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(originally published by Booz & Company)


The Organization Is Alive

To change an organization from within, it helps to understand four basic circulatory systems, analogous to the channels of communication in a living body.

Over the past 30 years, management thinkers have largely come to accept the idea that organizations are not machines; they are as unpredictable, unruly, self-organizing, and even sentient as any living beings. Gareth Morgan, Arie de Geus, Peter Senge, Meg Wheatley, and others have written eloquently about this. Even those who don’t buy the idea of organizations being literally alive are bound to agree when writers such as Jon R. Katzenbach and Zia Khan (in their book, Leading Outside the Lines: How to Mobilize the Informal Organization, Energize Your Team, and Get Better Results [Jossey-Bass, 2010]) suggest that hard-nosed, engineering-oriented leaders need to develop virtuosic skill at managing the informal, personal aspects of a company. In other words, although organizations may not literally be alive, when it comes to running and changing them, they might as well be.

In that light, the primary organizational challenge facing any business leader is much like the challenge facing a parent: to understand this living entity, placed partly in your care, well enough that the moves you make will lead to productive growth and change. And although there is a body of theoretical work on living systems (including that of Chilean philosopher Humberto Maturana) to draw on, those writings have little to do with the day-to-day realities of a product launch or a project team.

But there may be some help in the rough resemblance between biological circulatory systems and the way that information travels in organizations. For example, some of the most interesting and accessible writing about the human body (at least to a layperson like me) has to do with the interlinked bloodstream, neural networks, and chemical systems that regulate life. Sherwin B. Nuland, a Yale University–based surgeon and writer, explains the uncanny responses of human physiology this way in his masterwork, The Wisdom of the Body (Knopf, 1997).

To coordinate all of the instabilities in all of the cells [of the human body] requires that the far-flung parts of an organism be in constant communication with one another, over long distances as well as locally…. This is accomplished by messages sent via nerves, in the form of electrical energy we call impulses; via the bloodstream, in the form of the chemicals we call hormones; and — to nearby groups of cells — via the specialized substances we call local signaling molecules. As each of these methods of communication was discovered, researchers…came to recognize the inherent wisdom of the body.

Nuland portrays the cardiovascular system, the neural network, the endocrine system, and other biological systems as vital channels of communication, exchanging chemical and electrical signals, and thus enabling the health and vitality of the whole. Might something similar be true of companies and other organizations? Indeed, in both management literature and everyday corporate practice, four such systems seem to be consistently important. They are channels through which organizations communicate with themselves; and they each tend to carry distinctly different types of communication.

  • The hierarchy is a circulatory system for messages of authority; specifically, for anything that can be expressed as a number. It is the means by which the organization seeks scale. It flows from and to the top: the CEO and then the shareholders or owners. It might be analogous to muscle coordination.
  • The network conveys knowledge — in the form of gossip, guidance, information about opportunities, and anything else that people talk about easily. It is the means by which the organization develops its capabilities. It flows from and to a broad base of people throughout (and outside) the company. It might be analogous to neural networks.
  • The market is the exchange of goods, services, and money within an organization and its value chain. It is the means by which the organization manages its workflow. It transmits anything that can be bought, sold, or traded, flowing ultimately to the customer. It might be analogous to the cardiovascular system.
  • The clan is the family or community-like circulatory system, operating below the surface of every organization (and often subconsciously). It is the means by which a company’s culture is maintained, with a “core group” of its most important people at the center. The organization establishes its view of legitimacy through the clan. It might be analogous to the endocrine system.
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  1. Art Kleiner, “Karen Stephenson’s Quantum Theory of Trust,” s+b, Fourth Quarter 2002: Introduction to network theory and “hubs, gatekeepers, and pulsetakers.”
  2. Art Kleiner, “Elliott Jaques Levels with You,” s+b, First Quarter 2001: The great theorist of hierarchies explaining his requisite structures.
  3. Art Kleiner, Who Really Matters: The Core Group Theory of Power, Privilege, and Success (Doubleday, 2003): The clan system and the nature of the core group, in detail.
  4. Gary L. Neilson and Bruce A. Pasternack, “The Cat That Came Back,” s+b, Fall 2005: How Caterpillar rebuilt its organizational DNA (and its workflow and hierarchy).
  5. Gary L. Neilson, Karla L. Martin, and Elizabeth Powers, “The Secrets to Successful Strategy Execution,” Harvard Business Review, June 2008: How implementing a strategy starts with information flow and decision rights.
  6. Sherwin B. Nuland, The Wisdom of the Body (Knopf, 1997): How biochemical interactions, via our circulatory systems, explain the quintessence of Homo sapiens.
  7. Authentic Leadership in Action Institute website: Programs include weeklong courses on social innovation, collaboration, and human systems dynamics. 
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