What kind of organization do you work in? Networks take different forms along the organization scale--from the very smallest groups to the very largest global confederations. Virtual teams, cross-functional teams, kaizen (continuous improvement involving everyone all the time), joint ventures, strategic alliances, and voluntary geographies, such as Silicon Valley, where hundreds of organizations work together to improve the regional economy, are all examples of networks operating at different levels.
New organizations are erupting at every level-from very small groups to globe spanning networks. Companies are furiously experimenting and learning, creating a profusion and confusion of management innovations. It's all happening at the boundary between the Industrial and the Information Ages.
A massive shift has been underway for half a century. From its zenith, the Industrial Age descends while the Information Age ascends. Decade by decade, the pace of change has been picking up speed.
While they work an honored spirit, some "new" ideas simply fix what appears broken. They are like the people who drew ever more complex epicycles to make Ptolemy's predictions work in spite of new astronomical data that completely refuted them. Some people only look backward as the end of an challenges their power. Sometimes, their fixes are very elaborate and work well-for a while.
Other "new" ideas are different, stimulated by authentic changes. Their goal is to fit form to new, constantly changing functions. They have many names, but all share a common set of network characteristics reflected in the Five TeamNet Principles. Networked organizations can comprise hierarchies and bureaucracies, or function within them with infinite variations.
Safeguard Scientifics Inc., a networking partnership of companies that work together, turns this idea into strategy. "In the challenging business environment of the next decade, the ability to network effectively, both within the corporate organization and externally with other companies, will be a key strategic element to increased competitiveness and greater productivity," the company says in its annual report.
Teamnets appear all along the organizational scale-from very small internal units to macroeconomic expanses that interest nations.
The Large Life of the Small Group
Many small groups, but not all of them, have teamnet characteristics. The academic discipline of "social network analysis" studies life's informal small groups and extended networks of associations, the "sea of social relationships" in which we all are embedded. Business is both awash in informal networks of small groups and replete with hierarchical and bureaucratic small groups that run solely by commands, controls, and procedures. Usually, these are the formal organizational units with their "standard operating procedures."
Increasingly, however, more networked small groups are appearing as part of the formal management structure. Small, goal-oriented, peer-based, richly-linked, multi-leadered teams are the most common prescription for leading-edge management in the 21st century.
Procter & Gamble has been using self-directed teams since the 1960s; Cummins began experimenting in the 1970s. Saturn is General Motors's company-within-a-company that built a culture of empowered teams and lean hierarchy from day one. Eastman Chemical Company uses a self-directed team to run its senior manufacturing management function as well as hundreds of others at all levels.
High-performance teams call out the best in people as they combine innovative management approaches with information technologies. In these efforts, careful attention to how teamnet principles affect both people and technology reaps great rewards. AT&T; Universal Card Services has developed an approach called "loose-tight:" loose guidelines for a team empowered to take action, with a tight focus on goals and results.
Virtual small teams reach all around the globe for the electronically enabled, like those in our chapter 1 computer scientist/cardiologist Frank Starmer's "lab without walls". These truly new kinds of instantly-interacting but physically distributed groups are both formal and informal. One of Bell Northern's research and development labs extends from several sites in North America to several in China; each Monday morning, Ottawa time, all dozen members participate in a conference call.
Hints of the power of the new media to spawn informal social networks appear everywhere-from the newsgroups and chat channels of the Internet to the burgeoning commercial services like America Online to the countless bulletin boards catering to every need and locality.
Teams exist at all levels, top-to-bottom. ABB's functional units are fading as people organize into "Target-Oriented Teams," emphasizing their purpose. Sixteen TOTs exist among 200 employees in one of ABB's Swedish companies. The TOTs are organized into profit centers, and profit centers in turn are organized into companies. Small teams run what's left of the headquarters staff at the company and country levels of this $30 billion behemoth. Only five levels away from the TOTs sits CEO Percy Barnevick who is part of an executive top team of 13 meeting every three weeks to set global strategy.
