Intelligent organizations

Posted: June 30, 2008 at 9:26 pm in cognition, management

Tobias Lehtipalo asked a really interesting question on the pmclinic list, which essentially was: Can we apply the principles described by Jeff Hawkins’s model of the brain in On Intelligence to organization design?

To review, Hawkins suggests that the brain is composed of a set of pattern-recognition layers. Each layer is trained to look for certain patterns of inputs, and react accordingly. If the layer sees inputs that don’t match what it thinks it should be seeing, it passes the inputs upwards to the next layer to see if the next layer knows how to handle it, eventually filtering up to consciousness. So when we first learn an activity like biking or driving, we have to pay conscious attention, but as time goes on, our brains learn to handle most of the mundane details of such activities subconsciously without having to access higher layers.

Lehtipalo suggests an analogy for the organization:

An intelligent organization is one where employees act independently but in concert guided by management input and their own senses. As long as employee experiences matches the high level guidance no approval is needed for action. However when there is a misfit between management prediction and reality the staff experiences are communicated upward and management adjusts their model of the business and their guidance accordingly.

Employees handle most decisions at their “layer” of the organization, and only pass upwards the ones where the decision is ambiguous within the context of the high-level goals of the organization. Once those decisions are made by higher management, the team knows how to handle those situations in the future.

This could be perceived as a typical hierarchy, managed with ISO 9000 and three-ring-binders of process, but Lehtipalo is hinting at something more. Rather than treating employees as neurons capable of only routinized decisions, we need to start taking advantage of the intelligence already in place at each level of the organization.

This conception of the organization as collective intelligence fits in well with where my own thoughts on organizational design have been going. As I suggested in the social technologies post, I think “that future organizations will consist of consensus-driven vision creation, and then each person determining how they can contribute to that vision.” In other words, the organization will figure out an overall purpose that matches its strengths with opportunities, and minimizes its weaknesses, and then members of the organization figure out how they can use their own strengths to pursue that organization vision (yes, it’s a fractal organization design, where each level is self-similar, and thus could be broken into several levels of hierarchy without changing the process). The role of managers in such an organization would be to guide the vision-building process to achieve consensus, and then to guide organization members in finding the place best suited for them within that vision. If you’re a science fiction fan, it would look like Ender’s army in the book Ender’s Game.

In an interesting coincidence, this week’s book in the email business book club is Do the Right Thing, by James F. Parker, former CEO of Southwest Airlines. Today’s excerpt contained the following quote:

The ultimate success of any organization requires consistently excellent performance at every level. Vibrant and successful organizations … are built on a culture of engagement, in which employees believe in the mission they are trying to accomplish and know that they are contributing to its success. People who are given the room to succeed usually will.

As usual, I see the same patterns everywhere once I start looking, but I think this is congruent with the other thoughts above. Successful organizations have a compelling vision that employees value and to which they want to contribute. They find ways to contribute to that vision appropriate to their level (at Gore and Associates, people are not given specific responsibilities when hired, and just wander around the factory until they can figure out what they should be doing to help). This means that managers don’t have to tell their employees what to do – they just have to make sure that employees are put in situations where their decisions will match up with the organization vision. On the flip side, if there isn’t a good match between a given employee and the vision, then perhaps the employee and organization may not be a good fit with each other and should part ways (Zappos believes this so strongly that it offers new employees $1000 to quit).

I should include a caveat here that this is meant to describe organizations of talented “knowledge workers”, full of employees who are comfortable in a free agent world where they move freely between organizations as opportunities arise. I don’t know if it would work as well in a more prosaic environment such as manufacturing, although Ricardo Semler seems to be making it work.

To really make your head spin, we can take it a step further and think about how this all ties into Latour’s theory of the collective. In Latour’s world, a collective is confronted with a new situation or new inputs that are not part of the current collective (he calls this “Perplexity”). The collective undertakes a period of Consultation to decide how to respond to the new inputs. Once a decision has been made with appropriate inputs from all relevant stakeholders, a new Hierarchy of the collective is formed, and then the Hierarchy is Institutionalized to preserve the new order. Or, to put it in the terms of a recent post, learn a new behavior, then latch it.

