If we observe living systems all around us, we see that they come in all shapes and sizes. Nature’s rich variety is classified along kingdoms (animal, plant, fungus, etc.), where each species possesses a certain structure and often unique shape that is designed to serve a particular purpose within nature as well as ensure its survival and adaptation through the evolutionary process.
If business has structure, then why not shape?
Structure follows strategy. And strategy (or design) isn’t that different from nature in the sense that each business serves a purpose in the global value chain, it seeks to differentiate, it must compete for survival through sense-and-response mechanisms, etc. Therefore it is plausible to believe that every business does indeed have a unique shape – even though we may have difficulty visualize it.
Honestly, I don’t know if shape matters – intuitively, I know it does. Because to understand is to “see.” Humans are visual creatures. It is no coincidence that we use terms like “insight”, “vision” , and “imagine” to convey a richer understanding. 75% of the knowledge we gain is acquired by the sense of sight. Shapes and structures are inherent to how our brains learn and adapt. Shapes encapsulate structure and convey its complexity in a way that make them simple to understand. For example, when seeing the crystalline structure of the carbon molecule, we intuitively understand why a diamond is hard.
Yet, when asked to describe the shape of business, most of us have to stop and think about it. The shape that often comes to mind is a pyramid (which describes a management structure that was created at least 100 years before the information technology era.) But technology has transformed the structure in a way that the pyramid belies the complexity underneath this simple shape. The pyramid no longer captures today’s business complexity requires to support more product variety and features to serve more customer segments supported by an equally complex global value chain.
So what is an alternative to the pyramid shape?
Let’s go back to the example of nature: If we look at the animal kingdom, we see that the species have a common structure with “parts” that are designed for the same functional purpose – limbs for mobility, digestive tract for sustenance, nervous system for sense-and-response, etc. Businesses too have a common structure with “parts” carried out by certain functions – but instead of the traditional functional “boxes inside the pyramid” view, consider an alternative view as illustrated below:
The logic behind the visual structure goes like this:
- Your business has customers…
- The business make a brand promise to its customers…
- The brand promise is fulfilled by its products/services that the customer experiences…
- The products/services are created using fixed assets (property, plant & equipment), materials (in different states of inventory), people (hourly, salaried), all of which consume various utilities in the transformation process known as the supply chain where…
- You are the customer to your suppliers in the supply chain.
(I find this visual structure to be more useful when thinking about business as a platform – in particular, a platform that is explicitly designed for agility and flexibility with “sense-and-response” mechanisms at the critical linkages shown above. I get into more details about this alternative structure in my research report, “Customer Centricity in the 21st Century.” A follow up paper, “From Silos to Streams” makes the case on how technology is reshaping the pyramid (and silo) structure of the enterprise into a flow-based structure of digital streams of real-time data spanning multiple enterprises.)
Why we have difficulty seeing the larger picture
As employees its easier to see the parts (especially the functional parts we play) but we often struggle to understand the greater whole. Our own human instinct to “divide and conquer” is part of the problem. I learned this way back in 1993 from the late Ken Sharma (a mentor and dear friend) who first introduced me to systems thinking and the following quote in particular:
From a very early age, we are taught to break apart problems, to fragment the world. This apparently makes complex tasks and subjects more manageable, but we pay a hidden, enormous price. We can no longer see the consequences of our actions; we lose our intrinsic sense of connection to a larger whole.
When we then try to ‘see the big picture,’ we try to reassemble the fragments in our minds, to list and organize all the pieces. But, as physicist David Bohm says, the task is futile — similar to trying to reassemble the fragments of a broken mirror to see a true reflection. Thus, after a while we give up trying to see the whole altogether.
— Peter Senge, The Fifth Discipline
“Thus, after a while we give up trying to see the whole altogether.” In essence, how can we see the “shape” of business – if after having deconstructed the business into functional silos, we have difficulty putting it all back together?
Despite the advances in technology that have helped reduce the fragmentation of systems by “tearing down the technical walls”, our mental walls have been much harder to tear down. A common or shared vision can be an elusive thing because we humans are fundamentally wired in a way such that each of us perceives the world around us in our own unique way. In other words, how the “operating system” inside our heads reassembles the fragments to see the big picture will be unique to each of one of us.
In the absence of Vulcan mind-melding capabilities, the best we can hope for is to be “kinda, sorta on the same page” but that does not mean we stop trying. Sure it creates some challenges in getting people to agree but I suppose that’s what makes life interesting – and worth sharing.
— Sree Hameed