This is the fourth in a series of articles exploring the evolution of Organisations, from ‘Domain’ to ‘Dynamic’. In the early pieces we explored the origin and evolution of Organisations, how they evolved from an Industrial Age heritage, and built out the familiar hierarchy, structure, and mechanisms of effect that we see around us today. I introduced the notion of the Social Age, and the pressures that this exerts upon the older Domain structure, and yesterday discussed the tension between Codified Strength and Individual Agency. Today i am going to expand on a term i have used recently to describe the brittle hierarchy: the Porcelain Organisation.
Domain Organisations hold great compressive strength: through their systems and process, hierarchy and infrastructure, through their codified knowledge and institutional strength: through their great people, aligned to face a challenge that they understand well.
Through this series of articles, i have outlined how that challenge is changing, and the need for Organisations to adapt, at the level of their very DNA: not a ‘known change’ to thrive within a ‘known space’, but rather to change in new and novel ways, to adapt to a challenge that is not yet fully understood. The notion of the Porcelain Organisation is one that lets us explore that challenge.
A Porcelain Organisation possesses a great strength within that known space: ceramics are hard crystalline structures that can bear great weight. Running head on into competition, into known markets, within well understood regulatory and broader legal and financial structures, they are able to win. But hit from the side, they can shatter.
What does this force look like?
The forces of the Social Age that i outlined earlier are part of this: fragmentation of career (hence displacement of loyalty into emergent social structures), emergent community (hence devolved and rebalanced power between formal and social systems), diversified technology (hence weakening of formal infrastructure in favour of social moderated, owned, and trusted channels) etc. But there is more: un-modelled risk, ambiguity, asymmetric shock market fragmentation, and abstraction.
Our risk managed Organisations run on an assumption of understanding risk. And they often do, within the known space. But as Nassim Nicholas Taleb’s work has clearly demonstrated, it is the ‘unknown unknowns’ that kill us, and risk modelling is a remarkably arrogant exercise. Much of the true risk is held in things that do not feel ‘risky’ to a traditional Organisation. Look at Peloton, manufacturer of high end exercise bikes, that yesterday wiped 9% off it’s share value by tweeting a Christmas Ad that runs counter to the empowered women’s zeitgeist of the day.
Formal and hierarchical systems love certainty and kinetic action, but cannot abide ambiguity (i have previously shared my broad research on this in the writing on Black Swans and the limits of formal hierarchy). But it is in ambiguity that we may find the weak voices that we need to hear.
Asymmetric shock relates to the rebalanced power: the blows that rain down upon the Organisation may not be hard, in the normal sense, but can stun us because they carry a different type of power. Authentic action can shock the Domain Organisation.
Underlying markets, the very conception and concept of Domains, is being challenged by new connective and democratising technology: will notions of ‘financial services’, or even ‘healthcare’ survive, or be replaced by new organising principles? Many of our existing Domains describe utility, but we live in an age of experience.
Related to this is Abstraction, which i explored in a broader article last year on ‘modes of failure’: abstraction is where the market takes an existing packaged offering, and fragments it, extending the value chain, and abstracting the original player into irrelevance. It’s a slow death.
The attitude that many Organisations have is to change in known ways: they understand the evolved context, and need for change, but try to change on known terms, and often terms that preserve existing structure and power. But a Dynamic Organisation will be fundamentally evolved, which i will explore in subsequent articles.