Hierarchies were a solution to a communications problem

Hierarchies may technically be networks, but they are merely simple branching ones. They work well when information flows mostly in one direction: down. Hierarchies are good for command and control. They are handy to get things done in small groups. But hierarchies are rather useless to create, innovate, or change.

We have known for quite a while that hierarchies are ineffective when things get complex. For example, matrix management was an attempt to address the weakness of organizational silos resulting from simple, branching hierarchies. In matrix management people have more than one reporting line and often work across business units. However, the performance management system and job structure usually remain intact so that it adds more complication, rather than increased effectiveness.

Any hierarchy, even one wrapped in matrices, becomes an immovable beast as soon as it is created. The only way to get real change in a hierarchical organization is to create a new hierarchy. This is why reorganizations are so popular; and so ineffective. Most
organizations still deal with complexity through reorganization. Just think of the last time a new CEO came in to “fix” a large corporation.

Reorganization has to be part of an organization, not something done to it. This is why everyone, from an individual contributor to the CEO, has to understand networks. Networks enable organizations to deal with complexity by empowering people to connect with whom they need to, without permission. Enterprise social network platforms epitomize this, usually letting anyone connect to another colleague, and where the default permission to get access to information is public.

Networks are in a state of perpetual Beta. Unlike hierarchies, they can continuously change shape, size, and composition, without the need for a formal reorganization. Our thinking needs to continuously change as well. Of course this means letting go of control. Hierarchies were essentially a solution to a communications problem. They are artifacts of a time when information was scarce and hard to share, and when connections with others were difficult to make. That time is over.

So here’s the situation: markets, competitors, customers, suppliers, are already highly connected. The Internet has done this. It is why a connected enterprise needs to be organized more like the Internet, and less like a tightly controlled machine.

While a certain amount of hierarchy may be necessary to get specific project work done, networks function best when each node can choose with whom and when it connects. Hierarchies should be seen as temporary, negotiated agreements to get work done, not immutable power structures. Networks enable work to be done more effectively when that work is complex and there are no simple answers, best practices, or case studies to fall back on. Large-scale hierarchies have outlived their usefulness

west roman command structureThinking like a node in a network and not as a position in a hierarchy is the first mental shift required to move to a connected enterprise. The old traits of the industrial/information worker may have been intellect and diligence but networks need people who are creative and take initiative. People cannot be creative on demand. Nurturing creativity becomes a primary management responsibility.

The Internet has finally given us a glimpse of the power of networks. We are just beginning to realize how we can use networks as our primary organizational form for living and working. A connected enterprise has to be based on looser hierarchies and stronger networks.

In networks, even established practices like teamwork can be counter-productive. Teams promote unity of purpose. Sports metaphors are often used in teamwork, but in sports there is only one coach and everybody has a specific job to do within tight constraints. In today’s workplace, there’s more than one ball and the coach cannot see the entire field. The team, as a work vehicle, is outdated. In a complex world, team unity may be efficient, but not very effective.

Exception-handling also becomes more important in the connected enterprise. Automated systems can handle the routine stuff while people working together deal with the exceptions. As these exceptions get addressed, some or all of the solutions can get automated, and so the process evolves. Complexity increases the need for both collaboration (working together on a problem) and cooperation (sharing without any specific objective). Networks enable rapid shifts in the composition of work groups, without any formal reorganization. Networked colleagues, learning together, can close the gap between knowing and doing.

The high-value work today is in facing complexity, not in addressing problems that have already been solved and for which a formulaic or standardized response has been developed. One challenge for organizations is getting people to realize that what they already know has increasingly diminishing value. Solving problems together is becoming the real business challenge. Networks, not simple hierarchies, are needed to do this kind of work.