New business models, new organizational imperatives, new linguistic expressions... Several disruptions, from technological innovations to social standards adjustments, are on executive radars.
In current times, polysyndets, metaphors, and hyperboles are familiar figures of speech. Strategic planning cycles highlight concepts such as burning platforms as a starting point for reflections on new possibilities.
Incredible transformations have been witnessed in recent times. New value vectors have coexisted with consolidated foundations while conventional dogmas and paradigms are now challenged.
However, discussions about rupture still outweigh actual rupture actions. Intentions anticipate achievements. In the practical life of companies, organizational reconfiguration processes are developed in homeopathic doses, in test-drive mode. Compliance, stability, and predictability are not out of style. But, in a way, they are trying to live in new directions for the future.
Successive experiments have taken place in different layers of organizational structures: agile cells, platforms for accelerating and incubating startups, flexible project-oriented arrangements – even challenging institutions, laws, and paradigms. However, some traction is still in forming holding companies to manage company portfolios. Other experiments are carried out in incentive programs, governance models, and management systems. And they are also concerned with more abstract aspects such as language and clothing, work environment, and value proposition.
What are organizations for?
Only imagine a world with organizations. All dimensions of our lives revolve around some organization, from churches to governments. And this is something positive for society. At the same time, it takes work to envision a stable organizational momentum.
Organizations also evolve naturally – sometimes with jumps – in search of survival and relevance. And three functions stand out in this process:
I – Coordination
Organizations, including private companies, are essential because they create management mechanisms and structures capable of processing information and coordinating various economic agents at scale. Organizational coordination capacity is a significant differential in chaotic and hostile contexts. Over time, different coordination models were implemented and improved, while others were discarded. At the present moment, organizational reconfiguration agendas also challenge this primordial aspect: how to optimize the coordination capacity of companies?
II – Efficiency
A factual nexus of contracts. That is how an organization can be defined in the academic view of economists. To coordinate different agents' activities, an organization manages endless transactions, each with its respective costs. Thus, minimizing transaction costs means maximizing organizational efficiency. For example, transaction costs include the burden of coordinating productive activities and their monitoring system, the observance of property rights, and the negotiation of contracts.
Organizational complexity is related to the very uncertainty and hostility of external conditions and the dynamics of contracts underlying the existence of an enterprise. The pursuit of efficiency, therefore, is a journey with no endpoint. Technology, processes, systems, people, and facilities can be optimized in their combinations to maximize operational performance concerning the capital employed. Since the external context constantly changes, maximizing efficiency is always a new challenge. In addition to productive paradigms and operating models, new performance levels are being pioneered.
III – Well-being
An organization does not exist to maximize its result generation. Instead, it is always surrounded by multiple stakeholders with diverse agendas of interests, different bargaining powers, and networks of influence. This tension of forces defines the potential return on employed capital adjusted to an enterprise's risk level.
The very existence of an organization is, in a way, a concession by society for its well-being. In the case of a private enterprise, for example, the price system and the cost of capital define its financial viability. Organizations, therefore, exist to optimize the social well-being of the stakeholders around them. And for this very reason, they strive to maximize the financial return for their shareholders in perpetuity, provide a favorable work environment for employees, delight customers, consolidate their value chain, and meet society's general expectations.
Contemporary vocabulary has highlighted terms such as ESG, Diversity and Inclusion, Customer Centrality, and Impact. However, these and other concepts are expected, but they have just been increasing their relevance in the organizational agenda in this dynamic field of forces.
Interaction between concrete and abstract
From this essential tripod (coordination, efficiency, and well-being), ambition is designed, combining purpose, vision, and strategy. But every endeavor requires fulfillment. The level of corporate power refers to the critical convergence between culture, design, and capabilities.
Thus, business success lies in the exact fit between ambition and power - something difficult to achieve. Various external challenges impact the different layers. Besides, internal idiosyncrasies prevent the perfect alignment of the power levers.
The organizational reconfiguration process addresses different aspects. Some concrete, some more abstract. It is worth highlighting the inexorable coexistence between the concrete and the abstract. The locus of work, for example, is an essential concrete aspect of the organizational configuration, where abstract networks of influences and concrete management systems are manifested.
From a procedural point of view, the organizational configuration encompasses the combination of governance rules, financial and non-financial incentives, management systems, and roles and responsibilities. These four sets of elements model the concreteness of structures and diverse flows.
