Organize for Complexity, part I II - Special Edition Paper

1. Makeitreal! ORGANIZE FOR COMPLEXITY Howtomakeworkworkagain. Howtobreakthebarrierofcommand-and-control– andcreatethepeak-performance,networkedorganization special edition BetaCodexNetworkAssociates NielsPflaeging&SilkeHermann&LarsVollmer&ValéryaCarvalho IllustrationsbyPiaSteinmann BetaCodexNetworkWhitePaperNo.12&13,June2012

2. Thispaperaddressesfundamentalquestionsofinterestto businessowners,managers,professionalsandchangeagents Don'tweallaskourselvesquestionslike: •  Howcanorganizationsdealwithgrowingcomplexity? •  Howtoadjustagrowingorganization,withoutfallinginto thebureaucracytrap? •  Howtobecomemorecapableofadaptingtonew circumstances? •  Howtoovercomeexistingbarrierstoperformance, innovationandgrowth? •  Howtobecomeanorganizationmorefittohuman beings,andachievehigherengagement? •  Howtoproduceprofoundchange,withouthittingthe barrier? Inthispaper,wearguethatinordertoaddressthese issues,wemustcreateorganizationsthataretrulyrobust forcomplexity,aswellasfitforhumanbeings.Wealso discusshowthatcanbedone.Youwilllearnaboutconcepts thatallowtodesignentireorganizationsforcomplexity, regardlessofsize,age,industry,countryorculture.

3. Part1. Complexity:itmatterstoorganizations.Bigtime. Crafts ? manu-? facturing ? Tayloristic ? industry ? Global ? markets ? “OrganizeforComplexity“-BetaCodexNetworkWhitePaperNo.12&13

4. FrederickTaylor’sgrandideaandhowmanagementwasinvented: Thedivisionbetweenthinkersanddoers In1911,FrederickTaylorpublishedhislandmarkbook ThePrinciplesofScientificManagement.Heproposed managementasa“revolution”thatwouldeliminatethe productivityconstraintsoftheindustrial-age organization.Taylorismachievedjustthat. WhatTaylorpioneeredwastheideaofdividingan organizationbetweenthinkingpeople (managers) and executingpeople (workers) –thuslegitimatingthe managementprofessionasthatof“thinkingprincipals ofthenon-thinkinghumanresources”.Tayloralso introducedfunctionaldivisiontoshop-floorwork. Taylor'sconceptsweresoondecriedasinhumaneand non-scientific,hisconsultingmethodsasineffective. Buthierarchical/functionaldivisionbecamewidely adoptedafterhisdeath,in1915,hisprincipleswere appliedtonon-industrial,non-shop-floorwork. Management,asweknowit,isnotmuchdifferentfrom whatTaylorproposedacenturyago.Indynamicand complexmarkets,however,command-and-control turnstoxicforbothorganizationalperformanceand human/socialadvancement. WecalltayloristicmanagementAlpha. “Thinkers”/ Managers strategize,steer, control,decide “Doers”/ Workers execute,obey, follow

5. Thepriceofsimplicity:Tayloristicdivisioncauses“managed“ organizationstoexperiencethreesystemic“gaps“ 1TheSocialGap Hierarchicaldivisionandtop- downcontrolcauseanerosion ofsocial/grouppressureand dialog,andabiastowards managementbynumbersand leadershipbyfear 3TheTimeGap Personaldivisionbetween thinkingthinkersandnon- thinkingdoerscausesneed formanaged/imposedroles, complicatedIT,strategy, forecasting,andplanning 2TheFunctionalGap Functionaldivisionproducesa needofmanaged/imposed coordinationthroughprocess control,interfaces,planning,rules, standards,hierarchicpoweretc. 9am:Doing 3pm:Thinking Noneofthisfeelsgood.Noneofthisisvalue-creating.Thethreegapsallleadtowaste.

6. Thehistoricalcourseofmarketdynamics andtherecentriseofhighlydynamicandcomplexmarkets Wecallthegraphshownherethe“TaylorBathtub”. highdynamic sluggishness/lowdynamic highdynamic Dynamicpart ofvalue creation Solution:man Ageof tayloristic industry Ageof craftsmanu- facturing Ageof global markets Outperformersexercise marketpressureover conventionalcompanies Localmarkets, highcustomi- zation Spaciousmarkets, littlecompetition Formalpartof valuecreation Solution: machine 1850/1900 t 1970/80today Thedominanceofhighdynamicsandcomplexityisneithergoodnorbad.It‘sahistoricalfact.

