Part 5, the conclusion of "Communicate, Collaborate, Coordinate, Decide: How IT Achieves Strategic Leadership," our article in Cutter IT Journal, November '08
Part 4 is here.
Part 3 is here.
Part 2 is here.
Part 1 is here.
Decisions: Making and Communicating Them
Network models also show the topology of the organization as a whole. The dance between centralization and decentralization plays out in the dynamics of organizational design and redesign as strategy changes to meet the ongoing rush of events. Today, in particularly uncertain times, adaptive strategies are more likely to succeed than “stay the course” approaches rooted in the slower Industrial Era.
By analyzing network maps of the organization, IT can identify and clarify the real leadership positions from the bottom up and the “edge in,” bringing attention to critical hotspots. These “hub” leadership positions are the highest-potential/highest-risk jobs in the organizational network — positions that are typically overloaded and underresourced. By providing such information to leaders at all levels, IT expands everyone’s idea of leadership and how to improve it — knowledge that is at once visionary-strategic and practical-tactical.
Leaders make decisions and then communicate them. They depend on their organizational hierarchies to gather information, formulate options, offer recommendations, and make final decisions. Then leaders turn around and use the formal reporting lines as their primary conduits for distributing the official goals, strategies, policies, procedures, and other messages from the top. These directives eventually land in the laps of line managers who lead staff teams.
Organizations swing between decision making, a comparatively complex process, and “decision telling,” which depends on communication. Hierarchies need to accommodate both — the capacity for making high-complexity decisions and communicating them along the shortest possible paths.
This brings us to the two opposing principles inherent in organizational structure:
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Centralizing to optimize communications. Organizations do this by increasing manager reporting spans and decreasing the number of levels in the organization. Fewer levels indicate shorter communication paths from top to bottom.
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Decentralizing for complex decision making. Smaller manager spans, meaning that managers have fewer people reporting to them, increase the number of organizational levels from top to bottom. More complex designs like these allow the organization to engage more specialties and devote time to deeper analysis before making complex decisions.
The dynamic of local optimization of communicating and decision making carves a hierarchical landscape that is high in some places, low in others. Many-tiered mountains of small decision-making teams optimized for complexity are scattered through low-elevation plains of large teams transmitting strategies, standards, and procedures. The local organizational design and appropriate balance of the tension between centralization and decentralization depend on which concerns are paramount at any moment.6
Overall, organizations need to accommodate added decision-making capability while becoming even smarter about communicating. How do they do this?
The answer lies in how they mix the ingredients of size, manager span, and number of top-to-bottom levels in different parts of the organization. Where communication is the dominant need, as it is in sales groups, manager reporting spans and teams are often larger, which reduces the path between senior and operating levels. Where decision making is paramount, as it is in research, there are apt to be more departments with smaller teams, which increases the path from top to bottom.
This is a critical consideration at a time when organizational change, redesign, and, yes, downsizing are hitting thousands of businesses, institutions, and agencies. The standing prescription for redesign today is to flatten the organization. This is a poor general rule. In some cases, flattening the organization may produce nothing more than an enhanced ability to communicate truly poor decisions.
People rarely call for more complexity within their organizations as a means of coping with an increasingly complex world beyond their own four walls. They should. A basic tenet of systems science is W. Ross Ashby’s “Law of Requisite Variety,” which essentially says that a system’s internal complexity must at least match that of its external environment. In practice, this means that greater diversity — of people, viewpoints, skills, disciplines, and the like — can generate more innovation and faster adaptation than can homogeneous teams. While there is likely some upper limit of diminishing returns here, it’s instructive for organizations to ponder this reality, especially as regards the advantages introduced by working virtually, which radically increases access to diversity.
Organizing for Communication
Management teams of solid-line reporting relationships are ideal vehicles for communication. Such teams are two-level organizations, with a manager and his or her direct reports just one link apart. Communication distance doesn’t get closer than one degree, whether in networks of family, friends, or coworkers. Every manager in the hierarchy has a one-degree team, a star-shaped cluster of closely related positions. The whole hierarchy is an interlocked set of one-degree management teams beginning at the top and reaching all the way to the bottom, regardless of whether or not any particular small group sees itself as a team.
From the executive perspective, messages stream down the hierarchy of reporting links in a progressively articulated tree akin to any wide-area communication system. In cable television transmission networks, for example, signals cascade from the “head end” (Level 1) through high-capacity trunk lines (Level 2) into lower-capacity branches (Level 3) and feeder lines (Level 4), finally “dropping” a thin wire to your home (Level 5). By analogy, the CEO is the head-end source of signal and content, with managers in between repeating and amplifying the source transmissions, ultimately dropping the messages at the “homes” of the staff.
Organizing for Making Decisions
In Western culture, our primary tool for tackling complex problems is analysis. “Breaking down” the problem divides something complicated into smaller, more comprehensible parts that may in turn be broken down further. In organizational structure, this problem-solving approach reveals itself in the propensity to differentiate and create more levels.
