| Complexity
and Organizational Structure by Emily F. Breuner |
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Chapter
10 |
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| While decentralization is not a new concept, the art of structuring organizations such that they both garner the benefits of decentralization and maintain order is little understood. The success of the Internet and Visa shows that it is possible both to coordinate large groups of people and to create large organizations that are capable of meeting the challenges of the changing environment. By examining these two organizations using coordination and complexity theory, I have tried to identify some of the key forces at work in these organization so that they can be used in the construction of corporations of the future---corporations that can use information technology and organizational design to meet the challenges of the accelerated pace of change that is a driving dynamic in today's business world. | |
| Both Visa and the Internet have evolved to meet the changing environments in which they "live." They use the natural tendency of adaptive systems to develop disparate yet effective incremental solutions rather than trying to centrally plan and engineer them. At the same time, they have enabled cooperation among thousands of organizations and millions of people. Both have done it by structuring the organization to use the uncertainty of the future to its own advantage. |  |
| At the heart of both organizations there seems to be multiple paradoxes and ideas that are opposite of traditional organization design; cooperation and competition together help achieve results; information is centralized, yet power is decentralized; hierarchy is not used to concentrate authority, but to manage participation of autonomous agents; management does not solve problems but rather chooses among solutions; the role of those at the top of the hierarchy is not to lead with "vision," but to enable via careful stewardship. Obviously these ideas need to be tested in other organizations and situations to see if they hold true beyond this sample size of two. However, if they do, questions arise about the ability of individuals to evolve into this new management style. What kind of person will be the CEO of a corporation when power is no longer concentrated under him or her? How will Wall Street value these organizations? Will society's elite accept organizations that actively distribute power and wealth? Will society and its members willingly take on the responsibilities and duties that come with distributed authority? What will the legal system do with loosely associated organizations in which product liability is no longer directly attributable? All these issues will arise if and when these decentralized structures become more widespread. | |
| Most systems can be thought of as collections of interactions between agents. If indeed organizations and markets can be thought of as complex adaptive systems, complexity theory tells us that the outcomes of these systems are completely unpredictable. Rather than trying to control and predict the future, organizational architects should be concentrating on identifying and enabling the conditions that make organizations "infinitely malleable yet extremely durable," structuring them so that they may "evolve." In order to be successful in a world where the pace of change is accelerating, this kind of organization seems imperative, and this lack of traditional management essential. To quote Dee Hock one final time on the legacy of the Industrial Age, and the skills we will need in the future: | |
The essential thing to remember is not that we became a world of expert managers, but that the nature of our expertise became the understanding of management of constants, uniformity, and efficiency, while the need has become the understanding and coordination of variability, complexity and effectiveness. - Dee Hock, September 27, 1994
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