We are all to varying degrees prisoners of our metaphors. This is true in both our heads and when we communicate with others. And it’s definitely true in business. Depending on your industry, any number of metaphors can guide the acquisition of new capabilities. However, there is one global metaphor shift that will help you and your organization succeed in the Network Age, and that is shifting from a mechanical to an organic worldview – from a view of your business as a machine to an actual living ecosystem.
In the last few decades, the predominant metaphor has shifted in nearly every one of the sciences from mechanistic to organic. Some scientists have even posited that the universe itself may essentially be a living, complex organism. So it’s just time business updated its metaphor as well.
The machine metaphor is ubiquitous. From the dawn of the Industrial Revolution, we have used metaphors about machines to communicate about work. When things are running smoothly we say they are “humming along” or “it’s well oiled”. Likewise, if we encounter a problem that needs to be fixed, we simply “re-engineer” the machine.
Frederick Taylor, the pioneer of industrial age management, used his stopwatch to measure the motions of people as parts in a machine. This was the machinery of the Industrial Age, and make no bones about it, this reductionist approach yielded unprecedented gains in productivity and material wealth.
It seemed rational to treat people like parts in a machine when the way that you unleashed productivity was by putting people into factories. Those factories required huge outlays in capital. It therefore made sense to make decisions around the binding constraint on growth – capital itself. Measures like return on equity and the DuPont formula arose to facilitate rationing of capital and ensure its application to highest return opportunities.
Is ROE Capitalism’s “Runaway”?
The cornerstone of the Industrial Age business measurement system was ROE. Several years ago the Harvard Business Review published an article entitled Runaway Capitalism. A “runaway” in evolutionary terms is when natural selection and sexual selection become decoupled, as in the case of the peacock’s tail. The tail offers such evolutionary disadvantage that peacocks would be extinct were it not for the fact that humans like to collect them. Yet peahens are drawn to the tail, so it continues to be selected for by the species even though the natural environment does not support it. The author’s point was that ROE may be capitalism’s runaway. And the implication is that it may threaten the continued survival of the planet and the species.
The Challenges of a Machine Metaphor
If the above is true, then perhaps the biggest challenge presented by machine management is the belief that everything should myopically serve the machine. And that one number, ROE, represents “the One Ring to rule them all” in the machine metaphor.
Other challenges with the machine metaphor include the fact that it stifles initiative. Henry Ford captures the essence of the machine mentality when he asks, “Why is that when I inquire for a pair of hands, they come with a brain attached?” A business that is run solely as a machine is not adaptive. It is too cumbersome and slow and fails to consider externalities. It isn’t designed for emergence. Or as Carolyn Hendrickson, a Ph.D. in organization design quipped, “Why don’t matrix organizations work? Because the mind that designs the matrix is not the mind that inhabits it.”
One of the challenges of a machine metaphor is that we tend to apply it to ourselves when increasingly network scientists are showing us that we are ourselves the products of the networks we engage in.
Despite these problems with machine view, there are new perspectives that can include it in a new larger whole – that of the complex ecosystem.
The Power of a New Metaphor: The Complex Ecosystem
Modern organizations are composed of complex living systems or networks. The metaphor of an ecosystem implies we are part of a community of living organisms, intertwined with nonliving components like technology, all interacting as a system.
This boundless system goes far beyond the physical boundaries of the firm and includes psychosocial characteristics as well as the material elements of our supply chain. It also includes the emergent outcomes of local agents acting upon very simple rules (which is why a rigid three-year plan won’t work). In order to compete and stay relevant, we need to stop managing what we think of as static machines and start nurturing our boundless dynamic ecosystems. Some principles for a networked ecosystem design could include the following:
1.Think like a Gardener: assemble, shape, influence, enable and nurture.
Recognize that some problems like the “diabesity” crisis cannot be directly solved. For certain classes of problems what scientist call “wicked problems” we must focus on building capabilities for solutions rather than solutions themselves.
2. Start with Purpose. Purpose has been proven to be the factor that enables firms to outperform their contemporaries over extended periods of time. Purpose is the first step in our “strength from the inside out” methodology of ecosystem design and orchestration. Purpose gives a network energy, and it is a natural north star. The HP Way offers a classic example of purpose as an ecosystem design principle. It is as much a set of values that provides the basis for how people in the ecosystem will treat each other as it is an explicit statement of what the ecosystem is designed to accomplish. In complex networks, it is simple rules acted on at the local level that create the network experience. In a business ecosystem, these values act as simple rules that guide the behaviors of decision-makers locally and empower change at the network level. Strategy in the network age is about communication flows and the incentives and relationships driving them. In times of change and uncertainty, values and purpose can provide the DNA for a network structure by enabling communication flows and aligning intellectual, human and social capital.
3. Design for the Whole. Tim Cook tells the story of coming to Apple for the opportunity to work at the seams between hardware, software and communications because in his words “that’s where the magic lies”, Leaders who are network designers and ecosystem enablers know that the value you capture cannot exceed the value your ecosystem creates. In this sense, Michael Porter was wrong: There aren’t five forces, only one. In nature, waste equals food. Likewise in business, in the strongest ecosystems the parts feed each other. Disney’s ecosystem is a great example of a synergistic or integrated business ecosystem in which one innovation feeds the others. When a new Pirates of the Caribbean comes out, for example, the studios make money, the theme park gets a new ride, the franchises sell toys, the brand sells licensing agreements, and each of these entities benefits because the network is designed so that novelty within one part brings activity to the others. In working with clients across industries, we have found there is opportunity to have outsized share of voice and corresponding share gains by helping to solving larger pressing ecosystem problems even if you are not an ecosystem creator like Apple or Disney. On a more modest scale, taking the bigger view allows one to mobilize resources from complementary providers and other stakeholders.
4. Consider the Parts when Designing the Whole. It is widely known that businesses increasingly win on experience. Increasingly, companies compete by creating platforms upon which customers co-create and it is therefore nearly impossible to separate the network experience from the user experience. It is also the case that we are increasingly a cyborg network now. The best chess teams in the world are currently centaurs- half man half machine. How are you using to technology to augment your team’s abilities? And do you understand all the facets of your network experience?
5. Make your People Network Designers. Empower everyone at your company to understand and shape network behaviors—in short, to design for emergence, because as Churchill said, “We shape our Buildings initially. Thereafter, they shape us.” The same is true of our social structures.
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