We live in an age of accelerating change. Change begets complexity. Both change and complexity affect the efficiency of today’s business organization and its operations. The ways in which businesses are currently organized and operate are holdovers from a bygone era of the post-industrial age. Organizations from that age focused effectively on mass producing products, as the markets of that age demanded. Functional organizations were most appropriate for that kind of work – operations work, the focus of which was repetitive production of similar outputs. As the demands of the market rapidly evolve, so must business organizations and the manner in which they operate. This paper posits that the value-added work that the preponderance of businesses will do in the foreseeable future will be customized (or project) work rather than operations work. And while operations-associated skills will still be part of an overall management skill set, an organization’s ability to manage projects at both the individual and enterprise levels will determine its success in evolving market environments.
The order is rapidly fadin’/And the first one now /will later be the last/For the times they are a-changin’. Bob Dylan, 1963
It’s almost impossible to overstate the changes that have taken place over the last century. Their importance makes the overtaking of the Ptolemaic (geocentric) system by the Copernican/Galileian (heliocentric) system seem a minor blip in our perspective of the universe. At the end of the 19th Century it was widely believed that the universe followed Newtonian and Laplacian rules – it was ordered, reducible into its constituent parts, and predictable within the laws governing its operation. Discoveries in the 20th Century dispelled many of these beliefs. Einstein proved that time is relative, not constant; quantum mechanics showed the non-deterministic nature of matter; and both chaos theory and its offshoot, complexity theory, show the importance of phase-space attractors, tipping points, self-organization, and emergence. Moreover, these changes have occurred not just in the fields associated with science and mathematics but in many other areas of our lives – technological, social-political, environmental, and demographic. And while the physical size of our planet hasn’t changed, these changes make it seem relatively smaller than it once appeared just a century ago.
In fact, the rate at which changes occur is increasing. Think of this phenomenon from the perspective of existing knowledge. An early 1990s study done by the Wharton School of Business in association with Fortune Magazine shows that the amount of knowledge (defined as useable information) in the world at the turn of the century was only 10 percent of that which existed in 1990. Given that the rapid growth of the internet and other social media accelerated sharply in the mid-1990s, one can only guess how much more knowledge exists today, a mere 21 years after that study was completed.
Change and the Business Organization
Business organizations have not been immune to these changes. For decades, businesses operating under Newtonian assumptions about the universe, Fredrick Taylor’s theories around scientific management, and Henry Ford’s methods of mass production, have organized themselves based on their respective organizational functions (marketing, sales, design, engineering, etc.). Until the last two decades, these organizational structures have served to meet market demands more or less efficiently. However, as the rate of technological and social change has accelerated, these structures have been slowly changing as well.
Organizations that were originally able to meet market demands through the loose coordination of functional units have been grappling with the inefficiencies of that organizational structure. They have been spending more and more of their time and money trying to get outdated organizational structures to work in a business environment for which those structures are no longer appropriate. Emerging from these managerial maneuverings is what we now commonly call the matrix organization.
The matrix organization is essentially a functional organization that modifies its hierarchical (functional) reporting structures to accommodate the need for cross-functional efforts. While most employees report “hard line” to a functional manager, they are assigned to cross-functional (project) teams as needed to meet market or customer demands. These teams are typically headed by project managers to whom the project team members report on a “dotted line” basis. As the need for more projects has accelerated (along with the rate of change in the business environment) functional team members spend a greater amount of their time as part of these project teams than they do on operations work. Little wonder that the interest in, and the need for capable project managers has increased exponentially. This fact is reflected in the skyrocketing membership of the Project Management Institute over the last two decades.
Matrix organizations have been emerging since the 1960s, but they have been gaining a greater amount of acceptance in the last few decades in response to organizational needs. In my work as a consultant over the last 20 years, I have not encountered a single company that describes itself as a purely functional organization. On the contrary, they all show some degree of matrix characteristics. But now, even matrix organizations are put to the test in coping with the accelerating change in the business environment.
In his book on Complex Adaptive Leadership, Nick Obolensky sees a three-phase transition. He says that the functional organization has transitioned to a matrix organization, and that matrix organization is now beginning to transition to a new type of organization. While this conclusion may be splitting hairs, I believe that the matrix organization, which keeps much of the functional organization intact, is actually a mechanism itself for the transition to a new organizational form that has recently started to emerge – the Complex Adaptive System (CAS) Organization.
The CAS Organization
A number of authors have stated that all organizations are essentially complex adaptive organizations (at least those that are successful and survive by changing their configurations and processes in adapting to market demands). In his 1997 paper, Kevin Dooley notes:
Systems theory caused management theorists to see the organization as an “organism” … Fluctuations or contingencies from the environment are adjusted to by organization change… Contingency theory claims that the manner in which the organization is organized and functions must correspond to the nature of the environment in which it finds itself…
In a paper on Being a Learning Organization, Peter Fryer describes the evolution of a governmental group (Humberside Training and Enterprise Council) into a learning organization, and states:All organisations are complex adaptive systems whether we want them to be or not. No matter how much command and control is exerted on the system, underneath the organisation also operates as a complex adaptive system, therefore it makes sense to view them as one…. In order to survive, and more importantly thrive, we needed to co-evolve effectively with our environment
So successful organizations, ones that survive and thrive in today’s changing environment, are complex adaptive systems, and exhibit the characteristics of those systems. These characteristics involve having agents (in the case of the business organization the primary agents are people) that are diverse, interdependent, connected, adaptive, and self-organizing. Over time, and in response to its perception of market needs, groupings of these agents will emerge either spontaneously or under the leadership of senior management.
