Neuronal Networking as the Organizing Principle for Enterprise Architecture to Unfold Human Potential and Creativity
A guest article by FRANZ RÖÖSLI, MICHAEL SONNTAG and DOUG KIRKPATRICK
The human brain exhibits a series of unique and highly desirable characteristics. It has the ability to grow rapidly during development, to learn, adapt and self-heal after injuries. lt is capable of making new discoveries and connecting seemingly disparate thoughts. At the core of these characteristics lies the brain’s ability to self-organize and form new connections, which is described by the term ‘neuroplasticity’. In an age where adaptability, creativity, and connectedness are key success factors for organizations, a new understanding of organizations as living systems maybe called for. In this article, we want to introduce the concept of management plasticity that challenges the underlying beliefs that shape traditional organizational structures. In our case study on the highly successful tomato processing company Morning Star, we illustrate how the principles and practice of management plasticity, like neuroplasticity, allow for development and connectivity, learning and memory, creativity and leadership as well as innovation.
- 1. Hitting the Wall with Mechanistic Organizational Structures and Styles
The business environment has changed dramatically over the past few decades as modern economies have transitioned from the industrial age to the digital age, in which innovation and creativity have become critical success factors. Tue new and highly dynamic environment has brought an array of challenges and it seems that the old organizational structures were not suited to meet the new demands.
In this environment, restructuring has come to be seen as a panacea, with the underlying belief that if only the right organizational chart could be drawn up, businesses would once again be operating efficiently. This goal has proved to be elusive. The effort has been focused on what the organization would look like, but the way people work has not really changed. Even worse, employee morale, trust and engagement have been suffering, as numerous studies have shown.1
In our view at the core of the problem lies a linear-mechanistic understanding of organizations as machines with its deeply and therefore predominantly unconsciously underlying assumption of predictability and control. Hierarchical organizational charts are indicative of a business philosophy from a bygone era, in which maximizing machine productivity was paramount. Einstein once said: “We can’t solve problems by using the same kind of thinking we used when we created them” and we assume that the numerous counterproductive attempts at reorganization will continue or even intensify if the underlying beliefs that shape organizational structures remain unchanged.
A New Understanding: lntroducing Management Plasticity
To be successful in the new era, there is evidence that companies need a culture allowing employees to develop their human potential. This calls for a new understanding of organizations as living systems that operate in a mode of sense and respond, which is radically different from prediction and control for machines.2 What are the characteristics of a contemporary organizational structure and what principles could it follow?
1 See for example (LRN Corporation, 2012), (Towers Watson, 2014). 2 See (Laloux, 2014).
Looking at how Nature manages to cope with the dynamics and complexity of our environment we can try to build a new understanding. Modern neurobiology and affective neuroscience helps us to understand how the human brain’s ‘architecture’, through evolution, is conceived to cope actively with the complexity of the outside world in the most effective and impactful way. In fact in science the human brain is considered to be not only the most complex, but also the most adaptable living system that we know in the universe. lt is inherently built for learning.3 Our brain is organized as an immense, dynamic network based on self-organizing principles. lt is capable of changing either parts of its function or even its whole organizational state within milliseconds. In neuroscience this is called ‘neuroplasticity. lt is the ability to change functions coherently and quickly with a minimum of energy invested and without having to re-build or ‘re-structure’ the organic substrate.4
Besides high adaptability, self-organizing network structures have further portant advantages:
They are receptive to learning.
They work superbly even when the information is incomplete.
Being redundant, they are robust in case of partial failure of the system.
But how is neuroplasticity linked to the capacity to sustainably unfold human potential and creativity?
Research shows that unfolding human potential and creativity depends on our ability to mobilize intrinsic motivation.5 From neurobiology we know that these desired features will exclusively emerge when individuals and teams are able to act autonomously.6
See (Fuchs, 2009).
See (Haken & Schiepek. 2006). 5 See (Pink, 2010). 6 See (Panksepp & Biven, 2012).
