Relational organization
Organization as an Emergent Property
I see organizations as an emergent property of the interaction between a group of people, with resources and information to achieve something in a specific context. Organizations can also be viewed from a structural perspective, emphasizing resources, processes, and rules, or as a social system where people are most important. All these views are valid perspectives, but they condition how we generate value by creating services, products, or new resources, and how we organize ourselves and solve problems.
An emergent property is one that none of the elements of a system has by itself and that arises from the interaction between them. For example, an engine can produce power, the transmission can transfer this power to the wheels, and these can rotate around a central axis. However, none of these parts separately can transport people safely from one place to another. Only when all these elements combine to form a vehicle does the property of transportation emerge.
If relationships are what articulate and give life to organizations, it would make sense to design them in a way that facilitates interaction between people so that value is produced more effectively, reliably, and sustainably, and that the social system forming the organization focuses on its continuous improvement, development, and regeneration of relationships.
However, organizations are generally focused on efficiency and resource management, with people being human resources. Like any other resource, it is necessary to control their quality and reduce the variability of their performance, for which the organization fragments tasks, establishes objectives, monitors activity, and evaluates work regularly. This mentality comes from the industrial model of the early 20th century where organizations were understood as machines and people as replaceable parts, but in the current context where work is only a part of people's lives and where, in many cases, the limits of productivity and effectiveness lie in the organization's processes, structures, or policies and not in people, this model proves rigid and obsolete.
I assume that people perform better in contexts where the purpose is shared and each person's value contribution to the organization is clear, where work organization facilitates collaboration rather than competition, where autonomy to work and make decisions allows for pride, where trust and safety allow taking responsibility for errors because these are taken as opportunities to improve the organization as a whole.
The Capacity to Exist Independently
Imagine you're about to open a bakery where you want to produce and sell the sourdough bread you ate in your childhood. A week before opening to the public, you have the oven, work tables, storage, tools, etc. installed and ready to function, but no one is working yet, suppliers haven't brought the flour, and there aren't customers coming through the door to buy bread. Could you say your bakery is an organization? Perhaps it is from a theoretical or legal point of view, but not from a practical one.
The elements that will form the organization's structure may be installed, the processes to produce and sell bread may be clearly defined, and even the identity and values may be shared by all people. All these elements are necessary for the bakery to be viable as an organization, but they are not sufficient. For your bakery to come alive, exist autonomously, and fulfil its purpose, it's necessary to activate the network of internal and external relationships so that information and resources to produce and sell bread can flow.
People and Relationships
Imagine then, continuing with the example, two exactly identical bakeries, located next to each other, with the same space, machinery, tools, and products to make bread. The differentiating element between them is the type of relationships that people establish among themselves and with their environment. Imagine that the person responsible for one of the bakeries sees their workers as just another resource, like the flour or water used to make bread. Under this mental model, the relationship established with workers is to maximize productivity at minimum cost until the resource is exhausted, meaning the relationship established with people is to try to get them to produce and sell the highest number of loaves, for the maximum number of hours possible at the lowest legally possible wage. This type of long-term relationship has a negative impact on both worker productivity, motivation, and commitment, bread quality, and customer satisfaction.
On the other hand, the person responsible for the other bakery sees their workers as people and their bakery as the means for all of them to develop and improve their quality of life. From this perspective, the relationship established with them is that of colleagues, where each person is responsible not only for their work area but also for the bakery's results and the innovations needed to respond to customer needs. From this mental model, people are a fundamental part of the bakery and responsible for business performance, as well as constant customer satisfaction.
But these relationships don't only occur between people, but also with resources, information, or even conceptual abstractions or shared ideas. Imagine that the organization shares the idea that every penny counts. This is an idea or belief that will condition how people manage resources. In our bakery example, how the use of resources like flour, water, gas, or electricity is optimized to waste as little as possible. Similarly, if transparency is an organizational value, the way information is shared and discussed will be much more accessible and horizontal than in an organization where transparency is not a fundamental value.
If so, how are these conceptual abstractions, shared ideas, or beliefs that guide and condition relationships in the organization developed? How are they articulated in practice? How do we know when these ideas have ceased to be effective and need to be updated or replaced?
Properties of Relationships
My proposal here is that it is people who determine organizations' potential and capacity, not strictly through their knowledge, individual capabilities, or experience, but through their ability to relate to other people and elements that form the organization and environment. Personal factors undoubtedly facilitate or hinder this process, but the context where these relationships occur is determinant. Part of this context is under the organization's control, as people design processes, allocate resources, and make decisions. In another part of the context, organizations can only influence with their narrative and by commercializing their value, as with customers, suppliers, governments, etc., while there is a part of the context to which we can only adapt, such as the geopolitical context or climatic conditions.
If relationships are what differentiate organizations' capacity to generate and distribute value, there are several factors that can help us better understand how to improve and manage relationships and, by extension, organizations.
First, is the coherence of relationships. Organizations are artificial constructs that pursue a purpose in a specific context. The relationships that occur in this context must be aligned with each other and facilitate people working toward this purpose. If relationships don't allow for achieving the purpose, they won't be relevant to the organization. On the other hand, if relationships hinder people's work, place them in a vulnerable situation, or directly harm them, they won't have incentives to maintain them or they'll become conflictive.
Second, the effectiveness of relationships. This is the efficacy with which information, resources, or influence flow through them. An organization where relationships, due for example to power asymmetry, prevent value from flowing through it is an ineffective organization. The organization becomes bureaucratized, decision-making is ineffective, and productivity stagnates, reducing its capacity to generate value and adapt to changes in internal and external needs.
Third, trust. Trust in relationships is like a lubricant that facilitates people cooperating and collaborating to carry out any task. Trust also functions as a facilitator to overcome uncertainty generated by an unknown situation. Trust arises when there is personal affinity, transparency, and accumulation of shared positive experiences.
Fourth, is reciprocity. Relationships must provide value to all parties involved in them. This value must be proportional to the effort people invest in the relationship, although value doesn't necessarily have to be present in each transaction, as it can be a future reward. Without reciprocity, relationships become extractive, which damages the people from whom value is extracted.
Fifth, cohesion. Relationships involving different people are subject to discrepancies as they may have ends or means to achieve these ends that are not necessarily compatible with other people's ends and means. In these cases, relationships must allow resolving these discrepancies and negotiating new ways of belonging and moving forward.
In this article, I propose a vision of organisation as an emergent property of people's interaction with each other, with the different elements that form part of the organization, processes, resources, information, etc., and with the environment in which organizations develop their activity. Organizations' capacity to exist independently in their context and adapt to changes in the environment depends on relationships and how information, resources, and influence can flow through them to achieve their purpose. In my experience, this conceptual framework can contribute to redefining the very concept of organization to respond to both local and global problems, as changing the focus of the question from how we relate to efficiency to how we relate to collaboration would allow us, at least in theory, to relate to other organizations to create value jointly.
If you want to contribute with your reflections or ideas, don't hesitate to write to me at miguel@systemico.co.uk
