Blog | Archive for the ‘Organisations & Technology’ Category

Loosely-coupled organisations & the death of corporations

By Charles Armstrong | Monday, June 22nd, 2009

Over the last three months I’ve been doing a lot of presentations to IT and HR leaders about understanding and working with informal structure in the enterprise. My talks usually provoke a barrage of questions about privacy, inter-generational behavioural divergence, the potential for employees to “game” automated analytics and so forth.

One thing that’s surprised me is the number of senior executives who ask whether i think large corporations will exist in fifty years’ time, or whether they will be eclipsed by new types of economic player. This isn’t such a wild-eyed question as it might appear and I find it encouraging that people have the confidence to ask it. The modern public corporation only appeared at the end of the nineteenth century and secured its position as the dominant global actor during the first half of the twentieth century, displacing the private family-run business. Through history the baton has passed from one model to another reflecting changes in markets and technologies.

There are huge forces at work that threaten the corporation’s position. In the world of software highly distributed open-source development models have proven their ability to compete with concentrated proprietary approaches. The web has enabled collaborations that are significantly more agile and responsive than corporate structures. Meanwhile the web has also changed the relationship between producers and consumers to enable smaller providers to access large markets that would previously have been inconceivable. However I think it’s premature to write the corporation’s obituary just yet. It has evolved continuously over the past century and it may yet adapt sufficiently to prosper in the new world. The interesting question is whether it will be able to adapt fast enough.

I believe the twenty-first century’s most characteristic organisational structure will be a fluid and loosely-coupled federation of small groups and individuals. Functional coalitions will form around opportunities and evolve as circumstances shift. At any moment an actor is likely to be involved in multiple coalitions and the balance will constantly shift in line with demands. Entities of this kind will have the edge over corporations because they will be able to deploy resources much faster and more efficiently around new opportunities and changes in the trading ecology.

Such loosely-coupled organisations will only come into being once the financial, operational and legal mechanisms that currently involve manual document-based processes are transferred to being automated and electronic. Examples include legal structures, inter-agent contracts and remuneration systems. The kind of analytics which Trampoline provides will be essential infrastructure for the management and coordination of such complex trading communities. I’m also involved with an open source project called One Click Orgs which is starting to chip away at some of the legal structure and governance aspects.

As these new automated mechanisms become available forward-thinking corporations are going to start adopting them to increase agility. I think we will see some large corporations evolving to become more decentralised and operating in a way that’s increasingly similar to the loosely-coupled model i’ve described. Such corporations will gain some of the benefits of increased agility and responsiveness of the loosely-coupled organisations, whilst they will continue to possess the power of “diktat” over large-scale resources that the loosely-coupled orgs lack. This process of evolution will not be straightforward however. It will require some deep-seated cultural and strategic changes, not just the implementation of new technology. But I am sure some corporations will succeed in transforming themselves in this way.

In conclusion I do not believe the large corporation as we see it today will exist in fifty years’ time. But we will see a convergence with some corporations becoming more fluid and decentralised on the one hand, whilst networks of small businesses become more structured and economically significant on the other.

I’d love to hear other people’s thoughts on this if you feel like writing a comment.

Posted in Organisations & Technology | 3 Comments »

Social Network Analysis Comes of Age

By Charles Armstrong | Wednesday, December 10th, 2008

Back in September I was at the Network Roundtable in Washington DC speaking on a panel and launching SONAR’s Flightdeck visualiser. The Roundtable is the premier international gathering where large enterprises using organisational network analysis (ONA) get together to swap notes on what they’re doing. It’s masterminded by Rob Cross, Professor at the University of Virginia’s McIntire School of Commerce, who’s played a leading role bringing ONA from an obscure academic discipline to a mainstream business tool.

This was my second time at the Roundtable, the first having been Autumn 2006. It was striking how the event had changed in the intervening two years. For a start there were a lot more people there, with executives from a hundred and fifty large corporations and federal agencies. But more interesting to me was the change in focus.

Two years ago discussion was mainly focused on the practicalities of how to conduct an ONA survey. This time people were talking about a wide range of different business issues they were addressing. Specific working groups had been formed around talent management, organisation change, external relationships and innovation. Meanwhile the exclusive focus on survey-based ONA had broadened to embrace other network analysis techniques, with particular interest in “passive” analysis based on mining corporate data (like we do).

It seemed to me these changes reflected the coming of age of social network analysis as an everyday business technique. During my panel session I made a prediction that within a few years it would be taken for granted that an enterprise’s information system would generate organisational diagnostics as a matter of course. A discernable buzz went through the room at this suggestion. But whereas people would have regarded this as improbable a couple of years ago, this time it was received as a credible prediction.

Over the past three months it’s become clear that something specific is happening in connection with the economic downturn. Across industries and geographies businesses are going through a wave of mergers, restructuring and leadership changes. During and after processes of this kind decision-makers urgently need to understand the situation in their organisation to rebuild competitiveness and operational effectiveness. Previously businesses have relied on anecdotal information to identify critical experts, poorly-integrated functional units, at-risk customer relationships and so forth. But such information is partial, inaccurate and often distorted by internal politics. With SONAR we are able to provide decision-makers with detailed, factual diagnostics.

Customers in this situation require diagnostic information as quickly as possible. Yesterday we launched SONAR Diagnostic to meet this specific need. Rather than installing SONAR on a customer’s corporate network and integrating it with their internal systems, we provide SONAR as a managed service. The customer just needs to provide 1-3 months of archived email and contact data for the areas of the business they’re interested in and we do the rest. After a week or two of processing we deliver a detailed report highlighting the priority factors impacting performance. Our consulting partners are available to advise on interventions to resolve any issues that are highlighted.

