India Sets Stage on Digital Transformation // Not Just Nicer Bureaucracies // Open Systems Theory & the 3EO/Rendanheyi

Dear readers,

Welcome back to our?Boundaryless ?Dispatch. A fortnightly update where we connect the?trends?we spot, the?patterns?we identify,?and research threads from our backstage.

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This particular newsletter is written from my personal perspective, Simone Cicero , as it sparks from a direct personal experience after joining an event two weeks ago.

Around mid-September, I've been hanging around at the Avanscoperta ?Retreat where I was kindly invited to attend. Avanscoperta is a well-known Italian company that provides boutique training for modern software development and I've been collaborating with them for ages. They were actually the ones to launch the first platform design masterclasses as early as 2016! Ah, time flies.

As loyal readers know, at Boundaryless we've been keeping an eye on the wave of innovation coming from the Software development space, and Domain Driven Design ?in particular, for a while now. The convergence between software development, organizational design, and product/platform development is high and key.

At the event - organized in an Open Space Technology format - I provocatively decided to pitch a session to discuss how to make real Agile implementations and the dangers of making just “nicer bureaucracies”. To my surprise, this session was picked up by a couple of great brains and I had the chance to discuss the topic with Team Topologies practitioner and researcher Joao Rosa and my old friend Jacopo Romei - two among Europe’s smarter thinkers around the coupling between software and orgs.

We’ve often talked about organizational structure models emerging from the Agile/DevOps space as it undoubtedly represents one of the trailblazing spaces around these topics. Often, by the way, we reflected on how - as things scale - a lack of customer and business accountability can start?to manifest. We’ve seen it too often: teams detach from the user and become largely unaccountable.?

In the opening of the session after I presented my concerns, Joao introduced me to Open System Theory as developed primarily by Fred Emery, which sounds like an extremely interesting aim:

“to promote and create change toward a world that is consciously designed by people, and for people, living harmoniously within their ecological systems, both physical and social” - Fred Emery

As I learned about this particular approach - during the session and in the following days - I understood that it identifies two major design principles in how to structure an organization. These are called: DP1 (Design Principle 1) - so-called redundancy of parts and DP2 - redundancy of functions:

In the context of Open Systems Theory, according to Emery, the terms “redundancy of parts” and “redundancy of functions” refer to two different strategies for achieving redundancy in an organization .

• Redundancy of Parts ?means that whole tasks such as assembling a product, are broken down into narrow discrete jobs with minimal requirements for knowledge, skill, and, therefore, training. This approach produces a bureaucratic structure.
• Redundancy of Functions : In DP2 organizations there is more skill and knowledge built into each part/person than that person can use at any one point in time and the basic building block of a DP2 organization is a group taking responsibility for its own coordination and control - the self-managing group (SMG), where members are collectively responsible for meeting agreed goals

See here for reference: "An Open Systems Thinking Perspective on Agile Transformation ".

These two types of redundancy represent different approaches to ensuring that an organization can continue to function effectively in the face of challenges or changes. As I understand, according to OST, redundancy of function is more capable of generating?six key drivers of intrinsic motivation?in employees:

1. Elbow Room: autonomy in decision making
2. Continual learning - which involves some room to set personal goals or challenges and getting accurate and timely feedback
3. Variety: Workplace climate (factors that people can never have too much of)
4. Mutual support and respect; helping out and being helped out by others without request.
5. Meaningfulness, which consists of doing something that our society values, and being able to see your contribution to a whole product or service
6. A desirable future, not having a dead-end job

DP2 and the six key intrinsic motivations drivers can be used to ensure that - as we move into a structure with cross-functional, empowered teams we don’t end up in what is called “lassez faire” i.e. one environment in which - substantially - autonomy is given “until something happens” and there’s no legal change and structural adaptation made to the organization that prevents these retreating to happen, ending up with employees that are substantially disincentivized to really take massive entrepreneurial steps.

