SOCIAL NETWORKS IN TRANSFORMATION OF OUR ORGANIZATIONS

A sample chapter from our up coming “Practicing OD: Leading Change and Transformation” Fourth Edition. Wiley.

Our Whole System Transformation ( WST) journey’s see the facilitation of networks in the critical mass as the tipping point for positive organization change.

Working Trust is the fusion force in effective relationships. With our clients, trust most always surfaces as the key challenge these days of unexpected and rapid change.

A key outcome of our WST modality is Being and Becoming a more trust-filled agile organization. We believe such a transformed system will soar to new heights.

Dr. Karen’s theory and practice support what Maja Balasi  and I do.

Oh. What a story it was to get her into the book. She has been terrific to work with.

The combination of her work with our work can change the world!!

Use of her tools for a pre and post test of an organization’s trust network evidences the powerful impact of WST.

As soon as the system sees who it is, it shifts naturally through our designed robust process to it’s potential consciously. Very little resistance to change.

What we like to do is to use her instrument to discover the most influential in an organization and then bring them into our summits. WOW! The transformation that such group can make when aligned is magical!!

This is not an easy read. It requires deep reflection.

Dr. Karen’s chapter is so complementary to our Mergers and Acquisition Chapter. I have identified Mike and Phil as the best OD consultants in the domain. If M & A people would only build trust from the very beginning, aspirations would best be more realized.

In sum, networks are powerful. Good and evil networks are changing the world today.

WST channels the power for the good.

As my daughter and many of her new generation of OD Millennials believe. Use our social psychological or OD competence to uplift a sustainable and strong bio-diverse Mother Earth.

My hope is that you may have the discipline to hear what Karen is saying and then adopt her wisdom in your own way to your Change leadership efforts.

She says a great deal in a few words!!

Truly.
Roland

BEYOND SOCIAL NETWORKS: THE ÜBER CONNECTION

Karen Stephenson

http://www.drkaren.us/

A conventional organizational classification schema should be expanded to include heterarchy, in addition to networks (Powell, 1990), markets, and hierarchy (Williamson, 1976). Heterarchy is a precise amalgamation of networks and hierarchies (Stephenson, 2009). This organizational structure challenges more traditional forms of governance and organizational change and therefore presents an opportunity for organization development (OD) research in the 21st century.

We are on the cusp of a tipping point in 21st-century governance.

With the addition of network science in OD and the general, albeit young, practice of social network analysis, academics are researching and recording the successes and failures of singular hierarchical governance in diverse cultures in global society. Social network analysis is best defined as the practice of mapping and measuring a network of social relationships.

A network is depicted as a set of nodes, representing individual actors, and edges, representing the relationships between the individuals and usually drawn as lines connecting the nodes to each other. A network diagram can represent friendship, kinship, market relations, and organizational behavior.

Singular hierarchical governance, meaning a chain of command, worked well when the world was large and flat. That was before the advent of the digital domain that has made our world small and über connected (meaning superiorly connected and derived from the Nietzsche’s 1883 coinage of the term “Übermensch” to describe a higher state of man). It is suggested that this digital landscape will rival anything the Serengeti plains offered our hominid ancestors. In fact, we need not look back millennia but only 100 years to read Durkheim’s vision of the world as a vast interconnected network of institutions (Durkheim, 1933). He was correct. Organizations have morphed beyond singular entities into vast networks or conglomerates. Networks of organizations – or so-called heterarchies (McCulloch, 1945) – come with an innovative form of governance. Capitalizing on this organizational structure may require a rethinking of governance models and institutional change in future OD research.

Heterarchy is an organizational structure comprising a network that links three or more different organizations (hierarchies) to each other, where no single organization is privileged over the other (Stephenson, 2014). Networked together, these hierarchies share in the collective governance of the whole to achieve a greater good that no single organization could achieve on its own. This requires participating organizations to suppress their competitive drive in lieu of a collaborative ethos that benefits the whole network (Coase, 1937). We know something about larger heterarchies because of their spectacular failures. For example, the 2010 Deepwater Horizon oil spill was a man-made collision of special interests, which resulted in a natural disaster of epic proportions. Specifically, multiple organizations such as Halliburton, British Petroleum, and several insurers were locked in contractual relationships when an explosion struck and eleven lives were lost. In a maelstrom of publicly abdicating responsibility, organizations passed the blame while the deep sea rig bled oil into the Gulf of Mexico destroying marine and wildlife habitats, and fishing and tourism industries in what was to become the largest oil spill in the history of the petroleum industry.

Heterarchies are not dysfunctional by nature; they become dysfunctional when a leader of a single hierarchy naively privileges his or her own interests over the whole. Said differently, leaders mistakenly assume that their special interests are the only things that matter. This is largely due to how leaders learn their tradecraft by practicing as serial CEOs or directors of singular hierarchies. Alternatively, they may have been educated in business schools that are grounded in 19th century norms of leadership. Either way, leaders are generally unprepared to manage the social networks embedded in heterarchies.

