Loyal customers do more than keep us profitable and provide invaluable feedback. They give us perspective and purpose.

Mr. Zane, CEO of Zane’s Cycles, a $15 million dollar a bicycle business in Connecticut, and the author of Reinventing the Wheel: The Science of Creating Lifetime Customers,explains how his firm strives to create lifetime customers, and why it is important to culture and branding.

“These types of relationships are not easily formed nor are they formed overnight. They require exceptional care, attention, and a focus on continuously exceeding expectations. At Zane’s, where we have chosen to compete on service rather than on price alone, it means providing unparalleled customer service. We can never accept an unhappy customer, nor look at unsatisfied customer as an inevitable part of doing business. This method goes beyond the mindset of making an unhappy customer happy or simply matching the offers of our competitors. Creating lifetime customers requires that you offer every customer or potential customer more service than they consider reasonable. Further, it means that you actively solicit customer feedback about what you could be doing better and use that information to expand and tweak your offerings to best service the customer.”

Reinventing the Wheel: Creating Lifetime Customers
Chris Zane
Wed, 05 Oct 2011 15:00:00 GMT

But no matter what brand is nurtured, every firm needs at least some lifetime customers. And the reason is simple and goes beyond segmenting, profiling, feedback, profits, loyalty or any other traditional business and marketing concepts; it gives the firm perspective.

Customers for life

Perspective

Perspective is not the same as segmentation or profiling. Sure, we hope that our best customers are our most profitable customers, and also in the customer segment that we are targeting. If they are not, we have cause for at least some introspection and even concern. In fact, if your most loyal customers are loss leaders, there is more than just cause for concern; the whole business proposition is in question. But perspective is more than that. Lifetime customers can give us a viewpoint that goes beyond feedback, in the same way that advice from your best friend is more than feedback from your neighbor. Perspective from a lifetime customer implies honesty and closeness with just enough distance between you to let in the sunlight. Perspective frames accomplishments and errors. Perspective encourages humility. Perspective is as important as a thousand impersonal surveys.

On a related note, a firm I know sent its senior executives to meet customers 2 days a month, chosen by local branch offices. The customers were of all sizes and profitability, some happy, some disgruntled. I thought it was one of the most effective and inspiring programs they ever enacted.

Belonging, purpose and organizational structure

Lifetime customers

Relationships that ripple outwards compound security and belonging, a sense of purpose, and increase learning curves and bolster self-esteem. See more about Belonging from Maslow. The benefits of an ever widening circle of friends and contacts are endemic to our social instincts for good reason. We avoid the drive to connect to our detriment. Think of it as an experience in prolonged and challenging stimulation. And that sense of belonging is just as important to organizations and teams as it is to individuals.

Recommended Reading: Customer Loyalty: How to Earn It, How to Keep It Jill Griffin Most books in this genre, like most business management books, are ‘feel good’ stories with little practical advice to recommend them. Griffin hits the sweet spot here.

The Open Source model continues to confuse and frustrate theorists and managers alike on exactly where its strength lies.  What is its ability to innovate and provide lasting value in the marketplace?  The success of Linux, Apache, Perl and other software projects poses a conundrum to management science, economics and social scientists in general, threatening to overthrow their carefully constructed apple carts.

Free obscures the paddling under the water

Aurora 224 2ch Open Source DJ Mixer

It is surprising to see so many experts befuddled by impassioned entrepreneurs that rally around a cause and forge a future. Settlers in any number of cultures have been building churches, post offices, jails and garbage dumps long before any government took over the task and began directing them about its timing, zoning and purpose.

Do not get the wrong idea that the above examples mean open source equals community service, or is antithetical to profit. But the lack of payment has confused the discussion.

What those examples teach us is that free association is a pervasive one. We could also use examples of multiple suppliers enjoining to form a firm, but the problem there is the opposite one; people are confused by the seeming profit motive rather than the rallying motivation based on common interest.

What are the strengths of hierarchy?

To get to the heart of the matter, Open Source advocates could argue very forcibly that governments have done a worse job of managing cities than their unorganized fore bearers did. In fact, the management of complex and open systems is well documented and miserable. It is very difficult if not impossible to do, and it becomes the issue in conservation areas, large parks, global warming theories, and city planning.

Large organizations with command and control hierarchies would do well to consider these and Open Source examples and learn from them. If upper management’s first fiduciary duty in large organizations is to do no harm, their long term track record is abysmal, primarily because bureaucracies assume permanence and entrench it with structure and inertia.

Part of the strength of Open Source is that since it has no bureaucracy, it is inherently adaptable. One could say it listens well, but that is an inherently hierarchical statement. It does not listen as much as it communicates what it finds since the members are both employees and customers, to use the vocabulary of the firm.

