Ensuring Delivery Through Organisational Design
I will argue that the non-delivery of our institutions are due to the way we see “organisation”, the noun. We need to shift to a view where “organisation” is a an active and never ending verb. In this view of “organisation” the focus is on creating stability amid chaos by creating stable transformation guides for the system. On the other hand, we need to create organisational forms that seek change, as opposed to order, in order to be adapt and change friendly. Such enterprises need a balance between aligning the parts with the interests of the whole, whilst ensure sufficient autonomy in the parts to experiment and innovate in their own local interest, to an extend far in excess of what the traditional hierarchical organisational structure allows. This requires a different mode of governance for the enterprise, a mode where the very concept of management is counter productive. Such a governance style makes use of alignment around core ideas, coupled with empowerment to act on own initiative. In turn this requires, for most contemporary management (including the managed), a shift of mindset beyond that which most people can image. This finally means a fundamental development process in most, if not all our institutions.
The non-delivery problem
We all face a basic problem soon after birth: How do we get the rest of the world to do what we want them to do? It takes a few milliseconds to realise that crying helps, and some never unlearn the value of a tantrum, but eventually we have to face up to the question: How do we organise our fellow humans so that they act at least in part in our own interest?
Phrased in this manner, the whole issue of organisation opens up a fundamental set of questions. The first of these is: What is the purpose of organisation?
I believe the purpose of organisation, of whatever form, is ultimately to enhance the survival of the individual and his or her dependants. Initially, when the only forms of organisation were family groups of hunter-gatherers, organisation had to do with basic self preservation, of the individual, group and species. Currently, organisation primarily aids the socio-economic survival of individuals, communities and countries. Without being part of an organised grouping of some sort, basic socio-economic survival is more difficult for the individual. “Organisation” is a systemic response to the need for individuals to collaborate to improve their individual and collective survival chances.
The second question is that of organisation and change. It is ironic that the answer to the survival question, namely to get organised into more complex systems, created the change problem: These instruments of survival, namely organisations, were so successful that they acquired the ability to modify the environment in which they operate; not surprisingly since this was their purpose to start off with. However, the more ability organisations acquired for modifying their environment, i.e. the better they fulfilled the survival purpose, the more turbulent the collective environment became as a result of many organisations operating on their environment.
As described here, organisation, survival and change are abstract trends that apply to any organisation. As an example, take any company that succeeded with any product or service, say a chain of stake house restaurants. The success of the organisation, normally measured in financial and market penetration terms, directly ensures the socio-economic survival of the individuals in the enterprise. However, the success of the enterprise makes general field attractive to other would be survivors, say a fast food enterprise. This enterprise starts organising, and in so doing alters the original environment, e.g. in terms of customer expectations, that the original restaurant idea now is threatened in its survival, unless it re-focuses. This interaction becomes enormously complex if one adds multiple, not even many, interacting enterprises, all organising in different ways for survival. The ultimate outcome is an unstable, very turbulent environment, in which it becomes increasingly difficult for any one organisation to “deliver” its product or service consistently.
We now examine the effect of this on the very concept of organisation.
Change and Stability
Normally change and stability are seen as two opposites on the same dimension: The more (organisational) stability, i.e. order, you have, the less (organisational) change there is. Conversely, the more change there is in the enterprise, the less stability there is. In this classical view organisation is seen as a noun, and it defines stability. Things (what needs to be done, how it is done, etc) are clear, ordered and known. How you are set up do what must be done is clear and largely unproblematic. However, the problem is that what must be done changes, which implies a need for changing the way your enterprise is set up to work. Since how you are set up to work is seen as the “organisation”, this implies that you have to figure out what to change, how to change (the organisation), and then manage the change, and become a different organisation. The cycle then starts anew, normally before you have changed to the organisation you intended becoming. The implication is that the enterprise is in a permanent state of flux, lagging behind in what it should be. There is in particular a push towards stability because change as seen as the root cause for the confusion. Should this push succeed, stability rules and the enterprise slowly but surely becomes less relevant; stagnation set in.
I will refer to this form of management as first order organisation: The level of stability is the “organisation” (noun) itself. The focus of this mode of management is to discover the appropriate organisation (noun: how work should be set up), and periodically change this organisation into a new one.
An alternate view
For this alternate view, I use the word “organisation” virtually exclusively as a verb, and not as a noun. It derives from an infinitum Greek verb: A perfect verb (I “jump”) is an act that completes, an infinitum verb (I “learn”) does not have a completion and is an act which continues indefinitely. For this alternate view I use “organise” and “organisation” to mean the continual act of maintaining the enterprise as a functional, viable system.
For this alternate view, we regard stability and change as two independent variables, where different combinations of stability and change can interact; refer to figure below.
In this figure change can be high or low, and stability can be high or low independent of the level of change. The low change, low stability situation is not very interesting because it represents a situation where there is low order, i.e. there is low levels of organisation in place, but there is also little hope of changing the situation. It is a leaderless situation where very little happens. Frustration with irrelevance are coupled with hopelessness because there is little chance of changes being made. Some government departments may have been in this situation in the recent past, but for most institutions this would represent a temporary phase.
