Social Business: Cooperation vs Competition

Even Sumantra Ghoshal mentioned it in his in-depth criticism of the management teaching model used by Business Schools: the world of management has been built on principles and ideologies that do not take into account the real nature of man and social organization. The predominance of a vision of the company based on the assumptions of the classical economy – competition and tendency towards individual usefulness – have made us forget how the essence of the company is firstly its organization, or rather the search for an articulated and complex form of cooperation.  The (theoretical) success of the agency theory has reduced each social action to the relationship between an individual and a system of extrinsic incentives, with each problem seemingly solvable only with the adequate mix of incentives that reward only the best and most worthy.

Public services are also not immune to this, with schools, universities and the health system reduced to experiments of an unproved and unprovable abstract model of people and companies. And management is becoming more and more “talent management”, meaning management by only a restricted group of people characterized by unique and unrepeatable elements that they would like to connect to performance. The organization is also disappearing and being reduced to the creation of a context in which various talents are placed in competition with each other.

In this social Darwinist scenario, the explosive revolution of social media makes the little-known thought of Chester Barnard (1938), little-studied and barely-loved for its unnatural mixture of practical and human experience and of the complexities of theoretical and scientific references, has become topical again. For Barnard an organization is firstly the result of the evolution of humanity, based on the complete development of our capability to collaborate. The complexity of collaborating is not underestimated, so much so that Barnard points out its temporary nature and proposes that in fact management’s main role is to guarantee it. But his contribution has been suppressed by a transposition of the purpose of organisations which, by the complex achievement of individual collaborative capability, have been reduced to gyms for exercising competition. As in the parody of Monsters Inc. by Pixar, competition (like children’s fear) has produced its results, as its standard-bearers support, but they are not even vaguely comparable to the potential of cooperation (the children’s happiness).

The revolution of social media and the speed with which it has spread is often connected with the trajectory of the technologies, emphasizing, for example, the role of the transition from web 1.0 to web 2.0 and in general pointing out the size of the applications. In reality, the technology, as shown by Stephen Barley (1986), for example, is only the cause for social reorganization processes deriving from deeper needs. The success of social media therefore represents the beginning of the revenge of cooperation on competition and outlines a different path than that of the acquisition and adaptation of technologies by businesses to ride this change.

In order to better understand this success we firstly need to clarify what we mean by social media by using the most recent definition by Gartner, who make the following divisions:

  1. Social networking: products of management of online social networks such as MySpace, Facebook, LinkedIn and Friendster and social network analysis (SNA) technologies that use algorithms to understand and map relations among people in social contexts.
  2. Social collaboration: technologies such as wikis, blogs, instant messaging, collaborative office and crowdsourcing that allow people to exchange knowledge and work together without having to be in the same place as each other.
  3. Social publishing: technologies that facilitate the collection of materials and contents to be made available in a single manifold easily accessible by all members of the community of reference such as YouTube and flickr.
  4. Social feedback: tools to obtain feedback and opinions from a community on elements of specific knowledge as happens on YouTube, flickr, Digg, Del.icio.us and Amazon.

This definition greatly broadens the information horizon compared to the simple Facebook, Twitter and LinkedIn triad to which many managers refer in meetings. It also adds applications and tools that not by chance have led Gartner to predict that, by 2016, social media technologies will be integrated into the majority of business applications, requiring for example an integrated CRM management, internal communication and collaboration, and public initiatives of social relations with clients. Even research into information systems for the HR of CedarCrestone in the 2010-2011 edition highlights how as much as 15% of businesses have adopted social media tools and 14% intend to adopt them in the next three years. Faced with ever more complex and inter-connected problems, decisional architecture represented by modern business and governance models, heavily anchored in a hierarchical and command-control principle, is unable to withstand any longer. Since the Nineties, the symptoms of the crisis have been handled with marginal adjustments, for example on the human resources management policies front, by stimulating internal entrepreneurship, accentuating the differences on variable remuneration, or on an organizational model level, proposing learning organization or network concepts (Manzolini, Soda & Solari, 1994; Solari & Zanon, 2001). As often happens in transition stages, with some clear exceptions, those that would be called for a role to govern this transition are also those that had more to lose to begin with in terms of power and control. As a result there is a stubborn and organized resistance that is trying to transform social media into controllable and predictable tools.

