The way we manage our organizations is largely ineffective for the complex challenges we face, whether driven by the environment, demographics, economics, or politics.
Hierarchies assume that management knows best and that the higher up the hierarchy, the more competent and knowledgeable that person is. But hierarchies are merely centralized networks. 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. Hierarchies are ineffective when things get complex.
Source: Paul Baran, “On Distributed Communications: MEMORANDUM: RM-3420-PR” AUGUST 1964, the Rand Corporation
Distributed networks are in a state of perpetual Beta. Unlike hierarchies, they can more easily change shape, size, and connections, without the need for a formal reorganization, as there are no central control nodes. In a fast evolving environment, management thinking needs to continuously change as well. This means letting go of control. Hierarchies are 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.
The Internet has highly connected markets, competitors, customers, and suppliers. With an external environment that is highly connected, organizations have to get connected inside. A networked enterprise needs to be organized more like the Internet, and less like a tightly controlled machine. While hierarchies are practical to get work done, they should not be the overarching structure for the organization. There is still a need for responsibility and accountability, but authority has to be distributed to deal with complex problems.
Complex problems cannot be solved alone. They require the sharing of tacit knowledge, which cannot easily be put into a manual. In addition, tacit knowledge flows best in trusted networks. This trust also promotes individual autonomy and can become a foundation for organizational learning, as knowledge is freely shared. Without trust, few people are willing to share their knowledge.
Organizations have to become knowledge networks. An effective knowledge network cultivates the diversity and autonomy of each worker. Networked leaders foster deeper connections, developed through ongoing and meaningful conversations. They understand the importance of tacit knowledge in solving complex problems. Networked leaders know they are just nodes in the knowledge network and not a special position in a hierarchy.
What does a post-hierarchical organization look like?
It will be one that provides a sense of belonging like a tribe, but with more diversity and room for personal growth. It will have the institutional structure to manage the basic systems so people can focus on customers and community, not merely running the organization. It will have market type competition, but without a winner-take-all approach. Finally, it will promote cooperative actions that add to the long-term value of the ecosystem and community, not just short-term collaboration to get the next project done or achieve some arbitrary quarterly results. Making the networked organization more resilient will help everyone in it, not just a few central nodes. The networked organization takes the long view.