The 3EO/Rendanheyi and the OST

Suddenly I started to figure out how the 3EO model based on Rendanheyi could provide a good synthesis of the learnings in OST. First of all, it gives empowerment to teams through redundancy of function but it goes beyond that: Micro-enterprises are not only self-managing but they tend to be so complete to the extent that they’re “viable” beyond the organization and on the market. Furthermore, by widely adopting contracts with clear objectives and drivers of sin in the game on both sides - both at the moment a new team/ME is created and also at the moment that agreements are made between MEs - the 3EO/Rendanheyi manages to avoid the perception of disempowerment that comes when the “supervisor” retakes power from the fakely empowered teams. That simply wouldn’t happen as contracts state expectations, autonomy space, and rules very clearly.

Furthermore, the Rendanheyi/3EO model brings home both the concepts of redundancy of parts and redundancy of functions.

• Redundancy of Parts: each ‘micro-enterprise’ acts as an independent node which is similar to having multiple parts capable of performing the same role in the organization. Replication is allowed and even encouraged in strong Rendanheyi implementations, where even shared service platforms that enable teams with common services are often duplicated to avoid becoming a bottleneck. This allows for flexibility and resilience in the organization.
• Redundancy of Functions: as said, each ‘micro-enterprise’ in the Rendanheyi model is cross-functional, meaning it can perform multiple roles. This is akin to redundancy of functions where each part (or employee) can perform multiple functions.

In essence, the Rendanheyi model’s provides multiple pathways (redundant parts) for decision-making and problem-solving while also ensuring that each ‘micro-enterprise’ (part) can perform multiple roles (redundant functions).

We discussed the Ecosystem Transition with Roche

Two weeks ago?- as part of the program OpenTalk2023 conducted by Business Ecosystem Alliance and Haier Model Institute - Simone Cicero and Luca Ruggeri discussed the groundbreaking work of Roche Diagnostics in an interview with a client of Boundaryless and adopter of our methodologies - Global Head of Digital Diagnostics, Corinne Dive-Reclus .

The conversations have been deep enough to cover catalyzing this type of change from a cultural perspective, approaching the transition with a mix between designer, product manager, and engineering mindset, the implications in legal frameworks (especially in healthcare), serving complex customer needs and the need for a new approach to contracting.

Watch the video now

The Role of P&L (and contracts)

It’s therefore particularly important - we believe - to consider the role of Profit & Loss in the picture.?Despite other divisional approaches to organizing having historically introduced P&L as key - still they relied?on quite a lot of internal “complicatedness” needed to orchestrate objectives and strategies inside a “division”. We can see it with the modern obsession with OKRs. The radicality of 3EO/Rendanheyi (and in general of market-based models) consists in contemplating organizational artifacts that are preferably P&L constrained and regulated, and on its obsessions on contractualizing everything from the very onset. Suddenly this makes a lot more sense: to avoid employees feeling disenfranchised by soft agreements and “promises” that won’t stand a company crisis or a change of leadership, contracts may turn handy.

In conclusion, at Boundaryless we think there’s an interesting space to explore how our 3EO approach inspired by Rendanheyi can offer a relatively new approach to building organizational systems that are at the same time democratic and self-managing - thus going beyond bureaucracy - but also resilient in the face of the massive changes.

Check out this week's post ?>?India Sets Stage: A dive into India's business transformation

This article delves into India's vibrant digital evolution, technological prowess, and impact on defining global organizational standards.

We explore the several emergent industries that are redefining the nation's socio-economic and digitally powered landscape while creating a global impact. At Boundaryless, we are witnessing the coming together of communities and networks, as India sets the path for a more integrated and open future. Key points we cover:

• India’s emergent online marketplaces
• The path to Service Productization in India: its roots and future
• Next-Gen Finance in India
• The role and growth of Agritech as a key industry in India
• Revolutionary Government Policies and Actions
• Future of Organizing

Join the conversation and comment on the post here .

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