It doesn’t have to be like this. You can design organizations to evolve, but it generally requires quite a bit of transformation from what exists today.
First, understand your landscape.
It is difficult to organize around that which you cannot see. It’s important to know the details and to understand the landscape you are operating in. This requires some form of map – not any old diagram, but one that enables you to see the position of the pieces of your organization and how things can move. Wardley Maps provide this: they are a way of showing visually the context of an organization (or part of it), its position, its anchor, its movement and its components.
(An introduction to Wardley Mapping is available here).
For example, Figure 1 is a map of an online photo business in 2005. It is anchored around user needs, and shows the different elements of the business (online photo storage, print, CRM, etc.) mapped against their degree of visibility to the customer (photo processing services at the top, data centre at the bottom) and their position on the evolution path from custom-built (online image manipulation) to commodity (electrical power). It also indicates the scope of the different cells (here, teams) delivering these elements of the business, and the approach to providing each element that is appropriate to its current stage of evolution. For example, the software involved in online image manipulation in 2005 was state-of-the-art and uncharted, and so built in-house, but electrical power had long been a commodity and thus bought from a utility provider.
Figure 1 — Different methods of delivery shown on a Wardley map of 2005
Then you need to manage change
The components that the cells govern don’t just grow; they evolve through supply-and-demand competition, and as they do so their characteristics change. In uncharted waters, things are chaotic and unpredictable; they are poorly understood and changing, and require experimentation. Their value lies in the future and is uncertain, but they may deliver competitive advantage. Once fully evolved to a commodity or utility, they become ordered, known and stable; they are ubiquitous, high-volume and low-margin; they become essential and a cost of doing business.
The techniques and methods we use to manage a component must change as the component evolves. The way we manage the exploration and development of some new discovery is not the same as the way we manage the volume operations of a highly industrialized component. So, it’s not enough to populate the cells with the right sort of aptitudes (e.g. finance, engineering, operations, marketing). We must also consider the right sort of attitude. For example, software engineering in the uncharted space needs to be agile, but once that component industrializes then Six Sigma becomes more appropriate. In 2005 image manipulation software needed to be built in-house with agile techniques; perhaps in 2017 it would be regarded as commoditized and best outsourced to a commodity supplier. The same applies to purchasing, finance and marketing. As Figure 1 illustrates, there is no one-size-fits-all method and we have to embrace multiple methods.
You must change more than the method: there are Pioneers, Settlers and Town Planners
We have identified three different attitudes that apply at different stages of a component’s evolution: Pioneer, Settler and Town Planner. The cultures of these attitudes are very different. For example, in the uncharted space, you’re dealing with the unknown, the rare, the poorly understood and the changing. You have to be happy with failure, with gambling and gut feel. You need to be something of a pioneer. However, when the same component evolves to being more industrialized then it is all about volume operations and reducing deviation for something that is common and standardized. Now, you have to be happy with the relentless drive for efficiency, the complex scientific modelling required and the intense pressure of consistency. You need to be more like a town planner.
Figure 2 shows where the three attitudes apply on the 2005 map of Figure 1, with a list of common characteristics of each attitude in Figure 3.
Figure 2 — Pioneer, Settler and Town Planner
Figure 3 — Characteristics of Pioneers, Settlers and Town Planners
- Pioneers are brilliant people. They are able to explore never-before discovered concepts, the uncharted land. They show you wonder, but they fail a lot. Half the time the thing doesn’t work properly. You wouldn’t trust what they build. They create ‘crazy’ ideas. They make future success possible. Most of the time we look at them and say “what?” or “is that magic?” In the past, they might have been burnt at the stake. Their type of innovation is what we call core research. They built the first ever electricity source (the Parthian Battery, perhaps 400AD) and the first ever programmable, fully automatic digital computer (Z3, 1943).
- Settlers are brilliant people. They can turn a half-baked prototype into something useful for a larger audience. They build trust and understanding. They learn and refine the concept. They make the possible future actually happen. They turn the prototype into a product, make it manufacturable, listen to customers and turn it profitable. Their innovation is what we tend to think of as applied research and differentiation. They built the first ever computer products (e.g. IBM 650 and onwards) and the first generators (Hippolyte Pixii, Siemens).
