Podular Organization and Edge Businesses

May 9, 2013
Podulation -- From Dave Gray's Connected Company

Podular Design — From Dave Gray’s Connected Company

In Institutional Innovation and Podular Design I noted a number of insights from the Aspen Institute’s report, Institutional Innovation: Oxymoron or Imperative?, especially that “the most important innovation challenges are now in fact institutional in nature.” As an aside, let me just note that institutions typically change in dramatic ways only over long periods of time. Think of institutions such as religion, government, the economy, and then consider the various organizational forms in which these institutions took shape across cultures over time.

One insight I have not discussed in previous posts is relevant to understanding the changing way teams work together in organizations and, by implication, in a Connected Company — as outlined by Dave Gray. Richard Adler the Rapporteur for the Aspen sessions, noted that,

“New findings about the power of collective intelligence and about the most effective ways of organizing teams are providing practical insights about how to accelerate innovation.”

To start, let’s consider many companies organize teams and then turn to the “power of collective intelligence” mentioned by Adler to see how the two relate to podular organization. Several research projects in recent years noted the fuzzy boundaries of teams in large organizations. Skilful Minds first noted this phenomena in Who’s on Your Team? Enterprise 2.0 and Team Boundaries , and then a couple of years later in Social Learning, Collaboration, and Team Identity.

In fact, the phenomena of transitory team membership is so pervasive that some people propose we analyze “teaming” rather than teams when talking about how groups organize for cross-functional purposes within, or between, companies. Consider, for example the way, Mark Mortensen summarizes this trend in team dynamics,

First, organizations increasingly require collaborations to be fluid in their organization and composition, able to adapt to the rapid changes of the external environment. Second, collaborations increasingly overlap with one another, sharing resources — including people — as those resources become more limited due to increased competition. Third, collaborations must increasingly take into consideration the different contexts within which collaborators are embedded, including locations, time zones, cultures, and languages, structures, or organizations.

The liminality of such transitory teams results from several institutional challenges including the high degree of misunderstandings that initially occur due to team members rarely having the time to translate the different ways of thinking that people bring from their professional specializations into a mutual understanding of their shared business purpose. Developing mutual understanding requires shared experiences, getting to know who you are collaborating with, not just what they do or their skills profile. In addition, conflicting functional priorities, and often a lack of clear accountability, make it difficult for such teams to remain focused on the business purpose of their collaboration.

Teams were not always organized this way. As Mortensen notes, teams in multi-divisional companies were, at one time, defined by bounded and stable team membership and common goals that interdependent work was required to meet. Cross-functional teams in such companies today are not typically defined by bounded and stable membership, and common goals are still too often related to divisional performance driven by scalable efficiency rather than a connection to the purpose of the business the team is serving.

As Brown and Hagel recently observed:

Over the last 40 years, the emergence of new digital infrastructures and a global liberalization of economic policy have increased the pace of change exponentially. Many companies that were extremely successful in earlier times of relative stability are now finding that their relationship architectures are fundamentally misaligned with the needs of their business today. As the pace of change increases, many executives focus on product and service innovations to stay afloat. However, there is a deeper and more fundamental opportunity for institutional innovation—redefining the rationale for institutions and developing new relationship architectures within and across institutions to break existing performance trade-offs and expand the realm of what is possible.

Institutional innovation requires embracing a new rationale of “scalable learning” with the goal of creating smarter institutions that can thrive in a world of exponential change.

The challenge then remains how to enable organizations to adapt to their ecosystems by enhancing access to flows of knowledge that are likely to result in learning. Leinwand and Mainardi recently observed that permanent cross-functional teams tend to fare better than transitory teams in engaging organizational ecosystems. As they note:

We’ve recently seen a more robust cross-functional construct emerge, one  with an overarching organizational structure, based on building and maintaining a distinctive capability. Members of these capabilities teams are assigned permanently to them, reporting there rather than through a functional hierarchy.

Permanent cross-functional teams provide an institutional basis for what Hagel and Brown refer to as edge businesses that develop within large-scale enterprises, noting that such companies “should resist the temptation to confront the core, and instead  focus on opportunities on the periphery or at the ‘edge’ of their businesses that can scale rapidly.” I suggest below that Dave Gray’s conception of podular organization affords an important insight regarding how the institutional innovation of edge case businesses can develop and organize. Read the rest of this entry »

Business Exceptions Are Not Always What They Seem

April 30, 2013


Common wisdom among thought leaders discussing learning in organizations notes that most of the learning that occurs happens informally, or socially. A previous Skilful Minds post, Social Flow and the Paradox of Exception Handling in ACM , asserted:

people learning at work rely on social, or informal learning, around 80% of the time. Interestingly, I noted in a former post, Social Learning and Exception Handling, that John Hagel and John Seeley Brown contend that “as much as two-thirds of headcount time in major enterprise functions like marketing, manufacturing and supply chain management is spent on exception handling.” It is not coincidence that the two numbers are aligned.

