SUMMARY

Organising for complexity is an approach developed by Niels Pflaeging. It suggests a way to design an organisation not with the traditional command and control pyramid, but rather as a decentralised network.

Organising for complexity represents a move away from Taylorism, which espouses specialisation and dividing the company up into thinkers, managers and doers (the workforce). Tayloristic management causes three systemic gaps: the social gap, the functional gap and the time gap. Combined, these gaps create social pressures, prompt managers to use fear in their leadership style, produce unnecessary mechanisms for coordinating activities and inhibit knowledge from the edge to inform decisions.

Organising for complexity suggests that a value-creating network can avoid these systemic gaps by organising collective efforts that leverage the strengths of doers and thinkers in multi-disciplinary teams and create an operation network that can produce much faster using decentralised decision making and radical transparency. The underlying rationale is that a complex market with rapidly changing demands makes it impossible for a traditionally managed company to perform successfully.

Instead, a value-creating network navigates based on market demands with a configuration of teams that self-organise to meet the market’s requirements. While a value-creating network should have no line structures, departments, centralised staff or shared services, there are two different types of teams (network cells – see below) that enable the teams closest to the customers to focus on what they are good at.

KEY CONCEPTS

Designing an organisation as a value-creating network should compromise four key elements:

  • A boundary: Delimits of an organisations’ sphere of activity. The boundary should direct the organisation’s value-creation using guiding principles, values, positioning and practices.
  • Network cells: Cells are a key component of the structure and can be either central or peripheral cells, although there should be fluid movement of staff through the cells. The distinction between central or peripheral defines the key focus of a cell.
    • Peripheral cells have direct contact with the market and deliver the service or products to the customers. Peripheral cells should to be as autonomous as possible in their decision making and self-organise based on the market demands. They should not consist of more than 3 team members, who should have cross-functional capacities.
    • The central cells are seen as supply cells and have no decision making power over the peripheral cells. They provide the periphery with value that it cannot create itself. In an ideal situation they would charge the peripheral cells for their services on a per use basis on an internal market.
  • Connecting strings: Strings are the connectors between individual cells.
  • Market pull:  Links the peripheral cells with the market and is defining for the company direction because peripheral cells steer based on market-pull.

Other concepts include:

  • No fixed positions. People are not in fixed positions, but are encouraged to create a role portfolio by picking up responsibilities from several areas of the business.
  • Behaviour centric organisational design. The organisational design should consider which behaviours, motivations and preferences would influence how the organisational structure is enacted.
  • Leadership. Leaders in a value-creation network should lead by the three R’s: relate and create relationships with the workforce, repeat the best practices that need to be reinforced in the workplace; and finally, reframe the challenges that the company is focusing on to ensure that the company evolves its way of thinking.
  • Decision-Making. To ensure that decisions are made by those closest to the information, decisions should be made via a process called Consultative Individual Decision-Making.
  • Readical Transparency. An organisation that organises for complexity should embrace radical transparency and allow information free flow in the organisation. The increased level of information will foster ambition and competitiveness.

SOURCES

Organising for Complexity by Pflaeging, Niels