This is Part 2 of the analysis of the Lecko 2015 report on the Social Business market in France. As noted in part 1, much of the work is applicable outside France and there is a lot we can learn in the UK (visit https://kurtuhlir.com/hire-to-speak/ to listen and learn how to run a business successfully). Lecko estimate the French market growth in sales of SaaS solutions licences at c 40% (€56 million in 2014). While this isn’t direcly relevant to the UK, their note that they see the entrance of Facebook for this market an additional indicator of its potential clearly is.

What is very relevant to the UK (and any country for that matter)  is the rest of the the report, as the package analysis is comparing software from all over the world – this is Lecko’s equivalent of the Gartner Magic Quadrant analysis. They have 2 different Quadrants for software package analysis, using different axes of product capability:

Relationship functions vs Conversation Functions

Relationship functions are the ability of the various solutions  to enable management of your digital identity and social directory,  up to managing the social graph. Conversation functions are the ability of the solutions to supply the tools for discussion about content, sharing work etc.

Social Functions vs Business Line Functions

This latter area defines the functions specific to various aspects of a software package – Internal vs Exernal capability, Knowledge Management, Productivity tools etc. Above this blog post is an example diagram, the matrix for  Communication capability, to show the resulting Quadrant output from the analysis.

The matrix axes used above come from the detailed analysis per package, where Lecko look at each package along 10 different axes, for a total of 550 datapoints. The example shown below is Jive software. There are 38 packages analysed, from major players like Jive, Yammer, Sharepoint etc to startups with “next generation technology”. This analysis constitutes about 50% of the report and makes it a very usful alternative to Gartner et al.

As can be seen from the diagram, this is a very comprehensive analysis of any software package and is very useful for “best fit” comparison and software selection as well.

French Social Business research company Lecko brought out their 2015 analysis of the French market in February, and they presented some of it at the Enterprise 2.0 Summit in Paris. But don’t let the “French” bit fool you, there is a lot of content in it that is useful for any country, including the UK.  They have produced a version in English now, it is a very detailed piece of work, some 130 pages of detailed research, the first half of which we have summarised below. There are quite a lot of takeaways for the UK market in this (The report can be downloaded from the Lecko site over here, for free).

The report is structured in 4 sections:

1. Collaboration, the kingpin of digital transformation – deals with the ongoing evolution of the Social Business arena, and the evolution of the Enterprise Social Network (ESN) and the core position of Collaboration systems in driving value

2. Organised transformation – what companies are doing about Digital Transformation today, and how they are going about it

3. Constructing a collaborative offer – how they are implementing the software tools and systems

4. Market analysis – a detailed analysis of the software tools themselves – they have analysed 38 of the current software systems globally, from major players such as Jive, Broadview, Yanmmer and Sharepoint to innovative startups systems. A very useful part of this is the analysis of the systems that front-end Sharepoint.

The last section – Market Analysis – is about half the report, so we will summarise it in a second blog post.  This post will deal with the first 3 sections.

 

Collaboration, the kingpin of digital transformation

The “kingpin” is the pivot for a steering mechanism. Lecko’s view is that in the emerging Digital Transformation, the Enterprise Social Network, with its ability to track events outside and inside the enterprise, will be key. Their argument will sound familiar to most practitioners –  the digital world is forcing companies to change, so the company must anticipate major changes to its offer (before change is forced upon it). I think they make two useful points in the discussion:

– Tomorrow’s assets are different from today’s – i.e the “means of production” that are valuable today will not be tomorrow. I think this is a key to driving change, mainly in terms of avoiding (i) the “sunk cost” problem – just because you’ve spent money on it doesn’t mean it’s valuable; and (ii) the “this has always worked before” issue.

– Change breeds change – the need to changing culture and organisation so it has the means to change

They also do not believe there is a “right” organisation structure – their research implies the best is to look at the best organisational methods in each area of the company.

All in all we liked this, as it agrees with our research into lessons from the past 🙂 But a pertinent point is that our research is from global examples, so we would argue that the Lecko work is also applicable far outside of France (our view is that most OECD economies have more similarities that differences, excepting the UK is more of a “trading” than a “making” economy compared to Europe or Japan so the emphasis on Social services for market making is higher.

 

Organised Transformation

This section looks at the “how” – they analyse 4 main areas of how companies approach transformation:

– The strategic approach: Management has a vision and calls for organisation based on discussion and movement within the company.

