Chapter 4: Organize

Stanford professor Sebastian Thrun quit his job. But he doesn’t plan to go to another prestigious university. Nope. He, like others, has discovered the power of teaching online; in his case, he reached 160,000 students in a single online course. The implications for global education are huge, of course. And that would be interesting on its own.

But there is more to this story than online learning or mass dissemination. This is a central tenet to creating value in the Social Era: what once required a business card, key-card pass, and a title within a centralized organization no longer does. This has implications for organizational design and talent management in firms of all sizes. The freelance revolution, the rise of flextime, the proliferation of virtual teams and offices—all of these trends and more add up to a big shift: “work” is increasingly freed from jobs. Gazelles roam free. This fundamental shift changes how any organization can create value. 

This chapter answers the question: if you were going to design an organization from scratch today, what would you design for? And the answer is: flexibility.

Here are two different examples of organizations designed flexibly, at least in one part of their business.

Fluid Model #1: Staffing with “Concentric Circles”

The mark of a good university was to have hired leading-edge researchers into full-time tenured faculty roles, in big buildings. Impressive facilities were a way of showing off the power of wealthy alumni.

Singularity University flips the concept around. “Rather than a locked-down curriculum, full-time faculty, and buildings, we organized for latest thinking, no built-in overhead, and flexibility in design,” says Salim Ismail, Singularity’s founding executive director. With that design in mind, Singularity delivers three hundred hours of lectures with only seven full-time staff.

The seven full-time employees form a nucleus, or core group, to handle program management, operations, and communications. They also recruit the next rung of talent, ten thought leaders, one for each domain area in which SU teaches. These experts are highly briefed on the purpose and goals of the SU organization. These leaders then act as curators for the rest of the university, assembling ten to twenty domain specialists each, from around the world. Virtual work teams form as needed to coordinate curriculum intersections using Skype and other online tools. While the core group maintains the mission and continuity, the curators act as talent recruiters for the next layer: the extended outer circle of specialized talent that adds topical expertise and content delivery. The talent ratio is 5 percent core, 15 percent curators, and 80 percent specialists. As market needs change, SU is in a unique position to fluidly respond.

Instead of being about organizing in a hierarchical way that focuses on “getting the right people on the bus,” this model is about building concentric circles of talent that change and resize as needed. People get on and off the bus, take turns driving, change the bus route: the construct of circles rather than hierarchies allows the organization to tap into a shifting global pool of just-in-time talent.

In 2005, some 30 percent of the US workforce participated in the freelance economy, and some measures suggest it could be as high as 50 percent in 2012, accelerated, in part, by the recession. Some would argue—myself among them—that this number would be larger if portable health care existed. But for organizations the point is that this freelance workforce is not a fad or a trend. And using it fully is a way to design organizations for fluidity and flexibility.

It doesn’t just apply to whom and how we recruit talent. It can change how we create value. Model #2 is an example of that.

Flexible Model #2: Customer Service Outside the Perimeter

Typically an in-house cost center, service is usually viewed as a necessary evil and constantly targeted for “efficiency.” Over time, notable service firms built outsourcing capacity in India, Malaysia, Singapore, and elsewhere so they could have a global service workforce at a low cost. Support was always tied to a contract with a company to deliver X and Y within certain parameters. Sometimes lost in this process was the expertise that previously came from experienced in-house employees.

McAfee did something transformative to its service exchange by using social. It formed a strong bond of commitment with the hundreds of unpaid technical experts in the larger marketplace who know (and like) McAfee’s platform of solutions. It invited these “McAfee Maniacs” to participate in its Web-based technical support. The most prolific Maniacs posted responses numbering in the thousands.

These experts participate for a number of reasons: to keep their skills current, to build a body of work for their own IT support business, and for altruistic purposes. McAfee’s competitors were spending between 3 percent and 7 percent of their overall SG&A expenses on service; McAfee’s became virtually zero, directly boosting the dollars it could contribute to R&D and other innovation efforts.

