Esko Kilpi on Interactive Value Creation

The art of interaction, the design of digital and the science of social complexity

Tag: Agile

The two faces of digital transformation

Have you ever wondered why you don’t see anyone reading a book when you visit companies? We associate reading with finding information and learning, but we also include qualities such as contemplation, solitude and mental privacy when we think about books.

There is a mental framework that is used when dealing with books, and another distinct mental framework regarding information-related practices in the corporate world. Basically, you are not allowed to read a book, but you can read a document.

Documents and word processing are part of the framework of management today. Documents were born from the needs of a hierarchical, systemic approach to management. Top-down information was in the form of PowerPoint slide decks containing vision statements, Excel sheets with goals and Word documents explaining corporate procedures. Bottom-up information was used mainly to provide reports and data for managers, helping them to keep their employees accountable and to ensure the smooth operation of the business process.

Computerized word processing is associated with terms such as information flows and the sharing of information. This is not something you normally talk about when discussing a book. While a book provides a view of the contemplative mind, documents create a view of controlled content.

Are you still asking why you can read a document but you are not allowed to use Facebook?

Instead of predictive process flows, creative work follows a different logic. Work is about community-based cognitive presence. But cognition is just part of the answer. Work tomorrow will be even more about social presence. To work and to manage is to participate in live conversations. A dramatic shift is needed in the mental framework of information, communication and work. Without this changing mindset, no efficient digital transformations can be made in the corporate world. Work is communication. Conversations and narratives are the new documents.

The first face of digital transformation is about new ways to be present and new ways to communicate

You cannot design live interaction. Conversations cannot be controlled. The only way to influence conversations is to take part in them. You cannot plan in the traditional sense of specifying a structure or a process and then implementing it. As many have experienced, communities seldom grow beyond the group that initiated the conversation, because they fail to attract enough participants. Many business communities also fall apart soon after their launch because they don’t have the energy to sustain themselves.

Communities, unlike business units need to continuously invite the interaction that makes them alive.

Community design is closer to iterative, creative learning than to traditional organizational design. Live communities reflect and redesign themselves throughout their life cycle. This is why design should always start with very light structures and very few elements.

What is also different is that a good community architecture invites many kinds of participation. We used to think that we should encourage all the community members to participate equally. Now we know that a large number of the network members are, and should be, peripheral. In a traditional meeting we would consider this type of participation half-hearted, but in a network a large percentage of the members are always peripheral and rarely contribute. Because the boundaries of a live community are always fluid, even those on the outer edges can become involved for a time as the focus shifts to their area of particular interest.

Because conversations and communities need to be alive to create value, we need an approach to management that appreciates passion, relationships and voluntary participation. Rather than focusing on accountability, community design should concentrate on energizing, enriching participation.

The new structures and new designs are about communities continuously organizing themselves around shared contexts, meaning shared interests and shared practices. The focus of industrial management was on the division of labor and the design of vertical/horizontal communication channels. The focus should now be on cooperation and emergent interaction based on transparency, interdependence and responsiveness.

The really big objective of the social side of digital transformation is to reconfigure agency in a way that brings relationships into the center. Success today is increasingly a result of skilful participation: it is about how we are present and how we communicate. Through new technologies, applications and ubiquitous connectivity, we have totally new opportunities for participation and communication – potentially changing the way we work together.

The customer of the industrial age was seen as a recipient of value, or a consumer of value. Enterprises also viewed customers through the lens of a fairly uniform set of features, leading to customers being seen as having relatively uniform needs. But even commodity products are always a bundle of use contexts, buying patterns, complementary goods and delivery options. Just because a product is a commodity doesn’t mean that customers can’t be diverse in the ways they use the product. Different customers use products that are manufactured in the same way, with the same product features, differently. This is why customers are today understood to be active contributors to value creation. Without their part, the value of the product could not exist.

Companies used to have no mechanisms for connecting with the end users in order to understand and influence what was going on. Digital technologies are now changing this. When a customer teaches a firm what she wants or how she wants it, the customer and the firm are also cooperating on the sale of a product, changing the industrial approach to sales and marketing. The marketing and sales departments used to be the customer’s proxy, with the exclusive role of interpreting changing customer needs. Internet-based business necessarily transforms the marketing function and sales specialists by formally integrating the customer into every part of the organization. The customer of tomorrow will interact with, and should influence, every process.