From the tacit point of view, group norms anchored in values and beliefs, external and internal networks of influence, pacts agreed between teams, and collective mental maps stand out. These grouped elements define the dynamics and behavior of individuals and groups by structures.
Organizations navigate more efficiently – not always effectively – the procedural aspects. Executives, entrepreneurs, and collaborators can visualize concreteness more clearly to the detriment of the abstract. It is much easier to draw an organizational structure with its little boxes and flows than to understand group norms in all their implicit nuances and unconscious complexities.
However, organizational concrete is not only realized with its abstract counterpart. From the concrete structures, the tacit aspects model the dynamics and behaviors. Organizational semiotics is defined around these movements, symbols, and rituals. The organizational capacity to optimize coordination, efficiency, and well-being is also directly conditioned by the fluid integration between procedural and tacit aspects. Collective perceptions, both internal and external, are also defined in this interaction.
The organizational reconfiguration process consolidates three main imperatives for relevant enterprises' current and future context: lightness, empathy, and organicity.
Beautiful, light, and loose
The metaphor of transatlantic companies, with their difficulties in sudden maneuvers in favor of the consistency of the plans outlined from port to port, is already well known. In the current frenetic and ephemeral pace of transformations, the process of organizational reconfiguration reinforces the importance of lightness as a determining factor for success.
The lightness is expressed in the structure with its roles and responsibilities, rules of conduct, normative protocols, bureaucratic processes, management systems, and team sizing. It can also be understood in the minimalism of architecture, clothing, social interactions, organizational climate, language, the locus of work, symbols of power, and the exercise of leadership.
More principles, fewer protocols. More appointments, more occasional reports. More collegiate, less silos. Looser and less severe. More admiration, less submission. More beauty, less harassment. More experimentation, less perfection.
The lightness manifested in clothing, architecture, and language has also influenced the generalized horizontalization of areas, with increased front-line autonomy and the transformation of strategic macro-objectives into microcosmic objectives under the management of tactical teams. Vanguard organizations will be less complex and stilted. They will be light.
By the light of your eyes
Empathy is the word of the moment in the world of companies. The increasingly attentive look at the aspirations, perceptions, and needs of others around us emphasizes the outside-in logic in place in all dimensions, from the centrality of the customer to the individuality of the employee, also including empathy in multistakeholder agendas, with emphasis on for diversity, equity, and inclusion, environmental and social commitments.
Expressions such as Client Success (CS), Client Experience (CX), User Experience (UX), and Customer Journey have proliferated as contemporary jargon in business modeling. Hence, the centrality of the customer has become the primordial axis of value generation.
Similarly, the scarcity of specialized human capital and the latent well-being agenda in the work environment have driven empathetic approaches in labor relations around collective and individual issues. As a result, the employee's mental health ceased to be a taboo topic to assume central importance in people management practices.
At the broadest level, organizations are accommodating changes in bargaining power among their stakeholders. The recent ESG and DEI agendas illustrate such redistribution of management, with the maximization of financial return on capital today subject to greater boundary conditions.
New archetypes, welcome!
Many advances, transformations, and adaptations have been undertaken in recent times. Sudden and acute changes, however, stress the adaptability of organizations. As a result, organizational structures are still very traditional, ranging from multidivisional to matrix. The Structure, Conduct, and Performance (SCP) paradigm - similarly known as Structure-Behavior-Dynamics in Computer Science - can help connect the dots between organizational challenges and computational systems.
Today, the implementation of networks around large organizations is discussed, integrating links in the value chain and collaboratively building new fronts. Other studies analyze the feasibility of the Decentralized Autonomous Organization (DAO) paradigm inspired by advances in blockchain systems. It is also possible to observe the configuration of holding companies that manage the portfolio of invested companies in different stages of maturity, optimizing the risk return. The formation of biomes is rarer in various sectors, referring to the complete concept of organic operating systems that govern essential parts of society far beyond a company's borders.
New archetypes, therefore, cannot be found in existing structures. What's more, inspiration for new organizational configurations may not be found in today's unicorns and global digital icons. It may be in the evolution of computational systems around cloud networks, integrated and enhanced by artificial intelligence and, increasingly, by quantum computing. The path we have already taken can help to unveil future organizational paradigms.
From math to biology
The evolution of computer systems has always been in great harmony with organizational movements over the decades. Based on subsequent interactions and experiments, the computing area has constantly been challenged, testing new limits of technology.
