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Tuesday, August 28, 2007

Holism: The Real Enterprise 2.0 Opportunity! - Part 2

Click Here to Read Part 3: Process Complexity
Click Here to Read Part 4: Technical Complexity
Organizational Complexity
Typical organizational structure stems from the military model. The classic hierarchical model is intended to ensure proper chain-of-command, decision making and consistency. The "cascade" method of information and delegation, ensures a single focus especially in complex situations where the explanation of details impeded action. For example, in a war, immediate actions needed to take place and there was no time to explain every single action to every single person. Business operates in a similar fashion. We create hierarchies to ensure speed since the ability to manage all the details and make smart decisions on every aspect of a business is simply impossible for any single person. We "empower" the different levels in a hierarchy allowing them them to make their own decisions but always from a cascaded fashion to ensure a "single" direction.

So far, this seems to make sense. The side-effect however is that the bigger the organization and the larger the hierarchy, the more difficult it is to truly understand the entire business. This lack of holism, eventually results in decisions and ideas that may be good for a small group but is actually not the best option for the larger group. We get what we reward for.

For example, consider a company that is organized as shown in the org chart. This company makes widgets, and has grown rapidly over the last 5 years. To accommodate this growth, they've needed to hire more and more people. The size of the company requires the President to delegate decision making authority. Each SVP has clearly defined objectives. The SVP of Manufacturing, is tasked with reducing the per unit cost by 10%, the SVP sales is tasked with increasing total sales by 25%, etc... For the SVP of sales to hit her targets, she knows the biggest growth area will be in North America, and that her efforts should be slanted to growth and cascades targets to the VP of N.A. to 35%, and 20% to Europe. This cascaded approach attempts to ensure a single focus and continues down the hierarchy.
There are several examples, we can now illustrate where the need of the "division" goes counter to the best value for the company. The organizational structure inadvertently rewards people to think in silos. Here are a few examples, I am certain you can think of more.
  1. GM of Prod A in North America has client who really needs Prod B but doesn't realize this because his specialty is Prod A and is rewarded for Prod A sales.
  2. GM Prod A in Europe has client who wants Product B which is only available in North America for now. Since this doesn't contribute to the goals of the SVP nothing becomes of this opportunity.
  3. Manufacturing is testing out a new development process that will increase the strength of the product. Sales person in North America knows of a client who would is in need of a stronger product. The two never talk.
  4. Manufacturing fixes a "bug" with it's products but the ground sales staff, have found out that some of their lead customers are taking advantage of the "bug" to do interesting things with the product.
  5. Techniques used to sell Product B in Europe could also be applied in North America but are not necessarily shared.
In some cases, we incent people to not collaborate and in other cases we don't even know what we don't even know. This is where Enterprise 2.0 technologies can level the organizational structure and allow flow of information, to cross all parts of the organization and not be restricted to the hierarchical model.
It doesn't mean we abolish the hierarchical structure (although I know some of the readers of this blog would argue that... I did write a piece on self-organization which you may find interesting), but at a minimum it means providing the decision makers at every level of the hierarchy with unfiltered raw information. Information that would likely not float up and over. At least not having been filtered for "relevancy" at each level.
Not only is it information flow, it's connecting people in ways we wouldn't have had them connected. Allowing the right people to get connected. What if we brought in that sales person who was very close to a product and knew exactly how the clients were manipulating the product to suite other needs. What if you tapped into his knowledge when testing out the new designs? What if you connected 5 people out of 10,000 who all had dealings with a specific client but didn't know one another?
Discussion Forums, Blogging, JAM sessions, all have the opportunity to open up communication. Tagging, RSS, social bookmarking, Next-Gen Search capabilities provide the means to wade through the information.
Classic delegation through hierarchies and the creation of silos have the inadvertent effect of filtering information. If it's not relevant to my department or business unit, it's unlikely to stored by the company. This is where Enterprise 2.0 can have a direct impact. We can now ask the questions across the entire corporation (if you don't ask, it's unlikely you'll get an answer). Not only can you ask questions, by allowing people to express themselves on those things they personally judge to be of interest could answer questions we have yet to ask. The personalization of Enterprise 2.0 means that not only does information flow, but the people either "answer" the questions, or provide insight can be brought together to work on new initiatives, or ad-hoc requests in teams that may never have known one another before not bound by department, functional area, or hierarchical level.

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