– The tooling approach supported by the IT department: It is incorporated into the continuous modernisation of corporate collaborative tools.

– The business line approach: A business line manager relies on SaaS solutions available online to initiate the approach without the need for an IT project.

– The individual approach: Employees rely on their chosen online services to become more efficient.

The research is from a detailed base of 22 CAC 40 companies that Lecko monitors (The CAC 40 – Cotation Assistée en Continu –  index represents a measure of the 40 most significant values among the 100 highest market caps on the Euronext Paris  – formerly the Paris Bourse). The main conclusion is that the current dynamic around digital transformation suggests that much work so far is by individual projects and pioneers, and companies need to strengthen the “strategy” and “business line” front. The research also looks at the awareness at top level of the digital issues and the choice to recruit a Chief Digital Officer responsible for constructing a strategy and executing it. In this area they find that:

40% of CAC 40 companies have appointed a Chief Digital Officer. Reporting to the management team, the CDO is responsible for the company’s digital transformation. The missions and tools available do, however, vary from one company to the next. This change began 2 years ago, which shows that companies were becoming aware of this strategic issue.

80% of CAC 40 companies have at least one enterprise social network. 75% of CAC 40 companies have access to a cross-functional Group ESN for all employees. All of these companies are not, however, at the same stage. Having an ESN does not mean it has been successfully populated either.

80% of communities are the result of community manager (CM) initiatives (alone or with colleagues), 15% are communities controlled by management, 5% of CMs take over initiatives started by others. The challenge is recruiting the CM’s and helping them to succeed. 71% of succesful communities have high CM involvement.

Usage is becoming more intensive. The commitment index measures the level of commitment of the 1,000 top users (with more than 6 months of activity to avoid the early-day curiosity peak efect). In 2014, it increased 17% on the panel’s platforms (compared with 18.2% in 2013 when the survey started).

These outcomes don’t look that different from other countries, nor are their findings on the typical path, they note the digital transformation typically :

– began with the replication of existing models filtered down into the digital world (website, e-commerce),

– arriving today at a more structural change (rethinking of the customer journey through all digital and physical channels)

–  incorporate digital social technology more remotely – into stores etc, plus association of the digital technology with the products

– (starting to) create new services in line with the opportunities of the digital era.

Barriers to progress in France are also similar to elsewhere – the successes of the pioneers are difficult to reproduce across the organisation as it is not so much the final useage that counts, but how the pioneers succeeded to leading their colleagues through the change. In scaling up though, operatives are short of time and are tempted by strong-arm action to roll it out quickly. In summary, the core barriers to roll-out are:

– Lengthy change: the aim must be to get the company to learn, and this takes time
– Complex: cultural barriers exist at all levels (significant inertia, more than resistance, is widespread)
– Disruptive: often difficult to move the existing situation forward, it is about finding new solutions for those taking the reins. Competition and cannibalisation need to be managed carefully.
– Combination of simple innovation and smart methods is required.

One finding that echoes with our observation is that initial investment is often outsourced by early pioneers before being reintegrated into the company (Cloud based 3rd party services etc). These early projects make the company reliant on initiative leaders who can unite their colleagues around their project. Downside is that this situation results in the company’s overall efforts becoming fractured, with various digital appendices and so overall evolves less quickly. Hence the need for the CDO, who has to integrate the Strategic, IT, Business and Individual approaches referred to above. This is detailed in the chart below:

On the “what are they doing” front, there are interviews with several CDO’s from a range of large French companies. One of the key requirements is to start to integrate and co-ordinate the projects around a company, typically creating a central project team to do so. There is also a useful summary chart of what seems to work empirically (below):

Two key drivers (the axes) are:

1. Create Value for local entities

– Services delegated: management training, provision of statistical reports, transmission of a communication kit.
– Knowledge passed on: training to coach local teams, training and provision of tools, management of sharing practices and sharing of reusable sources

2. Overall Transformation leadership

– Definition of a framework consisting of rules to follow: the governance rules and the support process are imposed.
– Create a consensus around shared, collective objectives: encourage discussion and convince people of the direction to take, manage sharing of practices and convince people to act

In short, the centre has to control by a combination of persuasion and governance, while ensuring there is enough “whats in it for me” for the various local units to be motivated to adopt new services. To me the most pertinent observation was that the CDO is not (yet?) a “C level” job (ie top management tier role) so I’m not clear how they the CDO can do this task, as they are unlikely to have the budget or influence to really drive change.

