The Biology of Organizational Intelligence – It’s People

We can learn a lot about organizations from biology. In my last post, I wrote about how the membrane of the cell provides a new perspective on the way organizations connect with the world around them.

I closed that piece by noting that the “intelligence of the [cell’s] membrane is a metaphor for something very specific and very real…something that exists in every organization…” This post picks up on that topic of organizational intelligence and what the science of living systems tells us about smart organizations.

Yes, Virginia, there really is an organizational membrane

Imagine a container designed to hold all the resources and objectives of an organization. That container, if well maintained, can stay around for a long time. It’s not made out of plastic or metal though; it’s organic, a living system, made out of a material that constantly replenishes itself, regenerating over time, cell-by-cell, just like the organs in our body.

Hold out your hand, and take a look at your skin. It’s your body’s largest organ and actually serves as the membrane for your body, keeping what belongs inside, inside – and what belongs outside, outside. The skin you see covering your hand is actually at the end of its lifecycle. Over the course of two weeks, new skin cells form deep below the surface and gradually rise toward the top, replacing old ones and replenishing the membrane that protects you from and connects to your environment. It’s a membrane that regenerates itself from the inside out. Kind of creepy; but also kind of cool, don’t you think?

To truly capture the amazing intelligence that organizations display in relating with their external environment, we need something with organic flexibility and permeability, something innately responsive and able to deal with the messy, chaotic world as we find it. If there’s such a thing as an organizational membrane, it needs to be able to respond both logically and emotionally to a world deeply shaped by the thoughts and actions of real people.

So what would a membrane like that actually look like?

A Membrane Made of Humanity

I believe there is a functional equivalent of a ‘membrane’ that surrounds organizations and helps them negotiate the tension between their internal and external realities. What’s more, I believe that this membrane is made up of a wonderful layer of humanity.

That’s right, I’m saying that the ‘membrane’ that surrounds the organization and connects it with its environment - is people.

At a common sense level, we know this to be true when we look at organizational charts. Org charts are hybrid entities: part structure and part human.

The specific functional requirements for a CFO are detailed in that position description, but it is Rebecca who has that job right now. She gives that position life, animating it with the values she brings to the job, the skills she’s picked up in life, the people she hires and the day-in, day-out decisions she makes. One day, Rebecca will leave the CFO position, and someone else will step in to take her responsibilities. Rebecca is a person with a unique set of skills and a spirit all her own, but she’s also part of that structure of humanity that animates the organization and makes it a living system.

Rebecca is an example of a person who makes up the internal structure of an organization, but the analogy is just when it comes to maintaining the structures that support the organization’s connections with its external environment. We just may not be used to seeing it that way because so often we anthropomorphize organizations when we sit outside them; as though somehow the organization itself was a living, breathing entity, which it is not.

We hear statements like “IBM today announced it beat forecasted earnings” or “Comcast defended its move to…” but what’s really happening in these scenarios is that spokespeople in these companies are speaking publicly on their organization’s behalf. It’s a person who’s doing the actual communications; not not the company somehow speaking by itself. Companies can’t speak. They need humans to do that for them.

Who You Callin’ a Membrane, Membrane?

This may sound like a trivial distinction at first; but it’s not.

Spokespeople are just a more visible example of people who connect their organizations with the outside world. But there are lots of other jobs that are also fundamentally outward-facing. People in sales, business development, and customer support all spend much, if not most, of their time as part of the membrane that connects their organizations to the outside world. I know that sounds a bit weird, but we’re talking about a shift in perspective here, and sometimes that requires stepping into the strange.

Outward-facing roles in organizations are nothing new. What is new is that more and more employees now find a growing portion of their job is getting tied to outward-facing functions of the organization. In other words, more of the organization’s employees are now creating and participating in the membrane.

What’s a Membrane To Do?

As I noted in my last post, the membrane does more than just define what is and isn’t the cell. The membrane also connects the cell to the world outside by enabling it to exchange physical resources as well as information with its surrounding environment.

In enabling the exchange of physical resources, the membrane of the cell acts like a filter, determining what should and shouldn’t get into the cell. In enabling the exchange of physical resources, the membrane of the organization filters what should and shouldn’t get into the organization. Human resource professionals help decide who to hire, people in purchasing decide what supplies and raw materials pass quality standards, and people in finance determine which injections of financial capital are best for the organization. The flow goes both ways too. HR folks help move people out of the organization as well as into it, and people in shipping ensure that the organization’s products get to the right customers in the right way.

In enabling the exchange of information, the membrane is analogous to a transceiver, relaying information back and forth from the cell and its environment. In an organization, the exchange of information is far more prevalent than the exchange of physical resources. In fact, the number of people involved in helping the organization exchange information with the outside world is radically multiplying and decentralizing. In the language of cellular biology, the receptors of the organization’s membrane are proliferating like crazy.

