge as capital/ intangible value added, increasing diversity, segmentation of markets into niches (i.e., think Long Tail from Chris Anderson), economies of scope and specialisation combined with scale, increasing globalisation, formation of global production value chains and networks and instant global communications
What is one extra Revolution between friends?
One thing to point out is that in each of the above techno-economic paradigms you can generally point to what is referred to as a General Purpose Technology (GPT) that has capabilities that are applicable across a variety of industry verticals or functional organisational horizontals.
Identifying a technology as a GPT is a key characteristic of a paradigm making technology, this can be used to filter out or guide how to examine the latest shiny new technology that is made out to be the next best thing.
Techno-economic paradigms
Each of these revolutions was accompanied by a specific ‘techno-economic’ paradigm defining the age and era across business, finance, politics, economics, societal organisation and changing social norms.
One of the previous ‘certainties’ from the era of mass production is the notion of top down control of organisations by leaders and managers (i.e., Hierarchies of Authority). The former management and leadership paradigm is in the process of shifting to allowing for greater individual employee empowerment through: Autonomy, Mastery and Purpose. The Great Resignation in Developed Economies shows how working age adults if given the choice and the means to act will choose out work opportunities that speak to their need for autonomy, growth and contribution to a higher purpose. This could be an example of a possible future where individuals if they have some form of basic income support are then empowered to be selective in how they allocate their productive time.
With the advent of the computer and the internet, large organisation pyramids appear rigid and clumsy. Progressive organisations are beginning to adopt decentralised flexible network structures (i.e., Hierarchies of Competence) with a strategic core (Hierarchies of Authority) providing direction and rapid communication systems for communicating priorities.
It is important to note that the change in management and leadership paradigm will not be instantaneous but will be met by organisational anti-bodies especially by leaders and managers that might have seen success in the prior paradigm plus it also takes time for the new principles to be learned and applied by a significant portion of the employee base.
The COVID-19 pandemic has compressed a lot of change that would have taken place over a decade into a few years. Talking about agile or lean is no longer an IT or Engineering issue only. These topics are becoming increasingly pertinent for boards and operational executives looking to boldly move their organisations into a fast consolidating digital future.
The changes in techno-economic paradigm also impact other spheres like government, society and politics & ideology. At the moment the technical know-how and skills required to create the requisite laws and policies for this new age are lacking on the main. The rate of technology development is exceeding policy-making capacity to regulate in a rational and just way to avoid ‘the law of unintended consequences’.
Key societal institutions like educational institutions, public sector institutions and private organisations are going to have to adapt to the new paradigm to have continued relevance.
In this consolidating information age the key differentiator is going to be about the people, how talent is empowered to develop solutions to challenging business problems and organised into high performing teams focused on value creation, delivery and capture from solving significant and valuable business problems.
In my career I have been lucky enough to work in organisations ranging from e.g., small - XX tens of employees to large - ZZ thousands of employees that have implicitly appreciated the benefits of small, high-performing working teams whether in banking, management consulting, enterprise software technology product development and most recently leading the product development of a medical cost optimisation solution targeted at Payors (Public or Private) within an Insuretech and Healthtech start-up co-founded by AIA and Discovery.
Organisations are eco-systems and not machines - think adaptable, living and networked ecology
To deal with the challenges before your organisation, employees can no longer wait to be given top-down commands of what needs to be done. Organisations need to move from centralised hierarchical top down pyramid structures towards more decentralised flexible and adaptable network structures aligned to organisational purpose and specific mission objectives and goals/key results. This change in perspective can be clearly seen when asking what mental model are we considering when viewing an organisation. In the previous management paradigm organisations were seen to be ‘mechanical machines’ that can be made to move and act in a deterministic way, ‘Taylorism’ and ‘Scientific Management’ were the defining characteristics of this paradigm.
The new perspective is to see organisations as being complex and adaptive. What we are realising is that organisations are really socio-driven ecosystems where there are are a variety of stakeholder groups with varying aims and goals. In a sense there is competition and collaboration taking place within and between various levels within an organisation and with the various stakeholder groups whether internal or external to an organisation.
