Situationally Adaptive Organizations (“SAOs”)

  • Standardized procedures and rules that direct the execution of most or all processes within the organization
  • Formal division of powers with authority largely residing in the non-productive executives and general administration as opposed to residing with specialized and productive divisions (e.g., manufacturing, sales and R&D)
  • Hierarchical organizational structure and vertical power relationships
  • Form and standardization are elevated over function and excellence
  • Information is typically siloed and held in secret
  • Indirect and opaque communication often prevail
  • People are generally given responsibility without authority
  • There is typically a culture of competition, finger-pointing and blame rather than collaboration and problem solving
  • Customer focus
  • Leadership
  • Involvement of people
  • Process approach
  • System approach to management
  • Continual improvement
  • Factual approach to decision-making
  • Mutually beneficial supplier relationships
  • Flat Organizations are based upon the belief that well-trained workers will be more productive when they are more directly involved in the decision-making process. The Flat Organization is based on a structure that has the least amount of intervening management levels between staff and managers. The flat structure is common in entrepreneurial start-ups, university spin-offs or small companies. Employees often act as management and wear many hats. As the company grows, however, there is a tendency to become more complex and hierarchical, which leads to a structure with more levels, departments and rules. In general, over the last decade, it has become increasingly clear that through the forces of globalization, competition and more demanding customers, the structure of many companies has become flatter, less hierarchical, more fluid and even virtual.
  • Team Organizations can be both horizontal and vertical. The overarching character is the combination of individual competencies to achieve synergistic outcomes. Thus, the total performance of the team defines the quality of the organization. Although team structures are often used in smaller organizations, larger bureaucratic organizations can also benefit from the flexibility of teams. For example, each Whole Foods Market store is an autonomous profit center composed of an average of ten self-managed teams, while team leaders in each store and each region are also a team.[10]
  • Network Organizations overcome expense, inefficiency and internal incompetence by outsourcing any business function that can be done better or more cheaply. In essence, managers in network structures spend most of their time coordinating and controlling external relations, usually by electronic means. For example, H&M outsources its clothing manufacturing to a network of 700 suppliers, more than two-thirds of which are based in low-cost Asian countries. Not owning any factories, H&M can be more flexible than many other retailers in lowering its costs, which aligns with its low-cost strategy. Aside from outsourcing production, shipping, storage, fulfillment, distribution and customer service, many larger companies also outsource product design, development and even management.[11]
  • Virtual Organizations work in a network of external alliances, primarily using the Internet, telecommunications, video conferencing and collaborative software to connect the organization. This means the organization can maintain a small core but operate globally as a market leader in its niche.
  • Consensus Organizations are based upon a collaborative community model developed by Charles Heckscher. The organization is a network rather than a hierarchy in which decisions are based on horizontal decision-making (e.g., dialogue and consensus) rather than vertical control (e.g., authority and command). Heckscher’s “Ideal Type” model states, “The master concept is an organization in which everyone takes responsibility for the success of the whole.[12] This model also links individual contributions to the company’s mission and focuses on widespread information sharing. This overcomes and replaces traditional bureaucratic boundaries (e.g., rigid job descriptions and segmentation) with principled action, greater trust, openness, creativity and collaboration. This model is often used in housing cooperatives, non-profit organizations and community organizations. It is also used to encourage participation and empower people who typically experience oppression in groups. While consensus models have merit in certain applications, such as collecting group wisdom and non-urgent problem solving, it can create inefficiencies and delays in the decision-making and execution processes. By applying SAO strategies to consensus organizations, consensus can be designated as the standard operating system, with situational exceptions. Thus, a modified consensus can allow for openness and horizontal decision-making but puts time limits on such decision-making depending upon the urgency and complexity of a critical decision. If the decision is not made within the designated time, either a democratic or hierarchical process can be employed to avoid inefficiencies while still benefiting from collective wisdom.
  • Highly organic structure;
  • Minimal formalization of behavior, roles, and standardization of procedures;
  • Job specialization and authority based on experience and abilities;
  • Cross-sector teams, communication and participation;
  • Responsibility, problem-solving, and teamwork rather than blame, competition, and ostracism;
  • Organizational structure follows function rather than form with selective decentralization;
  • Power shifts to specialized teams and individuals and away from general administration (e.g., production, sales, R&D) for fluidity and focus on production, rather than layers of intervening non-productive middle management;
  • Networked, open, and transparent communication; and
  • Members are given authority equal to responsibility subject to specialization, skills and purpose.
  • “Adhocracies,” first popularized in 1970 by Alvin Toffler, are a type of organization that seeks flexibility and adaptability by focusing on opportunities and individual initiative rather than bureaucratic rules, policies and procedures.[13] World-renowned author and expert on management practices, Robert H. Waterman, Jr., defined “adhocracy” as “any form of organization that cuts across normal bureaucratic lines to capture opportunities, solve problems, and get results.” For Henry Mintzberg, an internationally renowned academic and author on business and management, adhocracy is a complex and dynamic organizational form. Mintzberg considers bureaucracy a thing of the past and adhocracy one of the future. Adhocracies tend to be excellent for problem-solving, innovation, and flourishing in a rapidly changing environment. Adhocracies require sophisticated and often automated technical systems to develop excellence and cohesion.[14]
  • Biomimetic Organizations” apply biological methods and natural systems applications that have evolved over 4.5 billion years of the planet’s evolutionary systems design. The pressure to evolve in order to survive typically forces living organisms, including flora and fauna, to become highly optimized and efficient. As influences such as environment, culture and access to resources change, living organisms are forced to adapt or become extinct. Thus, by learning from and mimicking nature, there is a greater likelihood of developing systems that optimally function and allow businesses to evolve and thrive.[15]
