Organizational Concept
Definition: An Organizational Concept answers the question "How are Participants in the organizational system related?" It specifies the legal nature of the organization, depicts potential functional relationships among Participants, and describes governance processes, including the initial decision-making bodies.
Organizational Concept - In Context: When all relevant and affected parties have been identified, design team members creatively search for and develop a general Organizational Concept for the organization.
In the light of Purpose and Principles, they seek innovative organizational structures and relationships that can be trusted to be just, equitable and effective with respect to all Participants, in relation to all Practices in which they may engage. They usually discover that no existing form of organization can provide that level of trustworthiness and that something new must be conceived.
In one sense, an Organizational Concept is the chaordic equivalent of the organization chart, though it tends to resemble the neurons of the brain or the complex patterns of an ecosystem rather than a traditional hierarchy. It also includes the key guidelines for interaction among Participants and for the emergence of new elements in the system.
When the Organizational Concept phase is completed, the design team has several useful products. They include a description of the organization as a totality, in its systemic context; initial preferences concerning the legal structure of the organization; a set of diverse visual images of potential organizational structures, decisions concerning basic organizational elements and their relationships, and a sketch of the way that governance bodies will initially be composed.
Prior decisions about Purpose, Principles and Participants will inform development of a powerful Organizational Concept. Work done in this phase will directly translate into key sections of the Constitution.
Processes and Approaches
Developing an Organizational Concept typically requires a great deal of creativity, dialogue and experimentation. It is as much about unlearning our conventional ideas about organization as it is about creating new ones.
The fundamental questions being explored are:
- If anything imaginable were possible, what would be the nature of an ideal organization to fulfill the Purpose in accord with the Principles?
- How do we create an organization that is trusted by all Participants to make decisions about the innumerable critical issues that exist and will emerge in this organization, industry or community?
- What is the most appropriate legal form for the organization? For profit or nonprofit? Stock or non-stock? 501c3 or 501c6? Some combination of these - or something else entirely? What are the strengths and weaknesses of various options? (This subject will inevitably be revisited in the Constitution phase of the process.)
When working with a single organization, we sometimes find it useful - and invariably revealing - to have participants begin work on Organizational Concept by drawing their current organizational structure. In most cases, different individuals will produce very different pictures of the organization. Exploring these differences, and probing the relationships depicted, will illuminate many of the issues that participants seek to resolve in reconceiving the organization.
In an inter-organizational initiative, we typically engage in a similar inquiry. In this case, the focus is not on the structure of a single organization but on the relationships in an industry, field or community. Having design team members diagram the dynamics of the system can provide important information about current challenges, highlight key Participants, and illuminate the fundamental social function that they are seeking to fulfill through their efforts. It can also help them begin to imagine innovative systems of interaction more appropriate to emerging realities.
The point of these explorations of organizational structure and system dynamics is not to reinforce what already exists but to begin seeing through and beyond it to more potent organizational possibilities. Consider for a moment four ways of looking at things: as they were, as they are, as they might become, and as they ought to be. The heart of the work on Organizational Concept revolves around this fourth perspective. It begins when team members start to envision new principle-based systems and structures that redefine relationships among Participants in flexible yet coherent ways. They should be encouraged to put aside perceived constraints and obstacles, including their preconceptions of what the law may or may not allow.
For the effort to be most successful, intensive, sustained and creative thought must be given to specific topics. Some of the more important are:
Nature of ownership
- Who will own the organization and its assets?
- Will it be owned equitably? How will equity be ensured at the outset and as the organization grows?
- Can ownership be "unbundled" from other forms of participation in the system?
Ownership means different things in chaordic organizations. It tends not to include rights normally associated with conventional stock ownership, such as proportional control of the governance structure, rights to liquidate commonly held assets, or perpetual royalties based on the share of externally invested capital (traditional equity).
Ownership is more likely to involve rights of participation, and access to or use of common properties. It might imply the right to create new products or services. Owners (or owner-members) may also have the right to create new parts of the organization in accord with the Principles.
Value flows and power
- Who provides what kinds of value, both monetary and nonmonetary, in the organization, industry or field? How do values flow within the system?
- What are the current constraints on an equitable flow of value(s) within the organization or industry? How could relationships among the Participants be reconceived to create a system that produces more value for all?