The most basic point to remember is that exceptions to formal business processes require efforts to design a scalable learning architecture that supports content co-creation needed to adapt to emergent challenges and manage the flow of that adaptation through an enterprise’s ecosystem. Whether judging an adaptation successful requires it to result in new formal learning content, i.e. content co-creation, or a new business process, i.e. organizational innovation, or both, remains an open question.

Informal, social learning is key to exception handling since both make up most of what people do in organizing work in enterprises.

Of course, for every generalization there is usually an exception. My posts on business exceptions to this point largely focus on Barely Repeatable Processes (BRP) where informal and social learning assists employees solve issues raised by the need to improvise and handle exceptions to maintain a good customer experience, or solve issues experienced by other stakeholders such as business partners, suppliers, etc.

Recently, while reading General Electric’s A Connected World blog, one case described there led me to think about informal learning and collaboration with a different twist. It caused me to reconsider exceptions and look at the way attempts to make processes better by using working knowledge learned informally also produces exceptions in some organizational contexts.

Read the rest of this entry »

Revisiting the Great Innovation Debate

January 2, 2013
Courtesy of Wonderfully Complex's photostream on flickr.

Courtesy of Wonderfully Complex’s photostream on flickr.

An early Skilful Minds post introduced The Great Innovation Debate, focusing on the distinctions between Tom Friedland’s conception that when it comes to innovation the world is flat, and the alternative point of view espoused by Richard Florida that the world is spiky. Meaning that the aggregation of creative people in cities, in proximity to one another, largely drives innovation and economic growth. As our previous post noted, John Hagel added an interesting vantage point on the debate by observing that, “Even though you can participate in innovation from more remote locations, if you want to develop your talent more rapidly than others, you are more likely to be able to do that in a major urban area.” In other words, the debate about innovation is largely a difference of viewpoints on the feasibility of effective collaboration across distributed people who work together to get jobs done. These collective efforts typically exist as cross-functional teams working with business partners, or customers.

The innovation debate was raised again recently when John Hagel and John Seely Brown added substantially to the questions behind it in a post titled, Friedmand vs. Florida and offered some key insights that coincide with key points from the McKinsey survey. The gist of Hagel and Brown’s position goes as follows:

It’s true that globalization has led to increased competition; however, there is also a significant opportunity for companies to access the talent gathering in different spike cities and then connect those people around the world using digital technology infrastructure so that they might leverage the skills of, and learn from, one another. Such a model does not develop overnight; to move from competitors to collaborators, participants must form long-term, trust-based relationships with one another.  When these relationships develop, then firms can connect capabilities across spikes, and ultimately, pursue opportunities for innovation and capability building across spikes.

Consider the following observations from recent research on the importance of proximity in how team members relate to one another. A recent Forrestor report, Making Collaboration Work for the 21st Century’s Distributed Workforce (registration required) noted that most information workers (including Gen Yers) prefer email, telephone conversations, and face-to-face meetings. These preferences appear to result as much from limitations in the available collaboration tools as anything else. The Forrestor recommendations are three-fold:

  1. create the sense of a “shared office” among distributed employees
  2. use tools that follow distributed employees on the go
  3. provide collaboration tools that make the work easier, i.e. are integrated into the work.

I’ll get back to the major challenge among the three outlined in the Forrestor report (creating the sense of a shared office) in a following post. First though it is important to note that the Forrestor report’s findings indicate fundamental differences between the opposing points of view in the debate over innovation by Friedland and Florida, especially as they relate to distributed employees (i.e. people who are not colocated). For example, a recent McKinsey Global Survey of 2,927 executives, Making Innovation Structures Work (registration required), offered two key insights dealing with innovation that merit attention in relation to the topic.

  1. “Companies cannot rely on a single innovation function alone to create successful outcomes, it must be integrated with the entire organization.”
  2. “The functions located near talent or target markets have more market success and meet objectives more effectively than others, though they are less likely than the functions at or near HQ to engage regularly with company leaders.”

The first conclusion relates to the McKinsey report’s overall insight that organizations are more likely to succeed with innovation efforts when those initiatives are integrated with corporate strategy as well as benefiting from the engagement and support of company leadership. It implicitly recognizes the ineffectiveness of organizing innovation efforts that occur in corporate silos, such as innovation centers or research & development labs.

On the other hand, the second conclusion recognizes the constraints faced in organizing innovation efforts among distributed employees. Creating a sense of a shared office, or workspace, is fundamental to efforts attempting to integrate innovation and corporate strategy, especially if the corporate strategy involves social business.

In my thinking, the key to Hagel and Brown’s point is that, as Gunter Sonnenfeld recently observed in a post called Relationship Economics, “relationships are the foundation of the social web, and the basis for the flat, seemingly infinite distribution plane that is the Internet.”  Rather than focus on whether the world is flat or spiky, serious attention is better paid to how enterprises organize collaboration and what limitations place and cultural context impose on that organizational effort to create innovation capabilities. How to organize distributed collaboration and manage the social interactions involved is the topic that requires discussion when these concerns are brought into focus.