As the goal is to create more value together, a critically important new element is embedded computing, the integrated intelligence that is attached to the “things”, the offerings, the products.

It is about creating new software code. It is about two new digital layers for all products: (1) an algorithmic layer, which can mean sensors or location and usage data allowing totally new kinds of data analytics and (2) a network layer.

As the customer’s need set is expanded beyond the pre-set features of the physical offering through software, the definition of the product changes and becomes more complex. The more complex the product, the more opportunities there are for the company to learn something that will later make a difference.

The value of the code may determine the value potential of a product more than the physical product itself. The effectiveness of an offering is related to how well it packages the learning from past activities and how it increases the users options for value creation. A product or a service should be pictured as a node in a network with links to other use cases, supplementary services and complementary features surrounding the product. The more relevant the links are considered to be, the richer the product will become. The task today is to visualize the product in the broadest sense possible.

The study of isolated parts offers little help in understanding how connected parts work in combination and what emerges as the result of network connections. What new relational technologies are making possible for manufacturing industries is a much, much richer repertoire of potential futures than what we were used to in a traditional industrial firm.

The ability to create value in a remarkably more efficient and resource-wise way corresponds to possibilities for interaction with other relevant parts and actors. If interdependent links are few, poor, or constraining, the activity and value potential will be limited.

Interestingly, the same principle applies both to things and to human beings!

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More: The product is the medium.

Complexity

The way we want to make sense of the world around us often has to do with causality. The question we ask is what caused “it” to happen. The mainstream approach is that an arrow, or arrows, can be drawn. There is a variable, the “it”, that happened, that is now to be explained. In scientific study this variable is regarded as dependent. An independent variable, or variables, that cause it are then sought. Causality means that X causes Y. If there is more X there will also be more Y. This is the if-then model of management. In organizations, a familiar explanation for success is that a particular manager or a particular culture caused it.

But there is something significant happening today. Scholars are increasingly pointing out the fact that this view of the relationship between cause and effect is much too simplistic and leads to a very limited or even faulty understanding of what is really going on.

Cybernetics recognized a much more complicated causality. In this kind of system the arrows, the links, between cause and effect can be distant in terms of time or place. The system can be highly sensitive to some changes but very insensitive to some others. For the first time, it was understood that it is a non-linear world.

Complexity challenges the assumption of earlier systems theories that movement in time can be predictable in the sense that X causes Y, or that the movement follows some archetypes. The modelling differs significantly from all previous systems models.

Complexity means a different theory of causality.

The most important insight is that it is often not possible to identify specific causes that yield specific outcomes. Almost indefinite number of variables influence what is going on. The links between cause and effect are lost because the tiniest overlooked, or unknown, variable can escalate into a major force. And afterwards you can’t trace back, you can’t find the exact butterfly that flapped its wings. There is no trail that leads you to an independent variable.

The future of a complex system is emerging through perpetual creation. Complexity is a movement in time that is both knowable and unknowable. Uncertainty is a basic feature of all complex systems. It is a dynamic in time that is called paradoxically stable instability or unstable stability. Although the specific paths are unpredictable, there is a pattern. The pattern is never exactly the same, but there is always some similarity to what has happened earlier.

In the end it is about the combination and interaction of the elements that are present and how absolutely all of them participate in co-creating what is happening. None of the elements cause the end result independently. From this standpoint a lighted match does not cause a fire. Rather, the fire took place because of a particular combination of elements of which the lighted match was just one. In the same way, a rude remark does not start a fight. The argument starts as a combination of an offensive remark and a coarse response.

The big new idea is to reconfigure agency in a way that brings complex relationships into the center. The task today is to see action within these relationships.

Complex relationships cannot be understood through spatial metaphors such as process maps or network charts. Unhelpful or wrong models and metaphors are often a big obstacle to moving our thinking forward after the technological constraints are gone.

We need to move towards temporality, to understand what is happening in time.

An organization is not a whole consisting of parts. There is no inside and outside. An organization is a continuously developing or stagnating pattern in time. Industrial management was a particular pattern based on specific assumptions about communication, causality and human psychology.

Recent developments in psychology/sociology have shown that human agency is not located or stored in an individual, contrary to what mainstream economics would have us believe. The individual mind arises continuously in communication between people.

The focus of industrial management was on the division of labor and the design of vertical/horizontal communication channels. The focus should now be on cooperation and emergent interaction based on transparency, interdependence and responsiveness.

