Tight Networks, Loose Connections and the Rise of the Synchronized Organization

Managers used to worry about something called span of control. The concern was about what size organization provided the optimal range over which they could exercise command.

Until they realized that technological advances had totally inverted the power pyramid. Control was largely ephemeral, possibly irrelevant and arguably destructive.

Even if you could get it for short periods of time, control was the last thing you needed and probably the last thing you wanted. Not because operational efficiency and productivity aren't still important: if anything they have become more important.

No, the issue is simpler than that: the combination of globalization, financialization and technology have revolutionized the traditional profit-making processes. The capital markets are only going to reward you for the value they perceive that you add. If they believe that unnecessary costs and sub-optimal profits are the result of outdated notions and self-aggrandizement, well have fun re-reading The Man in the Gray Flannel Suit as you enjoy early retirement.

The fact is that sharing risk and opportunity through networks and connections is the means by which most organizations and the individuals who power them can lever whatever assets they possess in order to maximize their impact on outcomes that matter to customers, investors, employees and suppliers. The network may or may not be the computer, but it is the channel, the media and the platform through which success is generated.

There are those who believe that domination is the antidote to competition, but the reality appears to be that scale has rendered control obsolete. It has also created phenomenal opportunities for those who have the ability to coordinate, collaborate and cooperate. JL

Greg Satell comments in Digital Tonto:

You need the right mix of cohesion and diversity to both innovate and operate efficiency at the same time.
Hundreds of consumers standing in line at your local Apple store.  Thousands of protesters rushing to flood the streets of Kiev, Istanbul or Hong Kong. Millions of fireflies blinking on and off in complete unison.  These are all synchronized systems.
Our hearts are synchronized systems too.  They rely on millions of pacemaker cells to coordinate every second of our lives.  If they falter even once, we cease to exist.  Yet they rarely do.  They continue to carry out their mission, with little conscious effort to organize them on our part.
So  why is it that the institutions we build—and put so much effort towards managing—are so rarely able to synchronize?  Despite our best efforts, most organizations are highly dysfunctional.  Fortunately, research into network science has begun to shed light on how synchronization happens and how we can make our enterprises function more effectively.

1. Small Groups

Most leaders tend to think on a macro level.  That shouldn’t be surprising, because our efforts tend to be focused on our responsibilities.  So if we’re responsible for an entire organization, then we tend to think in those terms and act accordingly.
Actions, however, are driven at the grassroots.  As Solomon Asch showed in his famous conformity experiments, we tend to adopt the opinions and biases of our peer group and will conform to those around us even when their views are demonstrably untrue.  Majorities, even local majorities, do more than rule—they influence.
Asch’s research helps explain why it is so hard for enterprises to adapt to new challenges.  It may be possible to create alignment among the leadership team, but that consensus will break down once the individual members return to their working groups.  There, they will find that they are confronted with local majorities opposed to the global leadership view and, in time, even leaders will conform.
That’s what seems to have happened at Blockbuster.  Faced with a competitive challenge from Netflix, CEO John Antioco came up with what seems, even in retrospect, to be a viable plan.  Nevertheless, various groups within the enterprise balked at the plan, Antioco was fired and Blockbuster went bankrupt.
So leaders need to treat new initiatives not as mere organizational governance, but as a grassroots movement of small, interconnected groups, each with varying thresholds of resistance—some enthusiastic, others hostile and many in between. Moving an idea forward is not just a matter of persuasion, but also of managing the connections between constituencies.

2. Loose Connections

Those close to us tend to have the same limited knowledge we do.  They have similar experiences, are confronted with similar challenges and share many of the same personal relationships.  So while our views tend to correspond to the local majority of our peer group, the global information we need usually lies outside of it.
That’s exactly what sociologist Mark Granovetter found when he began studying how people landed jobs in communities around Boston.  It wasn’t through close friends that people found employment, but more distant acquaintances—friends of friends.  He called the phenomenon the strength of weak ties.
It is the combination of tight circles and loose connections that drives high performing organizations.  A study of star engineers at Bell Labs found that the most accomplished ones worked in a close-knit group, but also frequently reached out to people outside of it.
Another study of Broadway plays found the same thing.  If no one in the cast and crew had worked together before then results were poor.  However, if there were too many existing relationships, then performance suffered as well.  You need the right mix of cohesion and diversity to both innovate and operate efficiency at the same time.
And that’s what makes synchronized organizations top performers—they are not only aligned internally but also able to adapt to new information that arises externally.

3. Shared Context

In nature, the purpose of a system is hardwired.  Nobody has to tell a pacemaker cell in the heart what it is supposed to do.  However, in organizations it is incumbent on leaders to set direction.
Hamel and Prahalad call this concept strategic intent.  Southwest has prospered by being “The low cost airline” and seeks to be nothing else.  Google strives to “organize the world’s information.”  Apple creates products that are “insanely great.”  It is the mission that drives the strategy, because that’s what defines what winning looks like.
Yet a clear mission, although important, is not enough.  There also must be a shared context of values and beliefs.  Apple, for example, has committed to specific design values and an integrated architecture.  Former Google CEO Eric Schmidt has described his company’s values at length in a new book called How Google Works.
What’s interesting about firms with strong value systems is how seamlessly they are able to adapt to new challenges.  Apple and Google, of course, have been successful across a variety of market contexts.  McDonald’s thrives in India, where it must cater to vegetarian diets. Cosmopolitan magazine succeeds in Islamic countries where discussions about sex are taboo.

The Path To Synchronized Organizations

Most leaders focus on strategies and plans because that is what stakeholders are asking for. It is easier to formulate a story based on market analysis than it is to promote better organizational health.  Nevertheless, research shows that informal networks within an organization are crucial to success.
We can no longer rely on hierarchies.  The problem is not that they have suddenly become illegitimate, but that they are slow and the world has become fast.  It is no longer enough to merely plan and direct action, today we must inspire and empower movements of belief.
So in addition to the role in formulating strategy and optimizing financial performance, managers must also seek to create synchronized organizations to carry out strategic intent. That requires a focus on small groups, loosely connected but united by a shared context