Complexity is frequently described as the measure of the number of possible states (of the agents and their interrelationships). If one thinks of a spectrum of a system’s possible states, from “simplicity” on the one extreme to “chaos” on the other, one of the important concepts associated with complex systems is that they operate most effectively on the edge of chaos, or where Professor Scott Page calls “the interesting in-between.” In a CAS organization, too little diversity, interdependence, connectedness, and adaptability lead to an inflexible structure, not able to effectively react to a changing environment. On the other extreme, in an organization with too much of the same, chaos will result to the same effect. In their book on the intelligent complex adaptive system (ICAS), authors Alex and David Bennet describe this “interesting in-between” as one of optimum complexity, in which what is important is “the number of possible states that make a difference to the organization,” or one which has “the right level of internal complexity to deal with the external environment while maintaining overall order and unity of purpose.” 
In Complex Adaptive Leadership, Nick Obolensky portrays an example of a CAS Organization in the following diagram.
Obolensky later describes the CAS Organization as follows:
The term CAS is meant to reflect a dynamic organisation where [teams are formed, perform, and then disappear] as the need arises. What forms the foundation … of this dynamic are clear people processes and policies, sound and flexible information and communication technology systems, and transparent, inclusive and flexible strategy development processes. People are very flexible and systems are open so information is shared and total transparency is gained.
In their vision of a potential ICAS, the Bennets see action teams that develop the value-added products or services and interact with “specialized, permanent operational teams that enable the ICAS to adapt, react, and sustain coherence… [including] the Operations Center, the Knowledge Center, the Learning Center, and the Career Management Center.” The work of all of these groups is enabled by a senior collaborative leadership and a supporting infrastructure.
Project Management and the CAS Organization
You might have noticed that both the Bennets and Obolensky foresee the value-added work being accomplished by teams of people that are deployed to exploit or respond to market-driven opportunities and needs (both external and internal) and then disband when their projects are completed. This author’s contention is that in the CAS (or ICAS) organization, the preponderance of the value-added work will be done by those in project teams, highlighting the importance of project management as one of the enterprise’s core competencies. It suggests that a key indicator of a company’s probable future success in a rapidly changing business environment will be an effective, continuously improving, and adaptable enterprise project management capability.
What is equally striking, however, is that in a complex environment, traditional hierarchical leadership models become much less effective – in fact, they become obstructive to project teams needing to quickly assess a situation, creatively develop alternative solutions, select the appropriate solution, and then implement that solution. While the authors of both Organization Survival in the New World and Complex Adaptive Leadership argue that a good deal of autonomy will need to exist within the project teams, Obolensky goes even further in his views on the appropriate type(s) of leadership for CAS organizations. He posits in his book that hierarchical (or oligarchic) leadership alone can no longer be effective because, among other things, it’s built on the false assumption that the leader(s) has the most knowledge about what must be done, and the followers merely need to enact the leader’s commands to bring about a successful outcome. In a changing environment, knowledge is the key. And in most organizations, that knowledge exists primarily among the many followers – not among the few leaders.
Obolensky argues that polyarchy, which he describes as “an extension, evolution and synthesis of anarchy (chaos and no leadership) with oligarchy (order and traditional leadership)” acting together in a yin/yang relationship, is the type of leadership that is emerging as the most effective for organizations in this time of accelerated environmental change. In his view, it is the responsibility of the organization’s corporate leadership to develop an environment in which polyarchy can thrive. Elements of the organizational environment in which complexity works well are in and of themselves pairs of opposites (yin/yang) as shown below:
Underlying, implicit and unifying common purpose
Clear, explicit and individual objectives
Discretion and freedom to act
Boundaries enclosing the action
Skill/will of individual people
A few simple rules of organization
Ambiguity, randomness far from equilibrium
Continuous and unambiguous feedback
Without diminishing the importance of the remaining seven elements, let’s briefly turn our attention to the “skill/will” element. One of senior management’s roles in a polyarchic environment is to ensure that project team members have both the skill and the will to accomplish the job set before them. Motivating employees (and keeping them motivated) using various means from a leadership toolkit is a clear responsibility of that management. Ensuring that those same individuals are properly skilled and experienced is another of senior management’s responsibilities. Among the skills a project team member needs to have in a polyarchic environment are role-specific skills. And a key role that a project team member may be asked to play is that of leading the project team.
