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Organizational Design in the 21st Century

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This is the first part of a piece of work that I’m doing to define a Pattern Language for Organizations. It sets the context for a bold hypothesis – that organizations are fundamentally broken – and a candidate set of performance criteria. From here, it’s about aggregating functional patterns. I’d love your help!

Presented at Planningness 2015

Published in: Business
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Organizational Design in the 21st Century

  1. 1. 1 The organization 
 is broken
  2. 2. 0.0 1.0 2.0 3.0 1949 1969 1989 2009 2 P R O D U C T I V I T Y W A G E S
  3. 3. 0.0 6.7 13.3 20.0 1949 1969 1989 2009 3 S H A R E O F I N C O M E , T O P 1 % , U S A G E R M A N Y S W I T Z E R L A N D P O R T U G A L J A P A N I T A L Y S P A I N F R A N C E 
 F I N L A N D S W E D E N D E N M A R K 
 N E T H E R L A N D S
  4. 4. -4.0 0.0 4.0 8.0 1949 1970 1991 2012 4 P R O D U C T I V I T Y / G L O B A L O U T P U T
  5. 5. 0.0% 1.7% 3.3% 5.0% 1965 1980 1995 2010 5 R E T U R N O N A S S E T S
  6. 6. 0 23 47 70 1958 1982 2006 2030 6 A V E R A G E L I F E S P A N , C O M P A N Y O N S & P 5 0 0
  7. 7. 7 Likely to be computerized
  8. 8. 8 Actively Disengaged
  9. 9. 9 Every day, millions of people wake up and play a boring RPG called ‘Professionalism’” “ C O R Y D O C T O R O W : Every day you see me, that’s the worst day of my life.” P E T E R G I B B O N S : “
  10. 10. 10 Wait. What about 
 everything else?
  11. 11. 11 0 300,000 600,000 1946 1966 1986 2006 C O N F L I C T D E A T H S , A L L T Y P E S , 1 9 4 6 - P R E S E N T
  12. 12. 12 0% 50% 100% 1880 1940 2000 S H A R E O F W O R L D W I T H A B A S I C E D U C A T I O N
  13. 13. $0 $1 $1,000,000 $1,000,000,000,000 1961 1981 1997 2000 2001 2003 2007 2011 2013 13 C O S T P E R G I G A F L O P
  14. 14. 0% 33% 67% 100% 1995 1999 2003 2007 2011 2015e 14 N O I N T E R N E T N O S M A R T P H O N E G L O B A L A D U L T P O P U L A T I O N W I T H . . .
  15. 15. 15 Category Starting Cost Current Cost Timeframe Cost Performance Improvement 3D Printer $40,000 $100 7 years 400x Industrial Robots $500,000 $22,000 5 years 23x Drones $100,000 $700 6 years 142x Solar $30/KwH $0.16/KwH 30 years 200x Sensors $20,000 $79 5 years 250x Neurotech $4,000 $90 5 years 44x DNA Sequencing $10,000,000 $1,000 7 years 10,000x
  16. 16. 16 0 8 16 24 Average
 Fortune
 500 $GOOG $FB $TSLA Uber Snapchat Oculus 
 Rift Y E A R S T O $ 1 B V A L U A T I O N / C A P I T A L I Z A T I O N
  17. 17. 17 What 
 should 
 I believe? T B H , I T ’ S H A R D T O S A Y .
  18. 18. 18 Work is simultaneously easier and harder than ever before. B U T I N P O C K E T S , W E ’ R E F I G U R I N G O U T H O W T O D E A L "
  19. 19. 19
  20. 20. 20
  21. 21. 21
  22. 22. 22 WHAT’S 
 HAPPENING 
 HERE? WHAT’S 
 HAPPENING 
 HERE? WHAT’S 
 HAPPENING 
 HERE?
  23. 23. 23
  24. 24. 24
  25. 25. 25
  26. 26. 26
  27. 27. 27 The legacy organizations 
 are broken that we designed 100 years ago legacy that we designed 100 years ago
  28. 28. We’re pursuing a normative definition of an “organization”… that is, what it should be in the 21st Century 28
  29. 29. Should work be easy? Should it be fun? Should it be a happy place? Should it be perfect? 29
  30. 30. We’re building an understanding from lateral and direct models, and through applied practice. 30
  31. 31. Something with “The Quality”… 1. is alive; invigorated, but not literally living 2. is whole; free from contradictions, but not enclosed or cut off 3. is comfortable; tuned, fit, not just soft or yielding 4. is free; wild, true to nature, but not without constraint 5. is exact; particular to specification, but not perfect 6. is egoless; unselfconscious but not without the maker’s “self” 7. is eternal; self-maintaining, but not mysterious, or religious Christopher Alexander 31 G O O D B U I L T E N V I R O N M E N T S
  32. 32. Five main performance criteria: 1. Vitality 2. Sense 3. Fit 4. Access 5. Control Plus two meta-criteria: 6. Efficiency 7. Justice Kevin Lynch 32 G O O D C I T I E S
  33. 33. 1. High-quality output, as judged by the team’s customers 2. More capable as a team than when they started working together 3. Makes significant positive contributions to the lives of the individuals on the team Wageman, Hackman & Lehman 33 G O O D T E A M S
  34. 34. 1. Consensus Oriented 2. Participatory 3. Follows the Rule of Law 4. Effective and Efficient 5. Accountable 6. Transparent 7. Responsive 8. Equitable and Inclusive United Nations 34 G O O D G O V E R N A N C E
  35. 35. 1. Individuals and interactions over Processes and tools 2. Working product over Comprehensive Documentation 3. Customer collaboration over Contract negotiation 4. Responding to change over Following a plan Agile Manifesto 35 “ G O O D ” = A G I L E