Looking at communication, not through it, what we are creating together.

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Thank you Ralph Stacey, Ken Gergen, Doug Griffin, Jim Wilk, Marko Ahtisaari and Katri Saarikivi

The Social Graph of Work

The approach of the industrial era to getting something done is first to create an organization. If something new and different needs to be done, a new and different kind of organizational form needs to be put into effect. Changing the lines of accountability and reporting is the epitome of change in firms. When a new manager enters the picture, the organizational outline is typically changed into a “new” organization. But does changing the organization really change what is done? Does the change actually change anything?

An organization is metaphorically still a picture of walls defining who is inside and who is outside a particular box. Who is included and who is excluded. Who “we” are and who “they” are.

This way of thinking was acceptable in repetitive work where it was relatively easy to define what needed to be done and by whom as a definition of the quantity of labor and quality of capabilities.

As a result, organizational design created two things: the process chart and reporting lines, the hierarchy.

In creative, knowledge based work it is increasingly difficult to know the best mix of people, capabilities and tasks in advance. In many firms reporting routines are the least important part of communication. Much more flexibility than the process maps allow is needed. Interdependence between peers involves, almost by default, crossing boundaries. The walls seem to be in the wrong position or in the way, making work harder to do. What, then, is the use of the organizational theatre when it is literally impossible to define the organization before we actually do something?

What if the organization really should be an ongoing process of emergent self-organizing? Instead of thinking about the organization, let’s think about organizing.

If we take this view we don’t think about walls but we think about what we do and how groups are formed around what is actually going on or what should be going on. The new management task is to make possible the very easy and very fast emergent formation of groups and to make it as easy as possible for the best contributions from the whole network to find the applicable tasks, without knowing beforehand who knows.

The focal point in organizing is not the organizational entity one belongs to, or the manager one reports to, but the reason that brings people together. What purposes, activities and tasks unite us? What is the cause of interdependence and group formation?

It is a picture of an organization without walls, rather like contextual magnetic fields defined by gradually fading rings of attraction.

Instead of the topology of organizational boxes that are still often the visual representation of work, the architecture of work is a live social graph of networked interdependence and accountability. One of the most promising features of social technologies is the easy and efficient group formation that makes this kind of organizing possible for the first time!

It is just our thinking that is in the way of bringing down the walls.

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Resilience, rationality and how we make decisions

We have been studying companies’ connections and disconnections for more than twenty years and have worked inside a huge number of them. Across all this research, common themes have emerged and intensified during the past few years: good communication in the era of the Internet and the new interactive tools does not mean any more that companies should listen carefully to their customers or that leaders should talk clearly with their subordinates. The linear view of communication, the movement of messages or sharing of content between people is giving way to a totally new understanding of what interaction, and work, are all about.

The first emerging theme is that communication is in fact a process of continuous coordination and knowledge creation. Knowledge is not shared as contents, but arises in action. Knowledge is never transmitted from one mind to another. It is a change from the movement of messages to a joint movement of thought. The future and viability of an organization depend on this process.

Economics still makes the assumption that individuals, the agents, as they are called, operate autonomously, separately from the influences of others. When choosing something, making a decision from a set of alternatives, the agent compares the attributes of the alternatives and selects the one that corresponds to her preferences. It is a world where independent individuals carefully weigh up the costs and benefits of any particular course of action.

However, scientists have emphasized the limits of our understanding. An important point is that these limits apply to everyone. They apply to politicians, to central bankers and to top executives of multinational companies. John Maynard Keynes once wrote that we have, as a rule, only the vaguest idea of the consequences of our actions. Herbert Simon and Stuart Kauffman on the other hand have argued that the number of future paths open to us at any point in time is so vast that it makes no sense at all to speak of the best or optimal decision.  But we still think the world works like a predictable machine operated by rational agents

Behavior that does not follow an economist’s definition is often called irrational, but it may be that in a world of ubiquitous networks, a proliferation of choice and an abundance of information, the economic definition of rationality has itself become outdated and irrational.

We need a new model of rational behavior and a new understanding of how we make decisions. We need a new decision model!

The second emerging theme is that the assumption that people make choices in isolation, that they do not adopt opinions simply because other people have them, is no longer sustainable. The choices people make, their buying decisions and their political views, are directly influenced by other people. That is to say that we construct our world together in communication. Network scientists such as Duncan Watts and Mark Granowetter have proved that the world comes to be what it is for us in our relationships. In the end it all depends on the company you keep and the conversations you have.