Self-organization and peer selection

Perhaps we are all too jaded to realize the power of self organized, engaged peer production. Perhaps we are all so accustomed to being herded and shepherded and organized from our first hours in kindergarten through decades of passive rote memorization and then structured Taylorean work places that we have forgotten that self initiated collaboration is the natural human state of affairs. Perhaps we have intentionally impugned competition for so many decades that we can no longer identify it when we see it.

The simple fact is that auto and peer selection is more accurate than supervisor allocation, and that engagement and creativity are bound with mastery and purpose, not obedience. Did we need social science experiments to prove that job performance is a function of both ability and motivational or dispositional factors, and that self-selection inherently favors the confluence of those functions?

The concept of self-selection is under-emphasized in the discussion of Open Source. As Eric Raymond says,

“…contributions are received not from a random sample, but from people who are interested enough to use the software, learn about how it works, attempt to find solutions to problems they encounter, and actually produce an apparently reasonable fix. Anyone who passes all these filters is highly likely to have something useful to contribute[1].”

That is a great deal of filtering, and arguably more effective than any hiring process. The cognitive effect on motivation of all that work hardly warrants mention. And coupled with peer selection, we have a hugely powerful foundation that is difficult to duplicate in a hierarchy without getting seriously out of the box.

Redundancy as a feature

Raymond also coins the ‘Linus Law’ which makes another fundamental point that most analysis of open source misses; “Given enough eyeballs, all bugs are shallow.” What he means is that the comparatively large number of programmer / debuggers makes what traditional programming finds difficult quite easy; each programmer tends to have their own perspective, thus increasing the probability that a bug will be matched to existing expertise to solve it.

There are fundamental lessons here for management science. First, it reinforces the concept of multi-disciplinary teams and specialization structured around a common purpose. Second, it portrays the strengths of complex systems; adaptability and emergence as a construct of self-organizing redundancy.

In traditional processes and hierarchies we tend to think in terms of efficiency which requires simplicity which demands single process points. Simplicity is efficient. But it struggles in the face of adversity. And it utterly fails when it faces novelty because it can not respond. Open source structures thrive on redundancy. They count on it.

Another key to the Linus Law is that someone characterizes a problem, and someone else understands it and answers it. Interestingly, most people agree that identifying the problem is the more difficult of the two sides of the coin. Here again, the answer is redundancy.

Communication as a role, not a management trait

As to structure, Open Source is not just a group of people jammed together willy-nilly. There is a great deal of method to the madness, with a core group of ‘halo’ developers that take on an organizing role which keeps overhead low. Hierarchical organizations tend to promote information aggregators; some organizations see it as a key management trait despite technology’s growing ability to automate most of the function. In Open Source, there is never confusion about roles because there is no hierarchy to climb.

Emulating complexity and scale free networks

But the central message regarding open source must return to redundancy. Innovation even in group projects revolves around the concept that design, enhancement and perfection are iterative, and occur in parallel spaces. That is a feature, not a bug.

Exploration loves connected duplication and diffusion. Communication is central, allowing chunky adaptations and almost immediate exploitation. What hierarchy views as waste, open source views as essential.

What is engagement?

To conclude, we return to the example of free association, where the Amish build a church or barn. There is no commander or middle management shouting orders or allocating resources, or motivating the troops. Like an ant colony, each person finds a place to contribute and does so. There is no queen or strategic CEO imparting vision or developing execution capability for the well being of the project or the organism. And even without the benefit of technology, the Amish will put up a barn as fast or faster at less cost than any group of construction workers similarly equipped with charts and plans and cranes and managers.

To be fair, the gist of the above paragraph may be too broad; a barn is a simple construct. But certainly no hierarchical organization can inject the same ‘empowerment’ or ‘engagement’ from the top down as a self-selected team working to pursue their passion. How then, does an organization imitate that? Actually, quite easily if one turns the question on its head.

On the other side of the coin, there is a great deal of useless information generated on the Internet by thousands of people working together. That may not be open source per se, but it is freely associated creative destruction, and the point is that bad ideas naturally degrade into nothingness in the unregulated, unmanaged atmosphere of the Internet, measured only by use, than under a government or managerial hospice nurtured by heroic egos and coalitions of inertia.

Inherent cognitive dissonance of hierarchy

The concept of Open Source embraces the idea that people, free of censure from superiors and the very explicit threat of a pay check, almost immediately become more engaged. And once engaged, peer pressure acts more effectively than any command and control structure.

The lessons learned from Open Source are not just of collaborative software. The primary lesson of Open source is that the benefit of hierarchies remains elusive, and their systemic tendencies of failure avoidance and permanence are rarely compensated by direction, execution, and vision, if they were ever strengths at all.

