Change towards an organizational ecology

This is an article which I wrote for Bright HQ - a Danish firm with independent consultants that help businesses create and capture value from emerging trends in technology, society and the workplace. The article is also available on: http://www.brighthq.com/archives/change-towards-an-organizational-ecology/

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This is the first blogpost in a series on why and how organizations should change towards an organizational ecology where it is possible to navigate, organize, manage and create value throughout a network of connections and valuable relations.

Over the last couple of years I have been conducting research on the role of leadership in promoting and optimizing an environment in which every staff member gets the ability to create and share new knowledge; the knowledge we are craving for to make sense of and decide over fast-changing and global opportunities and problems. By not having this new knowledge, organizations will become less innovative than its competitors and – in worse case scenario – will lose the competition.

It has become clear that traditional leadership was formed to deal with a very different set of circumstances and is therefore of questionable relevance to the contemporary work environment. Taking a far too simplistic view of the organization’s structure and culture for the promotion of knowledge-creating processes, will falter the required innovation. Leadership is a key element in a successful change of especially the culture where leadership should less focus on controlling the flow of information and knowledge by letting information and knowledge flow across and beyond the borders of the organization. As a result, traditional leadership is making way for a new type of leadership in which the leader is getting people to share their knowledge by not only new processes but also a new covenant between employer and employees.

It is rather easy to make this statement. It is of a different kind of scale and difficulty to implement this new way of leadership. That is the reason why Bright is assisting organizations and its leaders in social business design. Professional assistance from – for instance – Bright is needed, because what was one of the reasons of the recent crisis in society – the credit crunch? A lack of leadership in a free and open space!

Many guilty parties have already been found for the crisis of today, with the financial system as main suspect. However, who had the leadership’s role in this system? Were those the bankers or the governments? Certainly, the crisis started in the financial market itself. Governments did not construct the bonuses or the complex financial products which pulled the wool over everybody’s eyes. However, it is the task of governments to lead and interfere if the free market is getting out of hand, by setting out rules which, consequently, should influence behavior. The bankers were taking too much risk which was being made possible by the flexible rules of governments. Innovations within the financial markets resulted in obscure products and services which governments could not keep up abreast. As a result, governments failed as leaders because they did not have the ability to anticipate, identify, and respond to unpredictable occasions.

This example outlines the importance of leadership in fast-changing and highly competitive environments where there is a free and open working-space for the creation of innovation. In order to anticipate, identify, and respond as a leader in these spaces, new models of leadership continue to develop in which leadership relies less upon managerial authority, and a new set of ideas that transcends the physical, biological, and social science. Thereupon, organizations are moving towards a belief that organizations are not so much machines but, instead, organisms which are based on the advances in complexity science, combined with the knowledge from the cognitive science.

Accomplished 1st hurdle in PhD research: back-up from professor

Today I had a meeting with a professor from the Department of Management, Politics and Philosophy of the Copenhagen Business School (CBS). The reason why he invited me to come over was because I forwarded him a first draft of a PhD proposal in September.  I have proposed to execute an exploratory research on what the role of leadership is while working on the edge of chaos.  The main conclusion of the proposal is that he is very interested in the research, but - of course - I need to be a little bit more precise in some of my concepts (what is leadership, a complex problem and so on).

The professor and I have agreed that I need to work on the next step: to approach organizations and try to arrange a meeting in which I can pitch the research. If there is an organization interested in the research, I will and can nail down my research better (as the oganization can give me the specific context).  Additionally, it is important to have a specific organization because through that I can apply for an industrial PhD programme (50 % of 3-years research paid by Danish government; the other by the organization).

Below you can find a part of the PhD proposal. It is the chapter 'positioning of the research'. This gives you an idea of what the topic is about:

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Positioning of the research

The research question (what is the role of the leader in an environment where people work across boundaries and are encouraged to be self-organized) is as current as the recent crisis in society: the credit crunch.  Many guilty parties have already been found for the crisis of today, with the financial system as main suspect. However, who had the leadership’s role in this system? Were those the bankers or the governments? One thing is for sure and that is that nine months after the financial markets came to a terrifying standstill, governments rushed with billion of Euros to avoid the financial system’s collapse.

Certainly, the crisis started in the financial market itself. Governments did not construct the bonuses or the complex financial products which pulled the wool over everybody’s eyes.  However, it is the task of governments to lead and interfere if the free market is getting out of hand, by setting out rules which, consequently, should influence behavior. The bankers were taking too much risk which was being made possible by the flexible rules of governments.  Innovations within the financial markets resulted in obscure products and services which governments could not keep up abreast (Wester, 2009). As a result, governments failed as leaders because they did not have the ability to anticipate, identify, and respond to unpredictable occasions (Malloch and Porter-O’Grady, 2005).

