S ince the railroads introduced them in the 1870’s, hierarchical organizations have dominated our economic landscape. They have shaped our thinking and behavior.
Now that is changing.
Open, loosely joined networks are emerging as significantly more important to creating value, accelerating innovation, and promoting sustainability.
But how do we design and guide open networks?
Many of the familiar approaches to management no longer apply. We are still in our infancy in developing new approaches to managing complex collaborations in open networks. But here are some rules that I have found helpful.
Rule 1: Form a core team with distributed leadership roles
In hierarchies we are fixated on the single leader and the skills of leadership. In networks, leadership is embedded in a core team. Leadership roles are both distributed and shared. Leadership responsibilities are passed from person to person within a core team, depending on the situation. Together, the core leadership team takes responsibility for a collaborative process to design and guide the network. To be effective, this process balances between open participation and leadership direction.
Rule 2: To accelerate, go slowly at first
We turn to networks and collaborations because we are looking to do more with less, to create the magic of 1 + 1 = 3. Yet, co-creating new value collaboratively takes time. It starts with the intentional development of individual relationships.
Here’s another departure from hierarchical thinking. In a hierarchy, achieving scale implies starting with a “critical mass” to achieve dominance or make a statement. Network thinking is different. Networks grow and achieve scale over time. To achieve scale and speed with networks, go slowly at first. Simplify, figure out what works, then accelerate by pouring in more resources.
Rule 3: Find opportunities by linking and leveraging assets
Networks sustain themselves and grow when members of the network continuously “co-create” value that they share. This step is not easy. It requires exploring different combinations of assets embedded within the network. The key skills involve both listening and spotting emerging patterns. By generating hypotheses about what members of a network could do, they take another step away from hierarchical thinking.
In hierarchies, members of an organizations are taught to pay attention to boundaries. In networks, boundaries matter less. They are not fixed. Effective members of a network focus on connecting assets across existing boundaries. As they connect more and more assets, the influence of the network grows. Thinking becomes more horizontal and less vertical.
Rule 4: Create coherence with visualizations and outcomes with success metrics
Designing and guiding networks can be complex, ambiguous and confusing. Coherence emerges when we look for patterns and start drawing relationships among different parts of a network. As we start seeing and understanding these emerging patterns, we feel more secure and confident about our next steps. We get a better sense of where we stand and where we might be going.
In hierarchical organizations, people defer to the vision of the top leader. In networks, coherence matters more. To share our understandings, visualizations — maps and drawings — work best.
Equally important, we cannot rely on visions to move a network. Too often, visions are too broad and too vague to move members of a network. Instead, in addition to coherence, effective networks need outcomes with clear success metrics. Only then can we communicate our outcome to others in ways that they can emotionally engage.
Rule 5: Adopt simple rules to design and implement strategy
Strategic planning, designed for hierarchies, is too complicated and costly to operate effectively in open networks. Traditional strategic planning evolved from logistics planning in World War II. By the late 1960’s, multi-divisional corporations were using strategic planning to allocate capital among different business units.
There’s a major flaw when we try to move these traditional approaches to networks. Strategic planning assumes a command and control organization. A small number of people at the top of the organization come up with the plan that the rest of the organization implements.
This approach does not work in networks, where there is no command and control structure. (There’s no top or bottom, either.) Instead, we need a strategy process defined by simple rules. As members of the network follow the discipline of these simple rules, they can develop remarkably sophisticated, practical and agile strategies.
Rule 6: Promote transparency, mutual accountability and success metrics
Here is another departure from hierarchies. In a hierarchic organization, information is closed, and accountability runs in one direction. In networks, information is shared and accountability is mutual. Transparency becomes the key element to support mutual accountability.
Here is another difference. In hierarchies, metrics are primarily used for accountability. We measure to make sure our subordinates are doing what we told them to do. In an open network, metrics play a different role. They are primarily for learning. We use metrics to figure out what works.
Rule 7: Embrace action and experimentation
Open networks survive and thrive through “learning by doing”. In contrast, hierarchies tend to be biased toward analysis and away from action. They grow to be risk averse. The hierarchy assumes that the future is knowable, predictable and relatively stable. Stepping outside the boundaries — innovating — runs against the stable patterns that the hierarchy defines and reinforces.
In contrast, members of a vibrant network know that the present is continuously shifting and the future is unknowable. They understand that, while they cannot predict the future, they can shape their options for future actions. But the only way to understand this complexity is to embrace it with hypotheses, action, and continuous experimentation.