Network organizations, how to approach this new organization evolution
Faced with the need to strengthen their response capacity, companies are considering organic organizational models, such as Network Organizations, which ensure a greater flow of knowledge and autonomy for decision-making. However, the path for their adoption is still not clear and generates various pain points. Is it possible to measure the quality of this organizational model to mitigate these pain points and facilitate its adoption?
The organizational models that promoted work in silos, the centralization of decision-making and a rigid formal system of authorities, today seem to be a distant and ineffective scheme to us, but they worked because they responded to the demands of a very different environment.
What changed? Everything. Markets, industries and businesses do not constitute a static scenario. New challenges have arisen at a rate that traditional models are no longer able to respond to. The good news is that companies are adapting to changes in the environment: they are evolving.
As a result, more organic structures have emerged that enable collaboration based on dynamic strategic objectives, promote the flow of information, and streamline their ability to innovate by incorporating error into the process.
Among the new alternatives, Network Organizations stand out. Endowed with a neural network-like structure, their distinctive feature is the ability to circulate and share knowledge, enabling decentralized decision-making and accelerating responsiveness.
A network of knowledge
In essence, in Network Organizations, information and knowledge flow throughout the structure and collaboration is promoted, with autonomy for decision-making. Their proposal is both structural and cultural.
At a structural level, they are organizations made up of small, multidisciplinary, transversal teams created to address specific problems. These teams interconnect with others as if they were nodes in a structure that breaks the traditional ‘one-to-many’ communication paradigm and flows ‘many-to-many’, according to need and with technological support capable of managing this type of communication.
But a cultural adaptation is also necessary to enable a new way of doing things. A culture based on trust so that employees can innovate without the fear of failure being an impediment, as well as on the delegation and decentralization of decision-making, to achieve greater autonomy and speed in the decisions.
Although it is a very attractive model to design agile and innovative responses, we observe in our clients that its adoption is a challenge in itself, since it must start from the current conditions of each organization, such as the operational structure, relational technology or corporate culture.
Facilitate the adoption of organic models
At Tandem, we have developed a methodological framework that allows us to measure the quality or ‘health’ of the network organizational model and determine the stage of its adoption. Through a set of qualitative and quantitative indicators, the Organic Network Framework makes it possible to measure, among other things, the density of the network, the number of links between nodes, the behavior of team members, the identification of communication bottlenecks and the agility index of the governance model, among other key variables.
The purpose of the framework is to review, provide information and help optimize the main strengths that leverage the operation of this type of organization:
- Group meaning: While teams are formed to address specific challenges and reorganize when necessary, their legitimacy is based on short-term goals and planning is dynamic.
- Organic connectivity: the organic network is characterized by a closely linked structure and its nodes establish ‘many- to -many’ relationships, which also requires greater dynamism in the allocation of resources.
- Flexibility: as objectives and strategic needs are achieved or adjusted, interorganizational ties are reorganized and new teams are formed. That is why it is necessary to reduce the uncertainty in the relationships between nodes and increase the speed of learning and adoption.
- Scattered intelligence: knowledge is not concentrated in a central node, but is distributed throughout the network, where different nodes collaborate to solve challenges and requirements.
- Agile autonomy: The organic network promotes a data-driven culture, enabling decentralized, autonomous, and agile decision-making.
- Fail & Win mindset: errors are considered as sources of learning that strengthen the functioning of the network in terms of the confidence to delegate, the freedom to disagree and the ability to decide.
Today, we are experiencing a new evolution in organizational models to maximize collaboration, agility and unblock the flow of information. In this sense, Network Organizations can be an incredibly productive alternative. However, most companies still find them difficult to implement and operate, particularly in the early stages of adoption.
With the right adoption framework in place, leaders can help their teams overcome initial paralysis by addressing the key aspects of how the network functions: how fast information flows, where it gets stuck, how to collaborate, how knowledge is shared, and how results are produced, among others. In short, it is about reducing structural and cultural barriers to evolve towards a more organic work alternative.
Sebastián Fernández Parrau
Manager at Tandem.