How is the network era affecting large organisations?

This post was written in conjunction with Carl Lyon of the QoE

Slavery was a terrible thing, but for thousands of years it remained a convenient way to get work done. Mass slavery persisted until enough people decided that dominance through fear was no longer an ethical means of organising people.

The widespread abolition of slavery heralded a paradigm shift in consciousness. The advent of the industrial revolution brought with it the emergence of the first large organisations. Command and control became the best way to coordinate the masses, and the profit motive became the new organising principle.

As large organisations became more complex, often through mergers and acquisitions, a more subtle variant of the command and control approach emerged - that of ‘conformism’. Groups and departments within the same organisation often adopted an ‘us versus them’ mindset as they sought to defend their perceived territory from the new arrivals. The resulting blame culture that emerged gave rise to a silo mentality, and inter-departmental politics became the control mechanism.

So what’s next?

We are now thirty years into the digital era, and fifteen years into an age of hyperconnectivity. Digital technologies are fundamentally changing the ways in which we work, think and socialise, with ‘search’ and ‘share’ becoming central to the human experience. Mass connectivity has brought with it mass transparency, shining a spotlight onto the internal workings of large organisations.

While this has liberated the individual, it has caused terror for many businesses and governments as they are no longer able to hide behind traditional marketing and communication strategies. Not only are the masses getting much better at reading the intent behind the message, they are increasingly able to broadcast their own in order to challenge previously unchallengeable power structures.

We are seeing the emergence of a new organising principle: the network. But what does this mean for large organisations?

1. Reputation is now becoming as valuable as the profit motive. According to Thomson Reuters and Interbrand, 75% of the value of today’s average corporation is intangible. And in a survey by the World Economic Forum, three fifths of CEOs felt that brand and reputation were responsible for more than 40% of their company’s market capitalisation.
   
2. The power of collective opinion can increasingly determine the fate of any organisation. Whereas ‘old power’ models were based on the ability of a person or an organisation to control information and people, ‘new power’ models are grounded in sharing, co-creation and the potential of the crowd.
   
3. People – both inside and outside the company – matter more than ever before. As the global population becomes increasingly connected through social media, people are rapidly changing their expectations of large organisations. From customer experience to recruitment to marketing, digital and social are forcing transparency and accountability on an unprecedented scale.
   
4. There is significant opportunity for an organisation to innovate by empower its workforce through networking and socialisation. And the potential to innovate is no longer confined to employees: digital and social now make open innovation - crowdsourcing ideas from outside the organisation – both possible and profitable.
   

But navigating these opportunities and challenges requires a new mindset, one that acknowledges the limitations of command and control, rejects the fear of socialisation and embraces the power of the network. If you can no longer tell people what to do – even if they work for you – then you need a new approach to leadership. If you want to inspire loyalty, trust and engagement, you need to create the conditions in which people can and want to relate to the values of your organisation. And if you want to reduce complexity, you need to appreciate that a socially empowered workforce capable of asking and answering informed questions can be a powerful partner.

Inevitably this new era will challenge organisations to produce, store and share intelligence in ways that were unimaginable only a few years ago.

But, like it or not, the future is network empowered socialization.

Source: The QoE April 2015, Carl Lyon Written: Tony Reeves, University for the Creative Arts

Complexity as an engine of innovation

This post was written in conjunction with Carl Lyon of the QoE.

A customer's journey is often made up of both intended and unintended outcomes, but customer experience is 'the real outcome'. Or to put it another way, what actually happened rather than what should have happened. But as complexity increases in large organisations, it is becoming increasingly difficult to identify and control all the variables that can impact on the customer journey.

This issue arose during our March QoE discussion which focused on The Art of Simplicity in large organisations. The engaging two-day event highlighted many factors that can exacerbate the problem of complexity, including technology, employees, vision, acquisitions, and leadership. But if complexity is here to stay, perhaps what is needed is a shift in our perspective to help us tackle the problem from a different angle. If we can view large organisations through a new lens, perhaps we may be able to derive value from complexity and use this to improve customer experience.

The hierarchical model of workplace organisation that emerged in the early 20th Century continues to shape the structure of large organisations. But the suitability of the hierarchical model for an era of hyperconnectivity that has been instigated by the internet and mobile technology is increasingly under scrutiny. It is becoming increasingly apparent that we are attempting to solve complex, 21st Century problems with solutions derived from last century's industrial model.

So how can we take a different perspective? Consider for a moment that a large organisation is not a hierarchy of people, but is instead a collection of networks. This is the perspective put forward by Christopher Vitale, who proposes that in order to cope with a hyperconnected age we need to view our reality as networks of networks. Informed by research on complex systems science, Vitale observes that complex, dissipative systems 'consume energy and turn it into waste, dissipating potential in order to produce ordered complexity' (Vitale, 2015, p.23).

If we adopt this perspective, we can interpret a large organisation as a complex system, dissipating much of the potential of its employees by forcing them to operate under a hierarchical model that is poorly suited to the complexity of the modern world. But if we shift our perspective to view an organisation as a network of networks, then every employee is a participant in a multitude of networks incorporating other people, information, and systems. An organisation consists of networks of employees, information, and systems, and the organisation itself is part of a network of other organisations and systems. In this network-centric paradigm, the actions of the organisation have an impact on the networks both within and outside the organisation.

How does this help? Well, according to complex systems science a complex system also contains a huge amount of 'energetic potential', and this energy has the potential to transform and enrich its immediate environment. If we view a large organisation as a complex system then the implication is that complexity is a positive force, and tapping into the latent creative potential of the network will provide opportunities for creativity and innovation . What is needed is a way to effectively harness the energetic potential of the network in order to drive innovation, and a way to understand those areas of the organisation benefit from complexity (e.g. R&D) and those that may be damaged by it (e.g. customer experience).

Vitale also highlights the principle of 'robustness' in complex systems science, which can be understood as a way to produce more and better forms of growth. Sustainable growth is both an aspiration and a priority for almost every large organisation, and it is therefore possible to argue that achieving and maintaining a state of 'robust complexification' should be a key strategic driver. If we shift our perspective to view an organisation as a complex network of networks, an important aspect of leadership in large organisations then becomes how to achieve and maintain a state of robust complexity. By taking complexity to be an asset consisting of the creative potential residing in all employees, there are significant opportunities to harness this potential in support of the aims of the organisation.

If customer experience is the 'real outcome' of an organisation's efforts, then it is essential for leaders and managers to understand where problems of complexity in their organisation are having negative impact on the customer journey. By viewing the organisation as a network of employees, each containing creative potential and each having a unique insight into specific areas of the organisation, there is scope to mine this wealth of knowledge and use it to improve the customer experience.

Source: The QoE March 2015, Carl Lyon. Written : Tony Reeves, University for the Creative Arts.