  36. 36. IDEAS: 1. Interfaces 2. Dashboards 3. Experimentation 4. Autonomy 5. Social SCALE: 6. Staff on demand 7. Community and crowd 8. Algorithms 9. Leveraged assets 10. Engagement Exponential Organizations 36 “ G O O D ” = F A S T G R O W T H M A S S I V E T R A N S F O R M A T I O N A L P U R P O S E
  37. 37. Reinventing Organizations 37 Formal Roles Innovation Empowerment Self-management Processes Accountability Values-Driven Wholeness Meritocracy Stakeholders Evolutionary Purpose E V O L U T I O N A RY O R G A N I Z AT I O N S P L U R A L I S T I C O R G A N I Z AT I O N S A C H I E V E M E N T O R G A N I Z AT I O N S C O N F O R M I S T O R G A N I Z AT I O N S “ G O O D ” = H E A L T H E W O U N D S O F M O D E R N I T Y
  38. 38. 1. Individual benefit as important as the overall corporate benefit 2. Strategy before technology 3. Listen to the voice of the employee 4. Learn to get out of the way 5. Lead by example 6. Integrate into the flow of work 7. Create a supportive environment 8. Measure what matters 9. Persistence 10. Adapt and evolve 11. Employee collaboration also benefits the customer 12. Collaboration can make the world a better place Future of Work 38 “ G O O D ” = C O L L A B O R A T I V E
  39. 39. 1. Lead for the long run 2. Value diversity 3. Reinvent market incentives 4. Foster collaboration 5. Drive full transparency 6. Create thriving communities 7. Scale true accounting 8. Restore nature 9. Redefine reward systems 10. Ensure dignity and fairness The B Team 39 “ G O O D ” = S A V E T H E W O R L D
  40. 40. 1. Purpose over Profit 2. Empowering over Controlling 3. Emergence over Planning 4. Networks over Hierarchy 5. Adaptivity over Efficiency 6. Transparency over Privacy Responsive Organizations 40 “ G O O D ” = A D A P T A B L E
  41. 41. 1. Improve understanding of what coworkers do 2. Reinforce the people who are integrators 3. Expand the amount of power available 4. Increase the need for reciprocity 5. Make employees feel the shadow of the future 6. Put the blame on the uncooperative Yves Morieux’s Six Simple Rules 41 “ G O O D ” = A D V A N T A G E A M I D C O M P L E X I T Y
  42. 42. 1. Never add a process or a layer unless you absolutely have to 2. Never blame a problem on someone’s mentality or mind-set 3. Don’t let decisions be escalated to you 4. Don’t rely on financial incentives 5. Don’t try to measure specific behaviors Yves’ Five (Actually) Simple Rules 42 “ G O O D ” = A D V A N T A G E A M I D C O M P L E X I T Y
  43. 43. 43 Organizational Design Criteria
  44. 44. Ever-Better Organizations 44
  45. 45. Eight performance criteria: 1. Purposeful and important 2. Quality, achievement and context fit 3. Alive and interesting 4. Fairness and equality 5. More, and more forms of power for all 6. Connected beyond our walls 7. Supportive, safe and comfortable 8. Transparency, signaling and internal connectivity Ever-Better Organizations 45
  46. 46. 2. Dean Baker, Center for Economic and Policy Research, “The Productivity to Paycheck Gap: What the Data Show” 2007 3. World Top Incomes Database and Max Roser 4. University of Notre Dame Mendoza School of Business 5. John Hagel III, John Seely Brown, Tamara Samoylova & Michael Lui, “Success or struggle: ROA as a true measure of business performance” Deloitte University Press 2013 6. Richard N. Foster and Sarah Kaplan, Creative Destruction 2001 7. Carl Benedikt Frey and Michael A. Osborne, “The future of employment: how susceptible are jobs to computerization?” 2013 8. Gallup US Daily Survey, 2014. N = 80,837 9. Perhaps apocryphal, but cited to Cory Doctorow. Also, Office Space 11. Human Security Report Project, Battle Deaths from State-Based Armed Conflicts by Region, 1946-2007 12. Max Roser visualization of data from van Zanden, J.L., et al., “How Was Life?: Global Well-being since 1820” 2014 13. Top 500 & Wikipedia 14. Benedict Evans, Mobile is Eating the World 15. Michael S. Malone, Exponential Organizations 2014 16. Ibid 23. Horace Dediu, Seeing What’s Next 2013 24. Yaneer Bar-Yam, “Complexity rising: From human beings to human civilization, a complexity profile,” 2002 25. Ray Morris, Operating Organization of the Union Pacific and Southern Pacific System, Railroad Administration, 1920 Sources by page 46
  47. 47. 31. Christopher Alexander, The Timeless Way of Building 1979 32. Kevin Lynch, Good City Form 1981 33. Ruth Wageman, Richard Hackman and Erin Lehman, “Team Diagnostic Survey: Development of an Instrument” 34. Yap Kioe Sheng, “What is Good Governance?” United Nations Economic and Social Commission for Asia and the Pacific 35. agilemanifesto.org 2001 36. Michael S. Malone, Exponential Organizations 2014 37. Frederic Laloux, Reinventing Organizations 2015 38. The Future of Work Community 39. The B Team 40. responsive.org 41. Yves Morieux, “Smart Rules: Six Ways to Get People to Solve Problems Without You” 2011 42. Ibid Sources by page, continued 47

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