Recently, our team have been leveraging the excellent book Organizing for Complexity by Niels Pflaeging. The book is an awesome read for a number of reasons. This text is now serving as a baseline for us to better describe our own thinking and experience on the topic of Agile Organizational Design, so much so that I'll take the time to provide some coles notes on the parts of the book that we are extending for my take on a new way to do organizational design.

Management is a Toxic Social Technology

Perhaps one of the most controversial statements in Niels book is that management is a social technology that completely erodes an organization's ability to effectively deliver value. According to Niels, management in its current form has resulted in an organizational model that divides thinkers from doers, and shop-floor workers from each other; into Functional Departments. The result is a dependency centralized planning and coordination.

The management model of today is over 100 years old, going all the way back to Frederick W. Taylor Principles of Scientific Management, and is geared towards maximize efficiency. It works when you have to do work that while requiring specialized expertise, is almost always repetitive and standardized. This century old management style is designed for cutting costs and delivering commoditized products. A century ago these were good ideas. We were in the Industrial Age, management gave us a huge boost in Industrial Productivity.

But who really believes we are still in the Industrial Age? Niels continues to explain that we are currently in the Age Of Complexity, an era typified by hyper competition, rapidly evolving market niches, mass competition, and accelerated shifts in technology. In short we are in an era of constant and accelerated change. In this age the principles of innovation, fast feedback, and speed to market are what applies. The principles of division and command and control are completely counter productive in this day and age.

Cross Functional Teams Of Self Motivating People Are the Answer

The answer to addressing the needs of the Age Of Complexity requires that we re-examine our belief system about people, according to Niels. We need to challenge the belief that "people are fundamentally trying to avoid work and must be forced or seduced to perform". We need to everyone in our organizations to posses an entrepreneurial spirit, and we need to believe that everyone inherently possess this entrepreneurial spirit. Motivational research dating all the way back to the 1950s and 1960s back up this view. Neil articulates how the tools of coersion and cajoling actually erode people's internal motivation, creating a viscous circle where our management tools create the behavior they are designed to safeguard against. Under the right conditions people need to work, and enjoy it, will seek and accept responsibility, will be creative in meeting a goal that they accept, and want to reach their own potential.

Our new model needs to result in conditions that maximize people's self-motivation and cannot create conditions that interfere with intrinsic motivation.

A key point Niels makes is that we are talking not about empowering individuals! Many a management fad in the 90's resulted in what could described as organizational anarchy, rather than any increase in market value or improvement in working conditions. Niels goes onto explain the illusion of individual performance, no value can be generated from the result of an individual action! Value comes from interaction between individuals; especially if those individuals have a diverse set of opinion and capabilities, and those individuals can get frequent market feedback. If we add in a dose of radical transparency we start to see the alternative to command and control style decsion making; Niels calls it Social Density. It is the conditions where peer pressure can be used to allow a group to take the corrective actions it needs to deliver value in a constantly changing world.

Our new model needs to help people self organize in cross functional, market facing teams, and then promote radical transparency within and across those teams

Organizing Structure For Complexity, The 1000 mile view

In a nutshell, Organizing For Complexity ask us to re-imagine the mental model of our organization from hierarchical pyramid, to a circular network. Functional departments are replaced by cross functional teams. Instead of management layers, we have structure that fosters self organization. The metaphor of our organization is now a structure of networked cells that self form and self organize to deliver value. Key elements include:

• The Market: everyone external to your organization. Market dynamics are what steer your organization, not command and control
• The Sphere of Activity: a containing boundary that enables self organization towards value creation
• The Periphery: all teams and roles dealing with requirements of the external market in a value-creating way
• The Center: all teams and roles that deliver value to peripheral teams that they cannot create for themselves. Their role is to serve, not to rule, the periphery

Market pull is what connects the organization to the market. An external stakeholder of an organization “wants“ or “demands“, “orders“ or does something relevant to the organization, this will initiate market pull. One or more teams in the Periphery will respond, and as a result may request assistance from one or more teams in the center, which in effect creates pull from the center. The guiding principle here is that decision-making, is decentralized, Periphery team are free to seek alternatives to the services provided by the center.

There is a lot more to Organizing For Complexity, than what I have described here. Niels covers other topics such as the required leadership mindset, formal vs informal structure, and an overall approach to enabling transformation. For this work I am focusing on the key concepts from Niels work that will help me describe a new approach to organizational design. I have altered and adapted the work to fit into the context where one may not have permission to rethink the entire organization, but perhaps just a portion of it. I have also incorporated a number of facilitation techniques, and thinking / design tools including the use of team engagement patterns to providing some hands on options to guide the organizational design process. I have also provided some normative content to assist in organizational design for agile software delivery, and finally I have done my best to integrate and incorporate relevant work from various my sources of inspiration such as Kanban, Domain Driven Design and other works mentioned previously.

Get the supporting slides here