Hack:
Round Peg in a Square Hole? Could IoT Spark a Management Paradigm Shift -- Not Just Cool Stuff?

When the Industrial Revolution began, there were two models for large organizations, the Catholic Church, and the army, and, because of the lack of real-time data on things, it made sense to manage information the way those organizations did: top down, and in linear fashion, parceled out to different departments sequentially and when senior management decided it was relevant.

Now, due to the Internet of Things, we can get that information about how things actually work instantly, and it can also be shared instantly among all those who need it. Yet, even the most progressive organizations still manage themselves in traditional hierarchies.

As Thomas Kuhn wrote in his studies of scientific revolutions, over time more and more phenomena no longer fit a paradigm, and it suddenly collapses. Today that means work teams use collaborative software, work in forms such as Boyd's OODA loop, and the most profitable company in the world is building a circular headquarters, "where so many people can connect and collaborate and walk and talk."  Clearly, the handwriting's on the walls for hierarchy and linear processes.

In the second of their HBR articles on the IoT, Heppelmann & Porter seemed to second that doubt:

“For companies grappling with the transition (to the IoT), organizational issues are now center stage — and there is no playbook. We are just beginning the process of rewriting the organization chart that has been in place for decades.”

Could it be that the IoT, by closing the data loop and making it  instantly available to all, might show us a better organizational chart, the "circular company."

We're already getting a preview of the potential benefits:

• Siemens' Factory of the Future" has an incredible 99.99885% (no typo!) quality rate because M2M machine learning constantly fine tunes the production line.
• GE is using the "lean startup" concept from software of doing early releases of new products -- in as little as 3 months as opposed to three years in the past, then following with rapid updates. How? By using tools such as "digital twins," they know exactly how products are working (or not!) in the field, rather than having to guess such data.
• Hortilux no longer sells lights for greenhouses, it markets them as a service, guaranteeing maximum uptime by using predictive maintenance to spot possible problems rapidly and replace bulbs before there's an outage.

But those benefits have been created using the IoT within traditional management hierarchies. What about using this breakthrough ability to share data instantly to get rid of hierarchy, and what benefits would result?

For that, our best precedent is one that Gary Hamel has written about on this site previously, W.L. Gore Associates' and its "lattice" management: "At Gore, there would be no layers of management, information would flow freely in all directions, and personal communications would be the norm. And individuals and self-managed teams would go directly to anyone in the organization to get what they needed to be successful."

Imagine how such a structure could work when meshed with the Internet of Things.

Because all of the teams would have instant access to real-time data about products, they could break down departmental information silos, sharing ground-truth. This would unleash unprecedented creativity and increase efficiency because of the human dynamics of unfettered collaboration: based on real-time feedback about how products were actually used by real customers, someone from product design would suggest a new idea, then someone from service would say "wait, wait, that part you're talking about couldn't be serviced easily in that location," leading someone from marketing to react and suggest the product now be provided as a service, not sold.  Instead of doing their part of the work in isolation and then handing it on sequentially to another department,  they'd all work collaboratively and in real time, leading to insights and innovation that no single individual or department could have come up with if they worked in isolation. Because real-world problems wouldn't be ignored because a given department didn't have the expertise and unknowingly created a problem for another department, the real-time exchange would educate all the departments about each others' realities and needs.

The "circular company" concept is still in its early stages, but I think, from growth of all the circular tools that parts of companies are adopting, that linear and hierarchical processes are now obsolete in an era when we can and should share data instantly, so I hope you'll become involved in brainstorming how the concept might become a reality.

Best of all, there'd be an added benefit: this would mesh well with the "circular economy" concept that's taking hold, particularly in Europe, as a practical, profitable way to deal with serious environmental challenges: instead of cradle-to-grave linear processes adding more waste, the circular company could easily find ways to close-the-loo[ and design products to be easily upgraded and kept out of landfills.

I look forward to the dialogue!