Why do we need to spend our working lives in organizations that are hierarchical and autocratic, when the societies that we live in are free and democratic? Many people feel that this is a big paradox.
In this video, I start by discussing whether it is possible to create organizations without a formal management structure. I argue that it is possible, but that the track record is rather discouraging. I discuss the case of Oticon, a company that tried to do without a management structure, and Morning Star, which relies on “self management”.
A more realistic approach, if one wants to become more democratic, is that proposed by Russell Ackoff, who described the concept of a “circular organization”, which is essentially a “democratic hierarchy”. In the video, I describe the key features of this approach.
You may ask whether this concept is purely theoretical or whether it has ever been implemented. It has. Among other places, it was implemented in a US hospital and a detailed account was published of the experiences from the implementation of the concept.
This is the last of the five videos about “organization design ideas that may change the world”. I hope you have found them interesting – add a comment below this post if you have a question or comment.
First of all, I would like to make some general comments. First, there is a tendency today to ignore the true problem and find some roundabout solution to circumvent the true problem in management. The simple fact is that there are a large number of mediocre and even bad managers and leaders out there. Instead of organizing ourselves away from that fundamental problem we should try to solve it. Then, we talk about issues such as who is recruited to become manager and what training have they received. Most companies today have ineffective training programs and with more than 9000 theories and concepts of leadership and management it is not an easy job finsing “the right one”.
Second, organizational structure cannot be discussed without discussing the context of the corporation and hence what processes are required to be successful. From complexity theory we know about the noition of self-organization. Any group of people will over time self-organize according to a number of factors found in the group and the environment the group exists in. The purpose of organizational structure is to create a formal structure (as opposed to such informal ones) to achieve more predictable work environment and subsequent effective and efficient processes to mention just some objectives of organizational design.
So, to the circular organization. To me it sounds like a organizational structure that comes very close to simulate the hoshin kanri system in lean management. Hoshin kanri is an integral part of Toyota Production System and as such as been road-proven and tested and found exetremely effective. So, I do not see the need for it in an industrial setting, however, it might be a good idea in corporations that relies on standardization of skills on high level such as hospitals and universities where we find many highly educated people working in a relatively stable environment with fairly low competitive pressure meaning that they would have the time to allow such a organizational structure to work. Also, people like this are recognized to be hard to manage in conventional ways by ordinary leaders and managers because they typically believe they know the best or believe that what they do is so special and because of these attitudes they often have a hard time adopting to the discipline found in industrial organizations. In such a setting, the idea of this board might prevent or at least greatly reduce the politics taking place in the corridors of such corporations which in turn will result in greater effectiveness and efficiency. It was therefore interesting to see that an example was indeed a hospital – I sense a wise hospital director… 🙂
Jan, good points, had not thought about the similarity between Russell Ackoff’s ideas and Hoshin Kanri! Maybe goes to show that “great minds think alike”…..
Nicolay,
Circular org. concept sounds like sociocracy (did you explore taht one?).
Not enough for me. I have tried sociocracy during years and found a bunch of limits. This is why and when Holacracy arived in my life 🙂
Best,
Bernard Marie Chiquet
Bernard, could you be a bit more specific – in what kinds of firms did you implement sociocracy, and what was the experience?
We are thinking about incorporating circular organization into a college of education within a university. Do you have any thoughts about what we might need to consider given that the literature focuses on the use of circular organizations in corporations rather than schools?
Hello Cynthia,
interesting question. But the governance of universities is a complex topic so I am afraid I cannot provide a complete answer here. The circular concept may well work in this setting, but I would suggest that you go through the usual steps of a redesign process (e.g., evaluating the current situation, challenges etc) before selecting the solution. But if confirmed as the preferred solution, I would pay attention to how the formal authority of the board is to be defined, and its “jurisdiction”. For example, are recruitment decisions to be made in a separate process, or subject to the board’s approval? This is probably something that the university’s leadership should also be involved in. In addition, I would consider doing something to the departmental structure while you’re at it; as Ackoff pointed out, the circular organization can be implemented as a stand-alone concept, but is reinforced if one organizes according to a multidimensional structure (see my book for details).