We asked Gosta Lundqvist, one of five change agents on the corporate staff that serves ABB's 100 Swedish companies, what happened to the specific functions, such as engineering, sales, and marketing, he waved his hand and said nonchalantly, "They just went away."
Making A Large Organization Seem Small
It is surprisingly easy to build temporary teamnets within and between bureaucracies. Most companies today routinely form cross-functional teams, whether they call them that or not. Here the purpose is palpable and the need to cooperate across boundaries for the good of the whole is clear. Departments, functions, or agencies send representatives, draw up charters, and appoint a leader. The team segments its work through task leaders and proceeds, often breathlessly, until it accomplishes its mission. Then it disbands.
These one-at-a-time anomalies are true teamnets-and great learning environments. The challenge, however, is to fully realize the power of cross-boundary work internally. Toyota Motor Company is world-renowned for its ability to plan and manage horizontal relationships and processes across all the functions. Hewlett-Packard, an acknowledged U.S. leader, set up "company-wide councils" of cross-functional efforts that are themselves coordinated through a Product Generation Process Council.
Many companies find that there is a "natural size" for self-reliant organizational units. W.L. Gore & Associates, the $1 billion maker of Gore-Tex, regards 150-200 as a roughly optimal size for the manufacturing facilities that populate their "lattice organization." Parts of British Petroleum and General Electric Canada form cluster organizations, units large enough to maintain their own administrative apparatus and small enough to be responsive to customers. D. Quinn Mills' research suggests that 30-50 or so is an effective size range for these units.
Stories of pioneering derring-do mega-projects carried out at the speed-of-light across continents reach back only a few years. One example is Digital Equipment Corporation's globally distributed teamnet in the late 1980s, code-named Calypso that built its state-of-the-art midrange computer in record time, earning billions for the company. Once a bold new concept, social-technical systems reflects what is now a mainstream effort to relate organizational change to emerging technologies. The objective is to ensure greater freedom for the individual (social) while increasing collective productivity (technical).
The Elegantly Networked Enterprise
Teamnets appear in various guises at the enterprise-as-a-whole (company/corporate) level. Even small firms operate through even smaller internal components. Enterprise teamnets are also the crossroads for a great variety of external relationships and partnerships.
Some enterprises, more than others, vividly demonstrate the network form as a whole though all incorporated organizations are to some degree teamnets (e.g., connected components, multi-leveled, purpose-directed).
Eastman Chemical Company is an example of a 21st century quality organization succeeding today. It got there by practicing the Japanese principle of "kaizen." Kaizen, literally "continuous improvement involving everyone," is a company-wide total quality management system that, when fully deployed, is a teamnet. Improvement involves every part of the company at all times.
The use of internal markets is one astonishingly creative way to bust bureaucracy and empower internally independent organizations. ABB, known for its extremely lean bureaucracies and flat hierarchies, is a world-class exemplar of this strategy. The principle is simple: any internal unit is free to buy and sell externally as well as internally. This suddenly eliminates a welter of internal rules, procedures, and transfer prices. It offers enormous autonomy within organizations, and ensures that people throughout the enterprise experience market realities.
The advantage of internal markets, Gifford and Elizabeth Pinchot write, is that they take "decisions a bureaucracy would bungle" and turn "them over to the cutting intelligence of marketplace choice." In the words of William Halal, management professor at George Washington University, "[I]nternal markets are replacing hierarchy."
Virtual corporations allow companies to radically alter their way of doing business without extensive new investment. Chiat/Day, for example, a leading advertising firm, joins its nine offices of people, using 700 Macintosh computers in the United States, Canada, and England, and clients and vendors, including their travel agent, with a sophisticated electronic mail network. "`[W]e intend...to become a virtual agency,' said Steve Alburty, MIS director. `We're getting rid of all our desks. We'll be working from home or client sites, our office space will be shrunk to a third of its current size, and what's left will mostly be converted to meeting rooms.'"