- What types of power operate in the system? How are they correlated to value flows?
- What other interests or powers need to be integrated and balanced? It can be useful to think specifically about such issues as separation of powers, distribution of power, sufficiency of power, and how powers are reserved by or for different Participants.
Structure and self-organization
- What are the most elemental "units" of organization? (Borrowing from the complexity sciences, we often use the term "fractal" to refer an organizational component of chaordic organizations, especially the elemental units. Fractals will be embedded within or connected to the system, and they embody the same fundamental rights and obligations (Purpose and Principles) among their members as the organization of which they are part. Each fractal has the full authority of the whole in undertaking its operations and has the right to pursue any activity congruent with the Purpose and Principles.) What will these entities be called, and what minimum degree of diversity must they have to reflect Purpose and Principles? Will they be compromised of individuals, institutions or both? What will their obligations be?
- What is a clear and complete way to describe the different kinds of participants among which power needs to be balanced? Will some have different rights and obligations?
- Will the initial organizational units or levels be geographically defined? Defined by function, interest or subject matter? Some combination of these? Should rights or duties vary depending on whether they are geographically based, functionally based or based on interests?
- May these units join one another, and what will be consequences, if any, of doing so? How does the organization scale - that is, how can larger entities self-organize as functions or governance encompass larger domains? How do entities at different levels form, grow, change, and combine?
Governance
A central challenge of the Organizational Concept phase involves imagining the collection of bodies and methods through which participants will set policies for themselves, commit to joint action, or resolve issues. Chaordic organizations will have multiple centers of governance, none of which could be described as dominant. Important questions abound:
- Who will participate in governance of the organization? What are the respective rights and responsibilities of participants in the organization, whether individuals, institutions, self-organizing entities, governing councils or others?
- Does the organization have sufficient powers to make, implement and enforce decisions involving the needs of the system? These powers should rest in a board (or council) small enough to work efficiently, yet large enough to represent all relevant and affected parties.
- Is the governance body responsible for stewardship of the whole appropriately representative of all Participants? What is the optimal size and composition of that body, if it is to balance all relevant and affected parties?
- How will members of the board be determined (a) at minimum composition, (b) as the board grows and (c) at maximum composition? How are seats on governing councils filled - by appointment, election or some other method?
- What will be the powers and responsibilities of the board, and what voting or other requirements will apply to the board's exercise of its powers and responsibilities? What express limitations should be placed on powers of the board and reserved to participants?
- Should the organization's members, owners or participants have the ability to amend any parts of the concept that become part of the Constitution without board approval? If so, what parts and by what degree of agreement?
(Knowing the kinds of issues that must be addressed in the Constitution will guide detailed consideration of certain aspects of Organizational Concept.)
As design team members work through these and related questions, they are searching for a way to conceive initial conditions for the organization so that it grows and evolves in ways consistent with its Principles - without dictating how that development is to occur, and allowing organizational structure to be emergent.
A frequently recurring challenge during the Organizational Concept phase is the tendency of design team members to attempt to envision and provide for every issue and permutation that may arise as the organization evolves. This is a futile exercise, for in a truly self-organizing, self-governing organization the possibilities are infinite. It is important for members of the design team to recognize that the Organizational Concept is not a set of "rules" tailored to imagined scenarios, but rather creation of an initial governance structure and set of rights of responsibilities that will be trusted by participants to be responsive to a multitude of unforeseeable events in accordance with the Purpose and Principles.
We use visualization tools extensively during the Organizational Concept phase of the chaordic design process. Drawing materials, three-dimensional modeling tools, and other creativity aids can help participants conceive innovative organizational relationships and envision the organization's potential evolution.
The figures starting on page 10 illustrate a few of the images that we have used in organizational design initiatives.
Process Notes
The first three phases of the chaordic design process form the foundation for creating an innovative Organizational Concept. Work on Concept requires constant checking against Principles and careful consideration of Participants, in particular. Both are often refined during this phase of the process.