[1] Eric S. Raymond, The Cathedral & the Bazaar: Musings on Linux and Open Source by an Accidental Revolutionary, 1st ed. (O’Reilly Media, 2001).

Cathedral and the Bazaar  Eric S. Raymond

Here Comes Everybody: The Power of Organizing Without Organizations  Clay Shirky

Change management’s failure rate is 70%[i].  Since these are reported figures, actual failure rates are likely higher.  It is a despairing percentage  given the vast effort and research by thousands of public and private management and social scientists.  After this article, you will understand why the continued failure, and what you can do about it.

Research chronicles change

Change management remains a popular field; hundreds of millions of dollars change hands each year along with a continuing line-up of publications, books and speakers.  Balogun does a good job outlining the various cultural issues an organization inevitably faces in effecting change, and for that reason alone her book is worth adding to your bookshelf.  After all, change is fundamentally about changing people, not organizations.

But there is the first issue with most of the change management literature.  It chronicles steps and variables, all eerily akin to Kubler-Ross’ 5 stages of grief outlined in her book On Death Dying, that change encapsulates.  That is not a coincidence.  Any significant life change is likely to produce a combination of those reactions; humans are emotionally attached, especially to their habits.  Change management literature would benefit from the rich literature surrounding grief and longing.

Even so, much of change management literature fundamentally misses the point.  It describes the symptoms.  It does not treat the cure.  The fundamental issue with change management is that it performs surgery on the sniffles while the virus runs rampant.

Size matters

To illustrate the core issues with change management, remember that not all change is created equal.  Small organizations have a drastically better chance at effecting change than large ones, just as small groups in large organizations find it easier to change than large groups.  And although this intuitive truism is addressed in change literature, it does not form the basis of fundamental constructs in change management even though it points to the solution.

The reason it is easier to change small groups is simple.  They are us.  It is stratification and separation that defines the challenges of change management.  It is the study of prescription by the doctor.  But it is the patient that is sick.

Regardless of the approach taken to effect change, every one of them has two focus points; how to lead or communicate change, and how to coax associates into internalizing and accepting it.  This issue is obviously mitigated in a small group where the change instigator is already part of the group.  Their continued presence and influence is felt every day in every aspect.  In this fundamental sense, the leader is no longer the counselor.  The group is changing itself even if the change is instigated by only one member.  After all, is that not how all change begins?

Internalization and self-organization

In the end, no one can force change on anyone.  No counselor can enjoin or coax acceptance on a grieving widow.   No parent can force a teenager to internalize a love of reading.  There is no secret process wherein a CEO can lead a sub-group to fundamentally change their attitudes and processes.  In the end, change comes from within.  “You can lead a horse to water, but you can not make him drink.”

This then, is the fundamental issue with change management, and none of the literature proposes a practical solution to that problem other than refining the methods and processes of guidance, counseling, leading, and generally coaxing the horses.  But there exists an entirely different solution.

How to succeed at change management

Of course counselors, leaders and change agents are fully aware that it is impossible to force internalization.  The individual and the group must choose to change.  And the challenges of internalization rise exponentially in group settings; resistance is more easily buttressed.

The literature exhausts itself in methods to empower the group to internalize and change on their own.  This concept is not new.  But the derivative of that concept remains for the most part unexplored; it is the hierarchy itself that prevents the change.

Hierarchical structure is the issue

For relatively large groups that span departments and hierarchies, the chances of successful change drop precipitously.  The answer does not entail refining the process of counseling or leading change.  The answer is to collapse the hierarchy so that the group sees itself as a group with a common issue.  If forming a multi-disciplinary team is impossible, then successful change is highly unlikely.

Notice there are prerequisites.  If the group does not readily acknowledge an issue, then continued communication and leadership is unlikely to convince them, and there is little point in continuing.  If the survival of the organization is at stake, then we suggest an entirely different approach.

Second, the team must feel empowered and self-autonomous.   That is, its leaders must be part of the team on a continual basis.  And the major elements of the solution to said issue must be found within the team.  In other words, the team must exert control over themselves along with the tools to solve their challenges.  These prerequisites are simple requirements for any team to internalize its own issues and resolve them.

If the team does not have self-organizing authority, or requires significant aid through the bureaucracy, internalization decreases and success rates drop.  Empowerment in these cases is an inadequate word.  Actualization is a much better one.

Model 21 G.M.C. Change from chain to bevel drive. Dolly Var... by New York Public Library, on Flickr

Change and complexity

An organization is not a staid hierarchy or bureaucracy that sits in equilibrium which from time to time is prodded into action or change.  This model appears accurate only because significant change seldom occurs and so organizations appear to be statist.  It also appears accurate because the hierarchy itself represents equilibrium and permanence.  In that respect, the hierarchy is misleading and an impediment to the organization.