7. Thedifferencebetweenthecomplicatedandthecomplex •  Complicatedsystemsoperatein standardizedways.Here,imprecisionis diminished,non-objectivityand uncertaintyarereducedasfaras possible.Canbedescribedthroughnon- ambiguouscause-and-effectchainsAre externallycontrollable. •  Anyhigh-precisionmachineis complicated:Everythingisdonetoavoid imprecision/toincreaseprecision.A watch,forexample,iscalibratedto diminishmistakes,uncertaintyand illusion.Itisconfiguredtosupply objectivedata,certaintyandaminimum ofillusion. •  Complexsystemshavepresenceor participationoflivingcreatures.Theyare livingsystems-that'swhytheymay changeatanymoment.Suchsystemsare onlyexternallyobservable–not controllable. •  Acomplexsystems´behaviorisnon- predictable.Here,it'snaturalthatthereisa leveloferror,uncertaintyandillusionthat ismuchhigherthanincomplicated systems. Acomplexsystemmaypossesselements thatcanoperateinstandardizedways,but theirinteractionwouldbeconstantly changing,indiscontinuousways

8. Consequencesofcomplexity: Theimportanceofmasteryforproblem-solving Theonly“thing”capableofeffectivelydealingwithcomplexityishumanbeings. Whatmattersincomplexity,thus,asfarasproblem-solvingisconcerned,is neithertools,norstandardization,norrules,norstructures,norprocesses–all thosethingsthatusedtoserveuswellintheindustrialageanditsdullmarkets. Incomplexity,thequestionisn’thowtosolveaproblem,butwhocandoit. Whatmattersnow,thus,isskilfulpeople,orpeoplewithmastery. Peoplewithideas. Problem-solvinginalife-lesssystemis aboutinstruction.Problem–solvingin alivingsystemisaboutcommunication. Complexitycanneitherbemanaged,norreduced.Itcanbeconfrontedwithhumanmastery.

9. Theimprovementparadox:Incomplexity,workingonseparate partsdoesn'timprovethewhole.Itactuallydamagesthewhole Workingonindividualpartsofthesystem doesnotimprovethefunctioningofthe whole:Becauseinasystem,itisnotso muchthepartsthatmatter,buttheirfit. Whatreallyimprovesasystemasawhole isworkingnotonthepartsitself,but ontheinteractionsbetweentheparts. Youmightcallthisattitude“leadership”. Systemsarenotimprovedbytinkeringwiththeparts,butbyworkingontheirinteractions.

10. Part2. Peopleandwork “OrganizeforComplexity“-BetaCodexNetworkWhitePaperNo.12&13

11. Humannatureatwork-McGregor'scriticaldistinction. Askyourself:whichtheorydescribesme,andpeoplearoundme? TheoryY TheoryX Attitude Peopledislikework, Peopleneedtoworkandwanttotakeaninte- restinit.Underrightconditions,theycanenjoyit Direction finditboring,andwillavoiditiftheycan Peoplewilldirectthemselves towardsatargetthattheyaccept Responsibility Peoplemustbeforcedorbribed tomaketherighteffort Peoplewillseekandacceptresponsibility, undertherightconditions Motivation Peoplewouldratherbedirectedthan acceptresponsibility, (whichtheyavoid) Undertherightconditions,peoplearemotiva- tedbythedesiretorealizetheirownpotential Creativity Peoplearemotivatedmainlybymoney andfearsabouttheirjobsecurity Mostpeoplehavelittlecreativity-except whenitcomestogettingroundrules Creativityandingenuityarewidelydistributed andgrosslyunderused Source:DouglasMcGregor,‘TheHumanSideofEnterprise’,1960

12. Humannatureatwork:McGregor'scriticaldistinction Askedwhichtheoryabouthuman nature–XorY–describesus, everyoneimmediatelyknows:“Iama TheoryYsortofperson!”Whenasked aboutotherpeople,however,the answerisusuallynotasclearcut. Haven'tweallexperiencedTheoryX peoplemanytimesinourlives?At work?Inourorganizations? Behavior HumanNature Context DouglasMcGregor,inhisseminalworkfrom1960,distinguishedbetweentwoimagesof humannature,ofwhichonlyoneis”true”,inthatitholdsuptoscienceandavailabletheory. Theotherone,TheoryX,isnothingmorethanaprejudicethatwehaveaboutotherpeople. Therearetworeasonwhythistheory,besidesbeingasuperstition,iscommonplace.Firstly, itreflectscommonthinkingfromourpre-democratic,pre-enlightenmentpast.Secondly, whileobservingotherpeople'sbehavior,wetendtomakeconclusionsabouttheirhuman nature–frequentlyignoringbehavior-shapingcontext. Thismatters.Becauseassumptionswehaveinourmindsaboutotherpeopleshapeour behavior,andthewaywetendtodesignandrunorganizations:ifyoubelieveinthe existenceofTheoryXhumans,thencommand-and-controlsystemsdesignwillfollow.In ordertobuildcomplexity-robustorganizations,asharedviewofhumannatureisneeded.