Did McAfee or its customers lose something in this change? Hardly. Indeed, McAfee gained a first line of defense—that of loyal, committed experts cooperating in the viability of the platform. Customer satisfaction didn’t decline. There is probably no better defense shield than passionate market experts co-opted with a company—and for free.

Isn’t This Just Another Way to Cut Costs?

At first, these examples may seem like they’re just about reducing direct resources and the related costs.

But it’s not just that the 800-pound gorilla is going on a diet of sorts. Organizations take a risk in just running out and trying this, because it is not a model to tack on without understanding the philosophical difference in approach.

The point of these examples is what these organizations gained, not what they cut. They gained fluidity and flexibility, important to the demands of the Social Era. But they also gave certain things to the people involved—respect and recognition, shared power, and rewards based on the value brought forward. Sure, there is less control, but in exchange for control, they got more cooperation and expanded access and shared resources. High performance of the individual and of the organization therefore merges into a common goal when we can enable humans to direct their own lives to create and contribute where they are best suited.^[1]

In return, they received, in the case of Singularity, leading content experts coming together to teach current ideas to what they believe are change agents who will make the world better. In McAfee’s case, it got experts who passionately solve problems pro bono, just because the connected individuals like doing that work, and because it’s their way of making the world better. And McAfee’s ability to engage with its community means that it has people deeply interested in making McAfee better, thus building a competitive moat.

These are not stories of less; they are fundamentally stories of more. The common thread is that the involved participants have a shared purpose, and that creates more power. (I’ll spend more time on purpose in chapter 9.)

Work Is Freed from Jobs

When there is shared purpose, it doesn’t matter how many people work “in the company” and how many people work “with” the company or how many are serving as an army of volunteers who want to advance the mission of the company. What will organizations look like when only 5 percent of talent affecting output is directly on payroll, and others come and go?

Organizations will not need to be big (by themselves), think always in terms of full-time staff, or have a centralized corporate office to have a big impact. They can organize and align outside the conventional thinking of the “perimeter” of an organization. But they will need an extremely clear purpose and shared, decentralized power throughout. When a clear purpose is coupled with shared power, people can self-organize to reach a goal. In essence, Social Era organizations will finally act flat (and quite often this leads of speed) because they will actually be flat. The artifice of who is in or out of the organization will be less important than what work needs to get done by what talent and with what motivation.

Of course, this affects management’s role.

While management has always been about organizing, designing, and maintaining an environment in which individuals work together to accomplish selected goals, the tools at managers’ disposal have been rather limited: budget allocation, assignment of responsibilities, hiring and firing. Mostly managers had to focus on doing things that could work at scale. Strategy has said, “do things at scale” and leadership books have said, “bring out the best in people.” The Social Era constructs we’ve been describing say it doesn’t have to be about one or the other; we can “allow people to contribute their best” and “create scale” at the same time, as the Singularity University example showed.

 And, of course, this is going to require new skills, new metaphors, and surely new tools.^[2] Organizations will shift from managing a job function to managing each person based on his or her unique contributions. And individuals will not be thinking about “resume building” but about “portfolio building,” as they will come and go to put together a series of projects as “work.” This of course raises the bar on individuals to know what they are passionate about in order to come in, perform what is needed, and move on to the next portfolio item. Badges will not be about the organization we belong to but the things we care about—our badges of talent and passions and purpose, and the way in which we’ve built a portfolio of work that demonstrates what we care about.

The bottom line is that work is freed from jobs.

The implications and questions are plenty. Will managers know how to bring out the performance of many individuals who aren’t necessarily contributing because of a financial transaction or even in “agreement” of the exchange? When these people come together in multiple units of one, how will leaders enable a way for many to contribute? And how does a leader consider and then determine what is core to his or her firm, and what can and should be done on a project basis? The implication of all of these questions is how these existing distinct roles—as suppliers, employees, contractors, customers—will become less us/them and be more about how people come together to create value in scale.

This changes how we work at the broadest levels, how we structure every single part of our organizations, and how we create value.

 

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