 

Constructing a collaborative offer

This section is a summary of steps a company should use to think about constructing a collaborative system – it’s roadmap, if you like. In short the key tasks are to:

– Distinguish between mature and disruptive emerging uses ogf the existing systems in a company (eg email, office tools etc)

– Choose the right technologies – key is to distinguish between technologies athat are part of the “general case” Enterprise Social Network, and those that are task or operation specific (this is mainly what the second half of the report, the product analysis section, is about – which we cover in a subsequent post)

– Difficult to make up for a lack of integration – as noted in the xxx section above, if there are multiple cativities many problems satrt to occur that hinder rollout and seamless workflows. Unless one collaborates in building Collaboration/Communication systems, they won’t collaborate or communicate …. (this stuff isn’t new, this aspect of rollout seems to be  a company perennial issue)

– Position tools and uses – this follows obn from above, ie the taske define the tools – the diagram below is a useful framework to think about the lifecycle of various elements in the roadmap, looking at collaboration technology scope vs information governance (usage, persistance, privacy etc)

Lastly, Promote and support this – you need traditional training based implementation approaches, but they are not enough – you have to win people over too (especially if the change is non-negotiable). This is expressed in the chart below – as I read it Lecko believes the “what works” is using both traditional and learning organisational practices to complement each other, depending on the situation.

In conclusion, although there are a few things which may be French specific I think they are minor compared to the huge number of datapoints that are echoed in other countries, so as a review of the “what works, what doesn’t, what’s next” sort of analysis we use, it is a very useful new study. We would argue that the “4 actions” model they use – Strategy, Tools, Business Line & Individual – is better covered by the more comprehensive 7S model (Strategy, Systems, Structure, Staffing, Skills, Style and Shared Value – aka Culture) but that is a minor quibble – all the aspects of the 7S are covered in the report. What also comes across is the continual use of pragmatism in the real world implementations – i.e. use what works, drop what doesn’t  – and the continual themes of integration being critical, a bunch of disjointed initiatives will at best underperform at worst die.

The next post (see here) looks at the second half of the report – the evaluation of the IT tools market evolution, and the evaluation of c 35 products in it.

Some interesting points in the latest McKinsey report on the State of Social Business. If no one has been following this series, in essence they differentiate between highly connected companies and less connected ones, their hypothesis is that most of the benefits of social technology comes from the connections.

Firstly, some interesting points over last year’s report:

• Social tools are used most for customer engagement and least in operations processes – in other words the historic pattern of organisations using Social tools initially for Comms, PR & Marketinmg and then it radiating further through the organisation is still standard (see chart 1 at top of post)
• Increasing push to use mobile devices, with…you guessed it – Sales & Marketing being the major areas of introduction (i.e. used for customer outreach more than employee comms).
• At the more fully networked organizations, social technologies are integrated more deeply into day-to-day work & these organisations see more impact (network effects).
• (A small number of) respondents cite a growing number of benefits from social interactions with external business partners.

More broadly, say McKinsey, this year’s results confirm that company adoption of social technologies is maturing. Executives continue to say their companies use highly interactive technologies, such as online videoconferencing and social networking, more often than less engaging tools, such as wikis and podcasts. The use of social tools with customers or among employees is still more common than using tools with external business partners, although executives report only incremental changes in the internal or customer-related benefits their companies gain.

A growing share of executives expect their companies’ investments in social will increase in scale and scope, they say.  In effect, Social technology is “mainstreaming” – or, to use Bjoern Negelman’s analysis, it has fallen down the Hype Curve into the Slough of Despond, and from here on it replaces sex appeal with increasing value add.

The most interesting bit of the report is “what’s next” bit. McKinsey see 3 trends:

• Begin with a targeted approach, then broaden impact. While the overall adoption of social tools remains widespread, the results indicate that most companies use them intensely in only a few functional processes. Yet the successful use of social in sales-and-marketing processes suggests how much more potential value is at stake in other parts of the business. To get the most value out of social technologies, companies should focus on specific cases where these tools could be implemented in a targeted way. A company already using social tools could broaden the technologies’ impact by adopting them in areas such as operations, where they are used less often now.

