“We are uncovering better ways of developing an engaging workplace culture by doing it and helping others do it. Through this work we have come to value…”

Yes, that seems very close to the start of the Manifesto for Agile Software Development… This however, is how the Manifesto for Agile HR Development starts. Whenever people discuss ‘Agile’, there’s a few recurring values or themes. In this post we’d like to focus on one of those, taken right from the start of the Manifesto for Agile HR Development:

Collaborative networks over hierarchical structures

It is no secret that organizational agility is the way modern companies can cope with continuous change and uncertainty. It is the most effective way to build organizational resilience and adaptability, both keys for sustainability in modern companies. Though how and why does that lead to a preference for collaborative networks over hierarchical structures?

It is a complex world…

…, but what does that mean “a complex world”? The often cited Cynefin Framework is broadly used to explain complexity in a business context (although it actually is meant to identify decision making contexts with regards to complexity). Although the visualization is easy to understand, there is a complexity concept that doesn’t get visualized in the framework: Ambidexterity. Organizational ambidexterity is fastest explained as the ability of an organization to develop radical innovations (exploration) and protect their traditional businesses (exploitation).

Organizational ambidexterity

A great way to visualize this ambidexterity is the Panarchy cycle of continuous change

Exploration (back-loop) is composed of two phases: releasing radical innovation () and reorganizing (α) to commercialize the innovations. Exploration happens fast but is costly. The key risk lies in not being able to find a model for commercializing the innovation. Due to the high cost of this stage a company may end up in a poverty trap.

Exploitation (front-loop) is composed of two phases: exploiting the newly defined business model (r) and the conservation of such through continuous (small) improvements (K). Exploitation is slower than exploration and less costly. The risk here lies in creating a rigid focus on conservation of what we have. When we do not consciously keep a focus on exploration simultaneously, we risk ending up in a rigidity trap and be outplayed by smaller, innovative companies. This latter seems to be the case of what has happened to companies like Kodak and Blockbuster (remember those two?).

The complexity in Panarchy

Panarchy enables people to visualize how systems are embedded in systems. It helps to understand how the interdependence influences the spread of change. People become more alert to small changes that can help spread ideas up to other system levels. They learn how shifts at larger or lower system levels may release resources to assist them at another level.

The basic explanation is simple:

  • The fastest and smallest cycle is the consumer cycle. Representing each of us, as individuals. We take our decisions of needing something innovative quickly and find ways to use it (backloop). Then we spend time making use of it and holding on to it (frontloop).
  • The key for the middle cycle, our business, is to determine when many consumers are at the point where they decide they want something innovative. To have something to please consumers on the spot, our business must be able to exploit an innovation. And THAT’s complex: to be ready to exploit that innovative ‘thingy’ consumers actually want at that exact moment in time…
  • And to make things slightly more complex… there’s the large and slow governmental cycle. Companies are subject to laws and regulations that often times restrict their freedom to move as they would like to.

NOTE: this is a very simplistic representation of a panarchy ecosystem. It goes way beyond the purpose of this post to explain all. You can read more at the links included in this post or try the book Panarchy: Understanding Transformations in Human and Natural Systems.

Keep paying attention!

Although we’d prefer to, because it is our way to earn our innovation investment back, we can’t stick to exploitation only. When that happens, we allow small and flexible companies to be ready for the next consumer demand way ahead of us.

Managing ourselves within the loops of the ecocycle dynamics at play, we can create “opportunity windows” for innovations to spread among levels and across boundaries. We must ensure ambidexterity, a constant focus on exploration and exploitation, though in different amounts over time.

Our structure, culture, mindset and people processes allow us to embed this ambidexterity into our organizations. They allow us to become resilient to the ever-faster pace of change by embedding organizational agility as the new norm.

Organizational Structure

Remains the key question of this post: How do we organize for complexity? What organizational structure do we need to design that makes us sufficiently adaptable and sustainable in a complex world?

Interestingly, Jurgen Appelo used Panarchy to link organizational agility to organizational design. Here’s part of what he wrote in 2010 in a blog post called “Long Live the Panarchy”, for which he used “Panarchy: Governance in the Network Age” by Paul Hartzog as main source of information.

“A Panarchy is a system of overlapping networks of collaboration and authority. An agile organization is the inverse of bureaucracy through top-down planning. It is adaptable through bottom-up growth.

True agile organizations are panarchies. They have multiple sources of authority within the agile organization. Each team can subject itself, willingly, to the rules and norms of some specialist groups. But they can also form such functional teams themselves, or simply decide to do everything inside their own team. People and teams self-organize!

A Panarchy is an organic approach to organizational design, resulting in a fractal-like structure of small hierarchies which are all superimposed on one another in one big network. And because it favors scaling out over scaling up, there is no end to the growth of a panarchy.”

Can HR assume their role and become relevant again?

The Human Resources department plays a dual role in the development of an agile organization. Their first role is to drive the adoption of an agile mindset, people agility, throughout the organization. HR is best placed to do so because of their transverse reach in the company. The second role is the redefinition of classical people processes to more agile alternatives.

The role of a modern HR department seems nicely summarized in one the Manifesto for Agile HR Development’s principles:

Help to build and support networks of empowered, self-organizing and collaborative teams.

When HR accepts both roles they can become the driving organizational force within businesses (again). They can once more focus on creating better workplaces through the development of individuals and teams across all disciplines. HR can, and should, facilitate the design, formation and scaling out of the organizational structure needed to face complexity and make the business sustainable.  The trick is to start small where you are and keep it simple.