Organize for Complexity. How our organizations will become agile, radically decentralized, and networked. Sooner than we think.

1. Stretch Leadership & Management Conference,
Budapest, 09.12.2015
#stretchcon
@NielsPflaeging

2. Culture

5. • Fixed, individual targets
• Management by Objectives
• Budgets and Plans
• Performance Appraisal
• Hierarchical Pressure
• Pay by Position or Performance
• Incentives and Bonuses
• …

7. Formal part of
value creation
Solution:
Machine
Dynamic part of
value creation
Solution: Man

8. high
dynamics
Local markets,
high customization

9. Sluggish/dull,
low dynamics
high
dynamics
Spacious markets,
little competition
Local markets,
high customization

10. Sluggish/dull,
low dynamics
high
dynamics
high
dynamics
Spacious markets,
little competition
“Outperformers” exercise
market pressure over
conventional companies
Local markets,
high customization

11. Formal part of
value creation
Solution:
Machine
Dynamic part of
value creation
Solution: Man
Sluggish/dull,
low dynamics
high
dynamics
high
dynamics
Age of
Crafts Manu-
facturing
Industrial Age/
Age of
Tayloristic Industry
Age of
Global
Markets
1850/1900
Spacious markets,
little competition
“Outperformers” exercise
market pressure over
conventional companies
Local markets,
high customization
1970/80 today

13. Periphery
Market
Center

14. 1 Impulse
4 Command
3 Decision
2 Information
5 Reaction
Center
Market
Periphery
Client
Is in
charge!

15. 1 Impulse
2 Decision
3 Reaction
Center
Market
Periphery
Client
Serves the
periphery,
if needed
Is in
charge!

18. Transformación tipo 2:
“Profundización“
Transformación tipo 1:
“Burocratización“
Transformación tipo 3:
“Transformación Beta“
Young organization Older organization
1. Start-up phase
or “Pioneer phase“
2. Alpha phase
or “Differentiation phase“
3. Beta phase
or “Integration phase“

19. Transformación tipo 2:
“Profundización“
Transformación tipo 1:
“Burocratización“
Transformación tipo 3:
“Transformación Beta“
Young organization Older organization
1. Start-up phase
or “Pioneer phase“
2. Alpha phase
or “Differentiation phase“
3. Beta phase
or “Integration phase“

20. Transformación tipo 2:
“Profundización“
Transformación tipo 1:
“Burocratización“
Transformación tipo 3:
“Transformación Beta“
Young organization Older organization
1. Start-up phase
or “Pioneer phase“
2. Alpha phase
or “Differentiation phase“
3. Beta phase
or “Integration phase“

21. Transformación tipo 2:
“Profundización“
Transformación tipo 1:
“Burocratización“
Transformación tipo 3:
“Transformación Beta“
Young organization Older organization
1. Start-up phase
or “Pioneer phase“
2. Alpha phase
or “Differentiation phase“
3. Beta phase
or “Integration phase“
Type 2 transformation
“Deepening“
Type 1 transformation:
“Bureaucratization“
Type 3 transformation:
“Beta Transformation“

22. Industry
Retail
Services
Government/
NGOs
It is possible.

23. Theory X Theory Y
People need to work and want to take an interest
in it. Under right conditions, they enjoy it
People dislike work,
find it boring, and will avoid it if they can
Attitude
Direction
Responsibility
Creativity
Motivation
People will direct themselves
towards a target that they accept
People will seek and accept responsibility,
under the right conditions
Under the right conditions, people are motivated
by the desire to realize their own potential
Creativity and ingenuity are widely distributed
and grossly underused
People must be forced or bribed
to make the right effort
People would rather be directed than
accept responsibility, (which they avoid)
People are motivated mainly by money
and fears about their job security
Most people have little creativity - except
when it comes to getting round rules

24. Behaviors
Context
Human
Nature

26. ”Meritocracy“
Budgeting Planning
Control of work hours
Job Descriptions
Competencies Management
Incentives
Individual targets
Performance Appraisal/360°
Salary Ranges
Training budgets
Personnel Development
Org charts
Target negotiation
Holiday applications
”Personnel Expenses“
Suggestion boxes
Assessment Centers
Pay for Performance
Paid extra hours
Bonus Systems
Sales Quotas
Dress codes
Job titles
HR
Allocations
Cost Management
Plan-Actuals variances
Forecasting
MbO
Development Centers
Bosses/HR hire
Strategic Planning
Travel policies
Jours fixes
Earnings Guidance
Matrix Structures
Key Accounting, Business Areas
Business Partners
SWOT Analysis…
Succession planning
Flat structure
Flexible work hours
Casual Fridays
COO
Rules
Supervision
Positions
Standard Costing
Investment planning
Employee Surveys
Sales Department
Reporting lines
Product management
Project management
Milestones

27. • Fixed, individual targets
• Management by Objectives
• Budgets and Plans
• Performance Appraisal
• Hierarchical Pressure
• Pay by Position or Performance
• Incentives and Bonuses
• …
• Transparency & Improvement
• Comparisons between peers
• Comparisons with previous periods
• Dialog and Dissent
• Social and group pressure
• Pay by market value
• Results Sharing
• …
Low dynamics
High dynamics

28. Law Beta Alpha
§§1 Freedom to act Connectedness not Dependency
§2 Responsibility Cells not Departments
§3 Governance Leadership not Management
§4 Performance climate Result culture not Duty fulfillment
§5 Success Fit not Maximization
§6 Transparency Intelligence flow not Power accumulation
§7 Orientation Relative Targets not Top-down prescription
§8 Recognition Sharing not Incentives
§9 Mental presence Preparedness not Planning
§10 Decision-making Consequence not Bureaucracy
§11 Resource usage Purpose-driven not Status-oriented
§12 Coordination Market dynamics not Commands

33. Data Information Knowledge ?

34. Formal Structure

35. Informal Structure

36. Value Creation Structure

37. Compliance, Power Social Work/Value Creation
Formal Structure Informal Structure Value Creation Structure

38. Knowledge Age
Systemic, alive
Integrated, team-based
Work the work
Outside-in, led
With-each-other-for-each-other
Complexity-robust
Industrial Age
Mechanistic, dead
Differentiated, individualizing
Work the people
Top-down, managed
In parallel, in line
Efficiency-oriented

39. @NielsPflaeging
nielspflaeging.com
organizeforcomplexity.com
betacodex.org
slideshare.net/npflaeging