Organization is a process, not a structure

May 6, 2012

The way in which companies organize themselves and define their internal boundaries has essentially been determined by the way in which communication between people is planned and transfer of information is designed. The classic hierarchical structure was based on the assumption that a manager or worker could have rich interaction and exchange of information only with a limited number of predetermined people. A narrowing of interaction always marked operational boundaries. Thus you did not want people to cross functional silos. This was the infamous trade-off between richness and reach.

An increasing number of companies trying to become social businesses are now becoming aware of the technical barriers and structural bottlenecks that hinder or totally prevent cooperation that is not planned in advance.

It is time to rethink. Rather than thinking of organization as an imposed structure, plan or design, organization arises from the interactions of interdependent individuals who need to come together.

The accumulating failures of attempts at organizational agility can be traced to the fundamental but mistaken assumption that organizations are structures that guide and, as a consequence, limit interaction. An organization as a structure is a seventeenth century notion from a time when philosophers began to describe the universe as a giant piece of clockwork. Our beliefs in prediction and organizational design originate from these same ideas.

A different ideal is emerging today. We want to be agile and resilient and we want to learn effectively and fast. The tension of our time is that we want our firms to be flexible and creative but we only know how to treat them as systems of boxes (or network nodes, where the shapes are round instead of square), with a fixed number of lines between them.

It is time to change the way we think about organizations. It is not about hierarchies vs. networks, but about a much deeper change. Organizations are creative, responsive processes and emergent patterns in time. All creative, responsive processes have the capacity to constantly self-organize and re-organize all the time. Change is not a problem or anomaly. Change is the organizing input rather than the typical managerial re-design process.  All solutions are always temporary.

Gregory Bateson wrote: “information is a difference which makes a difference”. Information is the energy of organizing. When information is transparent to everybody, people can organize effectively around changes and differences, around customers, new technologies and competitors.

What we have still not understood is that people need to have access to information that no one could predict they would want to know. Even they themselves did not know they needed it – before they needed it. Thus an organization can never be fully planned in advance. When information is transparent, different people see different things and new interdependencies are created, thus changing the organization. The context matters more than ever. The easier the access that people have to one another and to (different) information is, the more possibilities there are.

We seek organization, but organization is a continuous process, not a structure.

.

Thank you Ken Gergen for a great evening and great conversations

More on Gregory Bateson. On social business. Narrative work.

21 Responses to “Organization is a process, not a structure”


  1. [...] Organization is a process, not a structure. [...]


  2. [...] Organization is a process, not a structure Written by: Esko Kilpi [...]

  3. rotkapchen Says:

    Love the piece. Still feel like thinking through this to challenge the concepts a bit more. It feels like it has to be a bit of ‘both’ to be living: flow and order. Surely it’s not the organizational chart sort of ‘over structure’, but a new form of minimal structure is required for all self-organization to avoid the abyss of chaos.

    For me, the word process itself falls on the ‘structure’ side of order — as an algorithm of the ‘way things should be’ — typically devoid of human contribution.

    Indeed, this is where what I refer to as the Design Thinking Continuum serves as a helpful reference: mystery, heuristic, algorithm, binary code — all are needed in a balance. Too often what we know as ‘process’ is either in the form of an algorithm or binary code, to lock out true human contribution. It is only by adding the heuristic of human intervention and the ‘spiritual’ aspects of our living reality (things that can’t be seen or proven), that we can truly obtain the greatest results.

    If we were to make a comprehensive statement as you’ve attempted at the close, it would be more along the lines of: “We seek organization, but absolute order is ‘death’. We need to maintain open structures to allow for flows of the ‘energy’ that feeds living business models — sustaining energy that will last.” For me, process is optional. It is a reflection of ‘agreements’ that allow for order — agreements that can and should change over time. They’re an artifact of social order, so we can know what to expect in certain situations. It’s how we ‘allow’ for order where we want it — to help simplify.

    The challenge is, for every choice of process that we agree to, some things are ruled ‘in’ and some things are ruled ‘out’ — by design. A grander design also allows for ‘exceptions’ to be handled by human decision, or by spiritual guidance. We’ve not yet figured out a way to automate the latter.


