ESSENTIAL BALANCES

BOOK

ESSENTIAL BALANCES is about understanding how organizations work, for diagnosis and design, below and beyond models, metrics, and methodologies. It reveals the fundamental principles of organizing for organisms, organizations, and society.

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Essential Balances

 

Contents

Foreword by Luc Hoebeke
Introduction
    Organizing
    Measuring
    Prescribing
    Glasses and habits instead
    The Three Essential Balances
    Who is this book for?
    How is this book written?
    Notes

1. Autonomy and Cohesion
    From plants to organizations
    Autonomy in organizations
    Capacity, Decisions, and Adaptability
    Cohesion
    Factors and Tools for Cohesion
    Nested Autonomy–Cohesion balances
    Summary
    Notes

2. Stability and Diversity
    Three-in-one
    Stability . . .
    . . . and Diversity
    When Stability is bad
    When is Diversity bad?
    Summary
    Notes

3. Exploration and Exploitation
    Allocation of resources
    A broader understanding
    Seeing Exploration
    Exploration and Exploitation in space
    Exploration and Exploitation in time
    Enabling Exploration
    Looking at yourself looking at something
    Summary
    Notes

4. Stimuli and Responses
    Melons, lemons, and cherries
    It’s everywhere
    A closer look
    The Essential Balances seen as variety balance
    Requisite Inefficiency
    Summary
    Notes

5. Productive Paradoxes
    Boundary
    Communications
    Decisions
    Productive
    Summary
    Notes

Epilogue
Acknowledgements
References

Excerpts

This book is about what makes organizations work, what it takes to see when they don’t work, and how to ensure they do when the environment is complex and unpredictable.

This book is also about balances.

When our meal is not tasty, we add salt. Just enough. If we add too much, it’s not tasty again – but in a different way. We maintain these kinds of balances with ease, and without thinking, in our daily lives, but we are not so good at seeing and maintaining balances in our organizations. This book is about acquiring that skill.

Why is this important?

We depend on organizations and on how they are organized. People spend most of their lives working in and with organizations. We are coupled with organizations. So everyone is happier if our organizations work well. And for some, it is their daily job to ensure that.

To be coupled with organizations means that we are mutually dependent and we co-adapt. But humans and organizations have had different starts on this planet. We humans have been around for millions of years. Organizations are much younger. They started appearing just a few centuries ago. No wonder that while in society, we advanced to the level of democracy, most big organizations have only reached the stage of feudalism.

Indeed, what we call organization is young. But if we look not just at those that are organizations, but more broadly at things that have organization, we can accelerate our learning. And there is good and bad news.

It turns out, things that maintain their own organization have common ways to deal with environmental challenges. The good news is that we can learn from millions of years of evolution. But how can we grasp so much and access it in a way that’s useful and usable? What I find fundamental, and yet largely ignored, are three essential balances. They are common for organisms and for organizations, and they don’t depend on the size or whether organizations are hierarchical or flat. New business models and new ways of working don’t change the importance of these balances. That’s also good news.

The bad news is that although the balances are common and only three are essential, there are infinite ways to maintain them. We can find retrospectively what worked, but we cannot prescribe it. We cannot extract best practices and develop methodologies. We can instead train our eye to see patterns and recognize trends before they become big problems.

But organizations can go out of balance in ways not experienced before. Then it is equally important to work on thinking habits and skills that we’ll need to invent new ways of restoring the balance.

 


The Three Essential Balances

Autonomy and Cohesion

The first balance is between autonomy and cohesion. If there is not enough autonomy in an organization, it will not be effective, it will not adapt quickly, and it won’t be resilient. But if there is no cohesion, the organization will not be efficient. It will grow silos. They will pursue their own continuation and growth at the expense of the organization.

Autonomy and cohesion need to be balanced at various levels. As “level” is a spatial metaphor, it implies hierarchy. That’s not the intention, and hierarchy is only a special case. These levels are not arbitrary. Each level refers to different scales of organizational identity. That’s why the balance between autonomy and cohesion (and the other two balances) works in both hierarchical and non-hierarchical organizations. They do it in different ways, but once you have the habit of using the glasses, you’ll be able to see how they do it and when they don’t. You’ll be able to see that things that seem different, such as meetings, mottos, complaining about the weather, rules, and language, actually play the same role in the context of the balance.

