Chapter 10 - Implications for Leadership
The author describes IBM, which has a pronounced corporate culture during a different era, when the firm was innovative and life-long employment was the norm. The founder took a "family" approach in which each employee was expected to support the firm (by contributing ideas, even if it is not in their formal job description) and the firm would in turn support employees as family members (generous benefits, skills development, etc.)
The author considers this to be an "industrial era" style of leadership that is an "outmoded remnant of past grandeur" that is no longer applicable to the way business is done today: companies do not offer a guarantee of lifelong employment but seek the skills they need at any given moment, and employees in turn do not expect to be cared for like family, but used like hired servants - used as needed and discarded, rather than developed and cared for.
(EN: This actually goes further back than the industrial era, into the feudal era when a productive estate was managed like a corporation by a lord who balanced the demands of his liege against the needs of his own family, servants, and slaves who produced goods. It wasn't until the late twentieth century that western culture broke free from this model to firms and employees who each were looking out for their own interests and there was more freedom for firms to hire and fire as needed and employees to seek the best offer available. My sense is our culture has not quite settled into this model, and continues to struggle with it.)
The networked organization is more applicable to the present way of doing business, enabling employees to flow freely to projects that require their skills and tending to their own developmental needs.
Organization Formation
Within a formal organization, the structure was defined from the top and the structure was controlled from the top, with divisions and groups created in anticipation of the kind of work that will be needed to accomplish organizational goals. In a peer-to-peer network, an organization is not formed until a task is defined - and at that point it becomes clear which skills are needed to accomplish the task.
The difficulty in networked organizations is sustainability: if the organization is to persist, rather than dissolving and reforming each time one task is completed and a new one begins, it must have an ongoing purpose and mission that binds nodes together for a longer period of time.
(EN: And here is the issue for companies who fail to consider the long term when managing a labor force. They are lured by the financial benefit of paying only for the workers they need from day to day, but are dismayed when the workers they have dismissed do not wait without pay to be rehired, but instead take other jobs for other firms [often the competition] and the firm must hire green talent and re-train them for each project.)
There follows a rather fuzzy notion of alignment: an organization is created in order to achieve a goal, and it is suggested that when the employees internalize the goal of the organization, it provides for a long-term cohesion among the nodes in the network. That is, the purpose of the organization matches each employee's purpose in life - but this must be mutually beneficial: a firm cannot demand employees serve its long-term needs unless it is willing to serve theirs.
There's a brief anecdote about a software company that learned one of their key executives was going to leave the company after giving birth to her first child - the company then decided to build a childcare center on site rather than accept the executive's resignation, and this was found to be beneficial in retaining employees in general. The firm in question tops the list of "best companies to work for" in the US, Germany, China, Brazil, Norway, and other nations and tends to retain its employees far longer than its competitors.
Human Resources and Organization Development
In the era of lifetime employment, human resources departments did more than simply manage the tasks of acquiring and terminating employment: it developed practices and programs that supported employees over the long term, ensuring that the firm was serving their interests to an adequate degree to retain them over a long period of time.
Since then, the HR department has shed many of these functions, and tends to focus almost exclusively on the basic hiring/firing tasks and has even in some instances become hostile toward employees, seeking to protect the company from lawsuits from its own people. It has entirely abdicated from managing human resources from the perspective of an ongoing business concern to focus on the priorities of the day.
It has since been noticed that the task of organization development has been neglected: firms are having difficulty finding the skills they need (because they do not develop these skills in existing employees) and retaining them for the long term. Entire industries are commoditized by mutual parasitism as one firm hires the employees another failed to retain, in instances where no single firm has the managerial competence to build and maintain a sustainable network within its own walls.
The author concedes that some firms "cannot recover" and have crossed the point at which creating a culture and building a sense of identity and belonging may well be impossible. In other instances, some firms have excelled at attracting and retaining talent - and while she indicates "their insight has guided and influenced my practice" she doesn't disclose any specific details at this time.
Questioning Traditional Leadership
The National Leadership Index, a survey of confidence in leadership across various sectors, shows that 63% of Americans do not trust business leaders, 83% believe that leaders seek to serve only their own interests, and only 69% have faith in their leadership ability. Yet 81% believe that the nation's problem can be solved by effective leadership. Taken together, this is a sign of disappointment with the present state, but optimism about the potential.
Reviewing the literature on leadership, one finds much confusion: there is no general agreement among researchers or practitioners as to how leadership is defined or which approaches to leadership are productive. There are a myriad of different "schools" of leadership that guide leaders to take different direction in managing organizations and personnel. And while there seems to be a general acceptance that the command-and-control style of leadership is no longer the most effective, there is no consensus on what should replace it. (EN: Add to this that many of the "new" theories of leadership are essentially the same as the old, merely paraphrased, reworded, and given a layer of whitewash.)
"The time has come to completely rethink our notions of leadership and recalibrate them with the realities of today," the author boldly declares. And then, a few paragraphs of rambling about "excellence," "twenty-first-century organization," "shift the current landscape," "fundamentally new direction," and other nebulous buzzwords.
Leadership as a Dyad Exchange Structure
The author borrows the term "dyad exchange structure" (EN: which in sociology simply means a relationship in which two individuals routinely engage in transactions) as the basis of networked organizations. There is no longer a one-to-many relationship between a supervisor who speaks to his subordinates as a group and treats them as homogeneous, but a number of one-to-one relationships that, while similar in nature, are each idiosyncratic to the individuals and situation involved.
The author also implies that a dyadic structure is egalitarian: there is no formal authority in the relationship of superior and subordinate but a negotiated exchange that is more of a partnership in which each represents their interests and the terms of engagement are negotiated.
In a truly networked organization, there are no leadership nodes that merely give direction to others, but nodes that take on leadership functions as needed to coordinate (rather than direct) activity of groups of nodes engaged in a specific task - and those who accept coordination do so as a matter of practicality rather than obedience to formal authority.
This arrangement also ensures that the network is self-sustaining: rather than operating under a given structure even when that structure proves to be ineffective, the terms of each relationship can be renegotiated by nodes at any time, and respond more fluidly when change becomes necessary.