My interpretation of the concept of polyarchy, particularly from a project perspective, is that while the project team may have a single person designated as the project manager, at different times during the course of the team’s progress, various people within the team will be called upon to assume a leadership role depending on 1) the life cycle stage in which the project finds itself and 2) who in the project team has the knowledge to lead to the work of that stage. This situation means that the designated project manager needs to be courageous enough to delegate (devolve, in Obolensky’s terminology) leadership responsibilities to other team members as the work and the team member’s knowledge requires.
However, in order for a team member to take on that leadership role, the team member, in my opinion, needs to have at least a basic understanding of how projects are managed. While they need not be PMP certified, team members certainly need to have a basic grounding in managing project work and project teams. Thus, they will need to be trained to some degree in the concepts, processes, methods, tools, and techniques associated with managing projects.
Additionally, projects are team efforts. It’s one thing to train an individual to assume a project leadership position – it’s quite another to get individuals who approach their roles on project teams very differently to consistently work well together, particularly under the stresses of a rapidly changing environment. Cross-functional teams, composed of people who will typically work together on project efforts, need to be trained to work well as teams. Situational simulation training has proved particularly effective in team training.
Finally, project work doesn’t happen in isolation. It must be championed and supported at all levels of the organization until it becomes ingrained in the organization’s culture. If it is not supported, if project managers are not permitted by their managers to accomplish the requisite efforts associated with planning and implementation that are, at least currently, outside of the mainstream of our current management mindset, all of the training in the world will not result in effective, cohesive project efforts and successful project outcomes. Thus the additional need for senior management to be both familiar and comfortable with the value and success factors of project management.
The complex environment in which businesses today find themselves cannot successfully be navigated by traditional hierarchical organization structures. To remain competitive in the future, businesses will need to adopt structures that are flexible and responsive enough to:
- Adapt to changing internal and external needs
- Effectively marshal and employ the organization’s collective knowledge
- Successfully exploit market opportunities by developing and implementing value-added solutions
The primary vehicle through which value-added work will be accomplished is through project teams. And these teams require a wide range of knowledge, skills, and support to be effective.
Senior management needs to develop an organizational culture which enables these project teams to be creative and to self-manage. A culture that promotes polyarchic leadership allows those who have the knowledge to create and deploy value-added solutions to operate effectively within the organization. And one key success factor for such a culture will be its competence in managing projects at both the individual and enterprise level.
While it’s perhaps too early to understand which specific organizational structures will emerge in various industries, the generic structures previously discussed provide a framework from which to proceed. With that said, it is clear that, in the future, two types of project training will be needed by a wide variety of employees. First, many potential project team members need to understand the basics of project management. This type of training guarantees that when they’re called upon to take up their individual leadership role in a project to which they’ve been assigned, they’re ready to do so. Second, since teams of people will come together to perform projects and then disband once they’re completed, cross-functional teams must be trained in team building and development. This type of training is best experienced together as a team, perhaps in multi-day project simulations. Simulations are the best vehicles to develop their ability to respond quickly to market opportunities that arise and to then effectively deploy value-added market solutions. The organization that best fulfills these needs will go a long way in ensuring its future success.
Therefore, it is necessary for the individual project manager to be flexible and responsive, and adapt to changing needs within the organization. Furthermore, today’s project manager needs a broad knowledge base from both the organization’s collective knowledge and outside sources. This will enable the PM to remain competitive in a complex business environment.
 T. Stewart, “Brainpower” series, Fortune magazine, 1991, as cited in Obolensky, N. Complex Adaptive Leadership, p.15.
 While exact figures are not available from PMI, one accounting notes that from 1970 to 1990, membership rose from around 2,000 to 8,500 (data from Delaware Valley PMI chapter which was posted on the mcg.com website, http://www.gomcg.com/pmi/pmi-dvc.htm accessed on 29April 2011). Since then, membership has risen to just under 342,000 (data from April 2011 PMI Today, p. 19). A similarly remarkable figure is that there were over 400,000PMP Credential holders at the end of February 2011(ibid.). When this author received his PMP credentials in the early 1990s he was only one of fewer than 3000 others to have done so.
 Obolensky, Nick. Complex Adaptive Leadership (Burlington, VT, Gower Publishing) 2010, pp. 23-27.
 Dooley, Kevin J. “A Complex Adaptive Systems Model of Organization Change,” Nonlinear Dynamics, Psychology, and Life Sciences, Vol. 1, No. 1, 1997, p. 3.
 Fryer, Peter, Being a Learning Organization (as cited on The Bumble Bee website, http://www.bioteams.com/2005/07/29/an_organisation_case.html on 2May 2011).
 Understanding Complexity, taught by Scott E. Paige, course guidebook (Chantilly, VA, The Teaching Company) 2009, p. 10.
 Adapted from Obolensky, op. cit., figure 3.1, p. 23. Reproduced with permission from the publisher.
 Ibid. pp. 26-27.
 Bennet, Op. Cit., pp. 80-81.
 These four steps are similar to the Bennets’ (op. cit. pp. 33-35.) four major processes of an ICAS: creativity, problem solving, decision making, and implementation
 Obolensky, op. Cit., p9.
 Ibid., p. 99.
 You can read more about devolving and complex adaptive situational leadership strategies in Obolensky, op. cit., chapter 10.
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