Collaborative tribal market hierarchies

Chapter Nine of The Firm as a Collaborative Community explores collaborations between enterprises. The author: Lynda M. Applegate sits on an advisory board for the Nasdaq Exchange which gives her an intimate view of its complexity. Her chapter is a treasure trove of insights that I had to read more than once to extract all the value I was realizing. 

Nasdaq is a market for the exchange of securities founded in 1971. The Nasdaq Exchange and many of the member issuers of stock are institutions with hierarchical structures. The ways they work together to maintain the vibrant marketplace and their own institutions are intensely collaborative. To facilitate the numerous transitions, adaptations and revisions needed as the market grows or changes, there are special teams with cohesive tribal characteristics that respond to each of those challenges. Nasdaq has proven to be very responsive to setbacks as well as complex enough to be sustainable over several decades. It provides a model for collaborative endeavors that David Rohnfeldt would call a "quadriform society". It embodies tribe, institution, market and network (TIMN) functionalities. 

From my reading of this chapter, I have distilled a series of four design patterns and anti-patterns for collaborative enterprises. These can be used to avoid pitfalls, generate sustainable designs and compare alternative solutions. 

Anti-pattern: Over-simplification - When we idealize collaboration, our approach lacks requisite complexity. We rely too much on the benefits of collaboration while ruling out the functionality of non-collaborative forms of contribution, connections and combinations.

• Pattern: Requisite complexity - When we synthesize collaboration with small teams, huge hierarchies and competitive markets, our approach becomes much more sustainable. We include enough variations, ranges of responses and alternative resources to withstand shocks to the system, adapt to changing situations and evolve to better serve the entire panorama of constituencies. 

Anti-pattern: Over-emphasizing trust issues - When we assume that trust is a prerequisite to collaboration, we fail to rely on the gradual processes from which trust emerges. We dismiss the possibility that an institution or market could grow to trust suspicious members.

• Pattern: Varied processes of trust - Applegate differentiates between institutional trust, affiliation based trust and process based trust. She perceives process trust emerging from affiliation and institutional trust, rather than determining whether or not collaborations can occur prior to start of collaborating. 

Anti-pattern: Conflating varied kinds of relationships - When we "make a thing" of collaborating, interdependence or relating, we fail to discern the variations that need special attention. We take an ineffective "rubber stamp" or "cookie cutter" approach to nuanced dynamics. 

• Pattern: Differentiating varied relationships - Applegate separates task-based relationships, information or expertise based-relationships and social relationships. She characterizes the organization of those varied sizes of these relationships as nodes, alliances and consortiums. The range of scales, contributions and benefits received provides a sufficiently subtle appreciation of the differences worthy of customized design responses. 

Anti-pattern: Relying on the complexity of the community - When we're overwhelmed by the complexity of inter-dependencies and network linkages in a community, we assume there's enough variety to respond to whatever comes up. We fail to imagine that members could feel abandoned, neglected or misunderstood.

• Pattern: Integrating tribes into communities - Communities need special teams to respond to particular issues, crises and disconnects. Those teams ought to feel like tribes of insiders which regards the rest of the community as outsiders. Rather than having a divisive effect, these tribal teams add to the community's resilience and sustainability. 

Chapter Nine further explores contrasts between Nasdaq and two other, less successful large-scale collaborations. Situations where large buyers seek set up "collaborations without trust" with their sellers end up breaking down. Their unilateral price squeezing undermined the long term viability of collaborations for both automakers and health care providers with their suppliers. Both examples feed our appetites for a "peak hierarchy" phase of evolution and a demise of obsolete bureaucratic institutions. However, this chapter suggests that hierarchies won't go away, they will get integrated into far more viable and sustainable combinations of collaboration, market mechanisms and tribal cohesiveness.