Phase Transitions

States of Matter

Matter transforms magically when it changes state. As its temperature reaches critical thresholds, water shapeshifts into ice or steam.

In liquids molecules slide freely past one another. In solids they are locked rigidly into place. In gases they dart randomly about at great speed. Heat overcomes the forces that limit movement. At high energy levels, atoms themselves break apart, turning gases into a hot plasma of charged particles.

Changing states of matter; clockwise from top left:
solid (ice), liquid (water), gas (steam) and plasma

Matter behaves very differently depending on the strength of the bonds between the elements that make it up.

Power Relationships in Organizations

Organizations form when relationships are created between people to pursue a shared purpose. Robert Waterman, coauthor with Tom Peters of In Search of Excellence, said “Organizations exist… to help people reach ends together that they couldn’t achieve individually.” Theodore Levitt, professor at the Harvard Business School, said “Organizations exist to enable ordinary people to do extraordinary things.”

Relationships are based on the dependencies between people. Outcomes are not produced in isolation, but by people working together. These dependencies create a power dynamic in human systems [Samuel B. Bacharach and Edward J. Lawler. Power and Politics in Organizations. 1980.]

“The greater the value attached to the outcomes in the relationship, the greater the power of the other; by the same token, the more value the other attaches to the outcomes, the greater the actor’s own power in the relationship. The overall implication is that actors evaluate not only their alternatives in the current relationship but also the importance of the outcomes in question.”

Power relationships are expressed as either authority or influence.

“An individual has authority when he or she can obtain unquestioning obedience from subordinates. In contrast, influence implies that subordinates do not suspend their critical faculties or willingness to act on the basis of their own inclinations…. Authority usually flows downward, while influence may be multidirectional. People can influence colleagues, superiors, or subordinates; they exercise authority only if their positions give them the prerogative of making the final decision.”

For positional power to work in an organization, everyone needs to accept its legitimacy.

“Legitimacy means that subordinates are willing to work within the confines of the existing organizational structure and that all members of the organization (regardless of their level in the hierarchy) are willing to follow standard procedures for conducting organizational activities.”

When we graph power relationships in different types of organization – the social bonds that drive organizational behavior – we see patterns that are analogous to the states of matter.

Organizational States

Like physical systems, social systems can also exist in a variety of states – in this case related to the exercise of power. These can be characterized as hierarchy, hybrid, network and crowd.

States of organization; clockwise from top left:
hierarchy, hybrid, network and crowd

Social systems behave differently in each of these different states.

At one extreme hierarchy centralizes and concentrates power and defends the status quo. At the other, crowd gives rise to anarchy, with no purpose or cohesiveness.

Between these two extremes, network distributes power, but without clear leadership or purpose. Hybrid blends attributes of both hierarchy and network, using authority and influence flexibly and fluidly to create an innovative, adaptive and nimble organization.

A pioneer of systems thinking in business, Ralph Stacey wrote at length about the significance of organizational structure and the exercise of power. In Managing the Unknowable: Strategic Boundaries between Order and Chaos in Organizations (1992), he described the behavioral attributes of the organizational types we refer to here as hierarchy, hybrid and network.

Hierarchy

Concentrated power creates very stable organizations, Stacey says.

“If power is highly concentrated and is always applied as force or authority, the result is a very stable organization in which little complex learning occurs because the boundary conditions are too tight. The organization can then deal only with whatever open-ended change the most powerful notice and are capable of handling. Strategy becomes the result of the intention of the top executive, and unless that executive is exceptionally talented, the organization will fail to develop sufficiently creative new strategic directions to survive.”

Relationships are rigidly defined in these systems, and they exhibit the following characteristics.

Characteristics of hierarchical structure

Hybrid

The flexible application of power creates nimble organizations, Stacey says.

“If power is unequal but distributed and applied in forms that alternate according to the circumstances, we find a flexible, fluctuating boundary around the political process that enables complex learning. The political and learning activity that may produce creative choices is spontaneous and self-organizing.  We cannot instruct anyone to have a creative idea in an open-ended situation. We cannot orchestrate factions and coalitions between people that will be guaranteed to support the right idea. All we can do is set up the boundaries within which behaviour favorable to the emergence of an innovative choice might occur.”

Relationships are fluid in these systems, and they exhibit the following characteristics.

Characteristics of hybrid structure

Network

Widely distributed power without authority creates loose organizations with no clear leadership or purpose, Stacey says.

“If power is widely distributed and hardly ever used as authority… the result is organized anarchy. Again, very little complex learning occurs, this time because the boundary conditions are too loose. Instead of new strategic direction for the organization as a whole, we find fragmented strategies arising from individual intentions that rarely converge because the group dynamics encourage only continual conflict or avoidance.”

Relationships are much weaker and more dispersed in these systems, and they exhibit the following characteristics.

Characteristics of network structure

Crowd

Like physical plasmas where matter has broken apart, there are no relationships in crowds. They exhibit the following characteristics.

Characteristics of crowd structure

The Ecocycle

Different structures are prevalent at different stages in an organization’s life cycle. Network, hybrid and hierarchy can be associated with the stages in David K. Hurst’s ecocycle. [see the “Crisis and Renewal” post in this blog]

Ecocycle Diagram (top). Source: Mary M. Crossan and David K. Hurst,
“Strategic Renewal as Improvisation: Reconciling the Tension
Between Exploration and Exploitation.”

Advances in Strategic Management, Volume 23. 2006.

The left- and right-hand sides of the ecocycle represent the extremes of network and hierarchy. In the middle is the hybrid sweet spot, where an organization balances exploitation of its current model of value creation with the exploration of new opportunities. This corresponds to the ‘edge of chaos’ where the organization – a complex adaptive system – is poised on the brink between stability and change.

David Hurst describes this balancing act. [David K. Hurst. The New Ecology of Leadership: Business Mastery in a Chaotic World. 2012.]

“The essence of the sweet zone is that, as successful organizations grow, they have to continually find their way between twin perils. On the one hand is the ‘rock’ of excessive stability, the so-called success or competency trap, where managers are quite unable to change the recipes for success that have led to wealth and power… On the other side of the sweet zone is the whirlpool of change: constant turmoil that yields nothing of value.”

The temptation, Hurst says, is to focus on what has been successful. But survival requires more.

“Somehow executives have to resist this force and make a move to the left, away from the allocation of resources, the optimization of means, and the distribution of wealth. The organization and its people must focus on the development of purpose, innovation, and the creation of knowledge and the discovery of new options for growth.”

Renewal is enabled by a hybrid organization.