  4. [...] will happen. Hmmm…not so much, because other stuff happens doesn’t it? Esko Kilpi’s post on organization as a process rather a structure also seems relevant [...]


  5. I think, Paula, that Esko is using “process” in a different sense to the one that you have assumed.

    It seems to me that he is not talking about designed management, information or operational processes but about the complex dynamics of organization – what I would describe as the complex social process of everyday interaction and what he has referred to as a creative responsive process. That is to say, he is drawing attention to the conversational dynamics through which organization emerges. As he says, “… organization arises from the interactions of interdependent individuals”.

    And that includes, of course, “every choice of [management or operational] process that we agree to …by design.”

  6. eskokilpi Says:

    Yes, exactly Chris!

  7. John Wenger Says:

    Great article. What came to mind is a parallel description of light: it is a wave and it is a particle. Organisation is dynamic and it is fixed and ordered. Continual renewal comes when the organisation is infused with spontaneity, to my mind. There is a “cultural conserve” that has arisen out of creativity and responsiveness to the world, but this conserve is also only the jumping off point for the creation of the next conserve, and so on and so forth. I like how you suggest that it is not about hierarchies vs networks; it is about something deeper, something that transcends and includes the two. There will be pragmatic hierarchies that arise out of a need, that then dissolve and re-form; these come out of the networks and dynamic relationships within organisations. So I see that organisations are BOTH hierarchies and networks. The key is that neither are fixed and both shift as information enters the system to reinvigorate it.
    John

  8. John Wenger Says:

    Reblogged this on quantum shifting and commented:
    It’s not about hierarchies vs networks. It transcends the two. A very thought provoking article!

  9. Jamie Notter Says:

    Amen! This is consistent with what Maddie Grant and I write about in our book, Humanize: How People-Centric Organizations Succeed in a Social World. We’ve been running organizations like machines for centuries and now is the time to shift to more human principles (open, trustworthy, generative, and courageous). The generative piece connects directly to what you’re talking about in terms of agility and responsiveness.

  10. Bruno Says:

    If so, what is organization design useful for?


  11. Organization designs, in the sense of formally established structures, processes and systems, are themselves outcomes of the complex social process of people interacting together. These simultaneously enable and constrain ongoing interaction – both in the formally intended sense and, more particularly, through the diverse ‘shadow-side’ responses that these generate.

    I guess that Jamie might argue for different design principles(e.g. “people-centric”) to be applied and a wider constituency of people to be involved in any design process.

    For my part, it’s important to recognize that the same dynamics – i.e. outcomes emerging from the complex social process of people interacting together – apply just as much in a so-called ‘command and control’ regime as they do in a highly participative arrangement. Issues of identity, ideology, interest, informality and intention etc are features of the natural, everyday dynamics of all ‘organizations’ – whatever their design parameters might be. And it’s in the playing out of these themes, through the give-and-take of day-to-day interaction, that we see “the organization” emerging.

    A corollary of this is that it is people’s conversations – and, in particular, the conversational themes that these reflect, reinforce and potentially transform – that are self-organizing. There is often a tendency for self-organization to be spoken about as a design parameter relating to the minimal imposition of formal structure on people’s roles and relationships.

  12. Vasco Duarte Says:

    Good post! I feel that the ‘process’ metaphor is very underused to try to understand and explain organizations and how they work.
    In my own work i have come to accept that organizations cannot be ‘controlled’ (which would imply order and strcture) but they can be influenced. This process of influence comes in many forms: policies, rules, communication, goals, visions, etc. The sheer number of ways in which organizations can be influenced suggests that it is a constant process, therefore leading me to think – as you state – that organizations status quo is ephemeral and requires constant influencing through means described above.
    Perhaps the counter-intuitive realization is that this influence on the organization is exerted by all, which means that hierarchies are not the only way to ‘shape’ this influence. In fact i believe influence in organizations is, in my experience, a fully distributed process. Why is this important? Because it helps me see where hierarchy can help and where it can hinder tje process of evolution in a project for example.