The view being taken today is that individuals, teams, functional or industry groups and organisations are emeshed in an networked ecosystem of interdependent relationships. The thing with eco-systems is that they are dynamic and have varying traits and behaviours that only emerge through the progression of time and interaction of the various elements within the system.
Top down control is fine for state of world which is stable with no feedback loops and not much is changing whereas current state of our world is more VUCA - fast changing due to having either positive or negative feedback loops
Top-down control may be suitable within certain contexts and environments mainly in situations where the environment is stable and at equilibrium with not much changing and there is no positive or negative feedback loops. Though when feedback loops exist which is pretty much the world we live in then we start getting complex behaviours emerging requiring adaptive behavioural responses.
So how do you adapt as a leader or manager to the new techno-economic paradigm?
Principles to guide managers and leaders
I have collated some principles of how to get high-performance out of networked driven teams and organisations:
Common shared purpose - A network must be driven by a compelling shared purpose and mission. The mission in the context of a business is informed by a strong customer focus. The organisational purpose serves as a galvanising tool. In the organisation I currently work for, the organisational purpose is ‘to make people healthier, enhance and protect their lives’. This purpose serves as the bedrock of all product and service ideas and innovations.
Networks of small teams - A key point to emphasise is that the network is made up of small teams that are highly aligned, modular, ideally decoupled or have limited dependencies (if any). I speculate that if we were to study most movements that have had an out-sized impact on the world we would probably find that small entrepreneurial action groups have been the principle drivers of change in different contexts.
Geared toward specific outcomes - Small groups enable a spirit of co-operation oriented towards achieving specific outcomes. They put ideas into practice and learn from experience. Ideally the experience they gain is iterated on and incrementally built upon to achieve accelerated and compounded impact.
Aggregate of small teams is the organisation - The organisational network is the aggregate of all small teams. A key way to think of this is to think about all the small teams representing an organisation when considered in its entirety. The overall network can be organised into various value streams (i.e., operational or development value streams) that are industry, organisational, size of organisation, stage of growth and context dependent.
Organisational guardrails - One way to incorporate bureacracy into a network organisation is to treat the legal framework governing an organisations existence and right to do business as a key guardrail. In this context, decision-making should be pushed down to the level of most competence and not authority but bounded by the legal framework of where you operate. This is the level at which Leaders and Managers should be held accountable for.
How should you organise networked teams in an organisation?
Possible approach:
Share a common organisational purpose and objectives (Executive Vision, Purpose and Strategic intent)
Practice Decentralised Command (Hierarchies of Competence) vs Centralised Command (Hierarchies of Authority)
Get Leaders to act more like farmers or gardeners and less like ‘Bosses’ commanding and controlling
Take a Value Stream approach where teams are networked and organised around value creation, delivery and capture
Develop a shared understanding on what value means in your organisation that is easily understood and widely communicated
Form (Structure) follows Function but Form is only known when value creation process (Function) is defined and understood
Make work visible and track flow of work through your value creation, delivery and capture system
Important dimensions to to consider:
Size of organisation: Start-Up vs Scale-Up vs Large Established Enterprise vs SMB
Locations: Single Country vs Regional Organisation vs Global Organisation
Existing organisational hierarchy: Organisational Structure and Functional or Business Silos
Work with Dunbars number: For how many teams can be networked together taking into consideration impact of Dunbars number for individuals on a team
Competence: Who is best placed to make a decision given the information and context at hand: Team vs Function vs Business Unit vs Operational Area?
#networks #dunbarsnumber #teams #teamofteams
PS. If you are moved please leave feedback so I can improve the publication and topic coverage.
Resources
Fourth Industrial Revolution - https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/
Fourth Industrial Revolution Definition Video -
Origins of VUCA term - https://usawc.libanswers.com/faq/84869 or https://comengage.us/thought-tank/an-antidote-in-todays-vuca-world/
Team of Teams Video (Short)
Team of Teams Video (Long)
Technological Revolutions and Financial Capital by Carlota Perez
Technological Revolutions and the Shape of Things to Come -