All organizations need autonomy for all their immediate effectiveness and long-term viability. By “all”, I mean also the organizations within an organization: teams, projects, programmes, units, departments, and subsidiaries. At the same time, there should be cohesion so that the organization does not disintegrate, so that it conserves energy by not duplicating efforts, by economies of scale, and by synergies. The focus will be on the organization, but the importance of that balance does not stop at the personal or organizational level.

Beyond the organizational level, autonomy is exercised as freedom of market initiative and action, and cohesion is manifested as market coordination and regulation. Various ecosystems maintain this balance. Sometimes autonomy and cohesion even enable each other. For example, the World Wide Web provides the autonomy to share and get information, which is enabled by the cohesion from using the same standards for network protocols and markup languages.

Autonomy is needed at the personal level for individual action. The more freedom there is to choose how to do what needs to be done, the higher the chance it will be done well. Autonomy is balanced by cohesion forces. Some of them originate from the individual, such as the need to belong to a social group or to maximize self-esteem. Others originate from the team, which has its own cohesion concern. The cohesion forces work not only between people but also within individuals. One example of such a force is what we commonly refer to as personal integrity; another comes from the personal ability to deal with multiple tasks that are competing for time. Habits, emotions, and social identities are cohesion forces too.

Stability and Diversity

The second balance is that of stability and diversity. It can be seen as three balances, one for stability, one for diversity, and one where they depend on each other.

Stability in organizations is dynamic, yet viable organizations have the ability to maintain it and to re-establish it when it is disturbed. When valuable people leave, others are recruited. When market share shrinks, new services are added, or new markets are explored. When a competitor uses and benefits from a new technology, it is adopted, or a better one is found.

Occasionally, organizations are disturbed in a way not experienced before. Then, stability can only be restored using novel means. If what has been tried hasn’t solved the problem, there will still be many more choices that haven’t been tried. No matter how much we think we can predict, we can never know which will work. Hence the need for diversity. It could be a different kind of diversity – people, ideas, or experiments.

Stability is not always a good thing, and neither is too much diversity. Organizations enjoying long periods of stability tend to develop organizational atrophy, hyper-efficiency, and blindness. Their ability to respond to changes is toned down, as well as their innovation capability and market sensitivity. At the same time, too much diversity can cause an unhealthy level of internal conflict and complexity.

Exploration and Exploitation

The third balance between exploration and exploitation is, at first glance, a resource allocation problem. Should you exploit a resource, refine a technology, and extend the offering to existing clients? Or should you look for alternative resources, new technologies, and explore new markets? It is equally a viability problem. An animal needs to eat (exploit) to have the energy to look for more food (explore). A company needs a flow of resources now so that it can finance research and innovation to ensure its viability in the future.

Organizations tend to over-exploit and under-explore. Why? Because the expected results from exploitation are usually known, while the potential results from exploration are always unknown. There is certainty and immediate return from exploitation. Exploration is prone to fail and difficult to defend. That’s why it needs more attention.

The three balances are related. Exploration requires more autonomy and diversity. Exploitation can be achieved when there are coherence and stability.

Growing the habit of seeing these three balances in completely different situations and at various scales is useful on its own. But it gets even more compelling when they are combined or when you use one pair of glasses to look at yourself looking at something using another pair of glasses. This ability is further enhanced by the generic balance between stimuli and responses.

At the end, there is an extra pair of glasses, through which organizations look like a network of paradoxical decisions.

 


 

Who is this book for?

The balances described in the following chapters are essential at the individual, organizational, and societal levels. The focus of this book is on the organizational level. Even so, there will be plenty of examples for the other two. Learning to see the balances at the individual level is important for maintaining the habit, as we have ourselves handy at all times. Seeing the balances at the societal level also contributes to honing the skill, for some phenomena are more visible there than at the organizational level.

Since the balances work at all three levels, this book might be useful for everyone. But as the focus is on organizations, it is more valuable to those of you who work in, or with, organizations. For example, if you are an individual artist, general practitioner, or a sole trader, it might not be as useful to you as if you are a manager, consultant, or entrepreneur.

Here is a list of roles for whom this book should be of highest value:

  • Managers at any level, from team leaders to CEOs
  • Human Resource managers
  • Change Agents
  • Governance professionals
  • Enterprise Architects
  • Project managers
  • Business analysts
  • Organizational Consultants
  • Coaches
  • Business process optimization experts
  • Policy officers in the Public Sector
  • Boards of directors
  • Strategy advisers
  • Entrepreneurs

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See also ESSENTIAL BALANCES, the workshop.