the 21st Century Organization
part 1 of 2
ask you to consider this critical shift in thinking
- the shift to seeing the company itself as the ultimate
creation... It means spending less of your time thinking
about specific product lines and market strategies,
and spending more of your time thinking about organizational
dont men to imply the the visionary companies
never had superb products or good ideas. They certainly
did, and... most of them view their products and services
as making useful and important contributions to customers
lives. Indeed, these companies dont exist just
to be a company; they exist to do something
useful. But we suggest that the continual stream
of great products and services from highly visionary
companies stems from their being outstanding organizations,
not the other way around. Keep in mind that all
products, services, and great ideas, no matter how visionary,
eventually become obsolete. But a visionary company
does not necessarily become obsolete, not if it has
the organizational ability to continually change and
evolve beyond existing product life cycles.
James C, Collins
and Jerry I. Porras
TO LAST: Successful Habits of Visionary Companies
want to extend the idea of this quote to
the scale of ValueWeb and argue that building the
most effective ValueWeb possible is the key organizational
task - for any enterprise - of the 21st.
aspects to this task. First to build a viable ValueWeb
ENTERPRISE; secondly, to be a fit
organization within that Web.
course, most individuals and organizations will
be part of many ValueWebs and play different roles
in within each. It should be understood that co-opitition,
as well as co-operation is a necessary aspect of
any complex ValueWeb system.
of the Concept
formal Business of Enterprise Model
was develop by me in 1985. Its roots (the network
organization) go back to the origin
of our enterprise and even before
it. From our beginning MG Taylor work, the network
concept slowly evolved into the ValueWeb model
was matured by use, in the mid 90s, with the Air
Force. Complex ValueWeb structures are co-dependent
on the PatchWorks
process concept; conceived in 1997 and now developing
into a standard practice. In 2001, the
ValueWeb model was developed into an Operating
It is now a system
and method, in patent pending, as an
extension of our original Patent. The ValueWeb
can be employed as a notional idea (model) or as
a formal system (method).
was not until 10 years after the model was
articulated that the ValueWeb meme started to gain
the attention our various clients and partners.
The first client team who made productive use of
it was the F-15 in 1995. This means that there
a 20 year incubation period from the creation of
the ad-hoc organic model of the
to a real, if partial, ValueWeb, functioning as
such, in a complex environment. This may
a long time; but perhaps not for such a radical
departure in organizational theory and practice.
the acceptance curve of an idea is
one aspect of Weak Signal Research and necessary
understanding when it ready to go to scale in a
market. Most of the technology that NASA used
go to the moon, for example, was developed in the
1920s and 1930s. And technology, generally, matures
faster than organization and learning methods.
of what has passed for organization change has been,
in fact, improvement of methods and processes associated
with a default in-place organizational model that
remains fundamentally unchallenged. This kind of
work is important but provides limited leverage.
In organizations beyond startup scale, the hierarchical
model remains dominate. This is about to change
as complexity continues to overwhelm existing organizational
I presented the model many, many times and it provoked
little dialog, less passion and no action - it was
seen an interesting distinction but
not something that solved a burning question. It
has only been in the last 7 years that increasing
organizational failures - made more so by mergers
and joint ventures - has surfaced a number of burning
meta-organizational issues that conventional inside
the skin organizational theories do not address.
the term ValueWeb is becoming ubiquitous. There
are white papers appearing up all over the Internet.
Most of these, however, are extensions of supply-chain
theory - they do not bring the investor, producer
and customer into a true PEER relationship.
This is understandable. When investor, producer
and customer (user) are brought into this
kind of relationship (if only temporarily as in
an DesignShop experience), the results are stunning.
This is disruptive technology. It has
to be treated as such. Most so-called value-webs
concepts are an attempt to put the WEB
back into the organizational box. In the end, this
will not be successful. ValueWebs have to be understood
and practiced as true emergent network architectures.
addition, to external pressures on organization,
the growth of peoples general awareness and
language of concepts, related to the network economy,
has been the principle driver of change. This is
due to the publication of books on complexity, chaos,
emergent systems and the like. Many who are in
organizations can now see problems they did
know existed before; they now have the words (concepts)
to better describe their experience. Suddenly, long
existing, often informal, ValueWebs are visible;
suddenly, complexity is appreciated. Management
is changing how it thinks, talks about and operates
organization; and, not too soon. In the general
marketplace, however, the tools to support such
awareness, and bring it to practical terms, remain
inadequate. The are many books and metaphors but
few practiced means and methods. I do not mean the
ValueWeb concept to be taken metaphorically. I mean
it to be employed the same as hardware and software
is in a computer system.
