In nature, there's a tradeoff between size and speed. Whales are slow. Birds are fast. But organizations today need to be big and fast. Is it possible? Can organizations be both agile and scalable?
There's some good news. Science is revealing that biology doesn't have to rule the marketplace. And new models of leadership are emerging from some unlikely places.
First, the science. Professor Geoffrey West from the Sante Fe Institute has shown that in biology, bigger does have its advantages. Whales are more efficient and live longer than birds. But they are also slower and less adaptive. Economies of scale give efficiency, but not speed or resilience.
Cities, by contrast, get better and faster as they get bigger. Large cities have higher income, lower crime rates, and more rapid innovation. People even walk faster in bigger cities.
The reason is networks. Bio-mechanical systems get more efficient as they get bigger, but they also slow down and become less adaptive. Networks, on the other hand, become more versatile and creative. The brain has this characteristic. So do social systems like cities and communities. And virtual communities like Facebook or Twitter.
But what about organizations? Are they more like cities or whales? Communities or machines? In his research, West found that companies today behave more like whales and machines. The pursuit of economies of scale has led to efficiencies, but also a loss of speed and agility.
The good news is that there's no reason companies can't be more like communities. After all, companies are social networks too. It's just that we haven't been running them that way.
To get bigger and faster, organizations need to be reconceived as networks. But how? The appeal of the status quo is overwhelming for many. The hierarchical models of the 20th Century are safe, dependable, and comfortable for leaders and investors alike. Networks sound unpredictable — good for creating social groups, but bad for large organizations that need to make disciplined decisions.
Outside of startups and tech firms in Silicon Valley, are there any role models to emulate?
One answer comes from an unlikely place: the U.S military. Perhaps the most whale-like organization in the world. There is no greater hierarchy in the world than within the five sides of the Pentagon. Yet inside this massive structure is a surprising amount of innovation in the area of organizational design and decision-making.
As we have written previously, the events of 9/11 led the U.S. military to realize that "it takes a network to defeat a network." The new enemy was a light, agile, and rapidly evolving network. The hierarchical models of post-cold war design were no longer sufficient. Our military was big, and now it had to be fast.
The thought-leaders of this change within the military reconceived the organizational relationships as network-based, versus the traditional hierarchies of the past. They developed a new model that enabled the military to use its size — and its extended network of relationships — as an advantage rather than an impediment.
Four strategies were at the core of this transformation: build relationships, establish shared purpose, create shared consciousness, and foster diversity.
(1) Build relationships
In network terms, relationships are connections between nodes. When viewed as a network, hierarchies have a relatively sparse number of connections. Each individual only has relationships with his or her boss, peers, and direct reports. So the first step is to build more relationships and connections. This change first developed inside the special operations community whose leaders faced the reality of being out-paced by a new type of networked challenger in Al Qaeda, and therefore focused on building the density and diversity of their own friendly network. They orchestrated an unprecedented level of interagency collaboration across organizations that previously had never worked together — a model often referred to as the "team of teams."
(2) Establish shared purpose
To build relationships, it's not enough to hold offsites and call bigger meetings. People need a reason to work together — a reason that simultaneously addresses the interests of all stakeholders: customers, community, investors, and employees. In Iraq, the shared purpose was rebuilding a nation on principles of freedom and self-determination. As General Stan McChrystal, one of the leaders of the military's move to networks, said in a recent TED Talk: "Instead of giving orders, you're now building consensus and you're building a sense of shared purpose."
(3) Create shared consciousness
To get where you are going, you first have to know where you are. Shared consciousness ensures that everyone across the network has a sense of where they are and is acting on the best available information. The formation of "intelligence fusion teams" created unprecedented levels of collaboration between a broad array of military units and many civilian organizations, accelerating the flow of information across the network. These globally dispersed teams were constantly connected and became the epicenter for creating shared consciousness. They gathered data from across the network, then pushed out the information to whomever was best positioned to take swift and effective action.
(4) Encourage dissent
In a hierarchy, obedience is a virtue. In a network, it is a vice. Conformity creates groupthink, stifling innovation and organizational resilience. The antidote is cultural diversity in all its forms: experience, gender, age, ethnicity, geography, profession, etc. The new military-interagency collaboration created an environment in which dissent was not only tolerated, but encouraged. Instead of being chastised for expressing a contrary or unpopular view, team members were reprimanded for withholding it. Individuals were incentivized to present counterpoints, and leaders worked diligently to ensure the environment was safe for the free exchange of ideas.
This new approach turned traditional war-fighting upside down and inside out. Instead of centralizing command and control at the top, information and autonomy was aggressively pushed to decision-makers in the field. Decentralize to the edge of discomfort became the mantra of many of these organizations — setting the conditions for rapid and focused action.
Motivated by a shared purpose and aligned by shared consciousness, the network became denser, more diverse, and more intelligent. The result was unprecedented speed, resilience, and effectiveness — even while surrounded by the chaos of war. Bigger no longer meant slower, and network no longer meant unpredictable.
If the Pentagon could turn itself from a whale into a city, so too can a large corporation. Most companies embody leadership and organizational models created at the turn of the 20th century. Back then, the goal was size not speed, and the challenge was coordination not complexity. We live in a different time and we need new models to enable us to get bigger and faster. We need our leaders to be more like mayors than generals, building relationships instead of issuing orders. If our generals can make the change, so too can our business leaders.
User experience. You can hear this combination of words quite often these days. PLM space is not an exclusion from that. People in enterprise software, engineering and manufacturing are starting to ask more questions about usability. There are multiple reasons for that. Think about end users – engineers, project managers, etc. Consumer technologies makes a significant influence on their perception about how future software needs to look and feel. In their home life, they are exposed to so many technologies. Many of these technologies are more powerful and more usable compared to products, company IT provides them. BYOD is only one example of consumer technology impact. Speaking about companies (opposite to individuals), I can see also see a significant interest to usability and user experience. On recent PLM Innovation conference in Atlanta, many companies spoke about the importance of usability in the future of PLM products.
