The economics, structure, and behavior of platform ecosystems and organizations

In a 1996 article (!!!) -- The Irresistible Future of OrganizingMargaret Wheatley and Myron Kellner-Rogers debunk the metaphor of the business as a machine and open one of the earliest explorations of the business as a complex, living system: an ecosystem.

The accumulating failures at organizational change can be traced to a fundamental but mistaken assumption that organizations are machines. Organizations-as-machines is a 17th century notion, from a time when philosophers began to describe the universe as a great clock. Our modern belief in prediction and control originated in these clockwork images. Cause and effect were simple relationships.   Everything could be known.  Organizations and people could be engineered into efficient solutions. Three hundred years later, we still search for "tools and techniques" and "change levers"; we attempt to "drive" change through our organizations; we want to "build" solutions and "reengineer" for peak efficiencies.

But why would we want an organization to behave like a machine? Machines have no intelligence; they follow the instructions given to them. They only work in the specific conditions predicted by their engineers. Changes in their environment wreak havoc because they have no capacity to adapt.

These days, a different ideal for organizations is surfacing. We want organizations to be adaptive, flexible, self-renewing, resilient, learning, intelligent-attributes found only in living systems. The tension of our times is that we want our organizations to behave as living systems, but we only know how to treat them as machines.

We are still living through the ramifications of this wrenching transition, and it will likely take an additional twenty years for a wholesale transition to visualizing — and realizing — business through the lens of ecosystems, and the shift away from clockwork logic toward self-organization and emergent order.

The authors go on to identify what they considered the three conditions of self-organizing systems:

  1. Identity: The sense making capacity of the organization — The authors discuss the power of a coherent identity that helps individuals make decisions: 'Most organizing efforts don't begin with a commitment to creating a coherent sense of identity. Yet it is this clarity that frees people to contribute in creative and diverse ways. Clear alignment around principles and purposes allows for maximum autonomy. People use their shared sense of identity to organize their unique contributions.'
  2. Information: The medium of the organization — Wheatley and Kellner-Rogers quote Gregory Bateson and Stafford Beer: 'Information lies at the heart of life. Life uses information to organize itself into material form. What is information? We like Gregory Bateson's definition, "Information is a difference which makes a difference," and Stafford Beer's explanation that "Information is that which changes us." When a system assigns meaning to data, when it "in-forms" it, data then becomes information.' New information does not destabilize self-organized systems because they are geared for it: 'But it is information--unplanned, uncontrolled, abundant, superfluous--that creates the conditions for the emergence of fast, well-integrated, effective responses.'
  3. Relationship: The pathways of organization — 'Relationships are the pathways to the intelligence of the system. Through relationships, information is created and transformed, the organization's identity expands to include more stakeholders, and the enterprise becomes wiser. The more access people have to one another, the more possibilities there are. Without connections, nothing happens. Organizations held at equilibrium by well-designed organization charts die. In self-organizing systems, people need access to everyone; they need to be free to reach anywhere in the organization to accomplish work.' And out beyond the formal organization, to the farthest reaches of networked ecosystem participants.

Wheatley and Kellner-Rogers sum up their prescient 1996 post through observations regarding leadership:

If self-organization already exists in organizations--if people are naturally self-organizing--then the challenge for leaders is how to create the conditions that more effectively support this capacity. They do this by attending to what is available in the domains of information, relationships, and identity.

What do leaders do in self-organizing organizations? As their organizations move towards a mode of operating that seems to exclude most traditional activities of planning and control, is there a role for leaders? Absolutely. Leaders are an essential requirement for the move toward self--organization. This is not laissez-faire management disguised as new biology. Given existing hierarchies, only leaders can commit their organizations to this path. But their focus shifts dramatically from what has occupied them in the past. In our work, we have observed many of the pleasures and perils of leaders on this path. We also are aware of some of the siren calls that seem to threaten the resolve of even the clearest of leaders.

And the threats? First, the top-down, linear mindset that starts with a step-by-step plan toward self-organization. How much do leaders trust their employees? They state,

Leaders also must have confidence in the organization's intelligence. The future is unknown, but they believe the system is talented enough to organize in whatever ways the future requires.

[…]

The path of self-organization offers ample tests for leaders to discover how much they really trust their employees. Can employees make wise decisions? Can they deal with sensitive information? Can they talk to the community or government regulators? Employees earn trust, but leaders create the circumstances in which such trust can be earned.

Because dependency runs so deep in most organizations these days, employees often have to be encouraged to exercise initiative and explore new areas of competence. Not only do leaders have to let go and watch as employees figure out their own solutions, they also have to shore up their self-confidence and encourage them to do more. And leaders need to refrain from taking credit for their employees' good work-not always an easy task.

While self-organization calls us to very different ideas and forms of organizing, how else can we create the resilient, intelligent, fast, and flexible organizations that we require? How else can we succeed in organizing in the accelerating pace of our times except by realizing that organizations are living systems? This is not an easy shift, changing one's model of the way the world organizes. It is work that will occupy most of us for the rest of our careers. But the future pulls us toward these new understandings with an insistent and compelling call.

While I read Wheatley and Kellner-Rogers' A Simpler Way, and Wheatley's Leadership and the New Science over ten years ago, I have a feeling I would benefit from a close rereading of those works.


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