On Discovering vs... Imposing Order on Social Groups

There is a post on a discussion list I am a member of today. To paraphrase it - there is a client, a small bank which seems to have grown so far with an entrepreneurial decentralized structure, but is perhaps now facing issues with further growth and cost efficiencies. The fundamental question seems to be - how do we now put some structure into this organization and redesign it to reduce costs and obtain greater efficiencies.

I think this is a very fascinating challenge. I know how we might traditionally approach such a challenge, an approach which is valid in its own right. But there is a maverick in me, which would like to understand how a contrarian might approach this challenge.

Entrepreneurial cultures, have deliberately loose structures, since there is much ambiguity that an organization has to deal with in its initial stages. There are too many different problems to solve in its own local context, and the best approach is often something that emerges out of trial and error. People take on rather than being assigned responsibilities. There are stories of what worked and what did not that guide them. These become a part of the organizational culture, its definition of success and failure, its heroes, its definitions of traps and things to watch out for.

If things go well, the organization grows, and comes to a point, when some of this 'seat-of-the-pants' logic does not seem to work. The organization develops an appetite for growth and  loses its appetite for experimentation, and risk. It desires predictability. The new people joining the group, cannot make sense of how the organization deals with its challenges. They are difficult to absorb into its ways. The time it takes for organic growth, seems too long.

"...the lesson from biological evolution is quite clear and direct. The time required for the evolution of a complex form from simple elements depends critically on the numbers and distribution of potential intermediate stable forms". (Herbert Simon - the Science of the artificial - Pg 190)

Perhaps the organization has not put in place the intermediate stable forms that it needs for the next stage of growth to happen quickly enough.

One of the reasons for the organization's current dissatisfaction with its attempt to grow, might just be failed attempts at imposing order. There perhaps are now two camps of people - those who yearn for the good old days, even if it meant burning the midnight oil, and those who could care less for the old stories. Hopefully, it is in an early stage of its development, where the imbalance between the two camps is not profound. It could also be, that the new power structure belongs to the new school, in which case, the organization has to rapidly learn some new stories from the outside world.

The question then is - to what extent is it necessary to impose order and in what form? Will a sudden imposition of order create more pathologies? Will it lose its capacity for innovation in exchange for what it gains in efficiency? Is it possible that there is order today, but just not apparent. It is this second possibility that I would like to explore.

Order exists even in the entrepreneurial organization, it is just in a different form, latent and not explicit. Social Network analysis can discover this order. I think, if one were to analyze their stories, we would discover what they already know - the archetypes of success, who their heroes are and why, what they believe are the attributes of excellence, what is the nature of their market and so on. They perhaps also know why someone is more of a hero than another. I think the trick to helping this organization lies in discovering these structures first.

The plan for growth then needs to develop group and individual identities, and formal roles around these intermediate building blocks. It needs to reveal their own practices - both the good and the bad ones, and keep the knowledge environment intact. If it needs to share services, they need to be non-critical to the functioning of these groups, so that they can become utilities.

I know, we perhaps will not be able to do something like this, but it is so tempting to think, that one might come across and opportunity to try something different. The maverick in me drools at that thought.