Hierarchies and networks

Harold Jarche has gotten me thinking again by his recently been blogging about business models: Are the systems starting to crack? Democratic WorkplacesNew models for living working and learning, and Spiders and Starfish. We're dealing with a whole new set of variables with instantaneous and digitized communication. Yet networks are as old as the rails, literally. Perhaps the next generation of business models won't be as extreme as purely distributed networks. That may be what Brafman and Beckstrom are suggesting with finding the sweet spot between big headed spiders and self regenerating starfish.

As we already know, functional hierarchies are structured as top-down, command & control systems. They deliver tangibles reliably and consistently. There are also dysfunctional hierarchies which deliver inconsistently and unreliably where the command & control dynamics become more oppressive to get the deliveries back in line.

Functional networks are structured as decentralized and distributed control systems. They deliver intangibles responsively and adaptively. There are also dysfunctional networks which deliver unresponsively and arrogantly where the users disconnect and spread the word virally to migrate to other networks.

In a functional network, each node is a little, reliable hierarchy that delivers intangibles. If a network was only responsive and adaptive, it would appear unreliable and inconsistent. The introduction of controls and feedback loops creates the consistent responsiveness and reliable adaptivity. A "starfish of little spiders" handles both sets of issues better than either pure hierarchies or networks.

Hollywood has discovered this business model works better than the big studio or indie filmmaker on a shoestring budget. Consummate professionals in the full spectrum of specialities (effects, sets, costumes, makeup, stunts, catering, etc.) are assembled for a single project. This "best of both" dynamic has also emerged in open source product development that has been chronicled in Wikinomics and Outside Innovation: How Your Customers Will Co-Design Your Company's Future.

Hierarchies can become responsive and adaptive if networks are integrated effectively. This is common practice in any shipping business like the railroads of a century ago. The customer did not have to buy each separate segment of the journey for his/her package. Door to door service transversed many networks, shipping rates, bundled loads, departure times, transfer points and intermediate storage facilities. Customers were not consuming an item, they are engaging a vast network without any hassle.

Seamless integration and interoperability has becoming commonplace in online commerce, on demand print publishing and wireless Internet access services. We've moved away from making it difficult for the customer to get what they are seeking and intending to share with others. Digitized data networks have merely brought a new level of responsiveness to pricing, scheduling, and bundling of purchases that has been part of delivery networks for over a century.

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