In reality, in the current scenario, organizing and managing means knowing how to reach the largest number of resources and building collaboration systems with these resources, partly regardless of the traditional distinctions between internal and external, but above all regardless of role distinctions. It is not the levels that build value for the end client, but the actual contributions. It is not a simple transition to carry out, and firstly summons the CEOs, supported by the CIOs and the Human Resources Department. A real Social Business Re-engineering process is required, a concept that takes the idea from Business Process Re-engineering of setting aside the pre-existing structure in order to concentrate on the sole activities that create value for the end client, and adds the knowledge that numerous interaction and decision processes must be added to the transformation processes, following a change model subdivided into the following stages:

  1. Interactional environment analysis. Every organization has its own interactional environment, or rather different methods with which collaboration is promoted. First of all, it is therefore necessary to analyse the existing channels of communication and the methods with which decisions are made, also identifying the specificity of different company areas. In this stage the physical layout and the geographical distribution of people also represent important analysis subjects.
  2. Sharing culture. The sharing of information and decisions is rooted in the culture of the organization and it is therefore important to understand what information flow segmentation elements are rooted in the organization and connect them to an analysis of the underlying organizational culture. From the link between the interactional environment analysis and the sharing culture analysis, we start by identifying the objectives of the transformation that may be incremental and therefore adapt to the existing or radical structure and promote with the introduction of social media a change in both the organization models and the existing culture. This process is therefore an organizational design process that embraces three stages that are independent from and parallel to each other.
  3. Infrastructure. The new organizational design requires initiating the macrostructure and the main processes in order to redesign them within a social logic, thus drawing an advantage from the widespread methods of involvement. At the same time, governance roles of the new structure must be identified and the organizational positions involved must be amended.
  4. New leadership models. The organization’s new architecture requires behaviour models and different management models, challenging the management to have to abandon the idea of being able to solve every problem on its own. A management open to criticism and capable of listening, as well as obviously familiar with the chosen technologies, is what is needed.
  5. Tools and technologies. The choices of technologies and tools are a function of the prefigured architecture and must be accompanied by a change process aimed at aligning the organization.
  6. New metrics. In an organization designed in this way, it is also necessary to provide for new metrics and new tools for assessing results and how things are working internally.

In conclusion, this is a central challenge for organizations in the near future, a challenge that the Human Resources Department will have to face first of all, side by side with information systems. If said department is able to manage the challenge, a renewed centrality will be created as a result, otherwise it runs the risk of being marginalized and of having to follow decisions that will be made by others.

Leadership from a network perspective

Managers as connectors. According to Organizational Network Analysis, a leader can be analyzed by looking at the position and the function that it has compared to the network; new perspectives arise from it to reread the key functions of a leader: openness to the new, integration of different perspectives and knowledge, ability to receive and circulate information, overcoming barriers and silos, etc.

The following table shows five types of leader in relation to their own function as a connector (revised by Gould and Fernandez, 1989):

Organizational Cultures

Organizational cultures condition the processes of sharing information and decisions that Social Business needs. We use the following model to make diagnoses and representations of the predominant cultural model, collecting indications on different sizes.

  • Dominant characteristics: procedures/rules vs initiative/pro-activity
  • Leadership: support/cultivation vs coordination/efficiency
  • Organizational glue: trust vs policies
  • Strategic focus: development of people vs efficiency/control
  • Management: participation/team works vs compliance/stability
  • Meritocracy: engagement vs efficiency

…………………….

Bibliography

Barley, S. (1986), “Technology as an occasion for structuring: evidence from observations of CT scanners and the social order of radiology departments”, in Administrative Science Quarterly.

Barnard, C. (1938), The Functions of the Executive, Harvard University Press.

Ghoshal, S. (2005), “Bad management theories are destroying good management practices”, in Academy of Management Learning & Education, 4(1), 75-91.

Manzolini, L., Soda, G., & Solari, L. (1994), L’organizzazione snella (The Lean Organization), Etas-Fondazione IBM Italia.

Solari, L & Zanon, A. (2001). La quasi fine della gerarchia. Organizzazioni come vantaggio competitivo nella new economy (The near end of hierarchy. Organizations as a competitive advantage in the new economy), Franco Angeli.

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