For organizations are not a staid set of processes and departments.  To the extent that they believe so, they become brittle and arthritic.  Rather, organizations are organisms, continually adapting to their environments, even if in jumps and starts because they are artificially frozen in place by their hierarchies.

The key to change management is to restructure (consistent with culture and purpose) so that the organization sees itself as a continually adapting self-autonomous organism that can and does instigate incremental change whenever circumstances warrant.  Teams then voluntarily undergo incremental adaptation for the most part internalizing their needs as they go.  The organization then adopts a self-instigated evolutionary approach to change, a constant adaptation to internal and external environments.  In scientific terms, we are introducing complexity.  In psychological terms, we are nurturing actualization through structure.

Critics may decry the impracticality of this approach.  To anticipate the foremost of these objections, the implications to the hierarchy are not nearly as revolutionary or anarchist as imagined.  The small 50 person firm with a traditional hierarchy (based on function) in most cases already forms a good model; embedded leadership, little or no departmental barriers, and group and team autonomy.  Second, the hierarchy does not need to disappear as much as change their roles; away from iron bound direction and towards facilitation, coaching, and expertise.  Think resource librarian or functional expert as opposed to counselor or supervisor. Imagine a celebration of discernment and self-autonomy as opposed to hierarchically mandated process.

As always, the implications are organization dependent, which is why we recommend Balogun’s book below, and once instituted, become eminently sensible.  Some of the best run companies in the world are already managed in this way, and their success has often forced a restructure of their industries.  Such has been the effect of their influence and profitability.

In summary, we do not need a more effective rider; we need to free the horse to approach the spring whenever they are thirsty.  The answer is not a better doctor; it is a more actualized patient.  Structure the organization so that change is and does occur as a normal course of doing business, instigated and managed by the teams that perform the work in the first place.  That is what is really happening anyway.  Why not structure the organization to help it to happen? Now the patient becomes the self-directing master of their own health. The responsibility, the direction, and the ultimate success is inherently internalized by structure.

Something else will happen in such a hierarchical structure.  The organization will immediately become more creative and efficient.

Reading on improving change success rates

[i] Julia Balogun et al., Exploring Strategic Change, 3rd ed. (Prentice Hall, 2008).

Exploring Strategic Change (3rd Edition)  Julia Balogun

An article in the McKinsey Quarterly describes the practice of ‘Knowledge brokering[i],’ wherein organizations gain product and process ideas from other organizations outside their competitive space. It seems this ‘open source’ (why obfuscate this term?) approach must meet certain parameters to be effective:

• Define the issue or problem at an appropriate level. If the challenge is too complex, outside sources will not have the context or experience to solve it. One of the methods to accomplish this task is to break the issue down into separate, discrete parts.
• Evaluate potential brokers. Concentrate on industries where the context free issue is prevalent and success depends on successfully dealing with it. The example given is where a bank suffering long customer lines approach a Disney theme park manager, a grocer, and a traffic expert.
• Engage the whole team to listen to the broker’s story, inspiring questions, new contexts, and breakthroughs.
• Develop a plan of action.

This consulting trend is at least partly inspired by another trend named ‘design thinking[ii],’ popularized by the folks at IDEO, another consultancy firm.

Meet the New Boss, Same as the Old Boss

The folks at McKinsey have done a good deal of work on the concept. After all, why re-invent the wheel? This article suggests that knowledge brokering, far from being an innovation strategy, is just good organizational structure.

On the contrary, the concept is more fundamentally understood if we view it as a systemic organizational approach rather than a new process to plaster over existing functions. And integrating key external relationships into team organization charts produces additional benefits than solving the latest challenge. It benefits from organizational support, and if one takes the proper stance, the relationships produce synergistic and emergent properties.

Begin with Actualization and Belonging

Maslow taught us the ingredients of an actualized individual. His Hierarchy of Needs is one of the most recognized psychological constructs outside the discipline. Any team or organization hoping to function at optimum levels must address that hierarchy or remain deficient in some aspect. Therefore all organization structures must actively design those components into their structures, or forever fight the deficiencies that ensue.

One of the pillars of actualization is ‘Belonging,’ which implies close ties to family and friends. In the organization’s case, those ties would be team members and intra-departmental contacts.

But belonging is much more than that.  Actualized individuals gain contacts and respect from a wide variety of constituents outside their immediate field of influence or expertise. Their contacts provide them with affirmation, ideas, direction and access. Sound familiar?

Implications for Brokering

Maslow’s definition of Belonging is the underlying premise of brokering in organizations. It implies that external connections are more fruitful if at least some of them are deep and lasting.