 

• Focus on metrics. As companies adopt (and adapt) these relatively new technologies in their business, they also face the challenge of measuring data they’ve never seen or worked with before. To use social tools more effectively and understand where and how they can add future value, companies must mind how to measure the impact from tools already in use. One approach is comparing existing metrics from areas of the business where social is used against control-group areas without social tools. But the best methodology depends on the process and what benefits companies ultimately want to see.

 

• Change the way people work. Executives are optimistic about the potential business value from social tools—a common attitude toward new technologies. There’s an initial growth phase that drives adoption and excitement around the technology, but then companies need time to figure out how to use it to drive real productivity improvements. To reach the next S-curve of value from social tools, companies must think more holistically about the organizational and cultural changes to make.⁶ Social tools have the potential to change organizations, but only if those tools are implemented in a way that changes how individual employees work day to day.

Now, if that doesn’t sound a lot like an implementation plan for any major system over the last 3o years…..

We take this (along with the emerging strong case studies) as fairly concrete evidence that Social Business has now jumped “The Chasm” into the early mass market and will become a key part of the business infsrastructure over the next decade or so.

 

 

 

Bjoern Negelmann’s analysis of the strategic situation of Social Business at the start of the Enterprise 2.0 Summit in Paris last week was one of those things that was so obvious once stated, yet has you kicking yourself that you didn’t articulate it so well.

In essence he used the Gartner Hype Curve and  showed that “Peak Hype” was in 2012/13, (see picture above) and we are now in the Slough of Despond,  the bottom you find when the bottom drops out of the first optimistic hype phase.

But the good news is that this is when things “get real” and actual value starts to be created – the next phase is the “Slope of Enlightenment” when people find out what works, what doesn’t, and what to do next (which just happens to be our company’s aim)

We started Agile Elephant a year ago as we felt the overall social business ecosystem had changed, the first heady phase of the market had ended and we felt the industry was now going to move into a more practical, implementaion phase. I couldn’t easily articulate why I thought this, but this model really makes it clear.

The only way is up…..

 

April and May have been very busy months for the Agile Elephant Crew – first client, first conference, first Meetups ,  first partners signed  – and has not left as much time for background research (and hence blogging) to take place. But it is ongoing.  One thing we have been doing a lot of work in is the future of Organisations in general. We have been researching where similar initiatives to current theories have occurred in the past, to learn what worked, what didn’t, and what came afterwards. Our first “Lessons from the Past”  article was on Ricardo Semler. This second one is about previous attempts at non hierarchical workgroups, specifically Quality Circles and Cell based operations, as they were a precursor to all the pods/peletons/holacracies/fishnets* (see diagram at top of article)/wirearchies etc. etc. proposed today.

Cells and Circles were adopted with enthusiasm in the 70’s/80’s but many had been abandoned by the late 90’s. The Economist notes that:

Quality circles fell from grace as they were thought to be failing to live up to their promise. A study in 1988 found that 80% of a sample of large companies in the West that had introduced quality circles in the early 1980s had abandoned them before the end of the decade.

 It is thus useful to understand why this occurred.

 

A summary  of Circles and Cells

From Wikipedea:

A quality circle is a volunteer group composed of workers (or even students), who do the same or similar work, usually under the leadership of their own supervisor (or an elected team leader), who meet regularly in paid time who are trained to identify, analyze and solve work-related problems and present their solutions to management and where possible implement the solutions themselves in order to improve the performance of the organization, and motivate and enrich the work of employees. When matured, true quality circles become self-managing, having gained the confidence of management. Quality circles are an alternative to the rigid concept of division of labor, where workers operate in a more narrow scope and compartmentalized functions.

Cellular manufacturing, sometimes called cellular or cell production, arranges factory floor labour into semi-autonomous and multi-skilled teams, or work cells, who manufacture complete products or complex components. Properly trained and implemented cells are more flexible and responsive than the traditional mass-production line, and can manage processes, defects, scheduling, equipment maintenance, and other manufacturing issues more efficiently. (This technique was used outside of manufacturing as well)

In summary overall, the initial benefits from these systems were very good, yet over time their effectiveness and efficiency waned and by the early 2000’s they had frequently dropped out of use. We wanted to understand if there were any lessons in this history that may apply to the next generation of non-hierarchical approaches being proposed today.

