Articles: Blog

Have we missed what really underpins performance in organisations?

What is the Dark Matter of Organisational Performance and Success?

Galaxy

In the universe of organisations, what is the dark matter of organisational performance?  (The Andromeda Galaxy)

Have we missed what really make performance happen in organisations?  In this article, I explore the idea of a, metaphorical, dark matter and dark energy, in organisational success and organisational performance.

Jim Collins, (Author of Good to Great and Built to last) suggests we have missed this important dark matter.  I offer ways you can explore and use this organisational ‘dark matter’ for yourselves.

This article covers:

  1. What if we have missed the most important thing, that makes an organisational successful?
  2. If we think of our organisations, not as organised structures, but as complex social systems
  3. Examples of common social networks in organisations
  4. Social systems are powerful levers of influence and change
  5. Social systems extend beyond the formal organisational boundaries
  6. Organisations as social systems is not a new idea
  7. Three caveats, before we head for the implications
  8. The implications for organisational performance and what you can do right now

What if we have missed the most important thing that influences organisational success?

As a consultant, I see many organisations struggle with very similar problems.  Typically these appear as:

  • the difficulty of making cultural and behavioural change happen;
  • the difficulty of getting decisions made, and getting trust and delegation to work.
  • people not being engaged in the strategy, and so implementation not happening; and
  • performance management systems not significantly changing performance.

My experience is that, a major underlying cause has a common theme.  One that is often completely ignored.  First, though, a short digression into astro-physics.

What is dark matter?

Look hard.  Can you can see the dark matter?

The model of the Universe that Physicist use, works so well that we can accurately send a spacecraft to Pluto.  A fantastic achievement.  But that model also has a problem.  It does not explain why the galaxies maintain their spiral shape: they should have torn themselves apart long ago and so the physicists have concluded something is missing.  To make their equations work, they have introduced dark matter and dark energy  into the equations.  This is not a small factor: their calculations suggest that Dark Matter makes up 27% of the universe, Dark Energy another 68%, while the material we can see makes up a mere 5% of the universe.  When they introduce dark matter and dark energy, into their equations, the models predict what they are seeing in the way the universe and galaxies behave.  Is something similar happening in organisational performance and success?

Does Jim Collins think we might have missed the most important thing?

Jim Collins, with Jerry Porras, are famous for two ground breaking books: “Built to last” (2005) and “Good to great” (2001).   To create these books, Collins and Porras conducted extensive research into the performance of organisations, what sustains them, what drives them and what starts them on the road to success. Though some of those companies have since under performed, that is only what you might expect after 20 years.  Overall their research has usefully contributed to how we think about organisational success.

Jim Collins was recently interviewed by Andrew Hill of the Financial Times. (May 2017).   In that interview, Collins says his confidence in the solidity of his earlier findings only grows with experience. (I recommend you read the full interview with Jim Collins on FT.com)  However, in the interview Collins also adds,

“I think it is fair to say, that we do not have an absolute, complete and clear model of what makes an organistion successful.”  (My italics).

That in itself refreshingly honest and revealing.  He continues by reflecting on what scares him about the research.  He muses,

“What if we just completely missed the biggest, most important thing?”

What is the dark matter of organisational performance?

Fortunately, at this point, Jim Collins is asked, “So, what is the ‘dark matter’ of organisational performance?”.  His reply? After quite a long, and presumably thoughtful, pause (ten seconds, apparently) he says:

“Increasingly I wonder if, in fact, the dominant structure isn’t organisations, but networks”.

I think he is right.

Collins goes on to explain that organisational structures appeared around 100 years ago.  He wonders if we are at a point where we have to recognise that networks are more important.  He goes on to say that social networks in organisations is an area that is not studied much, or considered in the way organisations work.

On this I believe he is wrong, (or perhaps I should say, ‘speak for your self, Jim Collins’).

Organisations as social systems have been talked about, studied and used for a long while.  I know many managers and Executives who are well aware of the social networks in their organisations.

