Wednesday, April 25, 2012

Size and Organizational Intelligence

What’s it like working in an intelligent organization? If you’ve ever worked in a successful start-up, you’ll recognize that there is a real desire to understand what the customers want, and strong commitment to collaborative problem-solving. Meetings are focused on solving real issues, and there is little tolerance for the kind of unproductive games that people play in larger and more established companies. In principle, it should be possible to have this kind of positive experience in any organization: in practice, these aspects of intelligence get rarer as an organization gets larger and older.

It is a popular idea that large organizations should behave like small organizations: one way to achieve this is to look at the way successful small organizations practise organizational intelligence. Let us start by asking whether it is NECESSARY to sacrifice the good things about small organizations to become a big one? And if not, why does it often seem to happen?

Small startup companies often need to mobilize high levels of organizational intelligence. One reason may be a self-reinforcing narrowness of scope that forces a tight focus on essentials; small companies have very limited resources they can't afford to squander. Therefore the founders and early employees scan the environment keenly and solve problems collectively.

As the company grows in size, it may lose some of this keen intelligence. Customer situations recur, and many of the day-to-day problems have been solved, so the challenge becomes simply efficiently repeating known solutions to known problems. Meanwhile, the immediate and intensive communication and coordination enjoyed by small teams gets attenuated as the organization grows. Workers still spend large amounts of time communicating with their colleagues, but the critical flows of information are more indirect and may suffer interruption, distortion and interference.

Because of these factors, large companies often display a number of pathological characteristics. For example: forced diversification to keep growing; geographic expansion and timezone issues; competitors start to see you as a threat; regulators get interested in you; new people join with their own agendas.

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Extract from new book on Organizational Intelligence by Richard Veryard. Available at http://leanpub.com/orgintelligence/

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