On the other hand, not being able to act autonomously and to protect our integrity actively in the case of potential threat is a key cause of fear and chronic stress. In a state of chronic stress, as we all know, our overall health is impaired but also our cognitive capacity, e.g. our ability to think clearly and to create new understanding and connections is reduced dramatically – we are no longer able to find new solutions. But also our ability to connect socially, the precondition to ask for help, is dramatically impaired. Tue neuroplasticity of our brain declines severely. Even worse: under stress we ‘regress’. We often return to our old strategies of action, exactly those ‘proven’ strategies which have caused the existing rigidity and inability to act. Tue negative process is intensified. Stress and the energy invested to survive and ‘keep control’ increases while the energy reserves are ‘burned out: This is the case on an individual as well as on the organizational level.
Conversely, if a person has the organizational – not only personal capability to act freely, in a self-organizing manner, the brain is stimulated and the energy level will increase. In this positively stimulated state, clear and flexible thinking is enabled and new thought patterns and innovative approaches arise. The eagerness to connect socially, which is the precondition for creativity, and the ability and willingness to act in a goal-oriented manner will rise. The brain’s neuroplasticity is boosted.
As we have seen, the traditional management approach with its rigid, command-and-control structures, division of labor into functional silos and underlying human nature assumptions attempts to ‘manage’ and control the individual and to minimize his or her ability to act autonomously. Thereby it creates exactly the opposite conditions to those that would be .necessary to unfold human potential and creativity. Having understood these basic principles, we have to conclude, that if an organization wants to meet the new economic conditions by enabling the unfolding of its human potential and creativity, it will have to build organizational structures enabling freedom to act within good relationships. Tue resulting organic, plastic structure is a dynamic network of self-organizing individuals and teams.7
Setting the organizational parameters correctly will facilitate neuroplasticity, problem solving and constructive actions, the preconditions to survive in the dynamic and changing circumstances of today’s economy.
Therefore we define management plasticity as the ability of organizational management to engage the energy and potential of each member to collaboratively, creatively and effectively learn from and adapt to dynamic internal or external changes, opportunities or threats.
Morning Star as a Prototype
California entrepreneur Chris Rufer formed Tue Morning Star Packing Company to process tomatoes near the small town of Los Banos, California. In the spring of 1990, a tiny farmhouse on the outskirts of town became a beehive of round-the-clock activity. The tiny farm kitchen became a conference room, where an endless parade of job applicants, bankers, regulators, vendors, and contractors met together in nonstop organizational meetings.
Chris and his team focused with intensity on getting the new factory up and running. A successful startup would declare an entirely new level of industry competition. Most of Morning Star’s new employees (including Doug Kirkpatrick, a co-author of this article) had left secure jobs to join the team. If the venture failed, there would be short-term personal disruption, but most of them would be able to find new employment. For Chris, however, everything was at risk.
7 See (Sonntag, 2012).
In a March 1990 organizational meeting with the founder (attended by co-author Kirkpatrick), Morning Star adopted two core principles: first, people should not use force or coercion against other people, and second, people should honor the commitments they make to others.
The first loads of tomatoes arrived at Morning Star’s first new state-of-the-art facility in mid-July of 1990 and kicked off a successful processing season, producing over ninety million pounds of bulk tomato paste for the world market. Morning Star is now the largest tomato processor in the world, with over $700 million in annual sales, its products consumed by virtually everyone in North America and millions more around the world.
While Morning Star owes much of its success to an innovative low-cost production strategy, much of its success is also traceable to its unique organizational philosophy of self-management, which is core for an organizational modus operandi of sense and respond. As a successful self-managed organization, it is a case study in management plasticity.
Organizational Design and Philosophy
Morning Star exhibits zero hierarchy. There are no human bosses; the only boss is the mission. The operating philosophy is total self-management. Morning Star employees consider themselves professional colleagues.
Since command authority does not exist in the company, there is no unilateral authority to fire. Colleagues acquire or culminate the services of others by invoking written Colleague Principles. No one has a title, which reinforces Morning Star’s self-management philosophy. Everyone has an equal voice regarding decisions that affect them.
