the clarion call · existing business models and structures were rarely intended to be democratic...
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the clarion group REAL. CLEAR. INSIGHT.
the clarion call July 2014
Structure-less Structures A New Day Is Emerging
Bill McKendree and the Partners of The Clarion Group
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The Issue Traditional approaches to business management are faltering under the pressures of rapidly changing market dynamics and the shifting needs and expectations of consumers, employees and company stakeholders. The age of hierarchy, predictability and structure is being left behind…in its place, an age where structure-less structures prevail. As organizational boundaries fade, leaders are being challenged to think anew and develop approaches to management that meet the challenges of the 21st century and enable the gradual redefinition of where, when and how work gets done.
What is a structure-less structure? What lessons can be learned from existing structure-less structures? How can leaders change their paradigm of traditional management thinking to exert less control, decentralize decision making and empower their employees through greater autonomy while creating the critical glue to achieve shared objectives…all while maintaining high standards for execution and meeting the increasing demands for growth and profitability.
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Wow! The Web! As we reach yet another internet milestone (the 25th Anniversary of the World Wide Web), we realize that all of us, whether in our nineties or much younger, have become accustomed to and dependent on the internet. Many of us were not paying much attention when the Internet Platform conversion took place some thirty years ago. Back then, we could see only glimpses of what is now possible. Today, the internet/web is our central source for information, and it has recently emerged as a primary place where commerce happens. It has altered everyone’s world, not only from a geographic perspective (the world is smaller than it was; physical location is not as important for interaction) but also in the ways we conduct our daily lives. The internet is where we research, buy, sell, connect, tattle, snoop, barter, advise, lobby, lurk, bully and more, with all of our activity data stored deep and available for analysis and review.
Yet, as the internet has inserted itself into – and been invited into – every facet of our business and private lives, most of us have not realized that this brings us closer to operating in a world that is evolving towards structure-less structures, a new form of structure that breaks away from the conventions to which we have been accustomed.
2014 the Clarion Group, Ltd. All rights reserved.
Let me first illustrate a structure-less structure using the example of the internet and its multi-stakeholder governance model to define its critical attributes (as excerpted from “Who Runs the Internet?):
The internet is a globally distributed computer network comprised of many voluntarily interconnected autonomous networks.
Its governance is conducted by a decentralized and international multi-stakeholder network of interconnected, autonomous groups drawing from civil society, government, the private sector, the academic and research communities and national and international organizations.
Internet stakeholders work cooperatively from their respective roles to create and maintain shared policies and standards that ensure global interoperability for the public good.
In my view and speaking more broadly, a structure-less structure has several defining dimensions:
Shared and community-derived policies and standards prevail, serving as the glue.
There exist purpose-driven self-organization and autonomy, usually borne from voluntarily interconnected networks of autonomous stakeholders united around a shared purpose.
Community-based decision making prevails, decentralizing and distributing governance.
Leadership emerges organically from different stakeholders at different times for different purposes.
The underlying intention is to make a positive contribution to a greater good, running off a shared purpose as a chassis.
The web (a major layer of the internet created by Sir Tim Berners-Lee and offered free to the world) operates as a structure-less structure outside of any one person’s control and operates without any business plan.
This structure-less structure with “power in the hands of millions and millions” has fundamentally changed our behavior and forever changed the rules of the game. The future evolution of the internet is unknown at the moment. But, even with the dangers of Net Neutrality and the various actors looking to influence the internet to serve their own narrow interests, many of the dimensions we see today will persist.
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The Internet Model The internet is an effective, fast and responsive user of data. It can facilitate quick (if often, temporary) decisions. It may not be especially efficient, if viewed in terms of how many people interact on any one issue, but those actions are so distributed that the amount of effort for any one person seems light.
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2014 the Clarion Group, Ltd. All rights reserved. Page 4
Today’s social and mobile technologies connect us with a gigantic network of people, with access to an exponentially growing body of ideas and information. As we strive to get done what we need to, the communities of interactions enabled by these technologies elevate and deepen our connections to one another, 24/7, across geographic, political, religious and socio-economic boundaries, with utility in multiple languages and currencies. Modern technology has indeed been a great societal equalizer, offering everyone the opportunity to access all information and, therefore, democratizing the information world.
We believe the internet foreshadows fundamental changes in our personal and business lives and requires a shift away from traditional ways of managing people and toward more structure-less structures. Existing business models and structures were rarely intended to be democratic so, unsurprisingly, they will be strained by the expectations of today’s workers and consumers.
