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Anatomy of Agile Enterprise

Janne J. Korhonen

Stratification Underlies Agility, Preface

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It may not be intuitive at the outset that organizational agility profits from hierarchic layering of capabilities and managerial accountability. After all, mainstream organizational development doctrines have suggested that flat organizations and team responsibility are virtues to go for. However, late Elliott Jaques, a Canadian psychoanalyst and organizational psychologist considered these ideas as fundamentally misguided, dangerous and outright wrong. Jaques defends hierarchy as a natural form of social organization; the hierarchy, per se, is not bad, but if the organization is poorly structured, people are not able to work at their full potential.

In his rigorous empirical research, spanning several decades, Jaques recognized that organizations exhibit a hierarchical ordering of work complexity that reflects the discontinuous steps in the nature of human capability. The role complexity increases discontinuously in specific steps, stratifying varying kinds of work into natural layers, or 'strata', in the hierarchy. These strata further constitute recursive 'cognitive quintaves', where systems of five strata comprise of lower order 5-strata systems.

In the realm of human organizations, Jaques distinguishes two orders of complexity:

Symbolic-Verbal (SV) order of complexity that covers strata I through IV. This is the form of thought and language used by most adults. Thoughts and words no longer have to refer to specific tangible entities. They are used as true symbols and can be construed and worked with as though they themselves were the things. This order of information complexity allows us to carry out all the activities necessary to manage day-to-day work from shop floor to middle management levels.

Conceptual-Abstract (CA) order of complexity that covers strata V and beyond. This is the form of thought and language required for successful work at senior corporate levels. Thoughts and words seem abstract in the sense that they refer to other thoughts and words rather than to things. Symbolic-verbal information is chunked into this more complex conceptual order of information.

Jaques maintains that each order of complexity comprises a hierarchy of four cognitive states that characterize work at different strata. This quartet of cognitive states gets recursively repeated at a more complex level in each higher order of information. The four cognitive states are:

  1. Shaping of concrete objects (Stratum I) or of whole systems from within (Stratum V).
  2. Definition of tasks at Stratum II and of whole systems at Stratum VI.
  3. Extrapolation in whole systems (Stratum III) or extrapolative development of whole systems (Stratum VII).
  4. Transformation of concrete systems to enhance aggregate values at Stratum IV and of whole systems to enhance social values at Stratum VIII.

Respective to the cognitive states there are four methods by means of which people process information:

  1. Declarative Processing: disjunctive, declarative reasoning (based on the logical 'or'), in which the reasons are separate and no connection is made with any of the other reasons.
  2. Cumulative Processing: conjunctive reasoning (based on the logical 'and'), in which independent ideas are conected to make sense as a whole.
  3. Serial Processing: sequential, conditional reasoning (based on the logical 'if') , in which each reason sets the conditions that lead to the next reason.
  4. Parallel Processing: concurrent, bi-conditional reasoning (based on the logical 'if and only if'), in which a number of possibilities, each arrived at by means of serial processing, is examined.

In 'Requisite Organization', levels of work complexity are measured by the required time span of discretion in a role and are aligned with respective human capability levels to support effective managerial accountability. A simple measure of the level of work is the time span of discretion in a role--the longest task for which one is held accountable. The longer the time span of discretion, the higher the level of work. Jaques maintains that the role complexity increases in specific steps at time spans of 1 day, 3 months, 1 year, 2 years, 5 years, 10 years, 20 years and 50 years.

A role falling into any given stratum should report to a role in the next stratum up. When roles are placed requisitely, an organization is likely to function effectively. When they are too close or too far, dysfunction is inevitable. Problems also arise when a person is in a role at a level higher or lower than his or her current capability or when there are too many or too few layers.

Table 1 sums up the strata in Requisite Organization in terms of the time span of discretion, cognitive state, mental process and paradigmatic roles at each stratum.

Table 1. Requisite strata

Order of Complexity Stratum Time Span Cognitive state Mental Process Exemplary Roles
Conceptual-abstract VIII 50+ years Transformation of whole systems to enhance social value Parallel Super-corporation CEOs
VII 20-50 years Extrapolative development of whole systems Serial CxOs of large corporations
VI 10-20 years Definition of whole systems in world-wide environments Cumulative Corporate EVPs
V 5-10 years Shaping of whole systems from within Declarative Business unit presidents
Symbolic-verbal IV 2-5 years Transformation of concrete systems Parallel General managers
III 1-2 years Extrapolation in concrete systems Serial Managers of mutual recognition units; senior professionals
II 3 months to 1 year Definition of tasks Cumulative First-line managerial work; specialist work
I 1 day to 3 months Shaping of concrete objects Declarative First-line manual and clerical work

In the next few blog posts, I will delve deeper into Requisite Organization and argue how proper stratification will facilitate organizational agility. As a horizontal framework to provide different views on each stratum, I will apply the 7 S Framework of McKinsey that identifies seven interacting factors that contribute to organization effectiveness:

  1. Superordinate Goals referring to the guiding concepts and values at the stratum.
  2. Systems that are characteristic to the stratum; procedures and devices that enable the organization to function.
  3. Staff that refers to the roles best suited to the stratum.
  4. Strategy that refers to the actions that are planned in response to or anticipation of changes in the context of a given stratum.
  5. Structure that refers to how the trade-off between differentiation and integration is arranged at the stratum.
  6. Style that refers to the way in which something is said, done, expressed, or performed that is valued at the stratum.
  7. Skills meaning the capabilities required at the stratum.

Janne J. Korhonen provides insights into how information technology can be applied strategically to catalyze organizational change and responsiveness. Drawing from both theory and practice, he discusses agile enterprise and its governance.

Janne J. Korhonen

Janne J. Korhonen is an independent business and IT consultant,specializing in enterprise architecture, business process management,service-oriented architecture and pertinent governance models. He has over ten years of experience as an architect and consultant in a variety of extensive and mission-critical IT projects. With strong theoretical underpinnings, his consulting encompasses systemic co-development of business, organization and information technology.

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