ValueWeb concept is a key strategy for building
both viable organizational networks and legal (by
present rules) organizational nodes within them.
It incorporates and expands upon the work which
has been done in supply chain management. A supply
chain, in a ValueWeb - which, acknowledged or not
all supply chain are in complex webs - is a string
of nodes (from a customer through multiple producers)
that make a specific product or service. The ValueWeb
concept expands on the work done with the quality
movement and various customer service initiatives.
It brings the investors of an enterprise into a
much closer and responsible role than it typical
for that community today. In fact, it realigns all
the stakeholders of an enterprise and fundamentally
changes their mutual rules-of-engagement.
most effective way to design and govern ValueWebs
is by employing NavCenters and by using PatchWorks
Designs methods. Together, the ValueWeb Model,
the environment and the methodology combine to make
a powerful response to a common set of conditions
that are now overwhelming many existing organizations.
(2002), at the beginning of the 21st Century, we
are beginning to test ValueWeb theory in new ways.
There are NavCenters being designed on the premise
that their main task is the creation and facilitation
of the organizations ValueWeb - this is something
new. We are building software
to help in the administration and tooling of such
organizations (as well as, using the the many tools
provided on the Internet). And, we are forming (at
last!) our own Enterprise into a real ValueWeb
- something that we have been working on for some
time. Together, these efforts make a vigorous experiment
and yield a great deal of learning about the practical
aspect of installing the ValueWeb OS
in existing organizations of various sizes and complexities.
This is a bootstrap
operation employing Rapid Prototyping methods.
Critique of Organization
Eliot wrote a criticism
of criticism - The Use of Poetry and the Use
of Criticism - London 1933). In it, he said
that four steps have to be taken to conduct a valid
criticism process. First, The Ideal or
Good has to be stated. What is the measure
by which the subject will be judged? Second, examples
from history must be cited. For example, in
Literature, there are works that have stood the
test of time and are considered to be masterpieces.
How do these illustrate the Ideal stated in the
first step? Third, the work being judged has to
be analyzed in relationship to both the Ideal
and examples from history. Where does it exceed,
meet or fail to meet the criteria? Criticism, to
Elliot, must employ both positive and negative judgments.
Fourth, the criticism must answer how the work in
question can be improved to better meet
the Ideal criteri
to do all four steps, to Elliot, is to take a cheap
shot(my words) at the work and to add little
value to human discourse
The House of Intellect, Jaque Barzon said
that only the very best examples of a type should
be criticized because to focus on the truly incompetent
and dumb is a waste of time. To Barzon, only basically
good works are worthy of criticism. This is certainly
a true insight - occasionally, however, I fall from
grace when moving from hotel to airport to city
to hotel and I have to resolve the experience with
the concept transportation system.
addition, when critiquing organizations, we should
remember that what today we find to be stifling,
and not nearly adaptive enough for modern conditions,
would be considered by our forebears as ideally
liberal environments. The architecture of our present
organizations was created as a response to many
conditions - most of which are no longer with us.
We have to remember that it was an invention and
great hack in it’s day. The purpose of what
follows is to lay the basis of an organizational
theory and practice that does meet the realities
we now face
together, Elliot and Barzon bring a different view
- than the typical modern practice - to the act
of criticism and impose a discipline not often seen
in contemporary discourse. It is in this spirit
that the following critique is offered.
organizational theory and practice in place
is a marvelous invention and has been developed
over a well documented 3,000 year period.
revolution, the development of liberal democracies,
the Nation State and Capitalism are radical
that have been built over the top of the older
hierarchy organizational model. They have,
in fact, extended
this model and given it, in wave of creative iterations,
a new lease on life. Modern computer, multimedia
and communications technology have also helped
extend this life-cycle by providing greater
throughput. However, these very dynamics now conspire
to destroy the very system they are built
rely on. This is both good and bad news. The good
news is that new forms of organization will
imposing on the individual, more adaptable, far
less prone to abuse, far more economical and
deal more human-friendly. The bad news
is that this is not an easy transition. These
organizational models are hostile to one another.