13. Thenatureofmotivationandwhyleaderscannotmotivate Peoplearedrivenbymotives.Itissafetosay thateveryonecarriesallkindsofmotives,toa certaindegree.Everyonethusisa“carrierof motives”,or“intrinsicallymotivated”.The specificlevelsorthedominanceofdifferent motives,however,varygreatlyamong individuals. Whatthismeansfororganizations,or employers,is:theycannotmotivate.Because motivationis.Themainthingthatorganizations candotostimulateperformanceisfacilitating optionsforconnectionbetweenindividuals andtheorganization,throughpurposeandwork. Wecallthephenomenon,whenanindividual connectsitselfvoluntarilytoworkandan organization,connectedness. Unfortunately,beliefinthemythofmotivational powerofleadershipisstillwidespread.Truthis: becauseofmotivation'sintrinsicnature,leaders, throughtheirbehavior,canonlyde-motivate.

14. Appreciatingbehavioraldistinctiveness:Peopleandpreferences Anindividual'sbehaviorisalsostronglyinfluencedbypreferences.Theconceptof “preferences”wasintroducedbyCarlG.Junginhispioneeringwork“PsychologicalTypes”. Attitude.Jungdifferentiatedtypesfirstly accordingtotheirgeneralattitude:Attitude describespeople'swayofreactingmoreto outerorinnerexperiences. Introversion Thinking Sensing Extraversion Decision-making“functions“.'Heady’ individuals,whoprefertomakedecisions bythinkingthingsthrough,rationallyusing the'thinkingfunction‘.'Heart'peopleprefer toevaluateandmakedecisions subjectivelyusingthe‘feeling'function. Feeling Intuition Perceiving“functions“.Weviewtheworld usingacombinationof‘sensing'torecord thesensorydetails,and‘intuition'tosee patterns,makeconnectionsandinterpret meaning.

15. Makinguseofdistinctivenessinpreference todealwithcomplexity Thereisgreatvarietyofbehaviorwithinthethreecategories ofpreferences,dependingonwhichpositiononeachofthe threebi-polarscalestheperson’sbehaviorisplotted.The majorityofpeoplewillnotbeextreme,demonstratingaclose balance–assuchtheycanbemoredifficulttoread. Everypersonhastheabilitytouseeithersideofthebi-polar scales,althoughwewillallhavepreferencesforoneside morethantheother–mostofthetime. Whenpeoplewithdifferentpreferencesworktogether,they cancomplimenteachother. Incomplexity,distinctivenessinmotivationsandpreferencescanbeanasset–oraliability

16. Individualcompetencevs.collectivecompetence “Welearnedthatindividual expertisedidnotdistinguish peopleashighperformers.What distinguishedhighperformers werelargerandmorediversified personalnetworks.” “Engineersareroughlyfivetimes morelikelytoturntoapersonfor informationastoanimpersonal sourcesuchasadatabase.” Cross, Rob et.al.  The Hidden Power of Social Networks. Boston: Harvard Business School Press, 2004

17. Mostorganizationsareobsessedwithindividualperformance. Butindividualperformanceisactuallyamyth Individualperformanceisnotjustoverrated. Itsimplydoesn'texist,inorganizations. Why?Becausevalue,orresults,neverarise fromindividualaction,butfrominteraction betweenvariousindividuals,orwithinteams. Asalespersononlydoespartofthesale– theotherpartsarebeingdonebypeople whomaycallthemselvesbackofficestaff, productionandprocurementstaff, accountantsandHRprofessionals. Becauseinterdependencyisin organizations,tryingtodefineindividual targets,ortomeasureindividual performance,leadstodeception.Appraisals ofindividualperformancecanonlyhavea de-spiritingandde-motivatingeffecton peopleanddamageteamspirit.