Quality Circles

The summary below, taken from Wikepedia,  is a pretty accurate and succinct description of the issues Circles faced:

Based on 47 QCs over a three-year period, research showed that management-initiated QCs have fewer members, solve more work-related QC problems, and solve their problems much faster than self-initiated QCS. However, the effect of QC initiation (management- vs. self-initiated) on problem-solving performance disappears after controlling QC size. A high attendance of QC meetings is related to lower number of projects completed and slow speed of performance in management-initiated QCS. QCs with high upper-management support (high attendance of QC meetings) solve significantly more problems than those without. Active QCs had lower rate of problem-solving failure, higher attendance rate at QC meetings, and higher net savings of QC projects than inactive QCs. QC membership tends to decrease over the three-year period. Larger QCs have a better chance of survival than smaller QCs. A significant drop in QC membership is a precursor of QC failure. The sudden decline in QC membership represents the final and irreversible stage of the QC’s demise

One of the big problems with Quality overall is that inconvenient messages of failure often get the messengers shot by embarrassed powerful people in sales, operations and finance. Quality Circles, multidisciplinary by nature, had no one powerful person who was a natural sponsor, so they needed a high degree of top management involvement (read: protection) to ensure they could survive the slings and arrows.

The other problem Quality Cells hit over time were newer, shinier fads came along – and thus these Circles were dropped as the newer fads needed crewing up, as the same workers had to be involved to make the new Thing work, so the Old Thing was dropped . That the new fads were more sympathetic to more traditional hierarchies didn’t help the cause of circles.

Cells:

The biggest challenge when implementing cellular manufacturing in a company is dividing the manufacturing system into cells. The issues may be conceptually divided in the “hard” issues of equipment, such as material flow and layout, and the “soft” issues of management, such as upskilling and corporate culture.

The “hard” issues are a matter of design and investment. The entire factory floor is rearranged, and equipment is modified or replaced to enable cell manufacturing. The costs of work stoppages during implementation can be considerable, and lean manufacturing literature recommend that implementation should be phased to minimize the impacts of such disruptions as much as possible. The rearrangement of equipment (which is sometimes bolted to the floor or built into the factory building) or the replacement of equipment that is not flexible or reliable enough for cell manufacturing also pose considerable costs, although it may be justified as the upgrading obsolete equipment. In both cases, the costs have to be justified by the cost savings that can be realistically expected from the more flexible cell manufacturing system being introduced, and miscalculations can be disastrous. A common oversight is the need for multiple jigs, fixtures and or tooling for each cell. Properly designed, these requirements can be accommodated in specific-task cells serving other cells; such as a common punch press or test station. Too often, however, the issue is discovered late and each cell is found to require its own set of tooling.

The “soft” issues are more difficult to calculate and control. The implementation of cell manufacturing often involves employee training and the redefinition and reassignment of jobs. Each of the workers in each cell should ideally be able to complete the entire range of tasks required from that cell, and often this means being more multi-skilled than they were previously. For this reason, transition from a progressive assembly line type of manufacturing to cellular is often best managed in stages with both types co-existing for a period of time. In addition, cells are expected to be self-managing (to some extent), and therefore workers will have to learn the tools and strategies for effective teamwork and management, tasks that workers in conventional factory environments are entirely unused to. At the other end of the spectrum, the management will also find their jobs redefined, as they must take a more “hands-off” approach to allow work cells to effectively self-manage. Instead, they must learn to perform a more oversight and support role, maintaining a system where work cells self-optimize through supplier-input-process-output-customer (SIPOC) relationships. These soft issues, while difficult to pin down, pose a considerable challenge for cell manufacturing implementation”

The issues the Cells had were not, then, just the “hard” systemic issues – or at least these were easier to predict and solve albeit could hit the business case at transition. The really hard issues were the “soft” ones, especially the requirement to have people who could be multi-skilled, whereas a more Taylorist system, with tasks broken down, can use less skilled labour. It would seem that whereas Cells when working properly worked very well indeed, it took more effort to set up and run them, whereas hierarchies have lower setup costs, need less “soft skilled” attention and can still work adequately, even if not properly run. In other words, Cells were high impact but high maintenance, and if they could not get all the inputs right – continually-  Cells tended to perform no better (if not worse) than hierarchical systems.