This leads to the importance of emphasizing relations instead of reductionism and separations. Reductionism means that the organization is understood as being split from its environment and one functional team is seen as being separate from another function. The worst mistake we make as a result of reductionist thinking may be that we assess and reward employees as if they were disconnected from other employees.

Links and communication are at the centre of organizational life. Depending on the quantity of interdependent links and the quality of communication, the organization lives or dies. Work is interaction between interdependent people.

The third emerging theme is that communication creates patterns. Words become what they are through the responsive actions of the people taking part. The relational view means in practice that if a conversation goes badly, it is always a joint achievement. On the other side, a conversation can only be successful if both participants join in and make it so as Ken Gergen points out. In management, it means that there is nothing one person alone can do to be a good manager. Good ideas don’t count as good ideas, if other people don’t treat them as such.

New leadership is about an awareness of creative and destructive patterns and having the ability to influence what is going on. In a creative pattern, the participants build on each other’s contributions. The conversation, thinking and action are in a process of forward movement.

Destructive patterns are the most harmful in terms of organizational viability. These patterns don’t contain forward movement but running in circles. People and organizations get stuck! People slow down in bitterness and silence, or even to the breaking of the link. The most destructive patterns often begin subtly, but unless they are worked with soon, not only will relations suffer but the whole network will deteriorate.

Being aware of the patterns includes being aware of the roles that we play. Whenever we speak, we do two things: we subtly define ourselves and define the other. Does the speaker in a company context define herself as one who can talk down to others or as an equal? What we say is important to the viability of the organization but the way we say it can be equally important. Talking down or talking up between people creates an asymmetry that leads to bad decisions and inefficient movement of thought.

The machine metaphor meant that we tended to think that the people “above” us have significant power. They are in control. We thus talked up to them. They should decide. They should do things for us because they were the ones who were responsible, not us. Knowing that they are not in control raises the question of a need for a new distribution of responsibility. Bottom-up as a metaphor is as harmful as top-down when the common goal is resilience.

There is no aspect of work or leadership that takes place outside the realm of communication. Human agency is not located or stored in an individual, contrary to mainstream economics. The individual mind arises continuously in communication between people.

Being skilfully present in the forward movement of thought and relational action is the new meaning of being rational.

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Thank you Ralph Stacey, Doug Griffin, Ken Gergen, Marcial Losada, Katri Saarikivi and Paul Ormerod

Links: “Resilient Performance in an Age of Uncertainty” “Possibilianism” “Stanley Milgram and the uncertainty of evil” “The fluid core“. “On functional stupidity and trust“. “Tulipmania” “Neuroeconomics

Patterns

Social sciences are concerned with understanding and representation of what is going on and what has happened. Earlier, social scientists took great leaders and their personal characteristics as the topics to be explained. Context and time did not matter. More recent approaches to the study of social phenomena can be summarized as trying to understand temporality; the processes of becoming, live movement in time, which, in the world of business, either gives rise to viability or makes us slowly, or rapidly, obsolete.

The life stream of individuals is the new focus area. Life streams are also called social activity streams. The term “lifestream” was coined by Eric Freeman and David Gelernter in the mid-1990s to describe a time-ordered stream of documents that functions as a diary; every document created and every document received is stored in the lifestream.

In management studies, the questions of becoming, remembering and forgetting are not only new concerns. They are the essence of modern knowledge management, especially in the time of Big Data, when “it is cheaper to keep than to throw away”.

There is a fear of memory loss in business, but there is also the opposite fear, that memory produces practices in the present that should best be forgotten.

Anthropologists claim that reproduction of the past is easier than change. This often leads us into situations where the past is no longer an adequate guide to the present, leading to a situation where an information asset turns into a liability.

Knowledge-intensive work takes place in communication. The process of knowing is the process of communication. The most important knowledge management challenge is to understand what takes place in that interaction: what is being discussed? What is not discussed, what is silenced? Who is included in the conversation, who is excluded? The most important measure, however, is how the common narrative develops, how fast, and where to.

This is why an organization should be seen as a pattern in time, a lifestream, a continuing story without beginnings. Everything we do is built on what has happened before. New people join this narrative and people leave. The patterns that emerge do so because of what everybody is doing. It is what many, many local interactions produce. Work is dynamic participation and influencing how the story develops.

