The document discusses how organizations will become more agile and decentralized as complexity increases. It argues that formal hierarchical structures will give way to more networked and dynamic structures where people and teams have more freedom and responsibility. Key aspects of traditional bureaucracies like fixed targets, top-down management, and incentives will be replaced by a focus on results, leadership, transparency, and sharing. Organizations will move from mechanistic and efficiency-driven models to integrated, team-based structures that can adapt to complex environments.

1. Spark the Change
Toronto, 09.06.2016
@NielsPflaeging
How our organizations
will become agile, radically decentralized
and networked. Sooner than we think

2. Complexity is like the weather.

4. Culture

10. • Fixed, individual targets
• Management by Objectives
• Budgets and Plans
• Performance Appraisal
• Hierarchical Pressure
• Pay by Position or Performance
• Incentives and Bonuses
• …

11. Formal part of
value creation
Solution: Machine
Dynamic part of
value creation
Solution: Man

12. high
dynamics
Local markets,
high customization

13. Sluggish/dull,
low dynamics
high
dynamics
Spacious markets,
little competition
Local markets,
high customization

14. Sluggish/dull,
low dynamics
high
dynamics
high
dynamics
Spacious markets,
little competition
“Outperformers” exercise
market pressure over
conventional companies
Local markets,
high customization

15. Formal part of
value creation
Solution:
Machine
Dynamic part of
value creation
Solution: Man
Sluggish/dull,
low dynamics
high
dynamics
high
dynamics
Age of
Crafts Manu-
facturing
Industrial Age/
Age of
Tayloristic Industry
Age of
Global
Markets
1850/1900
Spacious markets,
little competition
“Outperformers” exercise
market pressure over
conventional companies
Local markets,
high customization
1970/80 today

17. Periphery
Market
Center

18. 1 Impulse
4 Command
3 Decision
2 Information
5 Reaction
Center
Market
Periphery
Client
Is in
charge!

19. 1 Impulse
2 Decision
3 Reaction
Center
Market
Periphery
Client
Serves the
periphery,
if needed
Is in
charge!

22. 3. Fase „beta“
o “fase de integración“
2. Fase „alpha“
o “fase de diferenciación“
Transformación tipo 2:
“Profundización“
Transformación tipo 1:
“Burocratización“
Transformación tipo 3:
“Transformación Beta“
Young organization Older organization
1. Start-up phase
or “Pioneer phase “

23. 3. Fase „beta“
o “fase de integración“
Transformación tipo 2:
“Profundización“
Transformación tipo 1:
“Burocratización“
Transformación tipo 3:
“Transformación Beta“
Young organization Older organization
1. Start-up phase
or “Pioneer phase“
2. Alpha phase
or “Differentiation phase“

24. Transformación tipo 2:
“Profundización“
Transformación tipo 1:
“Burocratización“
Transformación tipo 3:
“Transformación Beta“
Young organization Older organization
1. Start-up phase
or “Pioneer phase“
2. Alpha phase
or “Differentiation phase“
3. Beta phase
or “Integration phase“

25. 1. Start-up phase
or “Pioneer phase“
2. Alpha phase
or “Differentiation phase“
Type 2 transformation
“Deepening“
Type 1 transformation:
“Bureaucratization“
Type 3 transformation:
“Beta Transformation“
3. Beta phase
or “Integration phase“
Young organization Older organization

26. Indústry
Retail
Servicies
Government/
NGOs
It is possible.

27. Theory X Theory Y
People need to work and want to take an interest
in it. Under right conditions, they enjoy it
People dislike work,
find it boring, and will avoid it if they can
Attitude
Direction
Responsibility
Creativity
Motivation
People will direct themselves
towards a target that they accept
People will seek and accept responsibility,
under the right conditions
Under the right conditions, people are motivated
by the desire to realize their own potential
Creativity and ingenuity are widely distributed
and grossly underused
People must be forced or bribed
to make the right effort
People would rather be directed than accept
responsibility, (which they avoid)
People are motivated mainly by money
and fears about their job security
Most people have little creativity - except
when it comes to getting round rules

28. Behaviors
Context
Human
Nature

30. ”Meritocracy“
Budgeting Planning
Control of work hours
Job Descriptions
Competencies Management
Incentives
Individual targets
Performance Appraisal/360°
Salary Ranges
Training budgets
Personnel Development
Org charts
Target negotiation
Holiday applications
”Personnel Expenses“
Suggestion boxes
Assessment Centers
Knowledge Management
Pay for Performance
Paid extra hours
Bonuses
Sales Quotas
Dress codes
Job titles
HR
Allocations
Cost Management
Plan-Actuals variances
Forecasting
MbO
Development Centers
Bosses hire
Strategic Planning
Travel policies
Jours fixes
Earnings Guidance
Matrix Structures
Key Accounting, Business Areas
Business Partners
SWOT Analysis
…

31. • Fixed, individual targets
• Management by Objectives
• Budgets and Plans
• Performance Appraisal
• Hierarchical Pressure
• Pay by Position or Performance
• Incentives and Bonuses
• …
• Transparency & Improvement
• Comparisons between peers
• Comparisons with previous periods
• Dialog and Dissent
• Social and group pressure
• Pay by market value
• Results Sharing
• …
Low dynamics
High dynamics

32. Law Beta Alpha
§§1 Freedom to act Connectedness not Dependency
§2 Responsibility Cells not Departments
§3 Governance Leadership not Management
§4 Performance climate Result culture not Duty fulfillment
§5 Success Fit not Maximization
§6 Transparency Intelligence flow not Power accumulation
§7 Orientation Relative Targets not Top-down prescription
§8 Recognition Sharing not Incentives
§9 Mental presence Preparedness not Planning
§10 Decision-making Consequence not Bureaucracy
§11 Resource usage Purpose-driven not Status-oriented
§12 Coordination Market dynamics not Commands

34. Data Information Knowledge ?

35. Formal Structure

36. Informal Structure

37. Value Creation Structure

38. Compliance, Power Social Work/Value Creation
Formal Structure Informal Structure Value Creation Structure

39. Knowledge Age
Systemic, alive
Integrated, team-based
Work the work
Outside-in, led
With-each-other-for-each-other
Complexity-robust
Industrial Age
Mechanistic, dead
Differentiated, individualizing
Work the people
Top-down, managed
In parallel, in line
Efficiency-oriented

40. @NielsPflaeging
nielspflaeging.com
organizeforcomplexity.com
betacodex.org
slideshare.net/npflaeging
How our organizations
will become agile, radically decentralized
and networked. Sooner than we think