Preliminary thinking about Practices may also be helpful, especially if it illuminates the need for a Concept flexible and adaptive enough to encompass a wide range of potential activities. In general, developing an Organizational Concept involves continually:
- Refining a new vision of the relationships among Participants
- Identifying and letting go of conventional assumptions about organizations
- "Unbundling" concepts of ownership, participation and value
- Deepening the inquiry into the organization's essential social function
- Seeking higher level solutions to the creative tensions that will inevitable arise
Exploring different organizational forms of organizational structure - hub structures, cooperatives, business webs, syndication networks, the open source movement and others - can be useful. Participants will typically discern features they seek in an Organizational Concept and limitations they aim to avoid.
As part of unbundling process, some groups find it useful to differentiate reasons that Participants might join together and then begin to imagine different ways those activities could be undertaken and related. We sometimes distinguish:
- Councils - Where people come together to make decisions that are potentially binding on them all. Conventional corporations make decisions through boards of directors and hierarchical power structures, but many other approaches might be possible and appropriate.
- Commons - Where people come together to share a resource that is either naturally occurring or brought into being through human effort. Are there ways to own common properties that are fair and that avoid negative incentives?
- Enterprises - Where people come together to complete tasks or divide labor efficiently and effectively. What form do enterprises take when principles of self-organization are faithfully applied?
- Communities - Where people come together, because that's what people do, for identity, meaning, nurturing and companionship.
These notions are not mutually exclusive. Options abound for how these different forms of activity can be pursued in complementary ways. Communities may have one or more councils, one or more commons, and one or more enterprises. Commons are may have one or more councils, several enterprises, and one or more communities. Councils may involve one or more communities, enterprises or commons. Enterprises are almost certain to include all three. We encourage design team members to explore what an organization starts to look like if Participants have the freedom to organize themselves in the most productive ways they can find.
Every organization is unique - and an Organizational Concept most fully empowering its Participants to realize Purpose in accord with Principles will also be unique. At the same time, certain perspectives will tend to characterize the structure and functioning of chaordic organizations. The organization will be:
- Inclusive. The organization will be open to all who subscribe to its Purpose and Principles in conducting the organization's activities.
- Multi-centric and distributive. There will be no single center of power - they will be everywhere. The smallest or most peripheral parts of the organization will retain the most power.
- Self-organizing and self-evolving. The organization will grow through self-organization rather than through a centralized command-and-control process. Every aspect of the organization will be subject to change as the whole evolves.
- Participant-owned and participant-governed. Participants will govern themselves and the parts of the network in which they participate. Any central board or council will be responsible only for those few decisions that concern the whole of the system.
- Diverse and adaptive. In a chaordic organization, there will be very few constraints on innovation and experimentation. Rich collaboration can occur and competing strategies can be pursued simultaneously. Good ideas will be able to spread rapidly, while bad ideas are likely to be choked off before they do much damage.
- Strongly cohesive, with an unshakable focus on common purpose and core principles. The overarching Purpose and core Principles of a chaordic organization are the basis for its enabling structures, which will allow Participants to pursue tremendously diverse Practices in a context of evolving agreement about issues that are fundamental to the whole.
Every choice concerning Organizational Concept will involve trade-offs. Recognizing this and being conscious of the choices that are being made - and their implications - will improve the likelihood that the organization will engender genuinely new possibilities.
Participants' trust in the organization will derive in large part from their confidence that organizational structure embodies the Principles that have been articulated. This involves carefully harmonizing the creative tensions among each and every part, and between different levels, within the organization. It is this balancing of creative tensions that ensures a chaordic organization's integrity and fosters its distinctive, dynamic balancing of self-organization and organizational coherence.
A danger during this phase of the chaordic design process is to leap to the first Organizational Concept that emerges. Groups rarely get a Concept "just right" on their first pass. To one extent or another, it is likely still to embody certain habitual ways of thinking about organization.
Even the Concept that is eventually developed will evolve over time. The Constitution must allow a way for changes in the Organizational Concept - membership classes and categories, or the size and composition of governance bodies, for example - to be modified by participants.
Finally, we encourage design team participants - during work on Organizational Concept - not to worry how they're going to explain it. That's a task they can tackle later!
What You Need For Work on Organizational Concept
- An ability to think abstractly
- Creative imagination concerning new organizational forms
- A willingness to examine unconscious assumptions and a capacity for "unlearning"
- The courage to embody fundamental values and beliefs - as expressed in Principles - in binding organizational structures
- Tolerance for ambiguity and uncertainty
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