Sunday, January 14, 2018

Rules in a structureless organization

A critical aspect for Structureless organizations is how they deal with rules. One might think, "As soon as humans need to deal with each other, we need rules". Yes and no. Let's explore how rules change as an organization becomes Structureless.

We will explore the topic by starting with an unstructured organization, then progress from there.

Unstructured rules

Martial law - Unstructured rules
Unstructured organizations have rudimentary rules, which are often simply made up on the spot, either ad hoc or post hoc. Rules mostly serve as a means to protect existing power structures, i.e. to beat others into submission and to exhibit superiority.
Rules are made exclusively by those who have power, and the rules serve them and their interests.

There is little mention of rules unless one is quoted or created to deal with a specific situation - and even then, the rule is hardly ever communicated to anyone beyond those involved. There is no examination whether these rules are consistent, conflicting or even make sense.

Most rules are arbitrary and wouldn't stand up to scrutiny, yet they never get challenged, as challenging them would equal challenging those who hold the power. The only people who will challenge rules are those higher up in the food chain, and only when it serves their purpose. This is usually not necessary, as further rules can be added at any point in time, as the lack of transparency around rules will already ensure that nobody realizes the conflict.

The following characteristics are symptomatic of "rules" in an unstructured organization:
  1. Double Standards: Rules apply only to some groups. Others are exempt from the same rules for no transparent reason. For example, favorable rules apply only to those with power and unfavorable rules only to others.
  2. Rules that don't solve problems: Rules serve more to shame those who have infringed upon them than to solve a real problem.
  3. Post-hoc rulemaking: When a situation occurs that is unpleasant to someone in power, rules are set up post-fact as a smoke screen to deflect the blame.
Such rules will never be written down, as the mere prospect of doing so might end up in a lawsuit. Those in power will make sure that it stays like this.

    Indirectly structured rules

    Indirectly structured organizations do have rules - and lots of them!
    There seems to be a rule for everything - and most of these rules are highly formalized. They are intended to prevent any potential misunderstanding.

    Most rules serve as a means of avoiding the need to address the root cause of the problems which have surfaced in the past, and every action of people is encompassed by some form of rule. Similarly to unstructured organizations, there is little discussion around whether rules make sense or are even applicable.

    When people are unsure what to do, they will either try to discover which rule needs to be applied, or will look to someone in charge to provide a rule. In fact, people will try to avoid situations where no existing rule can be applied, as this poses an undetermined challenge. People tend to be more concerned with keeping the rules they have than whether these rules make sense.

    Rules in indirectly structured organizations serve a more noble purpose than those in an unstructured organization. There are actually two different purposes:

    • Providing safety to those acting upon the rules that their actions are meeting prescribed standards.
    • Providing a sense of reliability to those creating the rules that people will act predictably.
    The most denominating characteristic of indirect structures is the separation of decision and execution: Those making a decision are not the same people as those acting upon that decision. The indirection is in full effect when people state, "If you want to know why - please ask that person!"

    The following three items are symptomatic for rule-making in indirectly structured organizations:
    1. Decision proposals: Instead of just doing the right thing, people need to prepare formal proporals with slide decks for managers to get approval for doing what they feel should be done.
    2. Central Process Decisions: It's not the people doing the work deciding what the best way to do the work is, but some people who - for some reason - are believed to have some form of superior knowledge about this work. This often comes with a Process Management division defining SOP's.
    3. Finger-Pointing: People would rather apply an inappropriate process than admit they are not aware of what needs to be done. They can point to someone who prescribed the process and will claim inaccountability for the consequences.

    The rules in indirectly structured organizations are often religiously followed by people at lower levels of the organization, while people on the higher levels are hardly aware of their existence. 
    Managers in indirectly structured organizations are often even aware of this problem, yet are unable to trace this back to the system they have created.

    Directly structured rules

    Directly structured organizations oddly have fewer rules than indirectly structured orgs!

    Rules are less constraining and prohibitive than in an indirectly structured organization, as they are aimed more at clarifying structure, helping people organize themselves and getting things done than at stopping undue actions.

    Rules serve everyone and no longer treat everyone equally unfair. Rules acknowledge context and provide guidance. Rather than abolishing the application of common sense as an indirectly structured organization would, they guide common sense decision making at every level. Unlike indirectly structured organization, inapplicable rules are scrutinized and reworked as needed.

