Russian Nesting

Russian Nesting

Empowering Structures For Business Organizations

"Our challenge. How do we create organizational coherence...how do we create structures that move with change, that are flexible and adaptive...that enable rather than constrain? How do we resolve the need for personal freedom and autonomy with organizational needs for prediction and control?" ~ Margaret Wheatley

Nobel Prize winner Oliver Williamson describes two dominant theories of organization for complex systems – hierarchies and markets. These theories compete in the way corporations are structured. A centralized, top-down hierarchy offers more control and efficient internal operations. But a "flat" structure offers an internal market for ideas and resources that promotes innovation.

Control versus innovation, hierarchy versus markets – every company struggles with that balance. We've seen plenty of companies fail, even within the Fortune 500, when they get it wrong. That balance was at the heart of a recent four-day strategic planning workshop that my company, Mastek, held for its top 50 leaders. Our goal was to examine structures that would make the organization more nimble, agile and creative in delivering value to our customers.

Emerging from that workshop, I came across an article on organizational architecture by Arun Maira that offers an alternative, a third way of structuring a company to thrive in the 21st century.

Maira, the former head of the Boston Consulting Group in India and now a member of India's Planning Commission, suggests complex, self-adaptive systems similar to those that occur in nature – and have recently emerged as the underlying architecture of the Internet.

These systems can remain on the creative edge between stifling hierarchies and unorganized confusion. An essential feature of such systems is the strength and quality of the lateral links among the various sub-units within the larger organization.

The growth and proliferation of the Internet over the last two decades is a powerful example of how complex, self-adaptive systems can thrive with just a few governing principles, frameworks and protocols, with no ‘boss' or central agency managing the entire exercise. The Open Source Movement and Wikipedia, for example, are neither hierarchical nor market-based.

To describe Wikipedia, management experts use terms such as complex, self-adaptive systems; emergence; connectivity; simple rules; iteration; and, interestingly, sub-optimal behavior. This is like describing a human being in terms of our component senses, organs, functional systems and the like. We don't really get a feel of the complete creature with such descriptions.

Here are my own assertions about how companies can be complex, self-adaptive systems. Organizations need to:

Recognize their function and purpose in the context of the environment as a whole.
See their journey as a gradual evolution – where all the component parts evolve together, and the larger system evolves in scale and impact.
View themselves as Nested Systems – having several self-contained component parts that include smaller self-contained parts within, and so forth. While this is often easy to visualize – think of Russian nesting dolls – what is less obvious is that the organization itself is a part of a larger ecosystem.
Maintain simple rules of engagement between component parts. Communication must be continuous and consistent, between all the parts, with each part empowered to act to benefit the system as a whole.

For example, the information about a cut on your finger is relayed instantaneously to other parts of the body, which then respond. The body does not wait for the information to reach the brain and for the brain to devise a strategy for response. Similarly, each part of an organization should be capable of responding to an opportunity or challenge on its own, instead of waiting for a command from the top.

The Connected Age requires new structures that are more appropriate than the hierarchical or market-based organizations of the Industrial Age. Do share your own thoughts on innovative organizational forms and what it would mean to individuals who are part of such organizations.

About the Author

The New Constructs is an initiative to examine our beliefs and assumptions - about life and living - that we need to reinvent in order to create a more inclusive and sustainable world. It is an opportunity for each one of us to connect, collaborate and co-create the world that we will rebuild for posterity. Do post your own examples on the Wall.

Sudhakar Ram is Chairman and Co-Founder of IT solutions provider, Mastek. He believes that creating a sustainable world would require a shift in the "constructs" that drive our attitudes and actions.