The Network Organization
Friday we talked about the philosophy of customer first without compromise. This philosophy can only be achieved via a new way of working. This can only be achieved through a network organization. In this post, we share the details about this philosophy.
The Network Organization
The Age of Networks
All around us, thanks to the extreme effects of digitization, we’ve started to shape a society that is entirely based on the concept of networks. Networks of information, networks of knowledge, networks of entertainment, networks of friends, networks of enterprises. Everything we see around us is based on the concept of networks, fueled by digital technologies that are making our society a more connected and networked system every single day.
We won’t be able to understand, or leverage, the age of networks if we don’t start to think about our world, our businesses, our companies, and our markets as complex, internetworked systems. We have to understand the new language of the age of networks if we want to reinvent our companies.
The Advantages of Networked Thinking
Networks may seem complex and hard to manage at first, but there are a number of advantages in networked thinking:
1. Information flows faster in networks. Companies need information on their markets in real time to make decisions faster than ever. Networks turn information ponds into rivers, flowing through the organization.
2. Intelligence filters faster in networks. With so much information around, it’s increasingly difficult to distinguish important data from rubbish. Networks distill information so the relevant information sticks out.
3. Innovation flows faster in networks. By combining the intelligence of more people inside (and outside) an organization, without hierarchical boundaries, good ideas will thrive faster. Just look at how start-ups function.
Rethinking Organizations for the Age of Networks
What will organizations look like in the age of networks? What will companies look like in an era of total and complete fluidity?
The Network doesn’t care for hierarchy. The world has shrunk to six degrees of separation, so why should employees care for a structure and a hierarchy that has too many managers between them and the CEO? The next generation has learned to live in the network, make connections in the network, and advance through the network. For them it’s not ‘up. It’s not ‘horizontal’. For them it’s all in the network. It has become a vertical playing field. The vector points to the network.
The network rewards people who can contribute. Information is only valuable if you share it. If you want to advance ‘in’ the network, you have to feed the network. You have to supply information, share information, and facilitate the velocity of information in the network. Networks live on information that is spread.
The network is a pure meritocracy. You earn your rights in the network based on what you do, what you provide and what you share. Not on some badge of honor, stars or stripes that make sense in the hierarchical world, but not in the network.
This will truly change the way we work. The way we build organizations for the future. The way we think about ‘companies’ for the next generation.
From Control to Fluidity
The new world of work will require a complete rethinking of the engagement of people to your company, based on the philosophy of the network. And we might have to throw away many, if not all of the tools that we have used in the past, when companies were still very much based on the ancient model of the hierarchical structure.
The central element of this transition to the age of the network, is that the static structures of today will have to be reinvented for the age of fluidity. This is a completely new paradigm. Careers will have to be reinvented and replaced by much more fluid thinking, but also the way we will reward people for their efforts will have to be completely overturned.
The fundamental shift is that we’re replacing the notion of ‘loyalty’ by the notion of ‘relevance’. The company structures of the past were completely based on control and loyalty mechanisms. If companies are going to behave in a network-based society, they will have to become networks themselves.
In the era of fluidity, we have to adopt this structure-network duality. We have to build organizations that are capable of behaving like a structure and as a network at the same time. That when we need to drive for efficiency, we need to push on the structure, and when we need to drive for innovation and creativity, we need to push on the network side of the organization.
Adam Pisoni, the CTO and co-founder of Yammer puts it like this: “Of course companies should have structures and org-charts. But it doesn’t mean companies should work that way. They should understand the network dynamics of their organization”. Yammer has a structure, and an org-chart, but as Adam says: “We just don’t use the structure. We use the network”.
The power of the network is forcing companies to change their organizational culture and structure. On the surface, we see this new way of working as technology and tools. But deep down, it’s a cultural thing. Starbucks is not just a corporation, it’s really a network. Their headquarters aren’t really headquarters, they are the central hub that supports the network. That philosophy is a deeply cultural phenomenon.
Michael Porter once said that â€œthe essence of strategy is choosing what not to doâ€. We found this mentality has really permeated Apple’s organization. If an Apple employee comes up with a new idea then this idea can be launched on condition that an old idea is made obsolete in return. Apple has the highest value of any company in the world and employs â€œjustâ€ 25,000 staff (not counting retail). Apple has fewer than 100 product marketers. This is made possible by their strong focus on a mere handful of products. Extreme focus is a necessity in a network organization. Without focus the network would be ruled by chaos.
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