The existing order does not naturally evolve into
the new. This is a circumstance where transition
management [link] is
critical and a careful implementation
strategy - which will be unique to every organization
- is critical for success.
what is the ideal? Notice today when you meet someone
and they ask what you do that most likely
you say who you work for. Then you state
your functional role and your status within that
organization. Ownership, utility, status. Ideally,
we should think of our organizations as means of
augmenting our unique capabilities and integrating
them with the capabilities of others. Organization
as a tool. In this context, organizations
work for us. We would think of them much
in the same way as a stockholder does (but with
a greater sense of responsibility than the typical
modern stockholder seems to.)
organization would be far more flexible and
than we have today and far less prone to wild fluctuations
in value and market fitness. They would be
of system and less what they are as a happenstance
of inspired leadership and heroic effort.
not to say that leadership is not important - it
is. Leadership, however, in this new reality,
would be distributed
throughout the entire structure of
the enterprise its very architecture will insure
this. It would be inspired and inspiring. It
the genius and dedication of the many members of
the enterprise. There would be, from time
heroic effort. This would come as an organic response
to challenge and opportunity and spontaneously
up when and where needed. The organization would
not be directed and driven - it would be self-organizing
and emergent [link].
new organization will be much more equable
its predecessor. The distribution of value
and wealth among the stakeholders will be a truer
reflection of real value contributed and less prone
to manipulation my a few to accomplish their self
interest at the expense of others. Internally,
the organization will behave like a market and
determinations will take place smoothly and without
the overhead of crushing time, cost and distractions.
overhead of this organization - at any operating
unit - would be a fraction of what it is today.
are systemically-driven 12 points of failure of
the traditional hierarchy that the ValueWeb architectures
can address. Actually, there are far more than 12 but
this list will do for our purposes here. They are:
hierarchy does not work for knowledge-work and knowledge workers.
hierarchy structure/process, today, cannot process information, exercise
communication, command and control
(C3) revise policy and exercise decision making
at the scale rate and complexity demanded by its
environment. This is the requisite variety problem that Beer made a center issue in his application of cybernetics to organizational design. This does not make existing organizations “bad” - although they increasingly look that way - it makes them structurally incompetent.
a hierarchy of large scale, the distance between
brain and actuators is too great - time lags
and lack of fine grain information
defeats the ability to lead effectively. 95%
of a circle is still a flat tire.
the traditional environment and work-system,
the language of management does not describe
the technical, systemic elements of the organization.
What is happening cannot be seen,
communicated and shared by the communities-of-work responsible for governance.
hierarchy dominate, the relationship between
the (legal entity, OEM) organization
and its other enterprise components
(producers, customers, investors) is passive-aggressive
and innately competitive - it is a game of
dominance and a constant struggles to see
who can get the majority of the profit. Someone
is (or feels they are) always getting screwed.
the traditional environment and work-system,
the way that wealth is accounted fragments
understanding and drives sub-optimal economic
behavior and the wrong kind of competition
among the enterprise components. This happens
on multiple levels of recursion.
definition, the hierarchy cannot have REQUESITE
variety with its enterprise/market/economy/ecology.
structure/process of control and intervention prevents emergence.
hierarchical model does not scale infinitely. Growth
distorts the structure (surface to volume
ratios). Overhead increases - an inward focus.
Internal complexity increases exponentially while the external reality of the enterprise radically grows in complexity.
hierarchy is an energy sink. It requires
constant investment by leadership. They are,
essentially, unfair in how they reward performance.
They have to be continually be remade, realigned,
inspired, and so on, through all
levels of it’s organizational recursion.
hierarchy is extraordinary efficient and effective
when in a situation it is designed for.
This very feature makes them less adaptable
in situations of rapid, turbulent change.
This structure tends to become a universal
solution with little local variation.
breed dichotomies: enterprise/ecology; art,
values/economics; us/them; management/labor;
organization/market... and so on.
stories and examples recited below, in this part and part 2 - each in different ways, address
each of these 12 characteristics of our existing
organizational theory and practice. They show that
there exists a tested, yet only a partially applied alternative to traditional
is important to understand that I do not advocate
the complete removal of hierarchical structures.