SEGMENTARY SYSTEMS
Heterarchies require much more than a coalition of the willing; they demand a well-designed and coordinated network to ensure the alignment of tasks across multiple and (at times) competing organizations. Not recognizing the primacy of this network structure in heterarchies is precisely why the most well intentioned leader will be derailed by segmentary politics. For example, teams or departments are created not from the ground up, but from sub-units of existing segments, mimicking cellular division. As smaller “chiefdoms” proliferate, they compete against each another, calling a truce only when a larger chiefdom threatens their mutual existence (Sahlins, 1961). For example, consider a government division where one team jockeys for position with another, one department attacks another to protect its budget, and the over-arching division as a whole fights other divisions to defend its turf. In these systems there is no internal structure or infrastructure to join up the system as whole; it is simply a collection of hierarchies or vertically “integrated” silos. As such, segmentary systems are never more (and often much less) than the sum of their parts, calculating power by comparing and contrasting their stock, status or budgets with other segments. If push comes to shove, they will cannibalize other parts of the organization in order to preserve their part (Douglas, 1986). This ruthless survival tableau describes segmentary politics. If leaders could step back and see the whole network of interacting organizations instead of only their portion, then no one would have to die, pay amends, or bear any of the blame.
An example of segmentary politics in health care happened in 2014, when the U.S. military health care system experienced an alarmingly high number of ‘never events’ (fatalities which are potentially preventable). The system is organized as a coalition of the willing and comprised of four major players: Army, Navy, Air Force and the Department of Defense (DoD). When certain ‘never events’ were revealed in a New York Times exposé, each leader of the member hierarchy blamed the others, when in fact, forensic analysis revealed that refusal to share patient data across the heterarchy is what led to the fatalities. As a former Army policy officer said: “Why should the Army safety system want to play with DoD? Because then I have less control over my data, less control over my kingdom (emphasis mine), and potentially DoD is going to tell me what to do,” (LaFraniere & Lehren, 2014, p.32). His words were taken straight from a page in the playbook of segmentary politics (Sahlins, 1963).

Heterarchies are an entirely different species altogether. Member hierarchies within the heterarchy will suppress the killer instinct in lieu of collaboration with others because they understand that if the higher objective is achieved, then they all stand to benefit, and not at the cost of a peer. By leveraging crosscutting collaboration to solve crosscutting problems, greater systemic benefits can be achieved. An example of a successful health care heterarchy is summarized in Sobczak (2014). Wisconsin hospital administrators recognized that “coalitions of the willing” in managing re-admissions would break down once collaboration clashed with the individual hierarchical chains of command in participating organizations. So they designed a sustainable heterarchy by (1) rewriting policy to account for institutional integration and collaboration, (2) designed the collaborative network that would sustain the heterarchical structure, and (3) building in individual incentives specifically targeting lateral collaborative behaviors that were a regular part of individual performance measures. Space constraints prohibit further elaboration of case studies, but the reader is referred to the reference material for additional supporting examples (Stephenson, 2008).

SUMMARY
Twenty-first century organizational governance must address a structural “deficit’ in theory and practice that only heterarchy can fill (Stephenson, 2011). Blueprints of the industrial complex – conventional hierarchical governance – are still needed and well researched. But, there is a new class of blueprint that is required and addresses the social networks between organizations, and not just at the board level, but at all levels. Heterarchical governance is deeply rooted in social network theory and practice. I suggest it may require a broadening of what problems we choose to research in OD going forward.

DISCUSSION QUESTIONS
1. Network connections are generally trust-based; hierarchical connections are generally authority-based. How would you use this framework to construct a research design for the study of heterarchies?
2. Can you identify historical geo-political conflicts and deconstruct their outcome in terms of heterarchical governance or the lack thereof?
3. What industries are most likely to organize themselves as heterarchies and why?
4. Have you observed heterarchical structure in your own work or research? If so, can you describe specific examples of the management or mismanagement of heterarchy?
5. How can the concept of heterarchy provide insight and new directions for OD practitioners?

RESOURCES

For a practical case study of organizational heterarchy applied to hospital readmissions, read “Wisconsin Hospitals Tackle Readmissions with Inside/Outside, Macro/Micro Strategy” by Stephanie Sobczak:

http://www.wha.org/pdf/Readmissions0614Sobczak.pdf

Social Network Analysis on Unique Characteristics of Organizational Heterarchies by Karen Stephenson:

http://web.archive.org/web/20130729204859id_/http://itc.conversationsnetwork.org/shows/detail1080.html

Kindly do not abuse our gift to you. I do not want to see this showing up on the web. While I believe in the free dissemination of knowledge, our publisher does not.

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