Software development is always a complex process. Numerous parameters, factors, and conditions are systematically related to structure, behavior, and dynamics. The software architecture itself is directly related to how teams and professionals in the computing area develop their methodologies. Computer systems need to adhere to the organizational context. There is an intimate relationship between the method and the final result.
The area of computing was born from the areas of Physics and Mathematics, which influenced how the first languages were conceived. While Physics provided the technological apparatus of valves, transistors, chips, and microprocessors, Mathematics acted in the scope of software with analogies for creating commands and functions, essential elements of these languages. More recently, biology has assumed more and more protagonism due to the organicity of the infinite connections in open systems.
As in the configuration of organizational systems, the modeling of computer systems can also be understood in three large blocks: Structure, Behavior, and Dynamics. The structure identifies the elements, their relationships, and how they are organized. The behavior is associated with the actions performed by each component or each set of parts, focusing on producing valuable results. Finally, the dynamics show how these elements interact to support the project's goals, meeting scope and scale requirements.
Although systems have become increasingly complex, the three blocks remain the tripod for developing a computational approach. Models and methodologies evolved, therefore, in step with the increasing complexity and breadth of computation. This tripod has come a long way, from binary monoliths to innovative embedded applications. The first computer systems in the 1980s and 90s were similar to how hardware works. Over time, many layers of abstraction were inserted between software and hardware. Nowadays, quantum systems stand out increasingly as new computational paradigms, and if confirmed, they will also have much influence on organizational systems.
Not-so-nimble revolutions
Since its inception, the modeling of computational systems has developed side by side with the evolutionary trajectory of the configuration of organizational systems. One is the transformational vector of the other.
Although there are still surprises with some technological advances that pull from time to time, as also happens in the specific case of scientific knowledge, computational systems evolve over many decades: from the beginning of programming, in the mid-nineteenth century, to the advent of quantum computing, in the early 1980s. Only a century separates the two paradigms!
From reach scalability to resource optimization, organizations enjoy many of the positive impacts of new computing systems and the breadth of integration of parts relating to shared business processes, generating even more interactions, learning, and connections.
There is always a time gap between any technological advance and its effective incorporation by organizations. In addition to the challenge of replacing legacy systems, the organizational learning process itself stands out in mapping and testing so many possibilities.
Features Catalog
Monolithic systems were developed in a step-by-step linear structure. They were composed of deterministic algorithms and sequential structures and stored their data in file repositories, delivered as black-box systems. The focus was to provide a catalog of functionalities for which users chose the correct situations. They were self-contained, could not integrate with other systems, and needed help managing business processes.
In the mid-1980s and 1990s, there needed to be more concern about separating the modeling of systems on the Structure-Behavior-Dynamics tripod, given the simplicity of the programs. However, the certainty did not even address the dynamic that a computer program would never be able to absorb an organizational system.
The automation was punctual and resolved the operation of some more repetitive activities with little breadth and integration within the scope of corporate management. Knowledge of the systems was fragmented among several collaborators. Systems were sequential and single-user, typically developed by a single programmer.
Network Architecture
The advancement of computer networks has increased the relevance of communication protocols and network topologies. Specific models began to be used for the development of these systems. Although still essentially monolithic, they became multiuser, and other professionals joined development teams. Client-server systems and the first database systems shared by users appeared.
The acceleration of technology and data processing capacity also motivated another relevant innovation: applying the principles of mechanics in Physics as an analogy for developing methodologies focused on object orientation and service-based architectures (SOA). Thus, business dynamics began to be automated and, therefore, processes began to be controlled more effectively and optimally.
In addition, a very robust set of diagrams called the Unified Modeling Language emerged. Suddenly, programmers could graphically design their systems to be analyzed and discussed with teams from other areas. The main characteristic of these systems was the union between data and algorithms – something fundamental due to the integration between functionalities and objects in the real world of organizations. As a result, it became possible to integrate different objects collaboratively.
War of GUIs
Icons, buttons, text boxes. A major revolution was necessary for software production when the strictly sequential process began to operate in event management modules, controlling clicks on each part of the screen and activating code sections with more excellent reliability and complexity. With that, applications and systems had to be rewritten for this new model, also causing the obsolescence of a huge volume of software based on the textual paradigm.
The graphic models required layered modeling, given the complexity of dealing with each layer. Then, professionals became specialized in each of these layers. At the time, the most used layer model was the Model, View, Controller (MVC), still in force today, which separates data processing, algorithms, and user interaction. With this separation, models began to be categorized into structural and behavioral.