- Town Planners are brilliant people. They are able to take something and industrialize it, taking advantage of economies of scale. They build the platforms of the future, which requires immense skill. You trust what they build. They find ways to make things faster, better, smaller, more efficient, more economic and ‘good enough’. They build the services that pioneers build upon. Their type of innovation is industrial research. They take something that exists and turn it into a commodity or a utility (e.g. with electricity, Edison, Tesla and Westinghouse). They are the industrial giants we depend upon.
However, it’s still not enough to organize by cells and populate them with people with the right sort of attitude. There is one further step you need to take.
Introduce a system of theft
You need to mimic evolution within the system, and this can be done by introducing a system of theft. The Settlers steal from the Pioneers, forcing them to explore new lands. The Town Planners steal from the Settlers, forcing them to move forward. Pioneers build on the components and the services that the Town Planners and Settlers provide. This system of theft completes a virtuous circle — see Figure 4.
Figure 4 — The system of theft
Be careful, for each group is important. You need to avoid the war that results from a two-party state of just Pioneers and Town Planners with no-one managing the transition between them (the ‘missing Settler’ problem). You need to avoid the ego problems that occur when you allow one group to throw a project over the wall to another when it is bored. You want the Settlers to steal from the Pioneers, not the Pioneers to throw crumbs to the Settlers.
Stealing is also essential to force groups to let go. The Settlers will want to hold on to their successful product portfolio; past success causes inertia to change, so the Town Planners must steal from them.
Each cell not only builds but operates what it builds. It uses components from others but it is responsible for its area.
Designing for constant evolution
By combining cell-based structure with attitudes (Pioneer, Settler and Town Planner) and a system of theft, you can create an organization which can grow, explore new territories and continuously adapt to an evolving environment. No more bolt-ons, no more constant reorganization and no more myths of having a single company culture.
Putting it into practice
If you are interested in creating such structures, there are certain steps you need to take. You can’t just impose the structure on an existing organization. As this blog has outlined, these steps include:
- Focus on user needs (this is the anchor).
- Understand your landscape with the aid of maps. Use such maps to improve collaboration, create continuous learning and help reduce duplication.
- Socialize the concept of multiple methods and move away from the tyranny of one method fits all.
- Introduce a cell-based structure — enable autonomy and mastery — while socializing the concept of different attitudes at different stages of evolution.
- Introduce a Pioneer, Settler and Town Planner structure and the system of theft.
I strongly recommend that you read:
- GCHQ’s exceptional paper Boiling frogs
- AirBnB’s journey into the elastic team
- Robert X. Cringley, Accidental Empire, 1992
- Ori Brafman and Rod Beckstrom, The Starfish and the Spider, 2006
- My blog on Mapping, Wardley Maps – a book I am still writing. Please help yourself.
I owe a great deal of thanks to Robert X. Cringely and his 1992 book Accidental Empires from which the Pioneer, Settler and Town Planner model is derived. I also owe a huge debt of thanks to James A. Duncan, who is not only the co-author of these concepts but implemented the first example of this structure when he was the CIO in the company that I ran back in 2005. I want to emphasize that date; the above is not the future of organizational design but the past. Someone, somewhere will have improved this. What’s state of the art today? That will be a jealously guarded secret – but it will have evolved.
This post first appeared on Leading Edge Forum in February 2017.
Author: Simon Wardley
Simon’s focus is on the intersection of IT strategy and new technologies, and he is the author of multiple reports including Clash of the Titans – Will China Dethrone Silicon Valley? where he assesses the hi-tech challenge from China and what this means to the future of global technology industry competition. His previous research covers topics including Of Wonders and Disruption, The Future is More Predictable Than You Think – A Workbook for Value Chain Mapping, Beware of Geeks Bearing Gifts: Strategies for an Increasingly Open Economy, Learning from Web 2.0 and A Lifecycle Approach to Cloud Computing.
Simon is a seasoned executive who has spent the last 15 years defining future IT strategies for companies in the FMCG, Retail and IT industries. From Canon’s early leadership in the cloud computing space in 2005 to Ubuntu’s recent dominance as the #1 Cloud operating system.
As a geneticist with a love of mathematics and a fascination in economics, Simon has always found himself dealing with complex systems, whether it’s in behavioural patterns, environmental risks of chemical pollution, developing novel computer systems or managing companies. He is a passionate advocate and researcher in the fields of open source, commoditization, innovation, organizational structure and cybernetics.
Simon is a regular presenter at conferences worldwide, and has been voted as one of the UK’s top 50 most influential people in IT in Computer Weekly’s 2012 and 2011 polls.