18. Peoplecommunicate&connectinwildlydifferentmanners. Aboutthe“archetypes”ofcommunicators Hubs Gatekeepers Pulsetakers drawinformationandbroadcastit carefullymanageinformationflows greatobserversofpeople KarenStephenson,Quantum Theory of Trust. Harlow:PearsonEducationLtd,2005 Connectors Mavens Salesmen MalcolmGladwell,The Tipping Point. Boston:BackBayBooks,2002 exchangeinformationwithmanypeople investmoretimeinpeople mastersofinterpersonalcommunication Itisnotimportantwhichoftheseconceptsis“true”or“better”: Thereispotentialinmakinguseofsocialpatternsandthesevariedwaysofacting. Makeuseofthem,orignorethematyourperil!

19. Whatmakespeoplecomplex:puttingitalltogether Anindividual'sbehaviorisshapedbymotives, preferencesandcompetencies.Motivesas personalcharacteristicsarequitestableovertime –theydescribehowimportantcertaingoalsare fortheindividual.Preferences,bycontrast,can partlyevolveduringthecourseofalifetime- dependingonenvironment,challengesand personalgoals.Motivesandpreferences, combined,influenceourinteresttoacquirecertain competencies:Thereareabilitiesthatarepresent orthatcanbelearned.Competencies,thus,are directlyrelatedtolearning. Aswesaw,onlybehavioriseasilyandreadily observable.Itisstillquiteeasytodescribean individual'scompetencies.Withalittlemoreeffort yet,preferencescanbemappedanddescribed. Properidentificationofsomeone'smotivesrequire evenmoreeffortanddelicacy.Humannature Behavior (visible) Competencies Preferences Motives Nature cannotbeobservedatall:itisamatterofconviction,orpartofthesocialtheoriesthatwe hold.Problemis:observingbehaviorseducesusto (mis)judgeothers´competencies,motives, oreventheirnature.Anorganizationfitforcomplexityrequiresmorereflection!

20. Part3. Self-organizingteamsandthenetworkedorganization: Fromtheolddesignprinciplestonew,andbetterones “OrganizeforComplexity“-BetaCodexNetworkWhitePaperNo.12&13

21. Formingteams “Theideaof“chunking”:agroupofitemsisperceivedasasingle“chunk”. Thechunk’sboundaryisalittlelikeacellmembraneoranationalborder.It establishesaseparateidentityfortheclusterwithin.Accordingtocontext,one maywishtoignorethechunk’sinternalstructureortakeitintoaccount.” Hofstadter/Douglas. Gödel, Escher, Bach. New York: Basic Books, 1979 Wecalltheindividualchunkacell,anditsboundary thecellmembrane. Wecalltheclusterofcells (thesystem),acell-structurenetwork. Wecallthesystem'sboundaryormembranethesphereofactivity.

22. Organizingthework:Commonformsofteamsegmentation– andwherethedifferencelies Designprinciple "Beta": Teams are cross- functional, orfunctionally integrated. “Diverseindividuals whoworkinter- connected,with eachother”- individualswho committowork together toreacha commongoal Designprinciple"Alpha": Groups are uni-functional,orfunctionally divided. “SimilarIndividualswhoworknexttoeachother,in parallel”,eventuallycompetingagainsteachother

23. Top-downcommand-and-control versusself-organization commands, control problems, information Designprinciple"Alpha": Control through bosses. Information flows up, commands flow down. Top-down decision- making. Use of rules for containment. boundary:rules, responsibilities, jobdescriptions radicaltransparency, socialdensity, grouppressure boundary:values, principles,roles,shared objectives Designprinciple"Beta": Self-regulation within the team. Control through peer pressure and transparency. Principles and shared responsibility. Self-organizationisnotthe“right”term:Betterwouldbe:Sociallydensemarket-organization.

24. Makinguseofsocialpressure 1.Letpeopleidentifywithasmallgroup. 2.Givethemsharedresponsibilityforsharedgoals. 3.Makeallinformationopenandtransparenttotheteam. 4.Makeperformanceinformationcomparableacrossteams. Socialpressure,usedright:farmorepowerfulthanhierarchy,nodamagingside-effects.

25. Self-organizationmustbeteam-based Ultimately,organizingforcomplexityand self-organizationisalwaysabout empoweringteams… …notaboutempoweringindividuals Theempowermentmovementofthe1990´salsomissedthispoint.

26. Aseemingparadox:Givinguppoweranddecentralizing decision-makingbacktoteamsactuallyincreasesstatus >Low,oraverageperformance >High,orsuperiorperformance Successisnotazero-sumgame.

