Spectrum of Organisational Forms

To most people, business organisations have been around for ever, their form is known. It has served us well, and will do so into the future. The reality is that the current form of most businesses, and the theories it is built upon, are quite recent. There have been many organisational forms, indeed there still are, but one emerged in the 19th century that became dominate in the 20th century.

This form is based on hierarchy and control. It separates out the thinking (management) from the doing (workers). It focuses on optimising cost and standardisation. This has worked well in the relatively slow moving world of the 20th century. However, the pace of change is speeding up and is also not at a constant pace; there are larger changes that seem to suddenly appear. The traditional organisational form is now struggling to cope.

There are organisations that forge their own path, that have thought about how they should be. Frederic Laloux’s Reinventing Organisations describes some of these and starts to describe a future form that is a better fit to the current business environment - Teal Organisations. There are also people who have thought about how organisations could operate, resulting in ideas like Sociocracy and Holacracy.

These are fantastic and exciting ideas, but if you are a traditional’ organisation how do you know which idea is good for you, and how do you transform to it? Looking to make the theoretical more practical, and with apologies to Don Edward Beck, I adapted the Spiral Dynamics definitions, and created the following spectrum of organisational forms:

Figure 1: Spectrum of Organisational Forms

The first five forms are taken straight from Spiral Dynamics by Don Beck. I renamed Exploitative Empire’ to Strength Empire’ as the former was a bit harsh for consulting engagements. After Systemic Flow’, Beck jumps to Holistic Organisation’ which I think is quite a leap, so have split into three to make the jump achievable.

  • Tier 1: These forms are constrained by the view that there is a single approach to organising businesses. In Social Tribes, the response to traditional approaches is to believe that everything should be Agile.

  • Tier 2: In these forms, there is acknowledgement that there is not a one-size-fits-all solution, that the organisational approach needs to match the nature of the problem. There will also be increasing connections beyond the organisation, to other organisations, the environment and society.

    Strength Empire

    Strength empires occur when a someone can control people through intimidation, either by themselves or through others. People would rather be part of the group than face being an individual. Thinking for yourself is discouraged. Progression is based on unquestioning loyalty or strength to overthrow the leader.

    Authority Structure

    Authority is not based on personal strength, but by the position in the formal hierarchy. Progression is based on meeting the criteria for progression and the availability of a role to progress to. The structure is rigid and rule based, but there is some room for interpretation. People are part of the organisation because the want to rather than out of fear, but there is segregation between the levels, between the ranks.

    Strategic Empire

    This is similar to the authority structure in that there is a formal hierarchy and progression, but there is more flexibility on how to organise to achieve specific goals. The necessary skills can come together when needed, regardless of where they are within the structure. Teams form and reform, and people mix across levels as needed.

    Social Tribe

    Rather than forming and reforming, teams now start staying together longer. Within the team there is no hierarchy, although the team itself may be within a hierarchical organisation. The teams are self-managing, swarming around a problem and deciding themselves how to solve it. Roles are not rigid within the team with people contributing where they can. This is where Agile typically starts appearing in an organisation, as IT adopts Agile approaches. More often than not, the rest of the organisation does not adopt Agile, so while software is better in quality and more responsive, the business is not able to fully exploit those benefits as it is still working in more traditional ways.

    Systemic Flow

    Most often, social tribes are only delivering part of the solution. To really own a solution, people need to align to be able to deliver from idea to a product in the hands of a customer. This means that a wider set of skills come together, maybe organising as teams of teams, that focus on the flow of work through the organisation.

    Local Adaptive

    As people are aligned to the delivery of products, that group of people own that product. They become more and more independent. They can adopt the way-of-working that suits them. They may have their own agreements with suppliers and work environments. What aligns the groups is the purpose of the organisation, goals they are given, and standards. They may share some central services such as legal and HR. Organisations can be a mix of more Agile approaches, as well as traditional. People apply the approach that best matches the nature of the problem. Focus moves from needing to adhere to a single approach, to realising that different types of problems may be solved best with different ways of working. For instance, I car design is a complex problem and can benefit from more Agile ways of working, while car production is a complicated problem and benefits more from a Lean approach.

    Core Adaptive

    The change with core adaptive is that the teams can change themselves. They can alter the roles, their structure, their rules and their membership. This allows them greater flexibility to react, or disrupt, competitors. In essence the organisation becomes a group of smaller organisations flying in close formation. What keeps them together are purpose and values.

    Contractual Network

    The boundaries of organisations fade. Value flow depends on people collaborating together and can involve people from many organisations. The organisation you are part of is less important than the competencies you have and the willingness to work together. With strength empires there is little cooperation between organisations; they have their own territories and defend the boundaries. By the time we get to contractual networks we realise that we need to work with other people, other organisations, to deliver our purpose; it is better to cooperate than conflict.

This means that an organisation, which had become a set of product value nodes travelling in close formation, can now be decomposed even further into individual teams, or even individuals. The boundaries of organisations become very blurred, with an organisation really becoming a vision and values around which people chose to congregate. Enabling this will be technology such as blockchain enabling contracts to be created, maintained and enforced quickly, accurately and at low cost. People can come together because they want to for mutual benefit, rather than simply because they have been told to.

While I admit my additions’ do not follow the theory of Spiral Dynamics, I am looking to create a practical ladder of achievable steps, to give organisations a route forward.

If an organisation wants to become more adaptive, it is unlikely that they would be able to just pick a form and decide to be adopt it. The reason is the difference in mind-set between the forms; someone running a core adaptive organisation will have a very different mind-set to someone running a strategic enterprise organisation. Mind-set takes time to change so organisations will probably only be able to move to the forms either side of their current one in a single step, see Figure 2:

Figure 2: Adjacent Possibilities

While some people will see the possibilities and want to change, others will need convincing. Ultimately learning only comes through doing and practical application. The adjacent possibilities must be close enough to enable initial implementation within the existing context, and using the results to build a case for wider change - they have to be close enough to be actionable.

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