 

10 Reasons for Success or Failure

In his book “Quality: A Critical Introduction”,  John Beckford quotes the example of a western retailer that took almost every wrong step in the book. These included:

– training only managers to run quality circles, and not the staff in the retail outlets who were expected to participate in them
– setting up circles where managers appointed themselves as leaders and made their secretaries keep the minutes. This maintained the existing hierarchy which quality circles are supposed to break out of
– expecting staff to attend meetings outside working hours and without pay
– ignoring real problems raised by the staff (about, for example, the outlets’ opening hours) and focusing on trivia (were there enough ashtrays in the customer reception area).

In summary, our research showed there were also a number of other conditions that also tipped the balance,and in summary  meeting or avoiding the the following conditions were essential for success:

1. Need to have top management involvement for them to work
Without top management support and resource allocation they seem to never make it to more than localised “interesting experiments”, and won’t scale or roll out. Over time they are not seen as part of the mainstream way of working and are prone to being disrupted operationally and politically (see point 9 below).

2. Have to be above a certain size/skill level to operate well (enough members)
This applies mainly to Quality Cells – they need a fairly large membership to keep going as people get caught up in other tasks, move on, or run out of creative ideas. Cells more tended to need a flow of new blood to prevent ossification.

3. Members need to be trained to use them (hard and soft tools). Both Quality Circles and Cells have two key requirements:
– People need to know how to use a large number of the tools/techniques they require, and that means they need to upskill from the more traditional Taylorist huge division of labour model
– People need to learn how to manage both themselves and everyone else in a team without a hierarchical structure, to ensure that things get done

4. They will not work if the thing they are trying to do doesn’t work in the first place
Circles and Cells were designed for very specific reasons and tasks, but were too often used as last gasp attempts to solve very intractable problems. You can’t inject quality into poor designs or substandard materials, and a cell approach won’t work for commodity products when Western labour costs are much, much higher than the Far East. All too often they were not given the authority, resources or time to match the responsibility they were tasked with, and so failure was assured.

The main reasons most fail are:

5a. Management kiboshes ideas coming from Quality Cells, especially if it impacts Management
5b. Cells are not given the authority to cover the responsibility they have
(i.e. the premise of both is scuppered from the get go)

6. Natural life – There is evidence that any organisation of people has a “natural life” before it ossifies. People naturally lose enthusiasm and interest after some time as operationally the biggest problems are solved / all ideas are aired/ rewards given don’t match effort put in etc., and the circle or cell ossifies and eventually dies. Given that mesh system require more input from their members, this process hits them harder than hierarchies.

7. Emergence of an internal hierarchy in the Circle or Cell is a real probability as it is natural for people to derive a “pecking order”, and must be managed – if it happens, losers tune out/leave and the people rising to the top in this way are too often not the best for operational effectiveness.

8. No real rewards for doing QC/Cell work well means people don’t have a motivation to do this over the more comfortable status quo (the real killer is to use it overtly as a cost reduction/output increase approach).

9. In a mesh structure, as opposed to a hierarchy, every node must be more fully functional. This quote from Wikipedia sums it up:

“The implementation of cell manufacturing often involves employee training and the redefinition and reassignment of jobs. Each of the workers in each cell should ideally be able to complete the entire range of tasks required from that cell, and often this means being more multi-skilled than they were previously. For this reason, transition from a progressive assembly line type of manufacturing to cellular is often best managed in stages with both types co-existing for a period of time. In addition, cells are expected to be self-managing (to some extent), and therefore workers will have to learn the tools and strategies for effective teamwork and management, tasks that workers in conventional factory environments are entirely unused to. At the other end of the spectrum, the management will also find their jobs redefined, as they must take a more “hands-off” approach to allow work cells to effectively self-manage. Instead, they must learn to perform a more oversight and support role, maintaining a system where work cells self-optimize through supplier-input-process-output-customer (SIPOC) relationships. These soft issues, while difficult to pin down, pose a considerable challenge for cell manufacturing implementation”

The change management programme here, moving from a traditional structure, needs to be huge.

10.  Staff, Cells and Circles usually exist within larger hierarchical structures, and there are continual tensions that must be managed. There are many whys and wherefores (see above points), but to use a biological system analogy, in essence the larger  organism tries to reject the foreign element and unless there is continual usage of immune-suppression drugs, it will eventually be rejected (unless the whole structure is changed – difficult –  or the cell/circle is kept at some distance, which loses a lot of the proposed benefit). The corollary – hierarchies emerging within heterarchical structures – is uncommon insofar as there are so few heterarchical structures, but exceedingly common insofar as the normal evolution for any heterarchy is a hierarchy – initially informal (a “pecking order”), later formalised. This pattern exists from early human settlement to the latest research on work teams and other “flat” structures.

