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Hierarchies and Networks – friends, foes, allies?

I’ve found myself thinking about the balance between hierarchies and networks for some time, as we witness power moving from the top of hierarchies towards the centre of networks as our world becomes more complex.  

It is easy to get tempted into binary thinking, as though one is better than the other. The reality is that they are in a relationship, and both are important. We get ourselves into hot water when we honour one more than the other, and over the last century, we have done that as “scale” became a mantra, and scientific management became a religion.   

As I was playing with the idea, I came across this abstract from a 1967 research paper on political economy that made me think:

There is a great deal of evidence that almost all organizational structures tend to produce false images in the decision-maker, and that the larger and more authoritarian the organization, the better the chance that its top decision-makers will be operating in purely imaginary worlds. This perhaps is the most fundamental reason for supposing that there are ultimately diminishing returns to scale.

As with many things, the harbingers of what we have come to witness were there a long time ago but ignored as inconvenient truths. Hierarchies and networks are in a dance, interdependent partners moving across a dancefloor of change. In his book, the Tower and the Square, Niall Ferguson looks at the choreography of this dance over centuries.

In more stable periods, we have hierarchies of networks, and in more unstable times, networks of hierarchies. Who leads and who follows is determined by where we are in a cycle of power.

Right now, we are in a transition, as networked organizations, from insurgent groups to business start-ups humble established hierarchies, from conventional armies to corporations. We can see it happening, even as the hierarchies stay wilfully blind as command and control go their separate ways.

So much for social science and history. What does it mean for us?

I think quite simply that networks will lead, and hierarchies will follow until we are on the other side of this transition dance. If we are in a big hierarchy, we will no longer get to call the tune as networks disintegrate, reform and adapt to reshape society and business until we enter a new phase of relative stability in a few decades time.

But hierarchies exist, even within networks. It’s just that they are servants rather than masters.  In a hierarchy, we need to understand the network it is part of as mergers, acquisitions and failures have their way. Is it small enough, strong enough, skilled enough and led well enough to survive the turbulence? If we’re out there in a network, are we connected enough to the emerging hierarchy that will, eventually, lead the dance?

As we stand today, we probably don’t know; it’s too early. 

If in doubt, my own money right now is paying attention to and nurturing the networks we are part of. The rest will follow.

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Complexity and volatility create enormous opportunities for those willing to go beyond the boundaries of "business as usual" to explore the edges of their business. I am an entrepreneur, a coach, a creative thinker, and above all, an explorer of possibility.

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