  • “Chaordic Organizations” was a term coined by Dee Hock, the founder and former CEO of the Visa credit card association. Chaordic Organizations refer to a system of governance that harmoniously blends characteristics of chaos and order, with neither behavior dominating the other. Nature is largely organized in such a manner. Living organisms and evolutionary processes are often described as chaordic. The chaordic principles have also been used in influencing and creating hybrid businesses, non-profits, and governments that are neither centralized nor anarchistic.[16]
  • “Fractal Organizations” are based upon a hybrid model that integrates Chaos and Complexity Theory; Quantum Mechanics and Quantum Biology; with Fractal Geometry and Cosmology to inspire “Biomimetic Natural Hierarchies.” Fractal organizations also rely heavily on biomimicry due to nature’s ability to create, innovate, adapt, evolve and cleanse. Fractal organizations also share knowledge and decision-making in a collaborative and iterative manner allowing for experimentation and discovery through trial and error. According to Janna Raye, founder of Strategems and a leading proponent of fractal organizations, “Fractal organizations are complex, adaptive systems that self-organize and succeed by cohering group efforts with shared vision and purpose.” When asked what differentiates the Biomimetic Natural Hierarchies of Fractal Organizations from bureaucratic hierarchies, Janna Raye said, “The primary differentiator is that people are led, empowered and evolve naturally. Processes, such as the production of products, are managed, people are not. This allows leadership to value and interrelate with people as complex living beings, not things, helping them improve and evolve. Leaders in Fractal Organizations provide the managers of processes with resources, information and support that enable the collective intelligence of the group to drive change and innovation. Top-down hierarchies increase entropy (disorder) through managerial attempts to control staff and the internal competition that emerges through perceived limited room for advancement.”[17]
  • “Holocratic Organizations” apply whole systems approaches, largely in the form of “nested wholes,” to create greater interaction, connection and transparency. In a Holocratic organization, authority is distributed into self-organizing teams that can be created, expanded or contracted as required for the purposeful functioning of the organization. The vision is for employees to hold multiple roles and move fluidly in and out of circles, increasing the flexibility and adaptability of people and the organization. Holocracies are often mistakenly thought to be non-hierarchical or flat when, in actuality, they create a new hierarchy around work rather than titles and authority. Zappos is one of the largest holocratic organizations and was recognized six years in a row by Fortune as one of the “100 Best Companies to Work For.”[18]
  • A multi-structure organization that serves function rather than form;
  • Function is driven by purpose, vision, mission, goals and objectives;
  • Structures are adaptable and primarily based upon biomimetic and living systems principles;
  • Applied whole systems strategies are used to predefine and optimally respond to situational, organizational shifts;
  • Principles, values and agreements are elevated over rules;
  • Authority is equal to responsibility;
  • People are led and empowered, whereas processes are managed;
  • Collaborative meritocracy that rewards innovation, productivity and achievement of goals;
  • Individual contributions are respected with minimal formalization of behavior;
  • Work assignments and leadership are based on expertise, abilities and performance rather than title;
  • Cross-sector teams, communication and participation are used to ensure greater cohesion and productivity;
  • Roles are defined but can shift anytime with a minimum of hierarchical involvement upon agreement of the team members;
  • Conflict resolution is compassionate (e.g., non-positional and non-adversarial), as well as exploratory, equanimous, open-minded and solution-oriented;
  • Culture is based on respect, integrity, collaboration, productivity, innovation, and individual empowerment rather than layers of non-productive bureaucracy, authority, competition, blame, and disempowerment;
  • Objectively defined milestones and commitments with great flexibility as to the style and method by which they are achieved;
  • Transparent, direct, integral, inquiring and compassionate communication with decentralized and open information sharing, knowledge transfers and exchange;
  • Leverages networked and virtual efficiencies;
  • Consistent evolution allows for gaining wisdom by making mistakes, taking risks, and improving systems; and
  • Flexibility, resilience, agility and adaptability.
  • Automated systems and procedures that 1) foster transparency and trust, 2) maximize flexibility and performance of required tasks through an opt-in process, 3) support real-time resource and budget allocation to holistically fulfill the organization’s needs, 4) real-time knowledge transfers, and 5) transparent and decentralized recordation of transactions, exchanges, resource flows and results of budgetary investment.
  • A clear statement of culture and governance. For example, the organization may want to consider the adoption of transparent, direct and compassionate communication, collective intelligence gathering, and general participation with a democratic voting mechanism after the expiration of the time limit for gathering collective wisdom and input.
  • Clear articulation of incentive plans and policies, including a detailed statement of how rewards (e.g., cash, stock, privileges) are earned and distributed. For example, the SAO may choose a meritocratic reward structure that is first weighted to organizational performance, then to team performance and finally to individual performance. While it is recommended that clear and objective milestones and key performance indicators be communicated, the evolution and changing of milestones and metrics are encouraged. When incentives evolve and change, it is critical that such changes be immediately communicated to the team. The awards can be done through peer-reviewed internal credit rating. The credit rating not only supports quantitative criteria (e.g., productivity and revenue generation) but also accounts for qualitative value, including integrity, emotional intelligence, leadership, cultural enhancement, promotion of the organization’s values, and being a good corporate citizen.

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Mark Chasan is a lawyer, entrepreneur and financial advisor supporting regenerative communities and eco-social entrepreneurs to foster the Regenerative Economy.

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Mark Stephen Chasan

Mark Stephen Chasan

Mark Chasan is a lawyer, entrepreneur and financial advisor supporting regenerative communities and eco-social entrepreneurs to foster the Regenerative Economy.