The high stability, low change situation represents an enterprise that is highly organised in the classical sense described above, and as long as its environment is stable it does not need to face up to changes. It is likely to stagnate, become outdated and become irrelevant because stable environments are mirages. There then is a continual push for more change, built on frustrations of being increasingly irrelevant and marginalised. In this mode enterprises often expends enormous efforts and wastes energy in trying to maintain the status quo in the organisation (noun): Changes are brought in at minimal levels when they can no longer be avoided.
The high change, low stability situation is where enterprises often end up after pro-longed periods in the low change, high stability situation. Its main characteristic is confusion, because there is much change and adaptation, but little overall direction to the pattern of change. It represents a chaotic working situation with little order in what must be done and how it must be done; these work aspects seems to be in continual flux and does not settle long enough for meaningful progress to be made in any particular direction, before change in a new direction comes along. There is much frustration with the in-coherence of the changes, the apparent disorder of the changes, and directionless future. The push is back to stability, because people are frustrated by the apparent incoherent changes.
The traditional trade-off between (high) stability and (high) change is represented by the push between stagnation and confusion, and vice versa.
The high stability, high change situation represents a situation where there is coherence in the deliberate changes which maintains the relevance of the enterprise over time, coupled to a stable transition process. Fundamental, structural changes are taking place in the enterprise, but within a framework of known and understood transition rules. There is stability in change, in the sense that the change takes place according to stable and understood patterns. These patterns of change, i.e. the rules of change, becomes the focus of management. The trick is not to control the change directly, but to manage the rules of the game, according to which the changes takes place. One has to determine the rules of the transformation, and not the results of the transformation itself. Organisation becomes a verb, where one seeks to create stability by stabilising the transform by determining the transformation rules.
I refer to this form of management as second order organisation. Second order organisation puts the stability of change primary, and accepts that the resulting enterprise (i.e. the first order organisation) is in a continual process of transformation.
Table: Different architectural styles of organisation and change management
Purpose of Modular Enterprise Design:
The Modular Enterprise Design is an implementation of second order organisation. Its primary aim is to create continuos (smaller) changes in the enterprise, which enable the enterprise to adapt structurally in an ongoing manner to changes in the environment. These adaptations happen without specific management according to stable transformation rules. The aim is to enable the enterprise to operate in the high change, high stability quadrant.
The Modular Enterprise Design (MED) reflects the result of research and practical application on organisational design, using systems thinking. The underlying question in organisational design is: How should the whole be put together? (What are the parts? How do they interrelate?) MED looks at this question from a systems approach perspective and applies systems thinking tools and methods to particularly business organisations. The result is a template against which one can measure and evaluate existing or desired organisational designs. The end result is a “design” (model, ideal, or image) of how an organisation should look like, which has been considered from a very wide range of viewpoints. The process and underlying template are systemic. The primary model used is the Modular Enterprise Design (MED) model; its description is beyond the scope of this presentation.
Management style implications
The issue is how one, an organisation, gets to act as one entity, and not exhibit the uncoordinated behaviour of multiple individuals ( I will use ‘individuals’ or ‘parts’ to refer both to individual people, or to collections of people, i.e. work groups or enterprise units.) This is a very fundamental question to the concept “organisation”, and different assumptions around this lead to radically different types of organisation.
The prevalence of the hierarchical, more or less autocratic, power driven, traditional organisational structure requires explanation. It is so popular because it is an answer to the above question, namely this mode of organisation gives one a way of ensuring that the whole acts as one, or at least has the capacity to act as one co-ordinated entity. Most people, including managers, sense that that is the essence of organisation.
I want to start with seeing autonomy (ability of the parts to act on their own initiative) and control (of the whole over the parts: ability of the whole to act as one) not as two opposites on the same dimension (which is how we normally perceive it), but as two different dimensions; refer to figure:
The low autonomy, high control quadrant is the traditional hierarchical control structure: It gives the capability to act as a whole in the sense that the sum total of a range of individual actions is coherent, that is, has meaning within a larger picture. When one moves to a high autonomy, low control state (top right quadrant), there is much action by the parts but little co-ordinated behaviour between them. Managers intuitively and rightly fear this situation with a passion. (The low control, low autonomy situation does occur, e.g. in some government departments, but most commercial organisations go out of business if they are in that quadrant for any period of time.)
What managers (and “parts”) must understand is the bottom right quadrant: A situation where there is high control and high autonomy. In this situation the “control” (ability to act as a whole) is implemented differently, namely through alignment of the parts. This goes hand in hand with empowerment of the parts: The parts may act autonomously because they have a shared system of decision criteria, i.e. alignment. Alignment is ultimately around decision criteria that drives individual behaviour; in practice this will take the form of shared understanding, shared mental models, a shared value system, buy-in into a mission, vision, strategies and policies.
