Panarchy, governance in the network age?
In the search for alternative modes of organization, I have come along a few already on this blog. In a comment on my earlier post on wirearchy, I already mentioned the concept of panarchy. Heterarchy, wierarchy and panarchy, all three are suggestions of how organization can be accomplished using alternative modes, in particular in situations where connections are easily accomplished by having online means of connecting. In this post I will try to unravel panarchy, according to Paul B. Hartzog this is a way governance can work in the network age. So what is panarchy? For the ones that have never heard of the concept before, it is the cumulative effect of the shift from hierarchies to networks is a system of overlapping spheres of authority and regimes of collective action, according to Hartzog. In short:
Complexity + Networks + Connectivity => Panarchy
The essay of Hartzog, which is a highly recommended read, explains the theoretical backgrounds and some real-world examples. I’m not an expert on this subject, but I do believe that we are reaching a point where other types of governance are better alternatives as opposed to hierarchical ones. I believe that global crises are about to occur much more often and that we should accept the fact that crises are a characteristic of our modern time. Instead of dealing with crises like we are doing today, that is fight them and trying to reach a stable equilibrium like we were used to do in the past, it is time to accept crises because of the properties of panarchy (such as complexity, networks and connectivity) are increasing and increasing, making the world more and more complex. This situation asks for systems that are complex as well, and not rigid, but rather flexible or fluid, like water that adapts to its environment. Water is a great metaphor here, it is strong, adaptive, and has some characteristics that always work within the same conditions. If we see situations we call crises now as reality and a logical result of increasing complexity, we don’t have to call these situation crises anymore.
So can panarchy be something like governance in the network age? That is a question which I find quite hard to answer. Is it a form of governance that encompasses all other forms? Or better, is there a form of governance that encompasses all other forms? Yes, you can call the shift panarchy if you like, but what’s the use of that? The paper I referred to does a great job in explaining what panarchy is, and Hartzog argues that it has the potential of becoming the dominant form of governance in the future. The importance of debates like this in my opinion is that many people still work and make big decisions that worked out well in earlier times, but not that good in the present time and not all in the future. The shift that we’re in, that the world is in, ultimately will lead to different modes of organization and governance. Power is more distributed, people are more connected and knowledge is created and transported in networks. Maybe one of the most important things that is happening, is that decision making is changing. It is changing in terms of who are able to make decisions because of where the knowledge is available, who can make the better decisions because of where the most accurate knowledge is available, and who are able to distribute the knowledge to let others make the decisions.
Ok, admitted, the end of the previous paragraph is nothing more than elaborating on the beginning of the previous paragraph and does not directly contribute to the main question here, but that is because (tacit) knowledge and decision-making are closely related to complexity, networks and connectivity, or panarchy if you like. And if the best decisions should be made, governance is important as well as organization. In addition to heterarchy and wirearchy, can panarchy help us as well?
Evaluating wirearchy
We all know that hierarchical organizational forms are less and less effective and realistic at the present time. Even in the past this form of organization was being criticized by many. Power and authority are not exclusive for the top of the pyramid. People in organizations form relationships with more people, from inside and outside the organization. Organizational bounds are blurring, and the same is true for the bounds of departments. People choose with whom they interact, communicate, and who they trust. Hierarchical organizational forms do not fit in this picture.
In response to hierarchy, we see many terms and concepts that explain different forms of organization. I already mentioned heterarchies, and there are many more that describe networked forms of organization, such as peer-to-peer and panarchy. Another one, one that Harold Jarche pointed me to earlier in my quest, is wirearchy. At the time Harold mentioned this, I’d never came across it before. Now I have had the time to read more about it and to evaluate this organizing principle, inspired by companies that organize themselves differently with result (such as Semco). So what is wirearchy? According to the ‘father’ of the concept, Jon Husband, wirearchy is:
A dynamic two-way flow of power and authority, based on knowledge, trust, credibility and a focus on results, enabled by interconnected people and technology.
This definition of wirearchy explains how many people use the web to communicate and organize things. It’s emerging, it’s reciprocal, it’s about trust, it’s about learning and about creating knowledge. And about many more things. The most important characteristic is the flow of information. Information now flows more like water or air, which means it can reach us all very fast, like an epidemic. Key is to negotiate meaning with each other to learn and to gain knowledge, using the continuous flow of information.
Now in my quest I’m trying to pursue self-organization and online collaborative spaces. The concept of wirearchy is very much related. One can choose a place in the network, and by interacting with other peers, one can build (trusted) relationships and learn from the (global) network. The network extends our knowledge. The question I’m always struggling with is, does it really work that way if many organizations are organized like this? I mean, many organizations are still large and top down and have clear boundaries. When many organizations shift towards a wierarchy or network, will it be ‘better’? The opportunities are numerous, obviously. But are these ideas still in a pioneering stage? Which organizations will set the trend, if needed at all? How do we reach the tipping point of organizing in a different way? What is needed (apart from the infrastructure, which is there), and who is needed? Maybe we’re still not ready to reach that point, or better, maybe we are very close to that point, but perhaps we can not identify this yet. The future will tell…
Answering these questions is difficult, and perhaps not even needed. Predicting the future is something from the past. The world is changing too fast for that and uncertainty is too high. So discussing these subjects stays very important, in our way to understand what is going on, to learn from each other, and to stay in a constant dialogue. Is that what organizations should be after? Just have the conversations started, nurture it, and then just never let go of these conversations? Maybe it is. This can spur an organic growth of a constantly changing dynamic network. Therefore I would like to add something to the concept of wirearchy: the dynamic two-way flow should be never-ending, constantly reciprocal, in order to be dynamic and foster learning.
The democratic organization
Last week I stumbled on a presentation of Netflix about their company culture. Almost instant I felt the people that made this ‘reference guide on their freedom and responsibility culture’ was very much inspired by the story of Ricardo Semler about his company Semco in his book Maverick which I’m reading at the moment. It is indeed a very inspiring book. Both companies seem to have found ways to empower employees to think and decide by themselves instead of being managed and judged by others, usually a higher level of management. At Semco, you can decide your own working hours, your own clothes, there are very little to no rules that prevent you from doing what you think is best, many can set their own salary but all salaries are known to everybody else, and so on.
The employees sort of organize themselves. They are given to power and trust to do so. Everything is very democratic, everybody has a say in what should be decided on the workplace. The most existing organizational structures are outdated according to Semler, especially classic hierarchical organizations. Semler really changed the organization which was first led by his father. Of course, this change did not became reality very fast, because Semler himself made many mistakes at first, and many employees that stood in the way were fired. But eventually he learned and the employees learned, and now it’s a very successful company.
If we look at the problem statement for this quest, one of the important parts is ‘how to […] empower employees for self-organization?’ I think we can learn so much from theory, but we can learn so much more from real examples such as Semco. Employees at Semco really have the power to self-organize, and they feel and know they are trusted to act like it. Trust is very important. Another related value which seems important is freedom. Freedom to decide when you arrive at work, what your salary is, and so on. At Semco it seems that the given trust and freedom results in being responsible for delivering high quality products. It really benefits the company.
When I have finished reading the book, I will write another post about it and what I learned from it. At this point it is interesting to show the presentation of Netflix. Some values are very similar to Semco, but others are very different as well. What is inspiring, is that both companies seem to be very different from existing organizations.
Bas Reus' quest on self-organization and online collaborative spaces 
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