While lacking formal structure, there are resources available to help colleagues synchronize their activities with others. Each colleague executes a Colleague Letter of Understanding (also known as a CLOU). The CLOU is a dynamic, transparent, negotiated accountability agreement between colleagues declaring each individuars personal commercial mission, process stewardships, and performance measures.
Morning Star’s success takes place in a complex and demanding business environment. Morning Star colleagues continuously navigate complex disciplines that include cell biology, plant genetics, microbiology, food chemistry, thermodynamics, meteorology, global currency exchange and many others. The Colleague Letter of Understanding is a key navigational and communication tool that enables management plasticity by creating networks of individuals based on the resource requirements and urgency of diverse problems and opportunities.
Interpretation of Morning Star’s Management Plasticity
There is as much need for leadership in a self-managed organization as in a hierarchical one; self-managed leadership is just dynamic rather than static- it completely depends on the issue and the individuals. Leadership in such an ecosystem can rotate and evolve naturally, depending on the circumstances. No particular leadership style is required, and many leadership styles can work well. Morning Star’s expression of self-managed leadership fits our definition of management plasticity. lt also proved to be a key enabler of Morning Star factory construction. A small band of self-managed colleagues in 1990 (about 24 during the construction phase) were able to oversee the construction of a new, state-of-the-art, $27 million dollar factory in a period of just a few months. This project and others could not have been completed on time with traditional, command-and-control hierarchies. Paradoxically, the very simplicity of the two simple foundational principles adopted in 1990 facilitated the management plasticity driving Morning Star’s growth. People had no choice but to manage with adaptability, agility and flexibility. There were simply no traditional management systems available to do it otherwise.
With the advent of successful new organizational models like that of Morning Star, it is worth asking the question: how do the properties of neuroplasticity inform the emerging theory and practice of management plasticity?
Morning Star’s organizational network resembles a spider web of connectivity. All associations between members are voluntary, and digitally recorded in the CLOU. When these connections are rendered in a diagram, they resemble a neural network. If one were to make a time-lapse movie of such a diagram, it would dynamically change shape and size as individuals enter and leave the ecosystem or voluntarily renegotiate their relationships and commitments. Morning Star’s actual organigraph is depicted above, built from a digital rendering of CLOU data.
One benefit of management plasticity is that organizations become more resilient and are able to adapt with flexibility to dynamic change. Threats and opportunities cause Morning Star’s human network connectivity to change rapidly in response, much like a human brain; it is all about a constant flow of sense and respond. Clusters of connections form and dissipate in response to organizational needs. Tue rapidity of this formation and dissipation is often startling – attempting to concoct or reorganize teams in a traditional hierarchical model would be glacially slow in contrast. Co-author Kirkpatrick has personally engaged with multiple temporary hot teams formed to address issues like spiking insurance costs and capital project management.
Self-managed organizations have also demonstrated, like human neural systems, the ability to regenerate themselves and self-heal.8 When an individual leaves the Morning Star ecosystem, roles and responsibilities are quickly relocated by self-managing peers, without direction or control. If the individual exiting the system possessed a unique talent or skill that cannot be quickly replicated by others, colleagues engage a recruitment and selection process to fill any gaps.
Morning Star’s member colleagues experience no structural barriers to communication with anyone in the organization. Learning is an ‘always-on’ activity, as members in similar and dissimilar functions and locations seek information from each other that will improve their own performances, and those of their peers. Members of individual business units that cross multiple factories (for example, Steam Generation) come together at least annually to formally share learnings and experiences. These formal meetings augment continuous informal communications that drive superior performance and innovation.
Creativity is another natural benefit of neuroplasticity. The virtuous cycle of absorbing new and outwardly unrelated ideas, and connecting them in unexpected ways, is the essence of human creativity. Does management plasticity provide similar benefits to organizations?
