| Complexity
and Organizational Structure by Emily F. Breuner |
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Chapter
7 |
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| One of the goals of this particular project was to consider whether these two entities, the Internet and Visa, were in fact similar enough to be considered specializations of a single generic process. Through work with Tor Rams¯y, Charles Osborn, and Thomas Malone, we have indeed determined that these two organizations can be thought of as specializations of a certain type of organization, an exchange network. | |
| In attempting to develop the general case for "Govern Exchange Network," I started from my knowledge of Visa's governance process. In particular, I have attempted to describe what Visa does in the most abstract terms since functional process maps of Visa's operations have already been diagrammed as part of a previous analysis of Visa's operations.(1) From the analysis in the preceding chapter, I have concluded that the main function of Visa International and its board structure is to facilitate cooperative behavior while facilitating beneficial competitive behavior. These two processes both manage important shared resource dependencies involved in funding cooperative projects as well as the usability dependency involved in the flow of both highly structured information (e.g. transactional data) and highly unstructured, equivocal information (i.e., issues that result from competitive behavior between the member institutions and in the credit card marketplace in general) between entities in the Visa organization. Figure 7.1 illustrates these dependencies. |  |
| In other process mapping methodologies, the only process one could map would be the board process, a simple approval process. However, I found that by doing the type of dependency analysis prescribed by the Process handbook, I have come closer to determining the true essence of how Visa accomplishes the coordination of hundreds of thousands of organizations and millions of people. While another researcher might draw a different diagram, it is the exercise of identifying the key resources and the mechanisms for coordinating the corresponding dependencies that reveals important subtleties that I believe would remain hidden if simple flow chart methods were being used. | |
| Using Visa as a starting point, I tried to determine whether there was a specialization of the "Run Visa Card Program" diagram that might similarly describe the Internet's governance process. The Internet has developed over the last 25 years with little attention from the commercial market place. As a result, the primary concern of its self-appointed governing bodies has been to facilitate cooperation between disparate users so that interoperability and reliability may be maintained. Therefore, the decomposition of "Run Internet" consists only of "Facilitate Efficient Cooperation." |
| Conversely, Visa has always been a system in which competition played an extremely important role; therefore, it includes the subprocess "Facilitate Beneficial Competition." While there is competition on the Internet, it is not part of the IAB's or the IETF's responsibility to manage it. This difference does not, however, mean that there is not a supertype of "Run Federal Exchange Network." Our vision of the specialization hierarchy appears below.(2) | |
| This analysis invites one to apply these ideas to other forms of exchange networks. Tor Ramsoy has analyzed AT&T's telecommunications network, which is completely centralized, regulated, and monopolistic. In thinking about this decomposition, it seems that there is little, if any, similarity between AT&T and these other organizational forms. If anything, the "Run AT&T" decomposition would look like a specialization of a conventional "Run Business" decomposition with typical product development and supply chain management processes. Whereas the other specializations' decompositions seem to show pure coordination of key resources, AT&T's is so different that I question whether it can truly be called a specialization of "Run Exchange Network." | |
| At the other extreme, one can think about any marketplace as an exchange network. Some markets are regulated via price supports or government intervention (as had been the case with the telecommunications industry until recently), and others are largely deregulated, such as the open systems market now apparent in the high technology industry. In this industry, there are hundreds of legal or ad hoc joint ventures between companies who are also competing with each other (e.g., Apple and Microsoft software for the Macintosh versus Apple and Microsoft Windows). Thus, the "Facilitate Cooperation" function is coordinated, but again, the competitive aspects are uncoordinated (except by the market). | |
| [Image] Figure 7.4: Run Decentralized Network | |
| Thus, it seems there are many similarities between the various decentralized exchange networks. However, the centralized network seems so different that it does not seem to fit under this specialization tree, but rather under a more traditional "Run Business Specialization." Nonetheless, by analyzing these examples in terms of the key resources being managed, these important differences have been brought to light. The Process Handbook thus seems to tease out important characteristics of coordination processes that other process mapping methods leave undetected and thus unmanaged. | |
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Footnotes (1) Graham Brown, Trevor Moody, George Tan, "Analyzing and Applying the Visa Organizational Model," paper written for MIT Sloan School of Management course 15.563: Inventing Organizations of the Twenty-First Century, December 12, 1994. (2) Developed by Thomas Malone, Tor Ramsoy, and Emily Breuner. |
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