I believe the underlying cause for many of the problems we see, all stem from a failure to consider the organisation as a social system.  Look at the list again: making cultural and behavioural change happen, getting decisions made, a lack of engagement in the strategy, and performance management systems not significantly changing performance.  Now think about the social systems that influence these issues.

Sure, the social systems might not be the only reason, but I am convinced a lack of thought about how the social systems work, is very often a significant contributor to the problem, or farther to the failure of initiatives.  As a result, in our consultancy work, we always think of the organisations we deal with as not merely organisations, but complex social systems.

What if we consider our organisations as primarily social systems, rather than “Organised systems”?

I have been observing, and experiencing, how organisations’ social networks work, for many years.

For some time I have been telling clients that organisations do not exist.  That organisations are really social systems: complex social systems.  That organisational structures are artificial constructs of finance and HR. That our structures date back to when we needed to organise people into teams to make pins in the sort of factories Adam Smith describes.  Obviously I am exaggerating for effect, but the point is real.  (Later I’ll concede that the structures are indeed useful, but I want to get to the social systems).

It is not how the structure works to support the organisation.  The challenge is how the social networks that matter, support the social system.

Socialising strategy in a social system

Clients often tell me that they have taken my phrase “‘Socialise strategy” into their day-to-day language.  (You can read about socialising strategy in my book, “Communicating Strategy”.)  The point of socialising strategy is to make it part of the norms and conversations and thinking of people in the organisation.  That means you have to work, not just through the organised structures, but through the social systems, the social networks, that transcend and cut right across, the formal organisational structure.  To socialise a strategy you have to tap into the social system of the organisation.

Thinking of organisations as complex social systems, extends into how I help clients during strategy and performance management engagements.  Before we explore that though, let us look at some examples of how social systems manifest themselves in seemingly organised and structured organisations.

Some examples of the social networks where dark matter permeates

There is a wide variety of social networks and systems that exist in organisations.

The internal networks

The social systems are all around us

At their most mundane level we see these social networks in every organisation.  The ‘s network regularly meet and talk around the smokers hut.  The lunchtime runners and yoga class members talk about things together.  The people who live in the same villages, car share, or travel on the train together, all talk together.  The group that head for the pub, bar or cafe, after work, discuss things they don’t discuss in the office.  Sure much of the conversation might be about outside of work, but these situations are also places where work based issues, ideas, rumours and events, get discussed and socialised.  I am sure you are a member of some of these.  Each of these are obvious examples of social systems that you can find easily in any organisation, but that are never captured in any organisational chart.

Sometimes the social networks are a consequence of the company history.  For instance, a large financial services company was formed by the merger of two building societies.  Five years after the merger it was still possible to have conversations that included “Oh, he/she came from company A, or Company B”.  The old networks, old cultures and the long-established social norms of the original companies still permeated the new organisation.

Sometimes the important social network is more deliberate. While at a large Family Owned Tour Operator I was shown the organisational chart.  Part way through the person said, “… but this is not the important part. You need to know where the family members are on this…”  They were the real hub: The most important social system was that of the family members in various roles across the organisation, either contributing to the business, or learning about the business.  And importantly, who those family members talked to and trusted.  Ignore this invisible organisational network and you ignore how the organisation really worked.

I am sure you can think of other examples of social networks in organisations that you have worked in.  In each case they are undocumented, but known.  They are independent of the organisational structures, often transcending them.

In many cases they are more important, for different reasons than the organisational structures.

Social systems and networks as levers of influence and change

Let us be frank here.  Experienced managers know that these social networks exist, and that they are mechanisms of influence and change. Here are just a few examples of how they get used.

The social networks hold the norms & culture of the organisation

How do people learn the cultural norms of an organisation?  Through their social interaction with others in the organisation. They see and experience behaviours.  They  adapt their behaviour to what they see.  Behaviours become learnt over time.  They become embedded and more deeply embedded in people, social system and therefore the organisation. (I call these DELBs.  Deeply Embedded Learnt Behaviours.)