We all understand the importance of a wide swath of social networks in the development of our own personalities and careers. They not only provide us with self-interested access to opportunities, they provide us with balance, and hopefully mentors from a variety of life experiences and approaches. They imply the rich and fruitful product of diversity. They imply a symbiotic and synergistic relationship that is beneficial to all involved.

On a related note, some companies encourage a percentage of ‘personal’ or ‘undirected’ time to innovate and experiment and explore. We speculate that this practice is often just another aspect of encouraging a connection of non-work relationships and thoughts; another form of belonging at work. An issue does not have to be pressing or urgent for solutions to arise.

Like individuals, all teams and organizations (any group with a purpose) benefit from a well developed sense of belonging in a very broad range. It is an integral component of their structure just as it is integral to any individual’s actualization. And like any organizational component or functional expertise, it benefits from formal development and nurture by team and hierarchical support, viewed as an organizational extension of the team itself.

The Complexity Approach

Key components of scale free networks are connections to other nodes.

Likewise, complexity theory[iii] supportively stipulates that emergence or adaptability in any organism or system must by its nature include external nodes or vertices. It is this property that nurtures new associations and connections.

These connections often threaten the concept of context. Emergence is very often the product of tenuous and often previously unconnected strands of information. Therefore the ant many times forages in what seems to be unfruitful ground. And yet its exploration is directed. It stays out of the water. It returns to established, previously covered ground as well as venturing into new territory. And like any actualized individual, it communicates its discoveries and stories with its comrades, their collective information forming a cohesive whole which eventually bears fruit. This is assuredly the same ‘aha!’ moment for them as it is for extending teams.

As another example, the Internet is a scale free network (a complex system’s structure) of web pages, linked tenuously at best through links and semantically associated tags. Any dedicated web surfer knows that following those links is a major source of inspiration and therefore innovation. A website aptly named Stumbleupon gains its popularity based on this emergent phenomenon.

Implications for Brokering

Optimal organizational structures that exhibit emergent properties are cascading scale free networks that conform to power laws. It is mathematically impossible to develop an effective, emergent complex system within the confines of one’s own organization; the network nodes are already too closely connected.

The properties of emergence demand all teams and organizations formally cultivate external clusters of networked connections in order to facilitate emergent exchanges of ideas, culture, spirit, approaches and ‘breakthroughs.’

The implication is also that the connections are more persistent and involved than the Knowledge brokering article implies. This thought makes much intuitive sense but is also proved in available research.

Additional observations

Knowledge brokering highlights the synchronous similarity of both complexity and psychology to predict effective organizational structures.

The disciplines also imply that external relationships for teams and organizations have a broader benefit than meeting particular business challenges, although that is certainly one product of the connection. But seeing the relationship through this lens arguably limits the full advantage of the construct as more intimately defined elsewhere.  The full range of benefit of networked connections is only gained when context is challenged and the seeker takes on an exploratory stance.

This article implies a much deeper inspection of what those implications are and how to implement them. For more information, contact Jim Leis.

End Notes

[i] Corey Billington and Rhoda Davidson, “Using Knowledge Brokering to Improve Business Processes,” Consulting, McKinsey Quarterly, January 2010, https://www.mckinseyquarterly.com/Strategy/Innovation/Using_knowledge_brokering_to_improve_business_processes_2512?gp=1.

[ii] Andrew Hargadon and Robert Sutton, “Building an Innovation Factory – Harvard Business Review,” Harvard Business Review 78, no. 3 (n.d.): 157-66, http://hbr.org/2000/05/building-an-innovation-factory/ar/1.

[iii] Jim Leis, “Complexity,” Leis Network, July 19, 2010, http://www.leisnetwork.com/science/complex-systems/complexity.

The outmoded centralized mainframe model is a good analogy for organizational trends. Managers continue to learn that centralization and control surrounded by robotic job descriptions may economize keystrokes and mechanics, but fall short in the much more important spectrum of decentralized, networked discernment where innovation, adaptability and peer pressured ethics flourish. 

They put a man on the moon with IBM 7090s

Centralized software systems struggle to efficiently understand that Mary (the customer’s bookkeeper) runs payables on the last Friday of each month, and that sending out a faceless, automated late notice to her firm only engenders negative vibrations.   More importantly, the centralized system will never replace the local relationship of the firms’ two bookkeepers, engendered because they take their children to the same day care and most importantly, the emergent ideas they come up with over coffee on how they can work more seamlessly together. There is little future in centralizing payables if it takes an emergent agent off the field.  Ant colonies would never dream of it.  Neither would any adaptive, creative complex system.

Adaptation, productivity and self-actualization are local, just like evolving complex systems and markets. Lately large organizations have been leveraging that power by loosening their structures and providing safe harbor for movement, community, and activity. Everyone has the innate ability to innovate, create, fail, and adapt if only the rules allow it.  Given the proper combinations of elements, reliability and creativity can amplify together, much as reconstituted wood chips form a bond stronger than the original tree.