Some organizations, such as service webs, are distributed by their very nature-spread-out organizations composed of semi-autonomous units. Hyatt Hotels is a management company for more than 100 hotels, each with a separate set of owners and expectations. Professional service firms naturally are spreading out as they hasten to adapt to the pace of change engulfing their businesses. Most of the Big 6 accounting firms and many consulting companies-already highly distributed corporate structures with local offices around the world and partnership power structures-have been reorganizing to include cross-boundary organizations (e.g., KPMG/Peat Marwick's lines of business) and teams to serve market segments and customers.
Finally, core firms, like EBC Industries, with both vendor and customer partnerships, invent new structures to enhance competitiveness. Traditional core-supplier configurations have a giant core and small, isolated, scrambling suppliers, but in the EBC network, purpose and personal relationships identify the center. Connections go directly from member to member, node to node, not necessarily through the core. Big companies like Chrysler are doing the same thing. "Chrysler and its suppliers are a virtual enterprise," President Robert A. Lutz told The Wall Street Journal.
Links among companies proliferate as business speeds up and goes global. Joint ventures are a traditional form of partnership, a minimal network, where two or more companies form a separate corporate entity that they jointly own. The most successful such ventures, such as the 60 or so created by Corning, Inc., reflect all five teamnet principles: clear purposes; independence not only among the partners but also of the created company; rich relationships to exploit the complementary capabilities brought by each party; multiple leaders (at least three sets); and many levels and boundaries to climb over and through in all the interacting enterprises.
Intel, the microprocessor manufacturer, is generating most of its new business in joint ventures: with Microsoft to create a telephone linking standard; with Microsoft and General Instrument to build an interactive TV-top cable converter; and with, among others, BellSouth, Bell Atlantic, Ameritech, Siemens and Alcatel.
The dominant business phenomenon of the 1990s is networking, a much more flexible and fluid mode than its predecessors. It contrasts with the merger mania of the 1980s and the traditional industrial response to gobble up the competition and get bigger. We are witnessing an explosion of new large-scale, multi-corporate networks that offer both cooperation and competition in a veritable zoo of strategic alliances. Such alliances are true networks, where the independence of members is as clear and unquestioned as the inappropriateness of hierarchy. With the independence of members and multiple leadership as basic premises, the trick here lies in creative development of joint purpose and voluntary relationships.
Two-party alliances are still the norm, while multi-member alliances are increasingly common. Small businesses also engage this fast-growing trend to ally in a big way. Flexible business networks are taking hold throughout the world, including in the U.S., some stimulated by government funds, countless others started by the companies themselves. These small company alliances offer a remarkable demonstration of the economic value of business links among independent companies.
Beyond the reach of individual firms are massive conglomerations of economic activity that are to some degree integrated and focused. These very-large-scale entities are likely to acquire increasing importance in the future. Known in Japan as keiretsu, they are linkages among a large number of firms in diverse industries anchored by a major bank or manufacturer. Massive webs of strategic alliances are now appearing elsewhere on the global stage. Global "digital keiretsu"-the 18 companies that swirl around Toshiba, for example, are shaping the future convergence of computers, telecommunications, and media.
AnnaLee Saxenian's study of the contrasting fates of Route 128 in Massachusetts and Silicon Valley in California underscores the enormous importance of a regional business culture conducive to the formation of networks. These voluntary geographies are gaining ground as people take a more consciously regional and ecological view of their businesses.
Small and medium-sized enterprise economic development, based on thousands of flexible business networks, is one of the most promising approaches for improving our myriad engines of job growth. USNet, a private, non-profit initiative funded through defense conversion grant money and state matching grants, provides services to a consortium of 15 states that encourage these networks.
In short, teamnets surface at all levels of organizations. While some networks demonstrate the five teamnet principles better than others, all reflect the principles to some degree. They are changing businesses and organizations of all sizes, everywhere.