This would be disaster. Hierarchy will be part of
any viable complex system. The problem is not hierarchy,
itself, it is the dominance of the model (and the
world view that goes with it) and the fact that
hierarchy is not seen as a MODE that functions
along with many other modes. It takes many mental and
work modalities to match the variety of demands
of the modern workplace let alone the organizations we charge with governance on regional and global scales.
management theory is aware of the hierarchy
as mode issue. This is not my point. My point
is that it matters little how you understand
the liabilities of the the present dominate organizational
architecture. No matter the effort applied and the
well-meaning expended, the structure will win in
the end. Sustainable success will require a different
structure not fixes and workarounds of the existing way of working.
Naturally management should pay attention and do
what they can to attenuate negative consequences
of existing structures. However, the center
will not hold.” It is time to design a new organization/process structure from scratch.
management, performing products and services, the
ability to replace obsolete elements,
economic and market fitness are concerns in any
organizational schema. ValueWeb architecture does
not make them and other similar issues go away.
In this section I am not talking about these constants.
They will play out differently in a ValueWeb architecture
but that is not the point. Just as a reciprocating
engine will leave half of its efficiency on
the table even if it is operating at perfection,
the hierarchy has inherent, systemic limits - the
John Von N Bottle Neck. Peoples
performance is always an issue - again, not (directly)
the focus here. People - individuals and (more importantly)
teams - (outside of non-sustainable heroic
effort) can reach only a certain level of
accomplishment in the traditional architecture.
In a distributed network, properly bound and structured,
peoples performance is, universally, a quantum
level higher than what we have come to accept as
normal.How do we know this? from 1000 DesignShops
which are temporary ValueWebs for a concentrated
period of time. How do we make this happen? By creating
the Zone of Emergence and holding the
integrity of that space. How do we know the
system remembers? By building strong memory
into every experience. How do we know that ValueWebs
can be incubated? by watching what happens in NavCenters.
How do we know that corporate transformation can
be accomplished on a pay-as-you-go basis? By applying
the ValueWeb tool kit to specific projects for concrete
gain while using these experiences as the medium
from which a new organizational architecture is
architecture addresses many dysfunctions systemic
in the present theory and practice of organization.
Organizational design is related to but different
from organizational management. The management issues
remain but are seen and dealt with in a new context.
Mature ValueWebs promise far greater stability in
dynamic and chaotic environments. However, ValueWebs
are disruptive technology and are brought about by
distributive technology. As such, the introduction
of ValueWeb architecture to an existing structure
has to be carefully facilitated.
From Our Experience
are several experiences that have provided us valuable
learning in regards what a ValueWeb is, how it operates,
how one is built (grown and evolved, more accurately)
and how a ValueWeb is maintained.
are captured in the following stories:
Pool Story (1960s). How
NASA Went To the Moon (1960s). The Story
of The Learning Exchange from the (1970s).
The Acacia Plan (1980s). FAA Delays
(1980s). Agency Group Restructuring
(1980s). AEDC and the 777 (1990s). Flying
the F-15 Another 15 years (1990s). CGEY
Transfer and Going To Scale (1990s). The
Big E - Evolving the MGTaylor ValueWeb (1979
of these stories tell us something valuable
ValueWebs and their potential. None tell it all.
ValueWebs are an emerging idea. Our thinking,
designing and experience related to network
goes back over 40 years. The intense work started
in the mid 1970s. It was not until the 80s
that the concept and methods were put to
with projects of sufficient scale and complexity
to see if the theory would hold up - it did. It
was not until our Patent filings of 1997 through
2002 that a formal system and method was defined
and comprehensively documented. While we have been
transferring the theory and practice of many support
processes, tools and environments since
1982, it was not until late 2001 that we started
to teach the underlying theory in depth.
To date, proto- ValueWebs have been
employed for great profit. No organization has
a full-featured, at critical mass, ValueWeb as their
permanent ORGANIZATION - including MG Taylor. Doing this is the next
step. As I write this paragraph (February 2002),
a handful of corporations are looking at this prospect;
one (as of mid 2003, is planning a network of
NavCenters that will, naturally, form a ValueWeb
stories, then, INFORM but they cannot
tell it all. The accumulated experienced does
argue the veracity of theValueWeb concept
and the system and method that supports it.
case is clear: great returns can be had on the
path to becoming a ValueWeb architecture. It
is a pay-as-you-go
process. No one knows what the real upside potential
is but I suspect it is the kind of wealth-building
that the dot.com period promised but failed to
A Tool For Building ValueWebs
network of NavCenters with a central mother-ship
NavCenter hub is an essential tool
for building and supporting ValueWebs. I do not
believe that fully functional ValueWebs can be accomplished
without this capability. ValueWebs need a commissioner
of Baseball - a facility that provides
a neutral space where members can come together
and do everything from clear the air to expand the
years we have been building centers mostly one-off.