References

Photo courtesy of Library of Congress

The Maslow model is the subject of a great deal of research. What is Maslow’s Hierarchy of Needs? Don’t they describe human motivation? No; they form a list of physical, emotional, and spiritual needs that are not necessarily hierarchical as the celebrated pyramid implies, nor do they necessarily belong in a ranking order. [i] And they do not explain behavior, as Maslow himself has explained.[ii] Likewise, attempts to find relationships between satisfaction, success and attention have met with only partial success.[iii] These mistaken assumptions cause significant confusion, perhaps partly due to Maslow himself.  The usefulness of the Hierarchy is not in explaining human behavior, but in understanding the multi-dimensional, inter-causal nature of our existence.

Maslow’s Effect on Marketing

It is in marketing where Maslow’s Hierarchy revolutionized modern segmentation and advertising efforts.  It forever humanized marketing and sales as an experience and fulfillment of needs.[iv] Product marketing changed forever, from pushing product usefulness to advertising associative customer self-perception.  We market life styles and profiles now.  We associate products with needs and aspirations.  We demonstrate reputation and need fulfillment.

Foreign luxury cars, for example, sell the image of intellectual savers who value understated quality.  To reject the car’s appeal, one must reject the profile.  Never mind that some American-made cars equaled or bettered the cost/quality ratio years ago.  Reputation and perception changes slowly absent significant events.

As a result of Maslow, the advertising industry transformed itself to profile and survey potential customer segments, associating key self-perceptions with product inclinations.  Imagery and voice-over are similarly tested.  We are no longer marketing the product, but the motivations and needs behind the product.

While mass customization and adaptive logistics and delivery channels are effective sales and cost drivers, even targeted long tail marketing enjoys greater effectiveness if it remains squarely focused on character.

Structure: the other application

Maslow Hierarchy of Needs reconstituted

But Maslow has the potential to contribute more to the organization than just marketing campaigns and a more humanistic approach to employee development.  It defines essential elements in optimizing organizational charts and structures.  For we live in a world of complexity where we shall learn only through trial and error. Participation is central to living. Relationships define the essential building blocks of life. Emergence is systemic and co-authored.[v] What could be a more appropriate organizational structure than one which characterized adaptive, creative, well-adjusted individuals?

Organizations and Individuals

We are safe in comparing individuals with organizations since they are both sentient complex systems.  They are both organisms living in a complex world.    The fascinating observation is that if we inject components of actualized individuals into an organizational structure, we find that we have also injected the components of a complex system.  They are essentially the same.

Each perspective brings with it its own language and perspective, but the essential structure is foundationally identical.  What results is a quicker, more nimble and creative organization.  In the current language of management science, we immediately find increased empowerment, engagement, productivity and creativity.

In addition to utilizing more traditional methodology in improving businesses and their products and efficiencies, we find Maslow can spearhead growth and profitability in ways where those purely management perspectives struggle.

The above drawing is a symbol of organizational structure.  Contact me for execution and implementation methods that fit your culture.

References

Motivation and Personality Abraham Harold Maslow

Man’s Search for Meaning (4th Edition)[Revised & Updated] Viktor (Author); Frankl

Principles of Marketing (13th Edition) Philip Kotler

Endnotes

[i] M Wahba and L Bridwell, “Maslow reconsidered: A review of research on the need hierarchy theory,” Organizational Behavior and Human Performance 15, no. 2 (4, 1976): 212-240, http://psycnet.apa.org/?fa=main.doiLanding&uid=1976-26106-001.

[ii] Abraham Harold Maslow, Motivation and Personality, 3rd ed. (HarperCollins Publishers, 1987), 27-28.

[iii] Frank K. Gibson and Clyde E. Teasley, “The Humanistic Model of Organizational Motivation: A Review of Research Support,” Public Administration Review 33, no. 1 (February 1973): 89-96, http://www.jstor.org/stable/974790.

[iv] Philip Kotler and Gary Armstrong, Principles of Marketing, 13th ed. (Prentice Hall, 2009).

[v] Peter Reason and Hilary Bradbury, The SAGE Handbook of Action Research: Participative Inquiry and Practice, 2nd ed. (Sage Publications Ltd, 2007), 6.

Organizational Structure Alternatives

As organizations grow, the inevitable question becomes how to remain lean and mean? How do firms avoid a staid, bureaucratic future when adaptiveness and creativity spelled their success?