The increasingly interconnected world we live today, with its revolutionary communications technologies and shifting business norms, is opening the organization in ways never imaginable just a few decades ago. Employees now blog and use social media like Facebook and Twitter to stay in touch with customers, partners and other key stakeholders. As communications decentralize within the organization, their flow steadily increases. The one-way, loudspeaker-like communications formerly wielded exclusively by formally-sanctioned spokespeople now gives way to the messy, more personal, chatter of conversation.

As this happens, the organization radically increases its permeability. It’s important to note that the permeability of the cell isn’t some simplistic form of “openness” and neither is the permeability of the organization. It’s not about simply opening the organization to everything that comes its way. Charlene Li, in her book on Open Leadership writes of the benefits of organizational openness; and what makes it good reading is that Li’s worked with enough clients to understand the natural tension that exists between openness and “control” as she puts it.

Not everything gets in: the key is letting in the right things. Not everything is good for the insides of the cell – just as not everything is good for the insides of an organization. Incorrect information, harmful ideas, supplies that don’t meet quality standards, and poor-performing new hires – these are all things organizations don’t want to allow inside – and it’s people acting as its membrane that ensure they don’t.

Super Elastic, Super Fantastic Membrane

There’s another turn in the story though, and it’s one I’ve touched on in previous posts. This membrane that the organization uses to connect with its environment is made up of people, but it isn’t just limited to the employees of the organization.

“Orders of engagement” is a framework for extending the membrane to include customers and partners who are also engaged in the work of the organization.

1. First-order engagement is management engaging employees in the work of the organization.
2. Second-order engagement is employees engaging customers and partners in the work of the organization.
3. Third-order engagement is customers and partners engaging other customers and partners in the work of the organization.

So it’s not only the case that people are the collective intelligence the organization uses to relate to its environment; it’s that this intelligence is radically decentralizing … it’s bursting out of the frame of the org chart.

Want a few examples?

• Social CRM tools like Radian6 help organizations monitor what customers are saying on Twitter, Facebook and other social media channels – a prime example of technology augmenting the membrane’s signal reception for information outside the organization.

• Amazon affiliates aren’t employees; they’re somewhere between a partner and a customer. There are lots of different types of Amazon affiliates, often specializing in various product or market niches. Amazon’s affiliate network builds its intelligence in selling to these niches, and unlike the old days, this intelligence no longer has to reside inside Amazon itself. It can sit outside Amazon, in its affiliate network, and still build the collective intelligence of the membrane. This particular distributed intelligence just happens to also create decentralized value that adds a nice revenue stream as well.

• Organizations like Facebook, Twitter and Foursquare would literally be nothing without the third-order engagement of their users, who literally build these services with each post, tweet and check-in they make. Third-order engagement is the cutting edge of organizational design precisely because it grows the organizational membrane – extending it dramatically through the social networks of users. These companies are the future of organizational design precisely because they’ve re-imagined the way they tap the most powerful source of intelligence and energy on the planet – the power of people.

Pay no attention to that man behind the curtain…

There’s no denying that technology plays an important role in the increased permeability of organizations, but behind every email, tweet and text message is a real person. Even something as technical as the relationship management database organizations use to track and organize their relationships is still designed and operated by people.

I speak from lots of painful consulting experience when I say that technologies that don’t map well to the way people actually work is technology that’s doomed to failure. The organizational membrane may be augmented by technology, but it’s still fundamentally a human phenomenon. Getting permeability right means getting employee engagement right. Another way of saying that is that third-order engagement depends on second-order engagement, which ultimately depends on first-order engagement.

What’s the Meaning of This?

Permeability and third-order engagement are the future of organizational design.

When it comes to thinking about the future, I’m half-Flintstones and half-Jetsons. I worry about whether we’re handing my boys and the generations that follow them a severely degraded quality-of-life. At the end of the day though, I guess I’m an optimist at heart. I believe that nature (or God, depending upon your point of view) has a wonderful way of correcting imbalances. Today we’re seeing massive societal and environmental problems arising from an old generation of large, powerful organizations having too much power over the future of our world. And yet, out of this imbalance, we are now seeing the stirrings of a powerful corrective force.

The emergence of new organizational designs based on the metaphors of open, living systems will become a powerful, corrective force. Permeability and increased stakeholder engagement are part of something very big just that’s over the horizon. You might even say it is the next phase in the evolution of democracy; one that will extend its reach beyond the public realm and into the private sector. When it comes, it will be good for society, good for the planet and good for business.

That shift is the long-term focus and purpose of my work as a writer, builder, citizen and father. But that’s a story for another day…