The cultural norms are not in the organisational structures.  Otherwise a reshuffle of the organisation’s structure would change the culture (which it rarely does).  The norms of behaviour persist over organisational structural changes, in the shared history and experience, the language and the behaviours.  The norms of behaviour are in the social system.  (I’ll write more about how these can be changed another time).

The social network as a consultative process

Working at a large Investment Bank many years ago, I was told that the organisation was ‘Highly consultative”.  When it came to decisions being taken, and that to get a decision made and owned, typically took around six months.  Reaching a decision, involved getting the idea discussed through the social network of people who were influential, until the decision emerged as an accepted idea.  These networks were not always formal.  Often they were with particularly influential traders or long serving and highly trusted members of staff.

In essence, the decision process was a social process, where ultimately it became decision commitment and decision action, only after it had been explored through the wider set of people in the social system.  By the time it had been discussed and accepted, it was being acted upon.  The decision was socialised and owned, before it was taken and acted upon.

The decision, is the start of the conversation

I was having dinner with three Directors from a large water & waste water company, as a part of a strategy engagement.  During the main course, the main Board Director said something that, at first, completely threw me… and then had me thinking…   He said, “The decision, is only the start of the conversation.”

He was referring to how a decision at board, or executive team level, gets discussed, explored and tested around the organisation until it becomes socialised, and is an implemented reality. (Read more).  This is not top down, command and control, decision-making.  This is decisions being explored, tested, refined and socialised through the social networks and systems.

Some of our people have a job that is to work the social networks

Almost all business sales books talk about navigating through the customers’ social network to create a groundswell of enthusiasm for the organisation’s products or services.  We expect our sales people to use the customers’ social networks: to work through the social systems of the organisations they are trying to sell to: to gauge demand and needs; to build a groundswell of interest; and to ensure interest, purchasing and use afterwards.

This also happens in consumer sales, where you are trying to influence social groups to take up your products (think Apple white ear buds, clothing brands, and even car brands).  It is clear that we ask our sales and marketing teams to connect with, place messages within, and influence the social systems of our customers.  In fact, those who are most effective at it, (our best sales people) we often praise and reward highly.

Yet at the same time, we often ignore the value of influencing a social network, when selling ideas internally.  That is a missed opportunity.

Using the external social network as a lever of external change

The Diana, Princess of Wales Memorial Fund’ s aim was to use their donations to change perceptions, and create action, in massive topics such as: Global perceptions of Mine clearance; How women in Africa with Aids were treated; and the plight of young Asylum seekers in the  UK.  The Chief Executive of the Dr Astrid Bonfield, told me she had no formal management training.  Instead she qualified in Anthropology and initially worked in looking at social systems in tribes in Africa.  She, and her small team of twelve people, operated way beyond traditional structures, using their wider social influence and networks, (as well as the influence of the fund) to bring about changes in thinking and behaviour.  (You can read more about our work with them in our Charity case study)

The last piece of work Excitant did for them was to help them explore how they might leave a legacy, from what they had learnt,  for the whole of the charity sector.  Making a significant contribution to the social network of the charitable sector.

The social network goes beyond the organisational boundary

Even back in 2010, Dell had set up a social media monitoring ‘command centre’ (Opens a new tab).  Dell used this to monitor their social media conversations.  In one example, a customer was critical.  The team in Dell did not respond, but a member of the social community did.  That person helped the person understand what they had done wrong and how to fix it, as it was not Dell’s fault.   The Social Media monitoring team were happy for the external social system to regulate the discussion and solve the issue.  The formal structure did not need to intervene.

Many of the clients we have worked with are enablers of the systems and networks.  UKWIR coordinate research across the UK water industry.  They only have six employees, yet they coordinate networks of water industry experts, choose, manage and review projects.  EGI coordinate the infrastructure providers and suppliers that support research initiatives and academics across and beyond Europe.  Less than 20 people coordinate a network across fifty different countries, that includes technology suppliers, academic institutions and research initiatives.  Many charities rely on networks of volunteers, that share the values of the organisation and contribute greatly to their image and presence.  We have worked with many examples of organisations like these.  The external social system is the business of these organisations: without the social system, they would not exist or be able to operate.