An organization tends to decrease manager span and increase levels when complexity increases and more decisions need to be made. Here, the hierarchy acts like a giant decision tree, a method used by operations researchers to analyze complex choices. At the highest level (Level 1 for our purposes here) is the final decision to be made (e.g., allocation of resources among major projects), with branches (Level 2) to each of the major option areas. Operations researchers map out successive levels of branching and analysis within each option until they have calculated all alternatives and values. The more complex the choice, the more decision branches they need to map.
Each team and team of teams must design itself to fit its basic mission. In simple terms, this is the recipe:
- To communicate better, make the organization’s structure flatter (i.e., reduce the number of levels and enlarge the size of the teams).
- To make better decisions, make the organization’s structure deeper (i.e., increase the number of levels and reduce the size of the teams).
For larger organizations, some parts will be more centralized, others more decentralized. No one design is best everywhere, and global edicts to flatten and simplify may, as we suggest above, undercut the organizational capability to cope with complexity. Indeed, collaborative technologies that connect people in all directions horizontally and vertically enable much faster and better communication pathways. So today’s fast-changing organizations can in fact become more complex to support better decisions, while also communicating faster through formal but nonhierarchical channels. The hierarchical design tradeoff between smarter decision making and better communication is being transformed into a “both/and” as the whole organization becomes interconnected at every scale from the single individual to the enterprise as a whole.
In the years and decades to come, organizations will need to morph to accommodate the pressing needs of the moment. But they can only do so if they can develop accurate, comprehensive mental models of themselves. And this is where IT comes in: using innovative tools, such as hyperbolic viewers and other network display technologies, it can map, navigate, and analyze the whole organization as a network.
Between Order and Chaos
Networks ripple. A small decision here plays out as major activity elsewhere in the web. Big effects arise from many small movements. Abstractions at a large scale become everyday local juggling acts for managers and staff across the hierarchy.
Organizations require both order and flexibility, stability and creativity. The structure must provide sufficient constraints to maintain integrity and enough freedom to innovate and adapt. Sufficient sameness and commonality have to mix with requisite variety and difference. If not, the organization will be either completely moribund or a total madhouse. Organizations change and rewire themselves as strategies shift and refocus, or they fail to adapt and eventually disappear.
Executives struggle to manage these contrasting forces. They find themselves simultaneously bringing some things to the center and pushing other things out, simplifying in some places and “complexifying” in others. They push for greater collaboration over here (perhaps to better deliver services) and greater competition over there (perhaps to control costs).
Three core functions — IT, HR, and finance — all have data with which to construct the basic network of how positions interconnect, in hierarchy trees and other networks of interdependent links. However, only IT has readily available and reliable data on both hierarchical and nonhierarchical relationships, including key contractors, formal teams, and patterns of inter-job/ inter-person communications (i.e., where working communication interweaves with social networks).
IT has its finger on the pulse of complexity. It can help the entire organization achieve a dynamic balance between order and chaos, providing stability while enhancing innovation. It can advocate for, then deliver, a new generation of the four strategic capabilities that enable people in the organization to more effectively communicate, collaborate, coordinate, and decide.
This is a powerful foundation for organizational wisdom that IT brings to the senior table.
ENDNOTES
1Majchzrak, Ann, Arvind Malhotra, Jeffrey Stamps, and Jessica Lipnack. “Can Absence Make a Team Grow Stronger?” Harvard Business Review, May 2004.
2The purpose of the Army project was to produce a Teams of Leaders Handbook with the Battle Command Knowledge System (BCKS), the US Army’s operational knowledge management (KM) “proponent” (as the military officially knows it, which provides legal authorization to push a specific agenda). Located at the Combined Arms Center at Fort Leavenworth, Kansas, the BCKS project focuses on executive teams that strive to be high-performing “teams of teams” while concurrently understanding and guiding the larger organizations they represent.
3Lipnack, Jessica, and Jeffrey Stamps. “The Easier Way to Work: Collaborating in World-Class Virtual Teams.” Cutter IT Journal, Vol. 18, No. 7, 2005, pp. 35-40.
4Majchrzak et al. See 1.
5Lipnack, Jessica, and Jeffrey Stamps. Virtual Teams. John Wiley & Sons, 1997, 2000.
6Our conclusions come from an investigation of “Eleum,” a 5,000-employee, multibillion-dollar business unit of a global enterprise. For details, see: Stamps, Jeffrey, and Jessica Lipnack. “The Virtual, Networked Organization: How One Company Became Transparent.” Chap. 30 in The Handbook of High-Performance Virtual Teams, edited by Jill Nemiro, Michael M. Beyerlein, Susan Beyerlein, and Lori Bradley. John Wiley & Sons, 2008.
Since the late 1970s, Jeffrey Stamps and Jessica Lipnack have been researching, writing about, and consulting on networks of people and organizations. They are the authors of six books on the topic, including Networking, The TeamNet Factor, The Age of the Network, and Virtual Teams. Their articles include “The Easier Way to Work: Collaborating in World-Class Virtual Teams” in the July 2005 issue of Cutter IT Journal. The authors can be reached at jeff [ dot ] stamps [ at ] netage [ dot ] com or jessica [ dot ] lipnack [ at ] netage [ dot ] com; Web site: www.netage.com.