So Far, So Good – Right?
Can industrial age models of management remain relevant? Consider these examples of TRADITIONAL and REALITY contradictions in business practices:
Impact on Traditional Management Models
When in Reality…
Hold onto top-down hierarchical structures Real work is done horizontally and in networked ways bypassing hierarchy
Have an “inside-out” orientation to their marketplace
Customers aggregate into buying groups – an “outside-in” way of operating
Build portals or doors for the customer to enter into a relationship with them (e.g., sales)
Customers have access anywhere, anytime and expect to set the terms of engagement
Have a clear functional separation of market research, product development, sales and service
Customers expect companies to seamlessly link these functions into a personalized, brand-consistent experience they can influence
Have employees with specific jobs/roles Strategic partners and outsourced relationships constitute a network or community of resources doing work aligned along a purpose to enhance value
Have pay and promotion systems that are linked to individual job performance
Communities of individuals, both internal and external, strive to achieve a common outcome
Traditionally companies…
2014 the Clarion Group, Ltd. All rights reserved.
Down-Structuring Is Not Easy Reality is pushing old models toward a new order of business. The evolution to less structured organizations has placed the great majority of our traditional management practices, processes and systems under life-threatening scrutiny. Financial Planning and Reporting, Human Resources Planning and Management, Business Planning, and Measurements of Business Performance: these and other systems will have to be re-invented as work becomes less individual-person or unit driven and more “network” driven.
For those brought up in the age of hierarchy and structure – even if they understand the need for change – it can be challenging to know how to lead and manage in a world where control is dispersed, shared and even relinquished. Even structure-less systems require leadership, but how that happens may not always be clear; leadership can emerge organically from different stakeholders at different times for different purposes.
Does this more highly-networked, community way of operating require corporate leaders to let go or reduce management control? Yes, in the traditional ways we think of control. But, if leaders don’t have control to keep the organization from going off course or becoming inefficient or flying apart, what do they have? What is the glue that will hold things together? There are lessons to be learned from others’ experience with shared goals and with shared power/responsibility.
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Less Structure and More Network “Less” structured organizations often flow from the goal of enhancing the role of employee self-governance and increasing employee decision-making authority. Companies that operate with minimal (or even no) management structure articulate a desire for an environment where all share the same goals and work for the mutual benefit of the organization. Zappos.com Inc., the online shoe giant acquired by Amazon in 2009, was recently highlighted for its major reorganization that eliminated job titles and placed employees in 400 self-governing circles. The Morning Star Company, a California company founded in 1970 that is the largest tomato processor in the world, has no managers and 400 “self-managing” employees. Other companies, Google Inc. (at its onset more than today), W.L. Gore & Associates Inc. and Whole Foods Market for example, are well known for strong corporate cultures with heightened employee decision-making roles and non-traditional organizational structures.
Such companies have migrated to work being done via distributed, autonomous, networked and self-governing teams, circles and networks.
Are leaders today required to let go or reduce management control?
2014 the Clarion Group, Ltd. All rights reserved.
Critical Glue To work, lead and manage in your organization, and to derive outcomes that are valued by your customers, you have to find the means to manage a wide array of diverse, geographically-dispersed, virtually-operating constellations of human resources working towards a common interest or goal. Recall that structure-less structures are centered around shared goals, an intention to do something positive for a greater good and shared decision making.
Cause-based organizations can be useful examples in this regard. These are organizations with a deep sense of cause or mission, where that mission is the uber "North Star” that defines the culture and guides everyone’s judgment and decisions down a common roadway.
Cause-based organizations, like non-profit organizations, hospitals and public policy research centers, usually share a deep sense of common purpose. That purpose has an intrinsically compelling meaning, with unifying goals in such areas as:
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What is the glue that will hold things together? There are lessons to be learned from others’ experience with shared goals and with shared power/responsibility.
Such cultures may operate on the edge of the mainstream, and may be viewed as contrarian or transformational. They can stand out of the normal flow of society or industry and often operate as though in survival mode. And they know what devotion to the cause requires, understanding they may be on a journey toward an unachievable goal.
There are lessons here for working in structure-less business structures. The operating values and principles that grow out of commitment to a compelling, high-level outcome are the primary glue underlying a larger mission and holding the efforts of structure-less structures together. Values and principles thus become the “structure,” not in the ways we think of typically but more in the form of a beacon of light to help people navigate.