Without understanding and visualizing where we come from and where we are heading, it is impossible to know whether we move at all, whether the flurry of daily activities is actually keeping us trapped in repetitive patterns without any progress. The same people having the same conversation again and again, as often seems to be the case.

Our past, together with our intentions for the future is present in the daily, mundane actions and interactions that often pass without notice. A lifestream is the ongoing reference point and visualization of progress in place (a map) and time (a calender). It is the means for pattern recognition to help create the future we truly desire.

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More on the subject: Euan Semple on Patterns. Doc Searls Weblog. Big Data and pattern recognition.

People, machines and the future of work

I took part in a high-level workshop on technological intelligence and the future of work. One of the questions raised was: “If machines can replace people’s minds in knowledge work as well as machines replaced their muscles in manual work, what will ultimately be left for human beings to do? Are we going to run out of jobs?” My answer was that this concern is based on a totally incorrect assumption. Working life does not consist of a finite number of problems and opportunities to which the human mind and human effort can be applied.

The challenges that confront us are unlimited. Every solution to a problem generates several new problems and also new opportunities. No matter how many problems are solved, there will always be an infinite number ahead of us. Although modern technology has reduced the number of things that in the past had to be dealt with by human beings, it increases the complexity of the challenges that require our attention now and in the future.

Technology: robotics, machine intelligence and cognitive computing do change what people should be doing and how organizations come to be what they are. This is why we need to revisit and rethink our conceptualizations of work.

When the Industrial Revolution began, the dominant Newtonian worldview meant that what was happening in the world was thought to be understandable without any reference to the environment in which things happened. Physical laws described what things following a linear, rational causality would do. The dominant view was that there are no significant uncertainties, or unknowns, messing things up. Most academic experiments were constructed accordingly, with the effect of the environment being eliminated. The aim was often to study the effect of one known variable on another.

Business enterprises were consequently thought of as machines. Enterprises conceptualized as machines, like all machines, didn’t have a will of their own. They were serving the intentions of their creator, the owner. The principal purpose was to obtain a return on the investment. Employees were, of course, known to be human beings, but their personal intentions were seen as irrelevant. People were retained as long as they were needed to fulfill the intentions of the employers.

The biological, meaning a systemic and cybernetic conceptualization, then replaced the notion of an enterprise as a machine. One, often overlooked, reason for this was the changing structure of ownership. When a firm went public, its creator disappeared. Owners were seen as anonymous, and too numerous to be reachable. The Industrial Revolution turned into the Managerial Revolution we are still living through today.

The Managerial Revolution changed the thinking around the purpose. Like any biological entity, the enterprise now had fitness and longevity as raisons d’être of its very own. Profit came to be thought of as a means, not an end in itself. Success came to be measured by growth. It was seen as essential, just like in nature.

The systemic view was a profound change in thinking compared with the mechanistic view. A biological organism is not goal-oriented in the sense of serving external purposes or moving towards an external goal. The movement is toward a more fit or more mature form of itself in a particular environment. An organism can adapt, but cannot choose to be something else.

But humans are creative and humans can choose.

Things are changing again. The sciences of uncertainty and complexity have helped us to understand that organizations are patterns of interaction between human beings. These patterns emerge in the interplay of the intentions, choices and actions of absolutely all the parties involved. No one party can plan or control the interplay of these intentions. But even without being able to plan exact outcomes, or control what others do, people accomplish great things together.

The thing is that people can only accomplish their work in the necessarily uncertain and ambiguous conditions through ongoing conversations with each other. This is why the next revolution is dawning.

The social revolution, the next industrial revolution, is about deeply rethinking the value of human effort. An increase in value can only occur if the parts of a “system” can do something in interaction that they cannot do alone. Social business may be more about complementarity and coordination than collaboration and working towards the same goal.

An enterprise that is conceptualized as a social business should serve the purposes of all its constituents. It should enable its parts to participate in the selection of both the ends and the means that are relevant to them personally. If the parts of a system are treated as purposeful, they must have the freedom to choose and to act. This means that the defining characteristic of a social business is the increased variety of behaviors that is available. It is not necessarily about common goals or shared purposes any more.

The way our organizations are conceptualized has a great effect on what people do, and what they do affects the way organizations are conceptualized. Enterprises have always consisted of people who have ideas, intentions, creativity and purposes of their own.

