Open Organizations

Typical Organizations are great in preserving the status quo and in excelling efficiency. But they are bad at creating something new and innovative. In addition hierarchies have a tendency to create silos, competition and negative externalities. Open Organisations can overcome these pitfalls. Do you want to know how?

The industrial revolution did kick-start the age of the corporations as we know them today.

Excelling efficiency to unlock economies of scale was the key strategy to offer superior products and services and dominate markets. Efficiency especially was focussing on capital efficiency as capital was the scariest production factor.

This time is over. We live in a world of nearly ubiquitous and free money. Capital and production efficiency is not the prime differentiating factor anymore. The most successful organizations of our time are excelling in adaptation, innovation and organizational and personal learning and growth. Therefore John Hagel proclaimed the paradigm shift from a scalable for efficiency to a scalable for learning organizations. This shift is also a shift from capital resources defining organizational strategies to human resources defining the success of organizational strategies.

This time is over.

We live in a world of nearly ubiquitous and free money.

The strategies of “scalable for efficiency” and “scalable for learning” are exclusive and cannot be pursued at the same time. Scalable for efficiency is counter-innovative and is favoring the “predictable” and “secure” status-quo over “uncertain” and “agile” innovation and change. Today that leads to the exact opposite - obsolescence.

Kodak is the prime example of the old culture is winning over the new culture and by that achieving exactly the opposite. The loss of market share, size and future. This root cause is called “innovator’s dilemma” and was first described by Clayton Christensen. It has so far very rarely been overcome and it is the main reason why the lifespan of companies has dramatically decreased over the last two decades. 

One solution approach to overcome the innovator’s dilemma is the “innovate from the edge” strategy of John Hagel. Another approach is the infiltration of the hierarchies by networks of innovation. Overall the required organizational growth is not only about re-skilling, education and learning experiences, it is also about mindset, culture and new ways of organizing work inside and outside of organizational boundaries.

I believe successful organizations of our time have to be Open Organizations. Openness in this context means openness to all stakeholders but especially the stakeholders that create the biggest value in regards to the organizational purpose. The organization has to create engagement, identification and alignment with these stakeholders. Employees or Members and Users or Customers of the organization in most cases are the key stakeholders. But openness also means openness to the future and innovations supporting the organizational purpose. And lastly purpose and culture are the most important ingredients to attract and retain the right people. If there is a strong attraction of talent, talent can be empowered and freed. The last Open Organizational trait.

In conclusion I believe the successful Open Organization of our time has to be more like a network with permeable boundaries orchestrating multiple communities of stakeholders. Decentralized Autonomous Organizations (DAOs) are showcasing a completely new approach to coordination and work and other resource organization. That also includes a new open mindset and interwovenness of DAOs for better cross-organizational collaboration - social composability.

One of my long-term career focusses is to innovate on organizational design and social technologies with innovative and large scale global HR and people organizations of all industries.

What most people don’t know is that all businesses will become platforms and the capability to create, shape, and bootstrap them as well as ultimately drive adoption of them will be the key capability to the success of any organization. And the pragmatic methodologies and frameworks to shape platforms to become the transaction engine and learning engine of an ecosystem deliberately, are readily available.

“Organizational borders are limiting innovation, collaboration and learning. The most successful organizations of the future will be open and membership will be non-exclusive and composable.”

Testimonials

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