Intelligent organizations need to streamline their learning and latching process so as to be able to respond faster when confronted with new situations. At the same time, to be successful, such organizations need to properly handle the “Consultation” period and make sure all relevant stakeholders are properly represented, which is more difficult in an ever-more-interlinked world (who would have guessed twenty years ago that a multinational corporation like Nike could be threatened by grassroots organizations?). To accelerate the learning process while ensuring the right things are learned, organizations need to figure out better ways to take advantage of the collective intelligence of their employees, such that all available intelligence is concentrated on the problem at hand, with each employee thinking about the problem at their level.

I still haven’t quite figured out how this all ties together yet, and whether the type of organization I’m describing is realistic, but I do think that the vision is starting to coalesce. There are many practical questions still ahead – as Lehtipalo asked in a followup email:

Is it possible through the structure of the organization, through processes, reward systems and with the help of various communication tools to make intelligent behavior the *natural* thing for the organization – i.e. make it the path of least resistance?

In other words, how do we set up the incentives of the organization such that employees do the right thing? It’s a hard question, so I’m going to leave it for another time.

P.S. 10 posts in June! Unsurprisingly, this is the most posts in a month since last summer. Amazing how not having classes gives me more time to blog.

6 Responses to “Intelligent organizations”

  1. Beemer Says:

    You have a lot of good ideas here, but I think one of the assumptions needs to be examined in further detail: how competent and intelligent are the employees?

    A lot of essays about how to build great organizations start with a statement along the lines of “start with great employees”, which, while true enough, strikes me as kind of like cheating. If everyone in an organization is a smart, resourceful go-getter, all the organization really needs to do is stay out of the way. You mention that this organizational scheme is meant for talented knowledge workers, and that demands the question: does it require them?

    In terms of social tech level, I think what we’re lacking are systems that let us construct organizations that behave intelligently even when half of their constituent employees are below average in terms of ambition, competence, initiative, and so on. This is important for two reasons. The first is practicality, in that it’s unrealistic to think that a company can grow beyond a small handful of people and expect to be able to maintain super-high quality in its hires. The second is that I would argue it’s ethically irresponsible to focus too much on systems that will only accommodate elite participants. You can’t get a good Civilization Awesomeness score unless all the bumblers, slackers, wallflowers and fuzzy thinkers can have meaningful and fulfilling jobs, too. (*I myself often fall into the ‘slacker’ category, I freely admit.)

    Now, the nice thing is that these attributes aren’t fixed. Humans learn and grow, so if you have an organization that doesn’t just encourage intelligent behavior, but will help its employees to become smarter, more competent, more productive, and so on… then you’ll really have something.

  2. seppo Says:

    DAMN YOU BEEMER!

    Seriously, you said almost word-for-word exactly what I was going to. If you have an organization of highly motivated, highly intelligent individuals, then your only real problem is making sure they’re coordinated and wrangling personalities. But *eventually* every hiring process will deteriorate, and some mediocre employees will seep into the mix. How you deal with that (and I think Zappos has a great first step, but Beemer points out another potential alternative, which is somehow trying to make mediocre employees better (though in my experience, that’s extraordinarily difficult, if not impossible for some roles) determines how robust your organization is.

  3. Eric Nehrlich, Unrepentant Generalist || Intelligent Organizations for the Rest of Us || July || 2008 Says:

    [...] and Seppo (and Wes in a separate comment) had the same objection to yesterday’s post, which I’ll summarize as: “What you’re describing will only work for [...]

  4. Adam Wishneusky Says:

    wow. I knew when I met you that you’re way smarter than I am ;)

  5. Eric Nehrlich, Unrepentant Generalist || Mapping out Organizational Space || December || 2008 Says:

    [...] each others’ contributions to the team’s overall goals. I’d like to think that a fractal organization could be built off of such teams which each have a team goal, and then each team trusts the other [...]

  6. Eric Nehrlich, Unrepentant Generalist || Cognitive Theories of Corporations || January || 2010 Says:

    […] to think more about is organizational cognition aka how organizations think, and how to design an intelligent organization. For some reason, I was thinking about this today, and made a connection to standard […]

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