27. Communicationacrossteams Designprinciple"Alpha": Coordination/communication through a manager, usually combined with functional division; taylorism >Sufficientindullmarkets Designprinciple"Beta": not through a manager, but laterally >Superiorincomplexmarkets Centralizedcoordinationisaluxuryorganizationsincomplexmarketscannotafford.

28. Thedifferencebetweena“department”anda“cell” Designprinciple"Alpha": A department implies functional differentiation and thus the grouping of functional specialists -marketers withmarketers,salespeoplewithsales people,etc.,allofwhichhavetobe coordinatedhorizontally.Business processes cross different departments. Result:groupsofpeopleworkingin parallel,notteams Designprinciple"Beta": A cell implies functional integration, or cross-functional teams. Coordination occurs laterally, among peers. Business processes flow within teams. Result:actualteamsofpeopleworking forandwitheachother Product management Sales Backoffice Businessteam2 Businessteam1 Businessteam3 Complexmarketsrequiredecentralization,combinedwithmarket-likecoordination.

29. Part4. Organizationsassystems:Howtodesignforcomplexity “OrganizeforComplexity“-BetaCodexNetworkWhitePaperNo.12&13

30. Thedominantmindsetturnedintoaproblem: Toimagineorganizationsaspyramidsisamisguidedmetaphor Designprinciple"Alpha": The organization as a bureaucratic hierarchy, steered by managers who are always in control Managerscommanding/controllinga pyramidof“followers”fromaboveis notasmartwaytoorganize.Mostof ussensethat,intuitively:Our experiencefrompracticecontradicts thatthiscanactuallywork. Thisremains,however,thedominant mindsetincompanies,sincethe developmentofmanagementtheory aboutacenturyago.Whenwespeak of“management”,weusuallyreferto techniques,toolsandmodelsaimed atimproving,optimizing,orfixing organizationsascommand-and- controlpyramids.

31. Abettermetaphor:Theorganizationasamulti-layerednetwork Designprinciple"Beta": The organization as an inter- connected, living network, steered by market forces. Nobody is in control. Everybody is in charge. Asmarterandmoreusefulwayto lookatorganizationsistoseethemas anetwork.Thisisnotonlymore alignedwithsciencethanthe mechanistic“pyramid”dogma,butit isalsobyfarclosertoreality,andin severalways. Becauseorganizationsareinfact: •  Networksofindividuals (throughInformalStructure) and •  Networksofvalue-creatingteams (throughValueCreationStructure). Let'stakeacloserlookatthese concepts.

32. Theworkplaceisnetworked:Theorganization´s informalstructure.Basedonindividualrelationships InformalStructuresemerge outofhumaninteraction.In anysocialgroup.Informal Structurebyitselfisneither good,norbad.Itsimplyis. Mostsocialphenomenaarise frominformalstructure: Gossip.Networking. Socializing.Politics.Group think.Conspiracies.Factions, coalitions&clans.Resistance tochange.Responseto crises.Peerpressure. Solidarity.Bullying.Youname it.Factis:Informalstructures arepowerful.

33. Theworkplaceisnetworked:Theorganization's valuecreationstructure,basedonteaminteraction Inanorganization,value-creation flowsfromtheinside-out. Valuecreationisnevertheresultof individualaction:Itisateam-based processofworkinginteractively, “with-one-another-for-each-other”.

34. Theworkplaceisdoublynetworked: Puttingtogetherinformalandvaluecreationstructures Understandingorganizationsas valuecreationnetworks,under- fedbyinformalstructures,and notascommand-and-control pyramids,youwillstopcaring muchaboutformalhierarchy (whichisactually“trivial”,from thepointofviewofcomplexity thinking). Youwillinsteadcarealot aboutvaluecreationstreams, andonsupportingpeer pressureandemergent networkingpatterns. Organizationalrobustness comesfromthequalityand quantityoftheinter- connectionsbetweenhumans andteams–notfromrules, bosses,orstandards.

