“When our first parents were driven out of Paradise, Adam is believed to have re-marked to Eve: ‘My dear, we live in an age of transition’.” (Inge 1929)

We started out a couple of months ago with this series on scalable startups with a reflection on organizations as lump of butter in a sea of milk. Organizations are social arrangements. Hence our next focus was the core constituent of any organization: Its people. A well-crafted strategy is worthless without a committed crew. The focus on people is core to what we do. Nonetheless, an organization is no end in itself. The fuel that drives the engine forward is customer needs. We cherish users like nothing else: They come first.

We argued forcefully for smaller organizations. Instead of large anonymous corporate monsters we made a case for smaller and nimbler units. We also outlined how to maximize involvement and reduce the useless part of management: Let people decide. To put these decisions into action we rely on a project methodology – Scrum – that finely aligns overall goals, immediate tasks, people and resources.

A particular issue we dealt with is how to get work done. Instead of word wilderness and excel wasteland we draw on the advantages of Wikis for documentation and a powerful task tracking tool. Both tool sets are completely web-based and accessible from everywhere.

In terms of actual setup and operation of an online platform we learned a lesson or two from our previous engagement at local.ch. A must is a shared nothing architecture plus automated building of the software application. To ensure consistency and reliability we made testing a daily priority.

The virtualization options available today are essential for a startup. We can cut down very considerably on our asset investment in servers and other bulky infrastructure items.

The outlined setup of a scalable startup is very much the realization of what Peter Drucker sketched out in his essay on The coming of the new organization over twenty years ago:

“The typical large business 20 years hence will have fewer than half the levels of management of its counterpart today, and no more than a third the managers. In its structure, and in its management problems and concerns, it will bear little resemblance to the typical manufacturing company, circa 1950, which our textbooks still consider the norm. Instead it is far more likely to resemble organizations that neither the practicing manager nor the management scholar pays much attention to today: the hospital, the university, the symphony orchestra. For like them, the typical business will be knowledge-based, an organization composed largely of specialists. … For this reason, it will be what I call an information-based organization.”

A little over two decades later, the startling development of the Internet has driven much of the transformation from an industry-based economy to an information-based economy. Multilevel hierarchies have given way to clusters of business units coordinated by market mechanisms rather than by layers of middle management. The large enterprise structures designed for the business environment of the 1950s and 1960s – firms that typically sought economies of scale through central planning and control mechanisms – are quite likely not the most adroit forms at meeting the current competitive environment that demands both efficiency and effectiveness. Companies track opportunities and resources on a global scale. In an attempt to maximize return on assets, firms perform only those functions for which they possess or can develop expert skills. Activities that can be performed quicker, more effectively or at lower cost by others are outsourced. An intricate network of formal and informal relations ties the firm together. The momentum is paced by information technology.

Back in 1978 Hiltz and Turoff summarized this phenomenon as follows:

“We will become the Network Nation, exchanging vast amounts of both information and socio-emotional communications with colleagues, friends, and ‘strangers’ who share similar interests. … we will become a ‘global village.’ … An individual will, literally, be able to work, shop, or be educated by or with persons anywhere in the nation or in the world.”

True.

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Series Overview

• Organizations – A lump of butter
• Focus on people – They are the one
• Rule #1 – Customer First
• Smaller organizations: The sum of the parts
• Project management: Skip management
• Turn the waterfall upside down: Scrum
• Abolish (MS) Office: Wiki will do
• Process & control: Do a Jira
• Shared nothing architecture: A solo performance
• Automation: No one around
• Virtualization: Really no one around
• Testing: To err is human
• Conclusions – The Network Nation

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Drucker P.F., “The Coming of the New Organization”, Harvard Business Review, January – February 1988, pp. 45-53.

Hiltz S.R. and Turoff M., The Network Nation: Human Communication via Computer, London: Addison-Wesley, 1978.

Inge W.R., Dean of St.Paul’s London, Assessments and Anticipations, London, 1929.