    Awesome post, with a lot of hooks for further thinking on my side :)

    • eskokilpi Says:

      Thank you Vasco! Excellent points.

    • Bruno Says:

      Understand organizations as they emerge to design formal structure and responsibilities that increase their effectiveness

      • Vasco Duarte Says:

        I’d make only one change to your statement. I’d write “to constant design and scan for structure and responsibilities that increase their effectiveness”.

        Although I’m not being very critical on the word “effectiveness”, which in itself is complete other discussion ;)


  13. Your comment, Vasco, that influence in organizations is a fully distributed process, is an important one for managers to understand. From a complex social process perspective, influence is exercised by everyone by virtue of their ongoing participation in the local sense-making-cum-action-taking interactions that make up everyday organizational life. Outcomes emerge from the widespread interplay of these local conversations, as people act both with intent and habitually in the light of the specific circumstances within which they find themselves. These interactions always refelect the power relations ‘at play’ locally – at that time, in that situation, and between those people. So influence is very much what’s going on – albeit mutual influence ‘in the moment’, rather than the unidirectional exercise of power as this is usually portrayed.

    Many of the themes that influence people’s thoughts and actions will emerge through, and reflect, the shadow-side dynamics of organization, rather than the formal, structured and ‘legitimate’ elements. In this regard, it’s equally important for managers to realize that the policies, rules, goals and so on that you cite as examples of influencing processes only have meaning to the extent and in the ways that these are taken up in people’s day-to-day interactions.

    On a related point, if we are to take complexity seriously, I believe that it is important to avoid any suggestion that managers can control what emerges from this process. You acknowledge this in your last-but-one Comment. However, a corollary of this is that they also can’t predict what impact specific actions – whether their own or others’ – might have on the effectiveness of the organization. Or on any other (socially-constructed) dimension of performance. So I have some concerns with the phrasing of your last Comment, and with Bruno’s point which sparked it. These imply that such foresight is possible. And also that managers are in some way separate from the action – objective observers and influencers of other people’s actions, rather than fellow participants in the ongoing interactional process.

    Paradoxically, perhaps, awareness of these dynamics frees them from the burden of having to live up to the fantasy of appearing to be an all-seeing, all-knowing, and all-powerful ‘heroic’ leader. It enables them instead to focus on the patterns, nature and content of the day-to-day interactions that ultimately determine performance – seeking to shift the patterns in ways that they judge to be organizationally beneficial. As always, although they can act with intent in this, they can have no certainty as to what will emerge in practice.


  14. Excellent post.

    One other interesting implication of this thinking is that also the roles in the organizations are actually emerging from this process. It means that in effect the roles are processes themselves.

    So to be a manager and have that role isn’t a fixed thing at all. Also the managers need to be negotiating their roles all the time in the ongoing power-games of the organization. This process of negotiations is affecting the decisions of those managers a lot.


  15. basically you are right — any organization is its communication. what the issue is – any system, and a communication system is a system will self-organize based on self-referentiality. So – it will create a “communication”-structure that will create a kind of control mechanism of the communication (power). the point is to create a regulatory mechanism that controls that the communication structure will not impose a power structure but remains a flat and open communication structure. (Democracy for example tries to do this.)


  16. [...] I was recently in a meeting where someone was describing how their business works while drawing an organisational tree diagram on a whiteboard.  As I watched and listened, it was like watching TV while listening to my iPod.  What I saw and what I heard did not match.  I suspect there are many businesses like this.  They have a hierarchical tree diagram to illustrate lines of reporting (or the way things are supposed to be), but lines of accountability and decision-making were pulling towards a more networked reality.  The dissonance between the old thinking and the new more effective thinking is beginning to wake people up to the fact that something has to change.  I have advocated for more diffuse power structures in organisations and to me, it seemed like that is what is occurring quite naturally in this particular business.  This makes sense to me, as systems are naturally self-organising.  The HR person present at this meeting piped up, “Of course, the informal structures and relationships are what really make things happen here,” and I was left bewildered why this business, which is in the midst of a significant transformation to a flatter and more cooperative way of working, would try to shoe-horn this far more effective organisational process into an outdated organisational structure. [...]


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