This, in the end, is what makes people different from machines.

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Background:

Kevin Kelly: “dream up new work that matters”. The Atlantic: “The Robot Will See You Now”. Russell Ackoff on Systems Thinking. David C. Aron on Systems Thinking, Complexity Theory and Management. Changing the social contract of work. Gary Hamel on the invention of management. McKinsey Quarterly: “The next revolution in interactions”. MIT Technology Review: “The brain is not computable and no engineering can reproduce it”. Race against the machine by Brynjolfsson and McAfee. Greg Satell blog post. Ross Dawson and John Hagel on the humanization of work.

Designing for sociability

Interactive technologies like smartphones have been with us long enough to become familiar and find their present dominant designs. The explosion of the mobile Internet and location based services have added the potential of connectivity for objects, places and services in ways that very few companies still grasp. There is a new design dimension to everything: designing for sociability.

Most of us are aware of the direct effect we have on our friends and relatives. Our actions can make them happy or sad. But we very rarely consider that things we do or say can spread beyond the people we connect with. Conversely, our friends and family serve as conduits for us to be influenced by people we don’t know. We can be deeply and surprisingly affected by events we don’t take part in, that happen to people we don’t know.

It may not be appropriate to think about (digital) action only in terms of spatial metaphors: spaces and walls. Things happen and develop in time.

Focusing attention on the temporal processes of relating between people encourages us to take a special view to what interaction design might mean. Organizations are processes, not things. People are processes, not things. They are reproduced and transformed in interaction.

It is about how we continuously experience being together. The outcomes of organizational interaction are not within the powers of any single individual to choose. Both the outcomes and the dynamics producing the outcomes emerge in the very interaction! You cannot take away the uncertainty and the surprises.

When we shift the focus from spatial to temporal metaphors, the ethics of participation become more important than ever. The experience of being together results less from the technical and functional aspects of interaction and more from the purposes and values of the people taking part –  in ways that are very hard, or impossible to predict.

Perhaps temporal processes and iterative designs are the new dominant ways of designing for sociability.

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Ten Timeframes“. “The Design of Time“. “Dark Matter and Trojan Horses“. “An interview with Nicholas Felton” by Dan Hill

Organization is a process, not a structure

The way in which companies organize themselves and define their internal boundaries has essentially been determined by the way in which communication between people is planned and transfer of information is designed. The classic hierarchical structure was based on the assumption that a manager or worker could have rich interaction and exchange of information only with a limited number of predetermined people. A narrowing of interaction always marked operational boundaries. Thus you did not want people to cross functional silos. This was the infamous trade-off between richness and reach.

An increasing number of companies trying to become social businesses are now becoming aware of the technical barriers and structural bottlenecks that hinder or totally prevent cooperation that is not planned in advance.

It is time to rethink. Rather than thinking of organization as an imposed structure, plan or design, organization arises from the interactions of interdependent individuals who need to come together.

The accumulating failures of attempts at organizational agility can be traced to the fundamental but mistaken assumption that organizations are structures that guide and, as a consequence, limit interaction. An organization as a structure is a seventeenth century notion from a time when philosophers began to describe the universe as a giant piece of clockwork. Our beliefs in prediction and organizational design originate from these same ideas.

A different ideal is emerging today. We want to be agile and resilient and we want to learn effectively and fast. The tension of our time is that we want our firms to be flexible and creative but we only know how to treat them as systems of boxes (or network nodes, where the shapes are round instead of square), with a fixed number of lines between them.

It is time to change the way we think about organizations. It is not about hierarchies vs. networks, but about a much deeper change. Organizations are creative, responsive processes and emergent patterns in time. All creative, responsive processes have the capacity to constantly self-organize and re-organize all the time. Change is not a problem or anomaly. Change is the organizing input rather than the typical managerial re-design process.  All solutions are always temporary.

Gregory Bateson wrote: “information is a difference which makes a difference”. Information is the energy of organizing. When information is transparent to everybody, people can organize effectively around changes and differences, around customers, new technologies and competitors.

What we have still not understood is that people need to have access to information that no one could predict they would want to know. Even they themselves did not know they needed it – before they needed it. Thus an organization can never be fully planned in advance. When information is transparent, different people see different things and new interdependencies are created, thus changing the organization. The context matters more than ever. The easier the access that people have to one another and to (different) information is, the more possibilities there are.