For decades, the tomato processing industry used energy-hungry elevators to carry loads of tomatoes uphill into flumes for processing in factories. Morning Star’s founder, Chris Rufer, observed that unloading trucks on top of a hill would allow gravity to carry tomatoes into the factory without the use of elevators. Today, the concept of an unloading hill is an industry standard. Similarly, he observed that evaporating water from tomatoes to produce concentrate required the use of large, inefficient cooling towers to cool water for reuse. He replaced the cooling towers with large ponds, and let the water cool down naturally through evaporation. In each case, creatively integrating natural methods of movement (gravity) and temperature change (evaporation) with industrial processes proved to be disruptive to an entire industry. In these examples, neuroplasticity and management plasticity worked together: neuroplasticity catalyzed new connections and creativity in the mind of the innovator, while management plasticity drove implementation.
When everyone is a manager, as in the case of Morning Star’s self-managed ecosystem, the benefits of management plasticity are widely distributed. In one recent example (2014), a mechanic identified an innovation in material management: the handling and usage of chemicals. The innovation, which generated a compelling return on investment, depended on the creativity of one individual with an ability to foresee improved process outcomes. The flexiblity of a self-managed environment, endowed with management plasticity, allowed that individual to creatively envision a desired future state, personally communicate the benefits to peers, re-design the process, create buy-in, and successfully implement the change.
8 See also (LRN Corporation, 2012).
How to Start a Journey Toward Management Plasticity
How can enterprises that have been built on traditional command and control management structures and tools take steps toward greater management plasticity, i.e. enterprises that have not been built from scratch in a self-managed manner like Morning Star? In the natural sciences, experiments are fundamental to progress and success. In contrast, in the business world, experiments will often face bitter opposition, as they are perceived as carrying uncontrollable risks with possible undesired outcomes. Yet experiments can pay off precisely because of their very nature of accepting unpredictability and failure and therefore fostering learning and adaptation in contrast to traditional projects within the outdated predict-and-control fashion of traditional management.9 Examples of possible managerial experiments toward management plasticity are10:
Voluntary participation in meetings of all kinds·
Voluntary participation in projects or experiments
Access to all information for all employees
Time and space for the employees to develop their creativity
Abolition of formal talks on target agreements and incentives (also financial)
·Abolition of job descriptions
Abolition of traditional budgeting and budget targets
Such kinds of experiments support management plasticity and the opportunities to live up to one’s full potential as lived by the Morning Star Company. This is in line with the call for management plasticity, which sees neuronal interconnectedness as a metaphor for a new organizational understanding.
Building an organizational structure based on self-organizing, dynamic networks releases trapped human potential and leads to creativity, as well as to a whole field of other positive and critical features in today ‘s complex and fast changing world, as we have seen in the Morning Star case. These include adaptability, resilience, ability to innovate and self-healing capacity.
In the end, to really unfold human potential and creativity, we argue that courageous leaders will be needed everywhere in organizations to transform the traditional management mode of predict and control into a new mode of sense and respond that we have defined by the term management plasticity in this article.
See (Hamel & Zanini, 2014).
See detailed examples in (Kirkpatrick, 2011) and (Hope, Bunce, & Röösli, 2011).
ABOUT THE AWESOME AUTHORS
Franz RÖÖSLI, PhD, is a professor at the University of Applied Sciences Zurich (ZHAW), management trainer and Director of the Beyond Budgeting Round Table (BBRT), an international, membership-based practitioner and research community. He had worked in different companies in leadership positions including member of the executive team before he started an academic career. His research and consulting interests are organizational behavior, leadership and management innovation. He co-authored the book “The Leader ‘s Dilemma”. Contact: firstname.lastname@example.org
Doug KIRKPATRICK is the author of Beyond Empowerment: The Age of the Self-Managed Organization. He is a former financial controller for The Morning Star Company and a participant in the adoption of its unique self-management philosophy. He is an organizational change consultant, TEDx and keynote speaker, executive coach, writer, educator and SPHR. Contact: doug@redshift:3.org
Michael SONNTAG is a medical doctor, Bioenergetic Analyst (trained by Alexander Lowen) and management consultant. He is specialized in teaching and creating the conditions needed to enable, enhance and govern deep transformational and self-healing processes, both on an individual and an organizational level. Contact: m.sonntag@sonntag-consulting. ch
Curated by Trevor Lee
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