These systems are characterized by reuse, adaptability, a high level of integration, and interdependent layers (like the MVC model), which organize the dynamics (algorithms), structure (database), and interaction (user interfaces). These layers are independent and can be developed by different teams, including designers. Professionals specializing in producing very high-level interfaces (UI and UX) emerged.
Web world, multiple screens
The Internet has revolutionized computing. Browsers have replaced all systems interfaces, unifying the point of user interaction with large-scale standardization. The integration of all the networks, in which the companies started to have direct contact with all the other networks in the world, brought new opportunities and many problems, mainly regarding information security. The increase in 24x7 users required other, more sophisticated resources to sustain computational performance. Once again, it was necessary to rewrite codes and redo systems.
A second revolutionary wave emerged with mobile devices connected to the Internet, smaller screens, and high processing capacity. Systems needed to adapt to the multitude of new screens, and thus responsiveness became critical.
New layers, such as networking and security, were included in the development. At that time, business modeling became essential, as the large corporate management frameworks already had the computational capacity to process all information circulating in an organization, such as ERP and CRM systems. A few years later, cloud computing optimized resources allocated in sophisticated CPDs and proprietary data centers, which migrated to shared cloud systems.
Connected and smart
More recently, artificial intelligence and business intelligence have become protagonists in computer systems as expressions of the capabilities of current frameworks to provide data processing resources in addition to hosting.
Again, the Structure-Behavior-Dynamics tripod drove the movement: process maps and interactive organizational models with users and other organizations become critical. As a result, reactive and procedural systems were becoming more active when incorporating data management, correlations, and processing. As a result, they became capable of finding opportunities, solving complex issues, systematizing activities, and automating routines inherent to the daily lives of human beings.
Large development platforms made it possible for various technical professional profiles to work without needing to know in detail each of the millions of algorithms present in current corporate computing systems. It was the digital division of labor.
Today, we look to quantum computing as the new frontier. Such systems have hardware that broke with binary logic to use aluminum atoms as the basis for their operation.
Synthetic biomes redefining landscapes
Biology has increasingly merged with Mathematics and Physics in the continuing evolution of computing. The so-called systemic biomes have broken boundaries and are organized in a differentiated and comprehensive way: each of the parts behaves beyond merely related parts, presenting its trajectory of conception, evolution, maturation, and death.
A biome is very interactive. On the one hand, specialized and highly integrable algorithms can be incorporated into organizations' specific solutions. On the other hand, significant globally consolidated frameworks have absorbed more and more non-functional requirements, such as storage, performance, security, and usability, without costs for low-volume transactions. Thus, most enterprise projects can focus on functional requirements.
The more the system is operated, the better the maturity of its modules. Machine learning is an artificial intelligence resource that allows the system to increase its knowledge of the business context to which it is submitted. Such evolution is less related to new programs and more to the volume of data accumulated over time, together with established parameters and algorithms to search for existing correlations. This information set, composed initially of numbers and texts, now also encompasses other media types, such as image and natural language processing, measurement of user emotions and feelings, and biometrics, among others.
Faces of the same (crypto)currency
How can computer systems inspire organizational reconfiguration?
In the current context of synthetic biomes based on large digital frameworks, it is worth reflecting on the latent organizational layer at stake. Instead of the internal structural locus, the new archetypes suggest the societal layer as the protagonist of the new contemporary era.
The matrices remain valid as internal forms of organization, being refined to be increasingly light, empathetic, and organic. Meanwhile, in the societal layers, organizations are increasingly characterized as managers of portfolios distributed in biomes with lasting connections and relationships. The Decentralized Autonomous Organization (DAO) paradigm still looks hyperbolic. However, as in the synthetic biomes of computing, it indicates the direction of the generalized decentralization of activities and resources toward affiliated organizations.
Digital transformation (high-tech) coexists with humanizing relationships (high-touch) in work environments. A multistakeholder collaborative protagonism has driven the energy transition. The abundance of capital and technology redefines prices, assumptions, and perspectives. Ruptures, experimentations and polysemy.
The reconfiguration of organizations will not find off-the-shelf formulas, at least for now. But that shouldn't stop the movement. The vanguard organizations of the future will not only be operators of processes and resources but of trends in networks, portfolios, and biomes. The new organizational paradigms have already emerged. We only need to adjust our lens
