Written by Nicolai Chen Nielsen
Organizations are the single most important invention of humanity. They have allowed us reach milestones that would be impossible to achieve for any individual.
Take the seemingly simple example of producing a take-away cup of coffee. The process includes steps such as: sowing a coffee plant, roasting coffee beans, cutting down trees for the takeaway cup, producing the plastic lid, providing drinking water. Many of theses processes require heavy machinery and chemical processes.
This description is greatly simplified, Now imagine the organizational processes required to transport someone to the moon and bring them safely back to earth again, or develop a self-driving car.
What then is the optimal way of organizing? This is a timeless question and is especially critical to consider today, as the pace of organizational disruption is the fastest it has ever been. The answer? It depends on the context and major trends (or “supertrends”) surrounding the organization.
As the complexity of the organization’s goals and operating environment change, so must the organization.
Different organizations for different purpose and time
History provides some important lessons that can help organizations today, especially because many organizations still harbour outdated modes of operating. What follows is a brief (and greatly simplified) summary of different types of organizations, borrowing from Laloux’s Reinventing Organizations.
At first, there was an imperative to bring order to larger groups of people, as societies with several thousand people emerged about ten thousand years ago. This spawned the impulsive organization, where strong chiefs brought coordination and protection through power and coercion, in return for loyalty. Impulsive organizations introduced top down authority and early forms of division of labour, yet struggled to scale as power was centered around one or a few senior individuals. They are also inherently unstable. Today, you might see this organizational form in organized crime or street gangs.
As larger and larger groups of people needed to be coordinated, the conformist organization appeared around 4000 BC. Typified by the Catholic church, workers’ unions and the military, this organizational form revolves around a common purpose and is anchored on a set of internalized rules that members follow. It introduced breakthroughs such as replicable processes and more stable organizational charts with clear role descriptions, allowing it to scale to in some cases millions of people. However, conformist organizations can be dogmatic and do not encourage out-of-the-box thinking, and as a result they struggle to adapt to change.
The scientific revolution, the emergence of capitalist thought and the First Industrial Revolution spawned the achievement organization, which is the dominant organizational form among today’s corporations. Achievement organizations are constantly trying to optimize efficiency and effectiveness of their assets and “human resources” to increase profits. This organizational form introduced breakthroughs such as innovation, accountability and key performance indicators (KPIs) to monitor execution, and a more meritocratic environment where high performers are rewarded. However, they can be too short-term focused due to financial pressures, and often leave employees disillusioned and unengaged.
With the growing disillusionment of pure play capitalism, the pluralist organization emerged with a focus on more sustainable practices and business models. They are often found in non-profits, social ventures and increasingly in the corporate world as well. Pluralist organizations introduced elements such as empowerment, values-based leadership, and the triple bottom line (profits + people + planet). Their main challenges include combining a more egalitarian and consensus-driven management approach with legacy hierarchical structures and mindsets, as well as the pressures of the stock market or other financially-driven owners.
Most recently, as the operating environment becomes ever more VUCA (volatile, uncertain, complex, and ambiguous), evolutionary organizations are emerging. Evolutionary organizations break down hierarchies and work in more fluid, distributed teams, treat employees as whole beings, and are guided by an emergent and evolutionary purpose and strategy.
Is your organization fit for Purpose today, tomorrow … ?
Organizations can be at different stages at the same time (e.g. no organization is 100% achievement). The key message here is that each time the operating environment and requirements changed, it spawned new organizational innovations, practices, and mindsets, while organizations that fail to adapt quickly reach their limits. The challenge is that many organizations today are still stuck in outdated modes of operating. They are not fit-for-purpose for today’s more complex operating environment, where the pace of change continues to increase based on supertrends such as the growth of AI, quantum computing, the internet of things, and virtual and augmented reality.
What organizational form most closely resembles your organization?
Is this fit-for-purpose for the operating environment and supertrends that you are facing today?
If not, what is preventing your organization from adapting?