The “parts” fear this business of alignment because they (often rightly) perceive it as another gimmick to implement the traditional control structure, and avoid the empowerment bit because that is a sure route to censure in the hierarchical control structure. The managers fear this empowerment business because they confuse this quadrant with the chaotic one. Neither side understands firstly, that the organisation absolutely requires as a matter of survival, the innovation and creativity that flows from the empowerment side, and secondly that the alignment bit (ability to act as a whole) is critical to survival, and that managers’ role is to facilitate the development of the shared decision criteria.
My message with this is that this bottom right quadrant is a different paradigm for all concerned. It reflects a fundamentally different set of assumptions about the nature of reality, the nature of organisation, and nature of inquiry in this context. It is a necessary management, in the deep systemic sense of the word, style to ensure the success of the Modular Enterprise Design.
This brings me to another topic: how do you shift paradigms? Unless one does this, the bottom right is a mirage.
On shifting paradigms
I want to give a framework within which to comment on the issue of shifting paradigms. I need to use two concepts, ontology (which means a theory of reality) and epistemology (which means a theory of knowledge and knowing). Taking any position on these two topics implies a methodology for inquiry. In practice decision making, problem solving, planning, design, and research are all different forms of inquiry. Methodology would refer to the set of principles to be used for finding out, that is to inquire, in a particular instance, for example problem solving. Different approaches to inquiry in practice (problem solving, research, design, etc.) can be distinguished in terms of fundamentally different assumptions about ontology and epistemology. Such sets of assumptions is what we would refer to as a paradigm.
Systems thinking, or ‘new’ thinking if you want, is essentially about a ‘new’ or different ontology and epistemology. Many authors and speakers address this ‘new’ way of looking at reality. As such there was much in the content, if not all, that I agree with and would endorse as a fair and accurate reflection of the systems ontology, particularly as applied to organisations. What they often do not address is the associated epistemology, and as a consequence, neither the methodological implications for inquiry in practice (for example how do we design an organisation to be a system?).
The implication of not exposing newcomers to a methodology, is that they do not have much chance of putting into practice a new way of seeing (the ontology), and in fact are likely to go way with a negative predisposition on the topic. The problem is actually even deeper: They do not even know if this new way of seeing is useful to them, or whether it should be further explored, but the negative bias they acquired now makes it more difficult to expose them to a new paradigm-shifting experience. For many this new way of seeing is so foreign that they cannot by themselves make the connection to say this is how they now have to structure their inquiry (decision making, planning, design, etc.).
About eight years ago my interest shifted from the studying of the systems ontology, towards trying to understand how one would shift people’s paradigms towards a systems paradigm. (In simple terms: How does one ‘teach’ systems thinking?) Our research in different contexts indicates that one has to present aspirant (potential?) systems practitioners with a methodology, applicable to their situation of concern, and allow them to experience the power of the underlying (systems) ontology, in their own situation. If this experience is valuable to them, some (most?) will start to shift their ontology and epistemology. Repeated experiences like these are required to achieve a paradigm shift.
Just to make matters worse: You cannot shift the paradigm of one or two people in a group, for example by sending them to do a PhD in systems at UCT with Strümpfer and Ryan. If one does this you create frustrated individuals, who experience the prophet-in-own-country rejection, and a frustrated organisation, which cannot deal with the misfits in its midst. One has to achieve a diffusion of the new paradigm, with a shift in the centre of gravity in the way most people in the group see and inquire. The implication is that one must create these ‘I-find-it-useful’ experiences as a shared experience on a relatively large scale. Paradigms must be shifted in numbers, and it takes time.
Putting the pieces together
I have said that the non-delivery of our institutions are due to the way we see “organisation”, the noun. We need to shift to a view where “organisation” is a an active and never ending verb. In this view of “organisation” the focus is on creating stability amid chaos by creating stable transformation guides for the system. On the other hand, we need to create organisational forms that seek change, as opposed to order, in order to be adapt and change friendly. Such enterprises need a balance between aligning the parts with the interests of the whole, whilst ensure sufficient autonomy in the parts to experiment and innovate in their own local interest, to an extend far in excess of what the traditional hierarchical organisational structure allows. This requires a different mode of governance for the enterprise, a mode where the very concept of management is counter productive. Such a governance style makes use of alignment around core ideas, coupled with empowerment to act on own initiative. In turn this requires, for most contemporary management (including the managed), a shift of mindset beyond that which most people can image. This finally means a fundamental development process in most, if not all our institutions.
(It is not by accident that the abstract and this summary is the same.)
This may sound far fetched, the theoretical dreams a harmless academic steeped in esoteric systems ideas. We are in the process of implementing this in significant organisations in South Africa right now. In a few years’ time this will not be news, and it will not be a foreign idea for many enterprises, for the simple reason that this will not be able to survive in the manner that they were used to being organised.
 Address: Programme for Systems Management, Menzies Building 522, University of Cape Town, Rondebosch, 7700. Tel 021-650-2600, fax 021-713-0135, e-mail firstname.lastname@example.org. Paper presented at the University of Cape Town SEM/PSM Systems Thinking Conference, Sanlam, Bellville, November 1997.
 Transform: A mathematical concept, which means the rules according to which a system changes from one state to another.
This site was last updated 2006-10-16