Monday, June 04, 2012

Pioneers, Settlers and Town Planners

I recently heard of a third organisation which has a pioneer, settler and town planner (PST) like structure rather than the usual organisation by type - IT, Finance, Marketing - or the various derivations of (Geography & Type, Business Unit & Type).

I was going to do a long rambling post on evolution, how activities and practices move from chaotic (poorly understood, uncertain, constantly changing, rare, future source of worth)  to more linear (well defined, predictable, stable, common, cost of doing business) and how organisations contain a mass of these activities and practices. Understanding this and using the right methods and tactics is important to creating a balance between the unstable but potentially high margin activities (chaotic) and the stable and low margin (linear).

This process of evolution from chaotic to linear is why "one size fits all" mentalities are so dangerous because you either impact survival today (through poor efficiency) or survival tomorrow (through future wealth creation). This creates the badly termed "innovation paradox" of Salamon and Storey.

There is however a route by which you can create a profitable but stable organisation which deals with the constant cycle of change, except unfortunately traditional organisational structures (by type) get in the way. They do so by obscuring the natural evolution (or flow) of activities from chaotic to linear which is driven by user and supply competition. Invariably the traditional structures built on type result in alignment issues and a host of other problems.

More cell based structures (e.g. Two Pizza) appear better than traditional structures at dealing with these issues but as I accidentally found out in 2004 (but couldn't explain why back then) this can be enhanced by a pioneer, settler and town planner (PST) structure which appears to solve the problem of flow enabling high rates of innovation of new activities and efficiency continuously.  These days, I can explain why this should work but with so few examples then it could just be coincidence or some other bias.

Under PST, there is no IT, Finance or Marketing departments or any grouping by type. There is only a structure defined by evolution and flow - hence pioneers, settlers and town planners.

Now, I could go through the details in a long rambling post but I've done this countless times before in presentations around the world over many, many years. So, instead I'll just add a few diagrams (pinched from various presentations) on PST which is useful for those with a basic understanding of evolution, value chains and the flow of chaotic to linear (for some background see Ten Graphs on Organizational Warfare)

Figure 1 - How things evolve.

Figure 2 - Mapping an organisation, value chain vs evolution


Figure 3 - Structure around it.



Figure 4 - An organisation based on theft.


Overall, I'm happy to hear of another example and I've also been told of a possible fourth. Alas, I'll need several hundred more operating under many years of economic competition before I can actually demonstrate the difference has significance.

The models say this is a more "right" structure than by type and if successful even in these few cases, the practice should diffuse. Time will tell and I'll be watching those companies with a great deal of interest.
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