One of the concomitants of the digital age
has been the advent of the concepts of electronic commerce and virtual
organizations. With cross-functional and cross-border networking becoming
features of competitive and globalized corporations, organization design has
entered a phase of matrix complexity. For all of this, digital technologies are
seen to offer an instantaneous and elegant solution. These developments and
organizational thought processes have unfortunately resulted in an unfortunate
short shrift to the classical principles of organization design. Random design
and expansion of organizations to meet current or short term exigencies has
resulted in organizational asymmetry, as a systemic feature. Overarching global
monolithic structures have resulted in structural rigidities and process impedances.
Technology, while seeming to aid flexibility and strength of organizations, has
unwittingly resulted in these imperfections.
The concepts of digital economy or automated
factories can never eliminate brick and mortar support systems or human brain
and brawn enablers. The only differentiation of the former (digital automation)
is that the latter (physical humanism) is less visible under a digital hood. The requirements of Google
and Microsoft to build huge server farms for Web and Cloud support systems, of
Tesla and Toyota to build giant battery farms and robotic factories and of
Amazon and Flipkart to build huge product warehouses reflect different ways of
doing business rather than obliterating conventional businesses. Technology
makes this shift possible but cannot eliminate conventional organizational principles
which remain still relevant. This blog post argues that simple engineering
principles are relevant for designing and operating high performance
organizations even if they are digitally enabled and globalized. Five simple
engineering principles of structural design and five fundamental principles of thermodynamics
and fluid dynamics are utilized to explain the hypothesis.
Structural symmetry
Symmetry is one of the important principles
of engineering design. Symmetry lends stability to structures besides providing
elegance. It also simplifies design itself. Symmetry goes hand in hand with
standardization as an underlying enabling concept. Organizations, like
buildings, gain from structural symmetry. Symmetry has both external and
internal dimensions. An organization which desires national marketing coverage
has to create a symmetrically designed (centre, regions, states and territories)
organization to work effectively towards its objectives. Global organizations
also need regionally or nationally symmetric organizations to think globally
but act locally. One of the best examples of structural symmetry is Rensis
Likert’s Linking Pin Organization where the overall organizational pyramid is
composed of several small pyramids linked with each other from the bottom up
and sideways. It reflects a principle that individuals make teams and teams
make organizations.
Centre of gravity
Centre of gravity is the unique point of a
body that provides stability to a structure, and even to a human body or an
organization. Civil engineers take special measures to ensure that asymmetric
buildings do have their centres of gravity nearer the centroid. A structurally
symmetric organization automatically results in a supportive centre of gravity.
If organizations have to be asymmetric for some reason it is important that the
layers or components are so arranged that the organization has a centre of
gravity that is well understood and experienced with an appropriate
distribution of mass. Organizations find structural asymmetry a little
unavoidable when venturing into sunrise technologies or unexplored regions. It is
important for the original established organization to reconfigure (actually
cantilever itself as an engineering concept!), to support the new initiatives
but at the same time be sensitive enough to establish symmetry at the earliest
opportunity (as we know, cantilevers can only support certain weight!). The slide
of Tata Motors in the passenger car segment after the initial corporate driven
successes has been due to a failure to create symmetry across different product
lines.
Strategic symmetry
Strategy is often seen to be as
unidirectional (specialized organizations) or multidirectional (diversified
organizations). It is less understood that strategies of all types gain from
symmetry. Hindustan Unilever in its fourth generation growth strategy created
symmetry in favor of emerging markets to ensure that they would contribute an
overwhelming share of the company revenues by 2020. Even qualitatively,
strategy gains from conceptual clusters. Harish Manwani in his role as the COO
of the company conceptualized his 4G sustainable growth model in terms of Competitive, Consistent, Profitable
and Responsible components to requisite thrust. Strategic symmetry is a key
driver for structural symmetry, given that structure follows and enables
strategy. Organizational scale and scope as well as symmetry need to reflect
longer term goals rather than shorter term compulsions.
Future is foundation
Visionary engineers look into the ground as
they envision ever-high skyscrapers; they ensure that the foundation is
designed to enable vertical growth and resist seismic shocks. Organizations must
lay foundations that support sky high aspirations and endure unanticipated
pressures. Typically, successful CEOs design, ab initio, organizational
foundations that last at least ten years of establishment and growth at each
time. An approach of tinkering with the base organization as an annual exercise
leads to weak joints and imperfect foundations. Structural base of an
organization should not be viewed in terms of people numbers; it must be
understood in terms of functional support that enables an organization to be
successful as an end-to-end connected enterprise.