 

(In)Conclusion

Big picture, its hard to set up and maintain these sorts of Cell/Circle structures for any period of time compared to a hierarchy – they are higher output, higher impact, true – but also need higher setup and input effort to keep the benefits flowing. This is interesting, as in theory a network/mesh is more stable than a rigid structure as it is more effective,  flexible and resilient. All the latest organisation models make the axiomatic supposition of mesh superiority for these reasons.  Unfortunately the one thing that is not coming through is that these early heterarchical structures were lower energy, stable, or self sustaining in any way (the opposite in fact) – whereas all the research is implying that hierarchies are (far too) stable and self sustaining.

It is very clear that setting up and running these early heterarchies was non trivial. It is also very clear that hierarchies are a comparatively stable state structure (By the way, the Holacracy model seems to look much like a conventional hierarchy above the workcells). Not only that, but where Cells and Circles were set up within a hierarchical milieu, they struggled. The opposite is not true, hierarchies – often initially “pecking orders”, later more formal structures – usually replaced the  heterarchies in these cells and circles unless carefully managed.

Arguably of course, these problems above are due to trying to construct heterarchical systems within existing hierarchies, and one should instead rather start an organisation as one means to carry on (the Heterarchical Startup gambit). But will a heterarchy scale up the Dunbar numbers to 50, to 150, to 500 people, as the level of automatic co-ordination reduces?  Note there are no examples of large scale Cells or Circle organisations, they all tended to operate within hierarchical structures, mainly defined by the workflow of the underlying enterprise, and typically topped out between the 15 and 50 Dunbar numbers.

Anyway, there is clearly something in these “Heterarchy 1.0” system designs that is flawed, we are not yet clear as to precisely what it is. That is the subject of ongoing research for us, but we believe these 10  lessons are all clearly useful for looking at the new wave heterarchy thinking around today and so we are looking at all the new ideas with the points in mind – but that will be a future post (or probably more than one…)

 

*Fishnet structures are interesting as they – in my view – point to the probable endgame, i.e. structures that can integrate heterarches & hierarchies.

 

Three interesting findings from MIT/Sloan Review on why Social Business projects fail, based on  data from the 2013 social business report from MIT Sloan Management Review and Deloitte, “Social Business: Shifting out of First Gear,” (points summarised below):

1. Managers go into social business with unclear business  objectives.

The first insight can be found in the question that asked respondents whether the social business initiative they were involved in was started to address a specific business problem. Sixty three percent of respondents indicated “no.”

This situation, a classic one with information technology, occurs when managers hear about the latest technological developments and decide their organizations need to adopt these tools simply because colleagues and competitors are doing so.

Uncritical adoption of technology, particularly when associated with social business, is a recipe for failure

2. Initiatives start as pilots then fizzle out due to modest participation.

A clear business objective may not be initially necessary, however, if the initiative is explicitly started as a pilot project…..Indeed, about half of the respondents indicated that the social business initiatives without a clear business objective were intended as a pilot project.

The problem with pilot projects is that they require an important condition for success that is often painfully lacking in most organizations — slack resources. If employees are going to figure out how to employ new social business tools in their work, they need free time to explore the technologies and figure out how to integrate it into their work.

3. Companies expect social initiatives, even pilots, to deliver a financial return on investment.

The third insight comes from the fact that 53% of social business initiatives are expected to deliver a financial return on investment (ROI). This finding, by itself, is not surprising of course. The desire to demonstrate ROI is understandable in for-profit companies, even if it is often notoriously difficult to achieve with social business initiatives.

More surprising is that there is a surprisingly low correlation between the desire for a financial return on investment and responses to the previous two questions.

As the article points out, it is difficult to quantify or achieve ROI in social business initiatives when its business objective has not been clearly defined.

It was interesting in the Enterprise 2.0 Summit in Paris that over and over 3 key points were felt to drive successful projects:

• Solve a business problem
• Even if there is no formal ROI, understand how value will be created by the Social Business project
• Get backing from the resource holders – pilots and point systems can only grow so far.