We are living in a time of global change. Organizations and institutions that were once bulwarks of society are in a transition.There is a sense of desperation showing. Is this about survival? Or, is this about the capacity of executive leaders to change?
This is the first of four posts of excerpts from my book, Circle of Impact: Taking Personal Initiative To Ignite Change. These posts are about the transition that I see taking place within organizations in particular, and global society in general. If you or your business is in transition, you may find that many of the ideas and tactics that you used to manage change are no longer effective. You need not only a different perspective, but new tools for living in the midst of a global transition of unprecedented proportions.
ORGANIZATIONS IN TRANSITION
Organizational leadership has for centuries been understood as a relationship between leaders and followers. The leader, at the top of the organizational hierarchy, leads the organization’s followers through planning, delegation, and influence. It is this structure of leadership that has guided the modern organization through the past century of global conflict and change.
When we experience dramatic change, whether personally or as an organization, hidden weaknesses show themselves. We feel it on a personal level. Fear and insecurity grow. We sense that our organization is broken, and our livelihood is in jeopardy.
Change of this kind is now being felt on a global scale. Turn on the television and we see the flaws and failures of leaders whom we once trusted. Problems are politicized. Lines are drawn. People take sides in a fight for the future. Through all this, leaders seem small and inadequate for the world that is emerging. Along with the diminishment of leaders comes a sense that the organizations and institutions that we depend upon to provide strength and security for society may not be capable of leading this transition to the future
We are at transition point in human history. The way organizations have been structured is going through a transformation. The advancement of digital technology has enabled two parallel developments. One is the automation of skilled labor. The other is the computing power available to us. You and I have, in the palm of our hands, computing capacity that did not exist a generation ago. This change in human history is taking place on both a global scale and an individual one. The result is that our assumption that organizational leadership is about the leaders and followers is also in transition.
Two Global Forces
Two global forces are at work in this change, pushing and pulling against each other. The first is the pull to centralize global institutions, particularly those in finance and governance, into one integrated system of operation. This is the apex of the 20th-century hierarchical organization, where centralized control for planning and management efficiency is a prime organizing principle.
The other force pushes back through networks of relationships that distribute decision-making and management in a decentralized way. The scale and spread of global collaboration through networks of individuals is solving problems in the developing world, which a generation ago was not possible. This collaboration evolution creates an environment where we both lead and follow. Instead of a pyramid of hierarchical authority, imagine a web connecting people together from every direction for sharing solutions and new ideas and creating change.
In some situations, these two forces are at odds with each other. Hierarchy and individual freedom often don’t mix well. However, both forces need the other.
This figure illustrates the differences between the traditional hierarchical organization and the emerging world of global networks of relationships. They are not polar opposites. They are complementary structures that touch different aspects of how organizations function. Hierarchy represents the traditional structure of an organization. The network represents a social structure for business. We speak of this as the culture of a company or the human dimension at work. It is the relational context of an organization.
Leadership within a hierarchical structure is established by the role a person has within the organization, as seen in above figure. The activities of the organization are focused on its institutional integrity. Within a network-of-relationships structure, leadership is based on social trust, and the relevance of an individual’s specific knowledge and experience to the current situation. The focus of the network is the impact of the relationships upon the purpose that has brought the network together.
From the perspective of the Circle of Impact, in a hierarchical business, the dimensions of ideas and relationships each serve the structural dimension. Organizational structure is the dominant dimension. Ideas and relationships serve a secondary or even a peripheral role.
Within a network-of-relationships structure, the three dimensions are aligned for the purpose of impact that defines the network. Impact is change. What is the change that a network-aligned organization seeks? What is the impact of ideas, or relationships and its structure?
It is the question about the impact of the structure that separates the network from a hierarchical organization. Take any vertically integrated business and ask what the desired impact of its structure is. Is it to produce efficiency? Or to maximize profit for shareholders? Take any organizational structure, of any kind of organization, and ask this question, “What is the impact that the design of its structure is to produce?” In my experience, very few people can answer this question. My conclusion to what I have seen for four decades of life in organizations is that this lack of an answer marks the transition to the next era in organizational purpose and its design.
The importance of this organizational transition is found in the transition that was described in the previous two chapters. The role of leadership is shifting from it being a function of organizational structure to one of human character and performance. This means that the future of organizations is in their transition to being leader-rich structures. By this I mean, even a hierarchical structure can create a leadership culture where each member is free and equipped to take personal initiative to create impact that makes a difference that matters.
From Chapter 6: Organizations In Transition, Circle of Impact: Taking Personal Initiative To Ignite Change, pp. 81-85.