If a business wants to monitor the situation following the initial diagnostic they can proceed to a full SONAR installation. But the crucial thing is to deliver the initial report quickly. Now we’re able to do that.

The current downturn may prove to be the event that cements the role of social network analysis in the corporation. At times like this businesses are willing to consider significant innovations that would meet strong resistance at other times. The companies that take advantage the best available tools to respond to the challenges they face now will be in the strongest position to grow as the economy recovers.

: c :

Posted in Organisations & Technology | 2 Comments »

It’s not just who you know…

By peter | Thursday, July 3rd, 2008

We’ve been discussing the issue highlighted by this posting internally. I think that the question boils down to this:

Do people currently feel so proprietary about their professional connections that they feel their connections must remain confidential to remain professionally competitive?

In the fairly recent past some have certainly felt this way, but the interent is radically changing that. Search, social networks and the massive increase of data available online to anyone makes it much easier to find people and things. This is causing our understanding and appreciation of relationships to change back to the way things were much longer ago…

It’s 1500, somewhere in Europe. Everyone in town knows the blacksmith; so what? The interesting questions were much more complex and contextual – eg who would the blacksmith let slide on payments? Who does the blacksmith socialize with? Is the farrier in town profesionally cooperative with the blacksmith, or is she a competitor?

Preserving knowledge of the existence of nodes in a social network as if they are proprietary IP and must remain obfuscated is an “old school” modern business behavior. It implies that the node on the other end would be happy to deal in the same manner with anyone, and as such it devalues the relationship to such a great extent that you have to wonder if there’s a relationship there at all.

Economies based on this kind of artificial scarcity are excessively vulnerable in a modern age of search and the internet.

Back when I ran a paintball field, and long before the interwebz had search, I found a source for the smoke grenades that most of us sold at our fields in WA state. It was hard to find this guy; he was in the Midwest somewhere and it took about 3 or 4 people hops and lots of phone chatting to get to him.

Once I did find him I was able to buy the grenades in fairly small numbers – say a case at a time – and sell them at a significant mark-up while still under-cutting my local competition. In essence I became a regional distributor. It was a good deal for me and for the other guy.

However he owed me nothing and he just wanted to move product, and so ANYONE who found him could get the same deal I got. Eventually someone did, which cut my regional advantage down to nothing. I still got a good price, but ultimately what happened was the regional price re-set so that we all got close to the same markup of a buck or so a grenade.

These days, that kind of advantage is tremendously fleeting. What matters is relationships themselves, and how they are nurtured over time. If just know who I talk to makes you directly competitive with me, then I am not doing my job.

I understand that sales relationships can be different animals than other kinds of relationships, and that sales people can feel very proprietary about their network. Inside Trampoline we’ve been very fortunate in that Adrian and the rest of the sales team treat our sales relationships as long-term investments which aren’t prone to being under-mined by other people simply knowing about them.

This happens to align nicely with our overall view of relationships – it’s not only who you know but also how you know them that matters.

Posted in Organisations & Technology | 3 Comments »

Japanese Business Culture and Social Computing

By Charles Armstrong | Friday, June 27th, 2008

A couple of weeks ago I was in Sapporo at the Infinity Ventures Summit (the site’s in Japanese) to talk about the role of informal networks in business and show off Trampoline’s SONAR Suite. This is the largest technology innovation conference in Japan, bringing together the leading start-ups, corporations, analysts and investors. The focus was mainly on mobile and consumer internet so Trampoline really stood out as an enterprise infrastructure provider. We were also one of just four non-Asian firms invited to present.

I’ve travelled in Japan in the past but this was my first visit in a business context. The amazing etiquette involved in exchanging business cards was the first thing that struck me. In an unstructured setting like a drinks reception in the West cards are typically swapped at the end of a conversation if there’s a likely relevance for future contact. In Japan cards are exchanged at the start of a conversation with no filter for relevance. This means you get through a lot of cards and your pockets rapidly end up bulging with other people’s.

Cards must be offered horizontally with the text in the correct orientation for the recipient, held at the corners in both hands. When you receive a card you must hold it similarly in both hands and give it your full attention for a second or two before looking up or continuing conversation. You must hold the card in front of you throughout the conversation. It’s insulting to put it in your pocket, scribble a note on it or (worst of all) hand someone a crumpled or disfigured card. If you’re sitting around a table with people the correct thing to do is lay everyone’s cards out in front of you in a neat row matching their positions around the table.

What interested me most, however, was the cultural alignment of Japanese enterprises with social computing solutions. Previously I’d assumed that Japanese business culture would be intrinsically hostile to technologies that make informal groupings and networks visible, or which lead to information being shared in new ways, since there is sensitive etiquette surrounding these processes. However my experiences in Sapporo completely changed my view of this.

The connection I’d failed to make previously is that Japanese corporations have historically placed a much higher value on the informal networks amongst their employees than their Western counterparts. Within the “shushin koyo” model of life-long relationships between employer and employee, many aspects of the individual’s social life were organised and supported by the corporation. This was seen to build organisational strength and forge links outside the formal structure (both of which are also notable drivers for social networking tools in the enterprise). During the long recession in the 1990s a lot of these extra-curricular activities were cut, but a management culture persisted in which informal networks were highly valued. On the face of it enterprise social computing tools are perfectly placed to fill this gap.

In many cases products developed for a Western market will need to be modified significantly before they are suitable for Japanese customers. This won’t simply be a case of changing language in the user interface. Behaviours around privacy management and authorisation will almost certainly need to be modified to fit different cultural nuances. But contrary to my initial assumption, Japanese corporations may prove to be early and well-informed adopters of social computing technologies.

I’m indebted to Shuji Honjo for drawing my attention to the possible like between social computing and corporate involvement in extra-curricular activities.

Posted in Organisations & Technology | 2 Comments »