1. Especially in today’s world, one option must be to remain small. ‘Small’ in this context implies several alternatives:
   1. Give up growth. Notice for large holding companies this option functionally becomes identical to the one below.
   2. Refuse corporate overhead. Pushing support functions down to operating divisions implies duplication of effort and lack of synergistic leverage. But this strategy avoids the issues above leaving corporate management to a single minded focus on the organization, the benefits of which can not be over-emphasized. Notice this option often implies a preponderance of outsourcing.
   3. Limit complexity of the organization. Concentrating on very few products or services, or separating large functional processes allows the whole enterprise to understand the mandate despite hierarchical silos; there is less to learn. Unfortunately this alternative has a tendency to re-arrange the silos.
   4. As complexity of the holding company rises, create separate overheads in an effort to resemble 1.1 above. In practice this option means building all support groups at region, channel or product levels to control complexity and retain single mindedness of purpose. This option is nuanced in execution, and threatens confusion on many levels. Still, it is at least a theoretical possibility.
2. Add staff in constrained departments to keep up with demand. This is perhaps the most popular alternative. The foundational assumption here is that the department is already running at peak efficiency. More on this topic later, but notice that it does not fully answer all the issues outlined in the previous article, namely the isolationist effect of silos.
3. Allow constrained departments to outsource. This alternative provides some relief in that it may address the bottle neck issues, and it may goad IT to increase performance by introducing a competitor even while providing them with hiring candidates. The concern is that it requires yet another set of rules and regulations governing the circumstances where outsourcing can occur. And it threatens to cause friction between departments by disrupting team atmospheres (e.g., telling your doctor you’ve decided to choose someone else for your treatment) and requires further training of the third party.
4. The preferred choice is to permeate the systemic hierarchy altogether and embed IT professionals in the groups they support. If the IT professional supports multiple departments or profit centers, reflect it in your ABC accounting.

Benefits of Embedding Support Groups

Highland regiment organization, on Flickr

If innovation and productivity are goals, there are only two alternatives in the above list for the long run; refusing corporate overhead altogether and embedding Associates. No other options address all the issues. Embedding IT (and other support) Associates reduces bottle necks, increases cross pollination, innovation, and cross training.

Multi-disciplinary teams arranged by purpose or project or process develop content, cultural and team synergies with benefits beyond inter-departmental isolationist prejudice. Embedding increases the likelihood of quantum automation and productivity gains by reversing the stimulus response cycle outlined above. Since they are now intimately involved in the daily activities of the group, tech savvy professionals can initiate, prioritize and develop production improvements themselves.

Embedded IT professionals can also act as liaison with IT since they speak the language and understand the mini-culture if there is one. After all, IT is where they ultimately report although compensation incentives will reflect their new home and associated dotted line authority.

The value of this paradigm change can not be under-estimated. Consider a prevailing example. How many users in a given department are inefficiently maintaining duplicative manual databases or spreadsheets that a day of programming could negate? What are the ultimate costs to the system of adding surrounding manual complexity utilizing inappropriate talent to do inefficient labor? It ultimately threatens the organism.

Knowledgeable IT professionals bring almost unique abilities to increase productivity to operating team members given the technology tools available in today’s changing world. Programming priorities could easily change in 80% of an organization’s RFPs if IT more holistically understood the daily responsibilities and future challenges of its operating divisions.

Immersion of IT in the front lines also changes IT mentalities and culture. Too often IT has been rightly maligned for building systems that end up solidifying IT control and guaranteeing maintenance positions. Putting them in the teams themselves nurtures a more distributive and empowering view of development. Not only are they now us, there is no one left in the back office to do the work anyway.

Lastly, creative managers will notice this strategy is implementable without IT approval or C-level mandate; at last resort they can directly hire IT professionals into their operating groups. The risk here, depending on corporate culture, is departmental alienation by IT and in general as a consequence of implementing maverick actions.

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Manage IT Costs and Culture

Alternatives to Address Departmental Inefficiency

Metrics to Manage Informational Technology

Should Your Organization Program Enterprise Software

Individuality and Team Dynamics to Innovate

Creativity is not born in a boardroom or a meeting. Brainstorming is vastly over rated. There is nothing quite so laborious and ineffective as ten people sitting in front of a blank page, even if they have a goal in mind. When it comes to first ideas, it is more productive to allow one or at most two people to first produce a straw model. They are encouraged to obtain as much input as they wish, with the caveat that ownership of the kernel of the idea always remains theirs to develop. A straw model has at least fleshed out major headings, and preferably more than that.

The strength of a well informed, collaborative group comes after the straw model stage, where different viewpoints in a collaborative setting can innovate and critique a defined idea. As with all group and meeting activities, facilitation ensures the group remains controlled and focused. Especially in incubation periods, groups are susceptible to scope creep.

How does the Lightbulb go on?

