In an earlier post we discussed “Free Inc”. and asked “Could Free Be An Organization?” We mentioned that theories of business have shifted over time as globalization sparks more competition and technology fuels innovation but the three fundamental elements remain the same: people. processes and power.
We’ve witnessed the era of the knowledge worker, the “free economy”, the networked world and social media with the collective influence re-engineering business as usual and everyone’s thinking everywhere. Will changes brought on by the web create a new virtual organization model?
What Would the New Virtual Organization Look Like?
The new virtual organization would be the interlocking social structure that governs how people work together in practice. It is the aggregate of behaviors, interactions, norms, personal and professional connections through which work gets done and relationships are built among people who share a common organizational affiliation or cluster of affiliations. It consists of a dynamic set of personal relationships, social networks, communities of common interest, and emotional sources of motivation. The virtual organization evolves organically and spontaneously in response to changes in the environment of opportunity, the flux of people through its porous boundaries, and the complex social dynamics of its members.
The Virtual organization affords access to a multitude of talents and disciplines from resources geographically spread but with each bringing a value add to anyone particular project or engagement originated by anyone of the individuals affiliated with the organization. A virtual pool of experiences, talent, discipline and relationships representing virtual any market anywhere.
The Key characteristics of the Virtual Organization include:
- evolving constantly
- grass roots
- dynamic and responsive
- excellent at motivation
- requires insider knowledge to be seen
- treats people as individuals
- flat and fluid
- cohered by trust and reciprocity
- difficult to pin down
- essential for situations that change quickly or are not yet fully understood
The Virtual Organization provides the means, methods and medium to cope with the three dynamics that traditional organizations have had difficulty managing. These are rapid growth, learning and coping with the never ending demand of new ideas. Emerging knowledge gained from concepts andl strategies adopted by traditional business mindsets have demonstrated the value of leveraging the three dynamics further described below:
- Rapid growth. Starbucks, which grew from 100 employees to over 100,000 in just over a decade, provides structures to support improvisation. In a July 1998 Fast Company article on rapid growth, Starbucks chairman Howard Schultz said, “You can’t grow if you’re driven only by process, or only by the creative spirit. You’ve got to achieve a fragile balance between the two sides of the corporate brain.”
- Learning organization. Following a four-year study of the Toyota Production System, Steven J. Spear and H. Kent Bowen concluded in Harvard Business Review that the legendary flexibility of Toyota’s operations is due to the way the scientific method is ingrained in its workers – not through formal training or manuals (the production system has never been written down) but through unwritten principles that govern how workers work, interact, construct, and learn.
- Idea generation. Texas Instruments credits its “Lunatic Fringe”—“an informal and amorphous group of TI engineers (and their peers and contacts outside the company),” according to Fortune Magazine—for its recent successes. “There’s this continuum between total chaos and total order,” Gene Frantz, the hub of this informal network, explained to Fortune. “About 95% of the people in TI are total order, and I thank God for them every day, because they create the products that allow me to spend money. I’m down here in total chaos, that total chaos of innovation. As a company we recognize the difference between those two and encourage both to occur.”
What is The Value to Participating Individuals?
No one individual can possibly have all the required disciplines, knowledge sets and experiences to effectively grow a business never mind serve clients at optimum value. For any one individual to effectively serve a client they need a team of diverse talent, skills and knowledge. The Virtual Organization provides individuals with access to a resource pool to be called on “just in time” to serve the demand of the markets.
Additionally the Virtual Organization affords individuals the power and force of marketing, identity and reach given the power of the collective group of individuals contributing time, talent and revenue required to present the organizations brand to the global market. The organization does not maintain a “brick and mortar” presence nor does it have the traditional overhead that accompany historic organizational models.
Operating as one brand the virtual organization serves the needs of the individuals, the end clients and the entire market at much lower cost that the traditional organization. Next we will cover the economics of The Virtual Organization. Stay tuned and get ready to join or use “Free Inc.” to your benefit. As the markets migrate to the social web the Virtual Organization can and should play a vital role is helping markets adjust effectively and efficiently.
What say you?