This example outlines the importance of leadership in fast-changing and highly competitive environments.  Drucker (1999) argues that many organizations are taking a far too simplistic view of their structure and culture.  Organizations underestimate the size and scale of the “challenge of change” (Drucker, 1999; p. 193) of especially the culture. He stresses that leadership is a key element in such a successful change.  Additionally, Umemoto (2002) stresses that knowledge-creating processes, which are required to generate new knowledge to make sense and decide over new opportunities and problems in a fast and creative way, cannot be managed in a traditional sense of management that centers on controlling the flow of information.

Schneider and Somers (2006; p. 351) argue that “new models of leadership continue to develop, including a model of leadership for the new form of organization, in which leadership relies less upon managerial authority, and a new set of ideas that transcends the physical, biological, and social science”. Thereupon, organizations are moving towards a belief that organizations are not so much machines but, instead, organisms which are based on the “advances in complexity science, combined with the knowledge from the cognitive science” (Snowden and Boone, 2007; p. 75).

One of the preferred characteristics of this new organization is that staff members should become self-organized.  Firstly, because in order to adapt to a fast changing environment, organizations must also make it possible – even desirable – for staff members at all levels of the organization to own the obligation of identifying and responding to the shifting realities affecting their ability to address the purposes of the organization and undertake their own work (Knowles, 2001). In other words, self-organizing is exactly what happened within the financial markets: enhancing innovation by encouraging independence.  However, the danger of self-organizing – that organizations allow people to evolve too independently and thereupon become too loosely coupled to the organization – also happened with the recent credit crunch.

Secondly, the reason why self-organizing is a preferred characteristic of the new organizations is that it results in a blizzard of noise. By purposefully introducing noise, self-organizing systems can increase its ability to survive (Foerster, 1984). Neuroscientists now argue that people should let their thoughts grow in an orderly and predictable way until these ‘piles’ of thoughts just collapse out of nothing. This disorder is actually essential to the brain’s ability to transmit information and solve problems, because being at the edge of chaos allows the brain to rapidly adapt to new circumstances (Beggs and Plenz, 2003).  Beggs and Plenz (2003) argue that this is the reason why people get that particular idea at that particular time without any clue.

One of the existing characteristics of the new organization is that people collaborate across boundaries.  As a result, people are learning from highly diverse individuals and groups within and beyond the organization (Senge et al., 2008).  This means that making decisions of new opportunities and problems is a result of extensive knowledge recombination from fragmentary experiences.  Furedi (2004; p. 64) argues that this makes it “impossible to have a meaningful common standard to evaluate knowledge claims”. If we should believe this statement, it will be also difficult – if not impossible – to know how leaders read signals.

With a move to self-organized environments where people work across boundaries, the leader’s role is crucial to balance the organization between predictability and unpredictability. The credit-crunch example makes it clear that leadership is crucial, but also a complex discipline.  Therefore, the research aims to identify the new form of leadership that promotes self-organizing among people who work across boundaries, and, most importantly, create new knowledge so that the organization can move forward through fast and creative sense and decision making.

How chaos makes you smarter: an exploration in self-organized criticality and leadership

The NewScientist recently (29 June 2009) published the article 'Disorderly genius: How chaos drives the brain'. This article highlights a breakthrough in the current thinking of why every now and again the brain suddenly and unpredictably lurches into a blizzard of noise and that without any clue you got that particular idea at that particular time. Researchers are starting to believe that 'neuro-chaotic states [of the brain] may be crucial to memory, and could explain why some people are smarter than other'.

In the article they refer this process as being on the edge of chaos, or in a state of 'self-organized criticality'. These systems are right on the boundary between stable, orderly behavior, and the unpredictable world of chaos.

Self-organized criticality' means that thoughts grow in an orderly and predicable way until these 'piles' of thoughts just collapse out of nothing. Researchers argue now that this disorder is actually essential to the brain's ability to transmit information and solve problems, because "lying at the critical point allows the brain to rapidly adapt to new circumstances

Image: interrelationships between IM and KM, SLL and DLL, customization and innovation, and ordered and disordered

This article has raised some ideas which should be explored further. Now that we know that self-organizing is essential in order to become more innovative and 'smarter', what is the role of the leader to encourage and implement self-organizing in organizations. Obviously, self-organizing will result in different leadership styles, but how will these new leadership styles look like?