35. Togainabetterunderstandingofvaluecreation,itishelpful tounderstandthedistinctionbetweencenter,andperiphery Market Periphery Center

36. Theperiphery:theonlypartoftheorganization withmarketcontact Market Periphery Center

37. Thecenter:nodirectmarketcontact. Theperipheryisolatesthecenterfromthemarket Market Periphery Center

38. Centralizeddecision-making (command-and-control) inasystem Designprinciple"Alpha": Centralizeddecision-making, command-and-control Indull,slow-movingmarkets,centralization ofdecision-makingasshownhereis efficient.Centralizedcontrolisobtainable.In dynamicmarkets,however,centralsteering andthusanysystemthatreliesoncentral decision-makingcollapses. Market Periphery Center ! ! 2Information 2Information 3Decision 4Command 4Command 1Impulse 5Reaction Client

39. Solvingthecomplexitydilemma,throughdecentralization Decentralizeddecision-making, sense-and-respond Indynamicmarkets,thewayoutof thecontroldilemmaisconsequent decentralization,ordevolution,of decision-making,whichbecomesfar moreeffective:Thisway,decisions aretakenwhereinteractionwithand learningfromthemarketoccurs.The rolesofcenterandperipherychange dramatically. Designprinciple“Beta”: Market Periphery Center 2Information Servesthe periphery, ifneeded! 2Decision Isincharge! 4Command 1Impulse 3Reaction Client

40. Part5. Howtotransformyourorganizationintoa complexity-robustnetworkandhowtoturn “Beta”intothedominantmindset “OrganizeforComplexity“-BetaCodexNetworkWhitePaperNo.12&13

41. Designinganorganizationasadecentralizednetwork Toturnyourorganizationintoadecentralized cell-structure,ortobuildaneworganizationas suchanetwork,onemustunderstandthe elements,orbuildingblocks,ofsuchadesign. Fourelementsarenecessary: •  aboundary,orsphereofactivity •  networkcells (withadistinctionbetween centralandperipheralcells) •  connectingstringsbetweennetwork cells,and,finally, •  marketpull–connectionswiththe externalmarket Nolinestructures.Nofunctions.No departments.Nosharedservices.Nodivisions. Nocentralizedstaff.Thisisadifferent,andfar moreeffectivewayofdefiningstructure,in complexity.

42. Identityandthesphereofactivity SphereofActivity - (shared) Values - Principles - Positioning - Rituals - Memes - ... Organization&teams

43. Thesphereofactivity Market Organization&Teams Self-organizationrequiresthatthesystemis surroundedbyacontainingboundary.Thiscondition definesthe“self“thatwillbedevelopedduringthe self-organizingprocess. Thecontainingboundaryhastheroletodirectself- organizationtowardsvalue-creation. Theelementsofthesphereshouldbeputdownin writing,e.g.ina“LettertoOurselves”,a“Manifesto” ora“CultureBook”.

44. Themarketanditscomponents Market - Customers - Owners - Banks - Society - Competitors - Unions - … Organization&teams

45. Value-creationflowsfromtheinsideout. Market-pulldoesthesteering. Market Periphery Center Acell-structurenetworkgainsstabilityand resiliencenotthroughhierarchicalpower relationships,orthrough“resistanceto pressure”,butthroughthe“pull”thatcomes fromtheexternalmarket,andfromthe complexhumanrelationshipsitnourishes internally.Marketdynamicsdothesteering. Soundssimple?Itis.

46. Fromvalue-creatingteamstovalue-creatingnetwork Wecallthelinksbetweennetworkcellsstrings. Wecallthelinksofperipheralcells withthemarketmarketpull.

47. Marketpull:Onlyperipheralcellshavedirectlinkstothe marketandcanthusdelivervalueexternally

48. Step1indraftingyourorganizationasavalue-flownetwork: Startfromtheoutside-in,bythinkingaboutperipheralcellsfirst Peripheralcellsshouldbe: •  Asautonomousaspossibleintheirdecision- making,functioninglike“mini-enterprises”, responsibleforabusiness,holistically •  Containnolessthan3teammemberseach, withcross-functionalcapacities •  Measuringtheirownresults

49. Step2:Designcentralcellsasinternally value-creatingsupplyunits Theroleofcentralcellsisto delivervaluetoperipheral teamsthatthesecannotcreate themselves. Theirroleistoserve,notto ruletheperiphery.Itisnotto executepower,orcontrol. Ideally,theseteamsselltheir servicestoperipheralcells throughpricedtransactions, andonaninternalmarket. Examplesforhowtodothis existatcompaniessuchas Handelsbanken,dm-drogerie markt,andMorningStar.

50. Centralnetworkcells Centralservicesmightinclude: •  HumanResources •  Finance •  SystemAdministration (IT) •  Legal •  CentersofExpertise •  CommunitiesofPractice •  ... Insmallerorganizations,there mightsimplybecentral“shops”, •  “OrgShop”–ateamdelivering organizationservices,and •  “InfoShop”-ateamdelivering servicesrelatedtoinformation