The world of management is changing fast, and yet we still live in an environment where the prevailing organizational design is “functional/hierarchical” and organizations are thought of as a collection of silos.
At the same time, we know that we are experiencing increasing levels of complexity. Why is it so hard to manage these increased levels with a functional/hierarchical model? It’s because of the huge amount of interdependencies that complexity brings.
Interdependencies (and all that gas)
There is a parallel in thermodynamics that we can use to explain why the “silo model” is not fit for purpose when it comes to managing complexity and interdependencies.
Let’s consider a system as a volume of gas of non-interacting particles (silos); the natural behaviour of the system is to minimize its energy level in order to achieve the most stable “thermodynamic state” possible.
The gas can achieve this state once the particles have occupied all the available space (the gas expands, the silos achieve their local optima…), thus dissipating its energy into heat. The process of minimizing its energy has the effect of maximizing the Entropy of the gas.
The end result is that energy gets transformed into heat without producing any “positive work” (or a small amount of positive work) as a direct consequence.
As a matter of fact, it’s not possible to think of organizations as a set of non-interacting parts. So as this is the case, what is a better way of managing organizations?
A network of conversations
A Systemic Organization is one that, taking into account interdependencies, makes all the parts of the System work toward a common goal.
How do we do that? By creating the right “network of conversations” that have to occur among all the parts of the System, keeping in mind that they have to contribute to the common goal.
What we propose is to understand the organization as a Network of Projects.
The Network is, in this view, the vehicle that conveys energy with the purpose of producing “positive work” and minimizing the unavoidable increase in Entropy.
The Network of Projects
The Network of Projects is the catalyst of this process and it is the most straightforward way for all the competencies in the organization to contribute to the common goal.
The correct network of interdependencies (the Network of Projects), together with the right algorithm to manage them – finite capacity scheduling – is the appropriate way to synchronize the activities of organizations and produce “positive work”, in other words, increase throughput.
This post is by Intelligent Management Partner Dr. Giovanni Siepe.
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About the Author
Angela Montgomery Ph.D. is Partner and Co-founder of Intelligent Management and author of the business novel+ website The Human Constraint . This downloadable novel uses narrative to look at how the Deming approach and the Theory of Constraints can create the organization of the future, based on collaboration, network and social innovation. She is co-author with Dr. Domenico Lepore, founder, and Dr. Giovanni Siepe of ‘Quality, Involvement, Flow: The Systemic Organization’ from CRC Press, New York.
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