A Liquid, Not A Solid: A City, Not A Machine

Dave Gray is onto something with his Connected Company project (with Thomas Vander Wal), which is ostensibly looking at the way companies are changing as they move away from statically designed hierarchies and processes to dynamically self-organized networks:

Dave Gray, The Future Is Podular

One of the most difficult challenges companies face today is how to be more flexible and adaptive in a dynamic, volatile business environment. How do you build a company that can identify and capitalize on opportunities, navigate around risks and other challenges, and respond quickly to changes in the environment? How do you embed that kind of agility into the DNA of your company?

The answer is to distribute control in such a way that decisions can be made as quickly and as close to customers as possible. There is no way for people to respond and adapt quickly if they have to get permission before they can do anything.

If you want an adaptive company, you will need to unleash the creative forces in your organization, so people have the freedom to deliver value to customers and respond to their needs more dynamically. One way to do this is by enabling small, autonomous units that can act and react quickly and easily, without fear of disrupting other business activities – pods.

A pod is a small, autonomous unit that is enabled and empowered to deliver the things that customers value.

Let me rephrase:

The world is increasingly more dynamic: we are inventing our ways of working in almost real time. We can’t wait for a business process to be designed, and it might be out of date almost immediately, anyway.

We need to operate under new principles, where individuals can take independent action and spontaneously form on-the-fly groupings – individuals connected through personal relationships, rather than membership in company designated departments – whose reason for existence is to create and deliver value in a potentially innovative way.

Gray goes on to make a compelling case for the decline of business processes and the increasing ‘podularization’ of business, which is a synonym for the shift to social networks. I wrote a longish piece on this topic not too long ago:

Stowe Boyd, The Rise Of Networks, The End Of Process

From a social viewpoint, the architecture of business seems all wrong. People aren’t really designed to do one thing, like a cog in a watch. They have various relationships with other people, and through these relationships they have influence on the work going on all around them. They are not alone, like a moth in a bell jar. We are not alone, in our work. Even the most repetitive of work — screwing bolts on an assembly line, or delivering the mail — happens in the context of other people, and is made more valuable by their exertions.

Increasingly, people’s work is being viewed as a shared aspect of social relations. Time is a shared space, where we cooperate toward shared ends.

One casualty of this large-scale shift in business doctrine may be the hallowed business process. The notion of a process — a defined series of steps in the production of goods or the delivery of services — subordinates individuals to the their roles in the process.

For decades, business planners have made a distinction between repetitive, lock-step processes, where very little variability is involved (think pharmacy), and more free-form, unstructured processes where a higher degree of variability is expected (think emergency room). Taking the abstraction of a process out of the world of chemistry, manufacturing, and logistics, and treating the people involved as so many chemicals, gears, or trucks seemed like a good idea in the past, but is not going to be workable, going forward.

We will have to devise a new, richer way to think about people’s interactions — via social networks — and our connection to mechanical processes and devices. In effect, we will need to model work with two layers, one where people are communicating with each other in a very fluid and flexible way, and machinery communicates with us and other machinery in less fluid ways. Some of these communication paths will be very limited, like a copier blinking to represent it is out of paper. But increasingly, even machinery is becoming much more communication-rich, and the way that machines respond to the world is surprisingly humanlike: coke machines that signal their internal state, like temperature, and the fact that there are only two Sprites left, or cars that will automatically start to brake if they sense no hands on the steering wheel.

More importantly, the customers in the emerging social world will have new expectations about their role in business ‘processes’ and may be significantly less willing to be treated like pigeons pecking at levers in exchange for pellets.

One way to think about the business of the future – where these learnings are taken to heart, and have profoundly influenced the contours of work – is that in the future business will be more like a city than a machine, more of a liquid than a solid.

The boundaries of businesses will be more diffused: it will be hard to say exactly where a business ends, because of loose and shifting integration with other groups, freelancers, and customers. And internally, businesses will seem like marketplaces, with people cooperating and competing for resources, making deals and agreements, exchanging goods and services, building up and tearing things down, and lots of comings and goings. The edge of businesses will be where value is created and delivered.

And bigger businesses can scale from these activities, a fractal sort of scaling, where the same sorts of organizational principles are at work in the large and in the small, Which is how most bottom-up things work.

As in an city,

professional reputation will be more important than titles, connections more important than rank, and authority will be derived from connections not control.

I have written a great deal recently about these trends (see Liquid: The Mobile, Social, Connected, Webbed World) and I will be writing a series of long form essays on the media, business, and social implications of this tectonic shift.

Register here for more information on this project.

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