The social networks exist, and people and organisations are using them explicitly, despite the formal structures and organisational charts.  Why?  Because they are an effective way to gets things done in the real world.

Introducing people to the social systems and networks

Of course, when you join any organisation (Or when first working in one as a consultant, as I do) it is useful to understand theorganisational structure?  Who reports to whom?  Why does pay and rations?  Who do I report to? Who do I work with?  What do they want?

However, it is easy to forget that someone who has just joined ‘the organisation’ also needs to be introduced to the existing social systems and social networks.  Sure you will discover them eventually, but waiting to get tripped up, blocked ,or thwarted by them is not the best way.

In a way this sounds like joining the Freemasons, with strange rituals and entry criteria.  This is far from the case.  It is rare that the social networks are as overtly closed or ritualistic.  More likely, as in any social situation, it is about fitting in, having common interests, and sharing norms of behaviour.

Social networks have genuine common interests and values.

When working with a social network, find common ground, that is genuine.  Don’t take up smoking just to join the smoker’s network.  One organisation I worked with seemed to be composed entirely of Chelsea Football Club season ticket holders.  If the Chief Executive is a fanatical supporter of a particular football club, you won’t be able to fake membership of the “Interested in football” club.  One client in Wales had on their office walls, Welsh Rugby caps and the 1977 inspiring speech by Welsh Captain Phil Bennett against the English. I am a Rugby fan, but despite having the name Jones, I am English.  Don’t even try to fake it. You can be accepted in other ways.

Organisations as social systems is not a new idea

Machiavelli understood social structures in organisations

That organisations are predominantly social systems composed of social networks is not a new idea.  It is largely ignored as an idea, but it has been around for years.

The Roman empire was built, not by replacing the existing social systems, but integrating with the social system, myths, gods, practices of the lands the conquered.  They knew that the existing social system were important and not easily replaced.

In Management and Machiavelli, written in 1967, Anthony Jay, (One of the originators of Yes Minister) points out that much of the understanding of management and organisations should come, not from case studies, but from studying political history.  The solutions to management problems often lies in an understanding of people and power and leaders.

Peter Drucker, in Management tasks, responsibilities and practices, (1974), points out how Japanese firms make decisions by consensus, debating a decision, throughout the organisation until there is complete agreement on it.  Only then do they take the decision.  He suggests that this is a process that “would make western managers shudder.” He points out that Japanese firms he had studied had a higher capacity to take radical and controversial decisions.

Many mergers fail because the social systems of the taken over business, get trampled on by the acquirer.  As a result the talent in the  acquired company leaves.  In contrast, companies that are serial acquires of technology and expertise (eg Cisco) take great care to protect the values of the acquiring company and integrate the people into the new social systems. (See new tabs Cisco acquisitions and Cisco Acquisition strategy new tab)

Even back in 1985, I recall seeing a software tool that was designed to track and map the network of conversations and connections around the organisation.  In effect to look for hot spots and the real connections, as well as the formal links.  Nowadays there is software that creates such network views through email tracking, logging phone conversations or via social media.  Or you can simply listen to the organisation and social networks, talk to people and see who they are connected to.

In the excellent book, Strategy Safari, (1998), Henry Mintzberg, identifies ten different schools of strategy that represent ten different strategy processes.  One was “The power school”, where strategy is a process of negotiation, characterised by power and politics.  “Strategy making is the interplay, through persuasion, bargaining and sometimes direct confrontation, amongst parochial interests and shifting coalitions”.  Does that sound familiar?

We have known that organisations contain social systems for years.  Smarter organisations have used that knowledge.

Social systems extend beyond formal organisational boundaries

As soon as you start thinking, social system rather than organisation, you start to see all sorts of social systems that extend beyond the traditional organisational boundary.  Social systems that work inside organisations, often extends beyond the organisation.  These examples are easy to find. They come in various levels of connection.