We seek organization, but organization is a continuous process, not a structure.

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Thank you Ken Gergen for a great evening and great conversations

More on Gregory Bateson. On social business. Narrative work.

Contributions from many to participate with one

The nature of the relationship between customers and firms has changed dramatically. For over a hundred years, companies have assumed that consumers are an undifferentiated mass. Lately, we have moved through different degrees of market segmentation. Today, we have reached a point where the latest interaction technologies are creating an entirely new dynamic between the firm and the people we used to call consumers. Tomorrow firms will compete in making unique customer experiences possible.

The traditional approach was that the firm created value and then exchanged it with its customers. This firm-centric view of value creation is now being replaced by customers’ contextual experiences and co-created value. Value is created in interaction, but outside the corporate firewall. Even if a company is dealing with a very, very large number of customers, the firm must focus on one customer at a time.

We are in a world in which value is determined by co-created experiences – all a bit alike but all a bit different.

During the still (mentally) prevailing industrial era, most firms were vertically integrated. It was only around twenty-something years ago that firms started to source components from outside, from suppliers on a large scale. Today it is natural to rely on global supply chains. This is because the business goal is to access the most competent, knowledgeable sources and paradoxically, at the same time the lowest-cost producers. Access to resources and resource allocation is today by default multi-vendor, crowdsourced and global.

The changing relationships with customers and vendors are the main drivers behind the new ecosystems for communication and participation.

These trends also explain the situation we are in at the moment. The network is the architecture of work. People need to communicate and participate in order to invite contributions and to co-create unique experiences. It is about the relational view. It is not necessary to own the contributing parties. Capacity to connect and cooperate is what is needed. Cooperation is the new competition.

The world we live in today is in many ways the polar opposite of what we have been used to. The management challenge in the era of social media is to invite and combine the contributions of many in order to participate with one (at a time).

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Thank you C K

New structures – new designs

When we think about business structures, many of us picture an organizational chart or the layout of an office building. A structure often refers to the physical arrangement of things, the parts making the whole.  What we have missed so far is an understanding of the business structures that can foster faster learning and help us work better with information. Conventional structures don’t address knowledge-related challenges as effectively as they do problems of measuring input and output or accountability.

What social media have helped us to do is to link and coordinate unconnected activities or initiatives addressing a similar information domain. There have also been great successes in diagnosing recurring business problems whose root causes cross unit boundaries. We know that the problems we face today are too complex to be managed by one person or one unit. It requires more than one brain, one point of view, to solve them.

Sharing a practice or sharing an information domain requires regular interaction. Work is interaction and the new business structures should be built on interdependence and communication.

Almost all business communities started among people who worked at the same place or lived nearby. But co-location is not necessary any more. The Internet has changed that. Interdependent people forming a community can be distributed over wide areas. What then allows people to work together is not the choice of a specific form of communication, face-to-face as opposed to email or social platforms, but the existence of a shared practice, a common set of situations. What lies at the core of those situations is the need for different perspectives requiring interaction.

When you design for live interaction, you cannot dictate it. You cannot design it in the traditional sense of specifying a structure or a process and then implementing it. As many have experienced, communities seldom grow beyond the group that initiated the conversation, because they fail to attract enough participants. Many business communities also fall apart soon after their launch because they don’t have the energy to sustain themselves.

Communities, unlike business units need to continuously invite the interaction that makes them alive.

Community design is closer to iterative learning than traditional organizational design. Live communities reflect and redesign themselves throughout their life cycle. The design should always start with very light structures and very few elements.

What is also different is that good community architecture invites many kinds of participation. We used to think that we should encourage all the community members to participate equally. Now we know that a large portion of the network members are and should be peripheral. In a traditional meeting we would consider this type of participation half-hearted, but in a network a large portion of the members are always peripheral and rarely contribute. Because the boundaries of a live community are always fluid, even those on the outer edges can become involved for a time as the focus shifts to their area of particular interest.

Because conversations and communities need to be alive to create value, we need an approach to management that appreciates passion, relationships and voluntary participation. Rather than focusing on accountability, community design should concentrate on energizing, enriching participation.

The new structures and new designs are about communities continuously organizing themselves around shared information, shared interests and shared practices. Business is about doing meaningful things with meaningful people in a meaningful way.

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More: “Lead like the great conductors