There exist, now, nearly thirty NavCenters
of various kinds with different missions. We have
enjoyed periods of high networking between Centers
and periods (like 1998 to to 2009) of relative isolation
and inward focus. navCenters which focus inward tend to have short lives and does their ValueWeb.
are plans afoot (as of 2009) that will result in more than doubling
the number of these Centers and there is a growing awareness that, for all of us, to succeed
we have to employ this tool both individually and
as a COMMONS sourcing all of us. The
increase in the number of these nodes
and an increase in their interaction may well provide
the critical mass required to take the system to
the next level. Not too soon given the events of
MG Taylor ValueWeb
the moment, we call our ValueWeb the BigE.
We have been building this Web for over 23 years.
It has been through several cycles of the Stages
of an Enterprise Model.
our ValueWeb is undergoing undergoing a rapid growth
in membership and levels of activity. I think it
is about to get to the critical mass necessary for
a true web to function and be viable. We shall see.
mass is necessary for a ValueWeb to function as
a true Web. The web has to meet the definition of what
Jane Jacobs calls a replacement city. There must
be enough diversity within the web to recreate itself
when necessary. This is why a ValueWeb acts like
- and has to be governed like - part
society and part ecology.
the MG Taylor ValueWeb is about 7 companies and
100 people on the first clam shell; 25 companies
and about 700 on the second; and, somewhere around
5,000 players, on the outer most clam shell. None
of the members, at present, are informed enough,
involved enough, or active enough for this ValueWeb
to be successful. My sense is that, given what we
want to do, this is one order of magnitude too
small for critical mass. The growth of a ValueWeb
cannot be forced. It is not a matter selling or
recruitment. These activities make, at best, a network
- useful but a different phenomenon.
ValueWeb has to grown as a web of transaction-potential
nodes (or agents) based on affinity and interest.
The relationships inside it are governed by a specific
set of rules understood and accepted by the members
of the web. These rules constitute the webs
terms of engagement and they are far more fine grained
than the rules general to the society that surrounds
our case, we are just learning what those rules
are and how our web must be evolved and governed.
This is not easy. The common response to an issue
is to make an organizational adjustment. This is
almost always wrong. Structure is important but
organizational command and control actions in a
ValueWeb rarely work. This is not to say that decision
and action are not important to a web. It is that
these are done on a much more cellular level and
distributed manner than the way a typical organization functions. This is of course the basis of a ValueWeb’s resiliency and ability to adapt.
the level of the ValueWeb, itself a decision in
the common sense of the term is rarely - if ever
- made. What happens is emergence. This is
the same phenomena that happens in a DesignShop
event. This implies that a ValueWeb has to be facilitated - not managed -
in much the same way. However, there is a completely
different circumstance in the area of legitimacy.
Process of ValueWeb Creation
have to be grown - they cannot be built in the mechanical
sense. This is why most mergers and acquisitions
fail. It is too complex a task to force the pieces together. There must be a process in place to facilitate
the building of an organic web - something new
has to be created from the pieces of the old enterprises. The task is to grow a prairie
not make a manicured garden. Usually, the variety
and complexity inherent in the pieces are not matched
by the variety capability provided by the organizational
architecture. This is an important and technical
point. The architecture of any organization can
accommodate a certain amount of variety according
to its own structure. The mismatch between
the variety often intrinsic to a situation and the
capacity of the organizational structure selected
is often orders of magnitude. This
results in organizations that literally cannot deal
with themselves let alone the environment they find
themselves in. Introducing any organizational change
to any organization up the variety equation and
creates a double whammy. More complexity while there
is distraction an temporary diminishment in the
organization that has to deal with it. This is why
closing the gap between real projects and organizational
change is so important. It cannot be either/or.
It cannot be competitive. It must be a twofer.
true mature, sustainable Valueweb is yet to happen. This is not a negative nor a failure. It is a statement of where we are in our development.
Organizations Can Work in the 21st Century
ValueWeb Model cannot be understood and actualized
without understanding recursion.
June 22, 1999
voice of this document:
INSIGHT POLICY PROGRAM
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December 17, 2009
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this document is about 70% finished
Matt Taylor 1999, 2000, 2001, 2002, 2009