Some social networks across boundaries are merely transactional (Level 1)

We see a lot of trivial connections that look like a social system.  They are mainly transactional.  There is the trivial ‘add a review’ model, and the slightly more sophisticated amazon and ebay model of being a platform for third-party product sales product sales.

In these cases the ‘connection’ is useful, but it is not a real relationship.

Social networks of shared interests cross organisational boundaries (Level 2)

We see all sorts of social networks and systems, operating inside our organisations, supported by social media tools where people are discussing common issues and ideas.  These extend outside the organisation.

Most industries have common interest group and even shared research communities.  In the Water industry, UKWIR, (UK Water Industry Research) creates collaborative, impartial research that is shared across all the participating water and waste water companies.  UKWIR manages research into issues common to water companies today and issues anticipated over the next 25 years. They do this with funding from each water companies, and projects use people from almost every UK water company, as well as external expertise.  This creates a community of interest across the industry.  Experts reputations grow. People become known.  Experience gets shared.  Knowledge flows around.  Social networks and systems are formed.

Some organisations actively use their social network (actual and potential customers) to design and improve their products.  I have seen examples of this from simple tracking of social media streams, through to inviting the community to get involved in the design choice.  For instance, the T-shirt company Threadless that use their community to design and then score designs that might go into production.

Values based connection across the organisational boundary (Level 3)

The strongest cross organisational social systems are based on common values or purpose.

An example of this is the National Trust.   They have 62,000 volunteers contributing 4.2 million hours of their time (2014/15 figures).  That is the equivalent of 1,590 full-time staff. (National Trust Website stat).  In contrast there are 6,000 employees.   Why do they volunteer?  Like many charity volunteers they care about what they are supporting and want to make a difference.

In the water industry, many Directors and staff, from across the industry, give time and effort to contribute to Water Aid.  They are trying to improve access to safe water, hygiene and sanitation in areas that simply do not have the safe water we enjoy.  They hope to bring the experience they have in the UK, to help others far less fortunate.  Of course this connects people across the industry, way beyond normal organisational boundaries.

The ethical bank, Triodos, publishes the names and locations of all the businesses and environmental and cultural initiatives that it has lent to, so that its customers can visit and support those business and initiatives.  The investing customers can see through the bank to where their money is invested. Triodos hold regular events where customers can come in and meet the staff as well as suppliers.  Every banks like to claim they have ‘a relationship’ with their customers. Frankly it is mainly transactional.  In Triodos’ case, it is the customers saying they feel a part of, and related to, their bank, with a common purpose for the use of money.  That is quite different.

In these cases the relationship has reached as far as a common purpose, meaning and common values.

I suggest to you that it is the strongest of these, the social networks based on shared values, that are the most important to influence.

Three caveats, before we head for the implications

In thinking about this topic, I have three warning messages for you:

What this is not exclusively about… (except in part)

Just because this is about the social network, please do not take a narrow view of this.  This is not simply about social media, messaging technology and online networks. (Or not simply about….)

Of course, there will be social media networks, which are around the organisation. Some of social media networks, and some networks and groups within them, are likely to be important social networks for the organisation.  Of course,  social media can be useful as a medium to disseminate and discuss things.  A part of the social networks in and around the organisation.

However, social media should not be seen as the main part of that network and how it works.  Social media is simply a part of the system and one mechanism for communication.  People talk to people, through a variety of means.

Some see this as “political”, rather than social

As using the social system seems to cut through the formal structures of the organisation it sometimes gets seen as Machiavellian or Political.  ‘Playing games’, rather than ‘following the rules’.  Personally I think this is naive, but understandable.  I think of this contrast as an irregular verb:

  • First person singular:  I am talking to my friends and colleagues;
  • Second person singular:  You are taking advantage of the social networks and systems;
  • Third person singular:  He/She is playing politics behind people’s backs.

