Saturday, November 27, 2010

Between Hierarchy and Anarchy

<-ding-><-ding-> In my corner to the right, representing Big Hierarchy Inc, is Dave Snowden, a renowned expert of knowledgement management. Now entering on the left is Steve Denning , a purveyor of business narrative, representing Team Anarchy. This fight is scheduled for a few rounds or until some secrets are revealed...
In his post on November 26th, Dave talks about large organizations, big bureaucracies and businesses. On the other hand, in The Alternative to Hierarchy or Anarchy about his Radical Management book, Steve talks about techniques found in new, small, highly entrepreneurial businesses. For all the differences in their posts, and the vast difference in size, the two types of organizations have a lot in common. They are both grounded in the intellectual property business of providing software and services.

I think the real difference between the two alternatives is in how the work gets done. And so in this case we need to look deeper into the two systems being compared. In the matrix organizations that Dave discusses, and in similar large private and public bureaucracies, work comes from many points. However the rewards still come from the worker’s hierarchical connections. In essence, the boss who grants the rewards is the first among equals.

In the non-hierarchical, self-directed or even anarchical situations that Steve alludes to, work starts from within. But then were do the rewards come from? They come from the contract, explicit or implied, between the worker and the organization that is the sponsor.

If rewards matter to getting work done, then we need to consider how people are motivated. Looking at rewards under the best of circumstances provides a way to compare hierarchy and anarchy. If we look at the combinations of structure, motivation and reward, we can see that there is a relationship between both size and formality. The model I'll present here is a “best practice” one which shows all cases.

There are many subtle variations in the variables, enough so that we can find cases that “prove” the stereotypes of flawed organizations. Dave and Steve have cited some of these on a regular basis. There is plenty of evidence that monetary rewards don’t motivate very well, as Bob Sutton and other commentators describe. 

I think that the capacity to reward does matter significantly, and that there is a theoretical framework that  governs organizational practice. In order to follow the arguments and to recognize the claims and counterclaims, we need a framework that puts the discussion in order. Here is an attempt at such a model, a simple 2x2 management tool for looking at the alternatives:


They are both right. Hierarchy and Anarchy are opposed. It is just that context that lies between them that is different.  This round is a draw. <-ding-><-ding->

1 comment:

  1. Tony, as far as I can see at no point does Steve say that he is restricting his comments to small entrepreneurial organisations. Steve writes well and I am sure if he had meant such a restriction he would have said so.
    He also says that hierarchy legitimizes itself by saying that anarchy is the only alternative he does not advocate it; some very basic errors on your part there.
    Equally I was not advocating hierarchy at the expense of other organisation forms, but arguing against either/or approaches in favour of both/and ones.
    So your initial statements are either misreadings, misunderstands or misrepresentations.
    As to your two by two model I think its plain wrong (and simplistic not simple). Matrix forms are used in formal organisations, hierarchies exist in small ones. Partnerships are hierarchal and also are used in large groups. Anarchy cannot exist (a priori) in an "organisation.
    So its not that the round is a draw, but that the contest as described is a fantasy of the commentator. (Who should by the way get a more user friendly blogging tool for comments.)

    Dave Snowden