    Rules help people discover the most sensible course of action without being prescriptive on the course of action, permitting leeway for sensible choices. As the social and procedural context of the work might be dynamic, people need to be comfortable with discovering the best way to move forward. Rules would only be created when those doing the work are unable to produce a desirable result.

    Rules in directly structured organizations serve an even more noble purpose than those in an indirectly structured organization. Rules are directed at:

    • Providing a basis for mutually beneficial, positive collaboration.
    • Providing consistency on a larger scale.
    • Avoiding preventable fault, thereby providing psychological safety for those doing the work.

    Direct structures align need and provision: Those who have the need are able to either resolve it by themselves or directly access those who can. Rule decisions are made by those who can see and affect the outcome of their choices. The most sensible form of rule making in a directly structured organization is by asking those at the receiving end of a rule which kind of rule makes most sense for them.

    Characteristics of rules in a directly structured organization include:

    • Alignement with business goals: Rules support the work, rather than impede it. Rules that contradict business goals will be revised.
    • Scrutiny: Everyone may discuss rules, and this doesn't happen out of frustration, but to drive improvement. Rules that no longer serve their intended purpose might be abolished or changed.
    • Consistency: Conflicting rules which would result in a stalemate get revised.

    Rules in a directly structured organization clearly correlate purpose and outcome. It's not essential for people in areas unaffected by the rule to know about the rule - and when effects occur that are not intended by the rule, it will be subject to scrutiny.

    Structureless rules

    The weird part about rules in a structureless organization is that they don't seem to exist. This, however, would be a misunderstanding as rules actually do exist - except that they are usually implied rather than defined and people don't even feel the need to formalize them, as this formalization does not add any value.

    In general, the need for rules decreases as mutual understanding and alignment increase - and the high levels of collaboration in a structureless settings foster these things. While the creation of collaborative bonds usually requires a clarification of mutual expectations, rules are often not very helpful, because they are created with a lot of ambiguity and therefore, often misdirected. Much more important than setting a rule is aligning on the intended outcome of collaboration and creating an environment where impediments are quickly addressed and resolved.

    Formal rules in structureless organizations are usually externally imposed, such as laws. It goes without saying that structureless isn't anarchy - so such imposed rules need to be maintained. As they are not an intrinsic part of the organization, people will discuss these rules not in a setting on what to do with them, but on the easiest way to get along with them.

    Because structureless organizations no longer care about the rules themselves, discussions aim at:

    • Finding positive, effective ways of collaborating
    • Aligning mutual perspectives, understanding and outcomes
    • Resolving issues which might otherwise require rules.
    Nonetheless, these are already implicit rules - the rules of getting along and communicating. Probably the most important implicit rule of a structureless organization is the "No Asshole Rule". It will never be mentioned, as the mere need to mention it already means that a problem occurred that should not exist.

    Characteristics of the rules in a structureless organization include:
    • Implicit: Probably the most important characteristic is their implicitness: Rules do not need to be formalized, because they are implied by interactions.
    • Minimal: Since rules cause or hide problems, they are a "last resort", when all else failed.
    • Ephemeral: Structureless organizations rely on being able to constantly change and adapt, so rules might simply disappear when their context disappeared.
    • Local: Rules would only exist in a local setting, and there is no attempt trying to consider whether they could be generalized to a broader context, as if there was a need, it would pop up anyways.
    Structureless organizations aren't about rules. They are about aligning, collaborating and moving forward. When considering, structureless organizations have a lot of implicit rules - potentially more than the explicit rules found in an indirectly structured setting. The big difference is that rather than being in a manual nobody has ever read, these rules live and are part of people's lives.


    An unkeen observer might confuse structureless rules with unstructured rules - although the difference is immense! Whereas unstructured rules are makeshift constructs to preserve power, a structureless organization understands the advantages and disadvantages of formalization and has moved from the level of top-down exercise of power to mutual understanding.

    Structures are created to minimize communication over rules, assuming that rules can be formalized in an unambiguous way. Structureless organizations acknowledge that communication is essential to move beyond a limited and superficial mutual understanding. Once the necessary communication over collaboration has happened, the need for formalization disappears. Hence, the rules become implicit rather than explicit.