It is a matter of perception. To people who are naturally plugged into the social networks, this seems a normal route of discussion, exploration of ideas and of influence.  To those who cannot see it, or are outside the networks, this can appear as some dark art or activity.  It is not.  It is simply a natural form of social interaction amongst social groups.  The organisation is really a social system.  It just has structure as well.

Don’t ignore the organisational structure

This focus on the social systems and networks should not be done to the exclusion of the organisational structure.  If you ignore the established and formalised connections, reporting lines, responsibilities, and structures, you are going to annoy people very, very quickly.

The point is that you look at, use and acknowledge the formal structures, but listen out for, explore, navigate and utilise the social system and networks as well.  The work in parallel to the formal structures.  As you navigate the formal structures, notice and explore the social systems.

The organisational structures and the social systems exist together. Use both.

 

Implications for organisational performance

How we think about social systems and organisational performance at Excitant

Four key planks of our 4G BSC approach to managing performance

  1. Organisations are complex social systems. The organisational structures are artificial (but useful) constructs of HR and finance.  The organisational structure is important, but not as important as the organisation’s social systems.  Take an approach that is more anthropological, rather than technical.  Who needs to come together?  What are the social networks and norms?  How do we socialise the strategy through the social systems?
  2. Performance Management does not exist.  Rather it is part of something much larger.  It is really part of a wider decision process. In summary,  Make decision well, execute them well and learn from them quickly.  The organisation’s social systems play a large part in getting decisions made well and executed well.
  3. Performance management tools and techniques are primarily as social tools. Many see these tools and techniques as primarily technical.  They are really primarily social tools.  They are designed to improve the quality of conversation and thinking and decision-making in teams and across teams: a social challenge.  Think of it as a three-part test:  1) Do they make sense.  2) Is it useful for you?  3) What will you tell your friends about it?  It is the last part that will socialise the ideas and support their wider adoption.
  4. It’s about deliberately changing the culture and learnt behaviours around performance.  Traditional performance management treats measures and targets as motivation tools. (I am sure you have heard mantras such as, ‘Measures motivate’ and ‘what gets measured gets managed’). The issue for us is about what undesirable behaviours have been learnt (we call these DELBs), and how to get the people to learn new norms of behaviour.  It is about a model of change that specifically addresses the social change.  It is when these new learnt behaviours start to ripple through the social system that deeper, persistent change really starts to happen.

Stretching the dark matter metaphor: The big implication

The irony is that the social systems in our organisations are staring us in the face.

If the social system is a metaphorical the dark matter, then what passes through the social system, we can consider to be accelerated by the dark energy.   If we can tap into this energy, it can, metaphorically, create awareness of issues, to socialise strategy, to gather ideas, to test decisions, and, ultimately, improve the performance of the organisation.

The irony of the black square at the top of the page is that, “Yes you can see the dark matter, the social systems.  They are staring us in the face.”

What steps can you take to do this?

What you can do right now…

Understanding the social networks and systems

  1. What social systems are you already in?
  2. Draw up a network diagram of the people you are connected with (ignoring the organisational structure).   Think through where your network is strong and where it might be improved.
  3. How well do you connect and socialise ideas through them?
  4. Look out for and listen for, the social networks that exist in your organisation?
  5. Even if you are not a member of that social network, look for ways to tap into what they are thinking and saying. (perhaps through people you know who are in that network

Supporting and listening to the diverse networks

How can you support and learn from the various social systems and networks?

  1. Lubricate, encourage and support the social networks.
  2. Use the networks to explore ideas and gather feedback.
  3. Listen carefully to what comes through the networks and how they are reacting.
  4. Listen to the different opinions coming from different social networks

Implications for decision-making

Think about the decisions that you are considering…. and how the social systems can help you improve how those decisions are made

  • Who needs to come together…?  (from which social systems)
  • with what information…?  (Gathered through what social networks)
  • to make what decisions…? (propagated out through  which social systems)
  • when?
  • (and don’t assume it is the usual suspects)

and think of the dark matter of the social system that permeates the obvious organisational structure…

 

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