Organize for Complexity: How to get life back into work to build the high-performance organization

by Niels Pflaeging

“As we have seen, the world has already changed—high complexity in value creation has become the norm.” This book proposes a cell-based organizational structure (Beta) better suited to a complex, unpredictable world than the traditional hierarchical system (Alpha). 

Complex systems are interconnected and dynamic. “Complexity can be neither managed, nor reduced. We can only confront it with human mastery… Mastery is the human capability to solve new problems. It can only be developed through practice.”

“A smarter and more useful way to look at organizations is to see them as networks. This is more aligned with contemporary thinking than the mechanistic ‘pyramid’ dogma, and it is also far closer to reality, in several ways. Organizations are, in fact:

  • Networks of individuals (through informal structure) and
  • Networks of value-creating teams (through Value Creation structure).”

“Value creation is never the result of individual action, but inter-action: it is a team-based process… Informal group structures emerge out of human interactions. This happens in any social group. In crisis, especially, the unofficial collegial networks take over.”

“When one understands organizations as value creation networks, underpinned by informal structures, and not as command-and-control pyramids, one will stop caring so much about formal hierarchy… Instead, one will care a great deal about value creation streams, about supporting peer pressure and emergent networking patterns. Organizational robustness here, comes from the quality and quantity of the inter-connections between humans and teams—not from rules, bosses, or standards… Cultivate principles, not rules.”

“To turn your organization into a decentralized cell-structure… one must understand the elements, or components, of such a design… Four construction elements are required:

  • An organizational boundary, or sphere of activity, that sets the limits of action.
  • Network cells—with a distinction between central and peripheral cells
  • Connections between these network cells, and finally,
  • Market contact, or steering, through connections with the external market.”

“Market pull can be caused by customers wanting something, by shareholders demanding a compensation for their investment, a bank demanding payback of a loan, the state demanding the payment of taxes, or a competitor launching a new product. Market pull thus has varied sources.”

“The periphery is the only part of an organization with market contact. Through this interaction, the periphery is capable of learning from the market.”

“The role of central cells is to deliver value to peripheral teams that they cannot create for themselves. Their role is to serve, not to rule, the periphery. It is not to execute decision-making power, nor to steer or control… Innovation is always carried out by the center because innovation is not (yet) immediate client value creation. Those dealing with innovation in an organization thus always play a role of the center.”

Employees have “roles” rather than positions. “In a cell structure, roles can change frequently and formal status becomes less important. Members of an organization will not be pressed into job descriptions—they build individual role portfolios of their own… Individuals usually are not confined to one role, or one network cell alone, but will act in different cells, filling in different roles in different parts of the network.”

“What really improves a system as a whole is working not on the parts itself, but on the interactions between the parts. One might call this attitude leadership… One cannot, at the same time, lead and exercise hierarchical power. In complexity, leadership as a social process, (as a system’s capability) gains prominence.”

“Leadership does not set targets, nor does it build crash barriers. That is management, or leadership as a position. But leadership is a role, a kind of work, not a job. This work consists of collective action to create a space, a sphere of activity, in which value creation can materialize… Strings connect teams. There is nothing locked, or fixed.”

“Leadership in Beta is no longer synonymous with the right to make decisions. Instead, decision-making power ‘jumps’ to where the problems are: Any decision should be taken by a matching professional, or master.”

“Information is to entrepreneurial responsibility what oxygen is to the human body. In an organization, without fast and easy access to information—including that on team performance and financial results of the organization—teams and individuals will be walking around in darkness. Transparency is like turning the light on.”

“The attempt to find solutions for symptoms alone, or tinker with symptoms before the problem has been understood, is called activism…. Activism breeds failure and makes learning impossible…  In organizations, you may find hundreds of problem symptoms, but only a handful of problems which may go back to one or two messes. By acting upon the messes with adequately complex solutions, many problems dissolve.”

The author points out that start-ups are “naïve” Beta organizations. As they grow, they either develop a hierarchy or deepen “their Beta organization model, through successive cell divisions.”

Niels Pflaeging has also co-authored Openspace Beta: A Handbook for Organizational Transformation in Just 90 Days (2018). If you are not familiar with the concept of complex systems—and the difference between complex and complicated systems—I recommend It’s Not Complicated by Rick Nason as an introduction.

Pflaeging, Niels. Organize for Complexity: How to Get Life Back into Work to Build the High-performance Organization. New York: Betacodex Publishing, 2014. Buy from