Talent is material
Modern structural engineering continues to
develop to amazing heights because of the impressive strides in material
technologies. Apart from the inherent characteristics of load bearing
materials, development of superior metal and non-metal joining and bonding
materials has resulted in the design and execution of high integrity
structures. High integrity and strength do not mean non-moving structures. From
buildings (example, the columnar structure) to automobiles (example, the chassis)
well-designed flexibility promotes resilient strength. In a similar manner, by focusing on more
robust talent and developing intra-organizational collaboration as a specific
set of talent attributes, organizations can cement their talent to a perfectly
optimized balance of strength and flexibility.
If organizational structure is akin to a civil engineering
structure, organizational processes are akin to thermodynamic and fluid dynamic
processes of an entity-environmental system. Several laws and principles, ipso
facto, apply to organizational principles but only five significant ones are
discussed below.
Knowledge as driver
Talent, which comprises knowledge and
experience, is the motive force for organizations. In fact, even experience
translates itself into knowledge. Whether a device is mechanical, electrical or
electronic, heat is an essential element of its operation. However sophisticated
an organization is, the level of knowledge shall only be the primary driver of
its operation. Like particles (and molecules) that collide in a material system
but are designed to become a concentrated heat source, people talents (and
egos) do collide in an organizational system. The biggest challenge of
leadership is to ensure that interactions are collaborative and the cumulative
knowledge of an organization is at such level that it drives the organization
on its chosen path, despite competitive gradients and turns, with requisite thrust,
acceleration and velocity.
Knowledge equilibrium
The zeroth law of thermodynamics states that
thermal equilibrium is reached whenever bodies in different temperatures are in
contact with each other. The knowledge levels of individual people in an organization
determine the level of knowledge at which the knowledge equilibrium in an
organization is set. If an organization inducts pedestrian talent in a large measure
even the few brilliant ones would decay. A firm which faces a superior
competition must appreciate that it must consciously upgrade its knowledge to
ensure that it always stays at the superior knowledge gradient. Equally, it
must appreciate that the rest of the competition would also work towards higher
knowledge levels to achieve knowledge equilibrium with the leaders. A continuous
induction or generation of knowledge is essential for the knowledge system to
serve as a perpetual heat pump for organizational momentum.
Internal energy
The total energy of a system is the kinetic
energy of the system plus the potential energy of the system plus the energy
transferred into the system. The competitive agility of an organization, the
competitive pressures from the environment and the energy accessed by the organization
determine the total energy of an organization. Like all natural processes, the
human organizations have an inherent property of dissipating useful energy. However,
as a synthetic form, organizations can be led and managed to an appropriate
thermodynamic organizational state that minimizes wastage of energy and
maximizes the total organizational energy. This stems from an appreciation of
knowledge as the natural energy of a human organization rather than
misconstruing authoritative power as the synthetic energy of such a system.
Pressure boosters
The simplest of the laws of fluid dynamics
clearly states that fluid flow and pressure are adversely affected by the length
of the piping from the supply point to the delivery point. The more complex and
the more diffused an organization, the less intense the organizational processes
become from the supply point to the delivery or recipient point. Given that
organizations typically have goals and strategies developed at the very apex
level while the ground level execution and competitive realities are discovered
at the basic ground level, the mechanisms of free and effective transmission of
information across the organization is a challenge. It is important that
managers and leaders act as pressure boosters in an organization ensuring that
the processes move seamlessly without pressure drops.
Bottlenecks as venturis
Organizations typically have bottlenecks. In fact,
inherent in the pyramid design philosophy of a typical organization is the
concept of organizational bottlenecks. Typically, these occur as information
has to pass through restricted bridges between subordinates and bosses, and
between functions or organizational units through specified individuals. Fluid dynamics,
however, illustrates the venture effect in piping whereby constrictions
accelerate the flow of fluids across. It is necessary for organizational
managers to view the traditional bottlenecks as opportunities to create venture
effects. The pressure of knowledge accretion at source (whether at bottom
frontline level or the apex leadership level) and the vacuum of knowledge seeking
(again, at either points) would turn typical organizational bottlenecks into
desirable venturi phenomena.
Engineering high-performance
The ten engineering principles enunciated
above are relevant for multi-people organizations. Even a one person
organization is a singular and natural embodiment of symmetry, intrinsic
gravity, internal energy, knowledge drive and so on. As organizations are built
and processes are established, it would be necessary to design them with an
engineering flair as much as with behavioral approaches. Fortunately, as
discussed in this blog post, creating high performance organizations is more of
simple and conventional civil and mechanical engineering principles than exotic
electronic and digital technologies. As long as organizations remain as human
systems, the simplest of natural engineering principles would add strength, agility
and sustainability to organizations. It would be appropriate to invoke some
basic engineering flair for designing high-performance organizations.
Posted by Dr CB Rao on October 2, 2014
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