Emotional Investment and Avoidance on Change

The human mind is extremely powerful and emotionally preservative. Only a very small minority of management groups acting alone and of their own volition change course during turbulent times, even when they’re on the verge of bankruptcy. This is a normal human response. Like the seven stages of grief, the first and most enduring emotions are shock and denial. Especially in emotional situations, it is inspiring, logical and helpful to seek specialized consultation. There is nothing wrong or embarrassing about it. It is actually the appropriate response given what we know about the human condition.

In an example closer to home, it is interesting to note average golfers’ reasons for not taking lessons. They also mirror the seven stages of grief, with embarrassment an additional factor. Virtually all of them are in contrast to the fact that professional golfers rely on trainers and coaches throughout their career. We are reminded of the male stereotype that refuses to ask for direction, preferring to drive around lost.

It is difficult to over-emphasize the value of emotionally detached feedback. Seeking advice or consultation does not mean you are mediocre or untrained or uncreative. It means you are intelligent enough to realize how emotionally difficult it is to critique yourself and be creative in situations where you are attached. Psychologists have psychologists, and PR firms often hire PR firms. It is an essential foundation of the idea of mentors.

If your organization does not employ consultation on a number of levels, it would be at least a helpful exercise to understand why you do not. You may well find your reasons are predominantly rationalizations of Shock (paralysis), Denial (Avoidance), Anger (Emote), Bargaining (way out), or Depression (realization of the issue but feeling alone or unique). Getting to Testing (beginning to seek) or Acceptance (finally finding the way out) with consultants jump starts the creative process and speeds up progression through the other stages(Kubler-Ross, 1997).

Tension between New vs Existent Products

The examples above also give us some idea of the psychological hill to be climbed when it comes to developing creative atmospheres in organizations that are already thriving. Even in failure, or abstract mediocrity, the human mind tends to balk. And original thinking both to create and re-engineer is first and foremost an act of destruction, with all the emotional and psychological inertia that implies.

Creative destruction has implications on existent programs, along with its attendant failures in their attempts. Occupationally, creativity must find safe harbor. It is illogical to ask Associates invested in current products or programs to create their own demise. It would be like giving tax dollars to oil companies in an effort to invent alternate fuel sources. There is a foundational and psychological reason Microsoft is not the driving innovator of web technology. Their priority and strength lies in preserving and optimizing existing annuities.

Existing product managers may be expected to actively participate in model revisions or re-engineering efforts rather than eclipses. Besides, in an era of change optimizing current revenue streams will occupy all of a product managers’ time, and define the organizational corporate culture. That is entirely appropriate, and a worthy occupation.

True creation is effectively accomplished in separate multidisciplinary project groups dedicated to the task. Notice we are explicitly describing a network architecture of specialized participants; not a silo approach with administrative and technical support ‘on loan’ or ‘on call’ from various departments. That traditional organizational structure inevitably leads to bottle necks and inordinate management intervention.

Separating new and existing functions has many benefits outlined below, not least of which is avoiding the cognitive dissonance and emotionality of destruction. If performed in organizations of considerable existent annuities, it may be necessary to occupy separate building and hierarchical space in an effort to divorce cultures and provide safe quarter. Reporting directly to the President is also a practical alternative.

10 Benefits of Creative Segregation

The benefits of separate and distinct development or ‘creation’ groups are immense. Notice that if separate accommodation is not arranged, and adequate resources allocated, the costs to the organization are the mirror of the benefits itemized below:

1. Nurtures the learning curve and specialization required for creativity and re-engineering, as well as the process of doing so. Separation means speed, production, and excellence. It also means less cost.
2. Measurements of current product management and creative investment is more accurate.
3. Encourages consistency and timeliness of deliverable.
4. Acknowledges workloads and priorities. While very small projects in maintenance positions may work, the emotional preference for the present over the future relegates even high priority projects down the list as the work day progresses.
5. Acknowledges the psychological difference between process requirements and projects.
6. Reinforces different talents necessary for detailed, repetitive work vs. project and creative work.
7. Allows different incentives between line and project work.
8. Creates safe psychological and cultural harbor by separation from existent product management hierarchy. Notice that reporting to the President or a suitable Senior Executive may be necessary if the organization is consumed with current annuities.
9. Allows a convenient and appropriate discussion for adoption or denial of ideas by the organization. Failure to approve does not mean failure of the work.
10. Provides a welcome berth and process for new ideas to aggregate.

Organizational structure or best practice is characterized by dedicated teams formed of varying number and disciplines depending on need supplemented from various organizational positions for exposure and training purposes. Detach the hierarchy from existent product management. Depending on the size of the organization, separate roving groups by specialization; re-engineering, product development, market enhancements, strategy development, etc.

Other Articles in this Series

Creativity

Practical Implications of the Biology of Creativity

7 Ways to Stifle Creativity and Innovation

My Personal Discoveries Exploring Creativity