Humanity and the greater social
good, e.g., addressing
homelessness and other poverty
alleviation efforts
The environment, e.g., global
warming, safe drinking water, conservation
Advancing something ground-
breaking, e.g., redefining or
creating a new industry
2014 the Clarion Group, Ltd. All rights reserved.
Successfully balanced operating principles will engender an agile organization that is as nimble as change itself, capable of continual, trauma-free renewal. It will be able to recognize the need for a strategy reboot. It will be able to avoid allocation rigidities that make it difficult to redeploy talent and capital to new initiatives. And it will be structured for growth while preserving the spirit of cause.
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Empowering such a beacon of light in a structure-less structure requires creating “Operating Principles” and then turning them into a reinforcing set of management processes and practices that energize and shape day-to-day actions of all employees. Over-architecting such Principles can result in:
Too much management
Too much hierarchy
Too much exhortation
Too little freedom
Too little community
Too little purpose
But carefully creating balanced principles can result in an interlocking weave of seemingly counterpoised values, all of which are alive and well in a structure-less setting:
Democracy
Trust
Community
Discipline
Accountability
Internal Competition
Innovation in Less Structure The commitment to mission, sense of drive and struggle to survive evoke a deeply embedded spirit of innovation, borne from the simple mindset of “we will do whatever we need to do to advance our cause.” Leading a cause-based organization, which underlies the tenor of many structure-less structures, requires having architecture in place that fosters and drives creativity and adaptability in all levels – management, strategy, products/services and operations – because there is less regimentation and prescription.
2014 the Clarion Group, Ltd. All rights reserved.
Can it Work? Google and Other Companies Say…YES! Principle-based corporate governance may not be common, but it is not new.
Early in its 100-plus year history, Mars, Incorporated, the confectionery, food and pet food business that is the third largest private company in the U.S., implemented The Mars Five Principles of Quality, Responsibility, Mutuality, Efficiency and Freedom. Mars describes these Principles as embedded in their approach to business.
Southwest Airlines and JetBlue Airways both have innovative corporate cultures that focus on employee empowerment and customer satisfaction. JetBlue refers to its values as “The Be’s: Our Jetitude.”
Google in its early stages and Zappos today are at the forefront of the business trend to focus on creating desired culture first and implementing structure second – and that structure is minimal and evolves as needed to enhance and maintain desired company culture.
There are benefits to be had from this. Shared governance may not, in fact, slow the decision-making process and functioning of atypically-organized companies.
Southwest founder and former CEO Herb Kelleher has described a “simple set of values” as an “efficient and expedient way to go…If someone makes a proposal and it infringes on those values…You just say, ‘No, we don’t do that.’ And you go on quickly.”
All of these companies cite employee retention stability and operations change agility as critical benefits from their principles-based operational focus.
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2014 the Clarion Group, Ltd. All rights reserved.
Less Management and More Engagement
Many managers are opposed to or at least skeptical of the prognosis of managing within a structure-less environment. Developing, communicating and applying governing values and principles is crucial to ensuring a company has a compelling mission for highly engaged employees to rally around (the “North Star”). Managers will be required to utilize new ways of motivating and measuring performance, including that often difficult concept of “letting go of control.” Governing values and principles that steer the operations of an innovatively structured company can self “control” corporate functioning and provide growth and change opportunities to meet ever-changing business world needs and realities. And yes, individuals and businesses all need the internet, to survive and achieve in today’s technology drenched culture.
If the principles and values of today’s internet can be described as encouraging openness and opportunity through ongoing efforts to increase access and expand information availability, businesses might be wise to incorporate the tenets of the most prevalent structure-less structure of all into their operating model.
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Less structure or structure-less As long as there is an entity whose performance needs to be measured, there will be a need for some structure. We’ve been using the term structure-less structure. It may be more appropriate to think in terms of structured-less.
Innovative models, particularly structure-less structures, are rapidly replacing traditional business hierarchies. Social and mobile technologies are pushing this trend to a tipping point. Many of our industries, and the businesses within them, may be ill positioned to respond, as new business models emerge and ways of operating drastically change. We can expect the migration towards structure-less structures to experience fits and starts, as people are initially intrigued by taking a first step, then become uncomfortable with less control, then regain their comfort, etc., with the pattern continuing over time.
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