by Jessica Lipnack and Jeffrey Stamps
from International Oil & Gas Technology,
In 1997, Royal Dutch Shell will celebrate its centennial. Like
its competitors and cousins in other industries, the l00-year mark
heralds a daunting task. How can companies that began in the 19th
century face the challenges of the 21st?
The rules of the game have changed considerably since the rise
of the great industrial bureaucracies. A hundred years ago, only
geography, access to resources, and capital mattered. In the century
ahead, the key is organisation and access to information. Once companies
could simply set their dials to continuous growth driven by fierce
competition. But the complex market realities of the next century
call for a new way of doing business.
Suddenly, in the past few years, the most unlikely of foes have
become friends: Mobil and Exxon, General Motors and Toyota, Apple
and IBM. In each case, by working together, firms are able to do
something that they cannot do alone: explore new territories, learn
how to manufacture in a foreign environment and engage in sophisticated
research and development.
Just as bureaucracies came about in the Industrial Age and hierarchies
came about in the Agricultural Age, networks are the organisations
of choice for the Information Age now upon us. Between each of these
new company initiatives lies a network of people, a new form of
organisation that is just coming into its own.
Whereas once even the largest of firms could go it alone, today
a new philosophy has replaced the urge to merge: co-opetition. Co-opetition
combines the concepts of competition and co-operation. On this project
you co-operate, while you still compete in other arenas. Each company
maintains autonomy while being able to leverage the resources of
Companies engage in co-operation because they have no choice, which
offers a guiding principle. If you can go it alone and do it well,
then do so. When a project which stretches your limits threatens
you, you need to network with one or more companies.
Interestingly, the same idea applies within companies, where competition
can be even more fierce than it is outside. The major management
initiatives of the past decade all lead companies to work across
internal boundaries. Decentralisation, matrix organisations, cross-functional
teams, and quality improvement all require companies to work across
internal boundaries, another form of co-opetition. Where it makes
sense, you network with people from another organisation. Where
it doesn't, you go back to your home organisation and compete with
others for internal resources.
Networks co-exist with bureaucracies and hierarchies. They make
life easier because they don't carry the costly administrative overhead
of bureaucracies nor the slow-moving top-down control of hierarchies.
Over the past 15 years, we have studied hundreds of companies that
work across boundaries both internally and externally. These networks
of teams, what we call 'teamnets', show five basic characteristics.
Teamnets share a common purpose
Each member of the team understands the long-range view of the
work, as well as his or her role in it. If everyone doesn't hold
the same view of the work, the teamnet will fail. Where hierarchy
has hire and fire power over employees, and bureaucracies have rules
and regulations to go back to for authority, networks only have
shared purpose. Purpose is the glue.
But if everyone's view is absolutely uniform with no room for exception
or disagreement, the teamnet will also fail. 'Groupthink' is no
solution to a lack of common purpose
Teamnets have independent members
Were the Exxon/Shell venture in Venezuela to fail, it hopefully
would not bring down either original company. This characteristic
of networks is much misunderstood. In nearly every culture, people
complain that they can't join a network because they are 'too independent'.
It's this very independence which gives a network its vitality
and distinguishes it from the exclusive dependence of hierarchies
and bureaucracies. Independent members also provide the network
with the fuel for its own bifurcation. When the disagreements become
too large, the network splits into factions.
Teamnet members are richly linked
This means that they have both excellent and multiple means of
communication and that they have rich and diverse relationships
among the people. Too often, people think that networks are only
the physical links. More than one company has installed computer
networks thinking that the wires alone would solve the inter-departmental
work problem. But computer networks really connect people, and without
them, the network is quite useless.
Relationships are the grease of networks, and they are built on
trust. Trust is an elusive quality in an organisation, but it's
one quality that people can categorically tell you whether
it exists or not. It takes time to build trust in an organisation,
but you also can destroy it in an instant. lntegrity is critical
to networks. Many hierarchies and bureaucracies structure mistrust
into their organisations, through such unexamined assumptions as
reward systems which, regardless of performance, dictate that half
the people are above average while the other half are below.
Teamnets have multiple leaders
Unlike hierarchies which have a single person at the top of the
pyramid or bureaucracies that install bosses at every successive
level, networks empower numerous leaders depending on the task at
hand. At Eastman Chemical Company, which won the United States'
prestigious Malcolm Baidridge Award for National Quality in 1993,
manufacturing is managed by a self-directed team of five. The team
comprises the presidents of the manufacturing facilities, with leadership
rotating every quarter.
Does this mean that everyone has to be a leader? Yes and no. Everyone
involved in a cross-boundary effort is there for a reason; the group
carries no administrative body-count that is there 'just because'.
Each person has a unique role to play and depending on what task
is underway, may be leading the group. However, this doesn't mean
that all decision.making authoritv has to be left to endless rounds
of consensus.building, Clear decision making co-exists with multi-leadered
Teamnets involve people from the hierarchy
and the 'lower-archy'
They integrate all the levels of the enterprise. The most successful
cross-boundary organisations stay closely tied to their sponsoring
organisations. The days of the skunkworks, where a hot-shot team
was sent off to the organisational equivalent of Antarctica to 'get
the job done in record time', are over. Networks link cross-boundary
people within an effort and remain linked to the organisations from
which people came.
It is vitally important that networks stay connected all up and
down the chain of command. If the people at the top don't endorse
the effort, it will surely fail. But if the people down the line
are not included, the organisational boundaries will slow down the
process immensely. Include the secretaries and the people in the
mail room, the platform managers and the platform workers, and the
effort is well on its way to success.
Common purpose. independent members, rich communication links,
multiple leaders, and integrated levels. These five characteristics
indicate whether a network exists, and whether a network can succeed.
The absence or misapplication of any of the five will throw the
effort back into the old ways of doing business. The 21st century
is a time of extremely rapid change. Only flexible, nimble organisations
will survive networking both internally and externally.
Article from International
Oil & Gas Technology.
Reproduced by permission of
Harrington Kilbride plc, The Publishing House,
Highbury Station Road
Islington, London N1 1SE, UK.