1. Strategy #9

2. Loose Hierarchies Characterized by greater delegation –Information flows up –Executives make decisions that govern subordinates –If you are in a hierarchical organization, you implicitly agree to abide by your superiors’ decisions –Rewards are based on pleasing superiors

3. Loose Hierarchy Examples Linux Wikipedia AES Corporation

4. Loose Hierarchy Lessons Strengths Minimal communication for coordinating large- scale projects Conflict of interest resolution Weaknesses Information overload as you go up Narrow perspective Decisions can be vetoed at any level Lack of autonomy, motivation, and what goes with them

5. Democracies Networked information sharing Decisions are made by voting – simple majority, consensus, other voting regimes You must abide by decisions made by the group you belong to Vote for you interests or your group’s interests

6. Democracy Examples WL Gore –Corporate Culture “Our founder, Bill Gore created a flat lattice organization. There are no chains of command nor pre-determined channels of communication. Instead, we communicate directly with each other and are accountable to fellow members of our multi-disciplined teams.” –Guiding Principles Fairness to each other and everyone with whom we come in contact Freedom to encourage, help, and allow other associates to grow in knowledge, skill, and scope of responsibility The ability to make one's own commitments and keep them Consultation with other associates before undertaking actions that could impact the reputation of the company

7. Democracy Examples Mondragon Cooperative "Nothing differentiates people as much as their respective attitudes to the circumstances in which they live. Those who opt to make history and change the course of events themselves have an advantage over those who decide to wait passively for the results of the change". Father Don José María Arizmendiarrieta Conceptual Creator of the Mondragon Cooperative System http://www.sfworlds.com/linkworld/mondragon.html

8. Democracy Lessons Strengths Individuals are insured participation Group decisions force people to do things for overall good Weaknesses High communication overhead to insure knowledgeable decision making Everyone’s opinions count equally even when some are more qualified

9. Markets Networked communication Decisions made via mutual agreement between parties involved in an environment of competitive alternatives Incentives come from profit maximization

10. Market Examples eLancing Guilds Quasi Markets for ad hoc projects Idea futures

12. Market Lessons Strengths Markets are efficient Markets are flexible Markets are motivating Weaknesses High communication overhead For some situations, overall good may not be achieved because agreement is not in a key party’s self interest

13. Trust Willingness to be vulnerable (Dynamic-RT) Dependability – to have faith or confidence Static versus dynamic understanding of trust – a state of trusting in contrast to the process of developing of trust or evolving trust

14. Trust Model Ability Benevolence Integrity RTRsTrust

15. Trust Model Three trust components –Ability: a group of skills, competencies, and characteristics. –Benevolence: the extent to which a trustee is believed to want to do good to the trustor. –Integrity: the trustor’s perception that the trustee adheres to a set of principles that the trustor finds acceptable. Risk taking dynamic (Risk taking in relationship)

16. Decision-making Structure Comparison Decision Making Structure Communication Cost Individualization and Synergy Potential Conflict Resolution Autonomy, Motivation, and Creativity Centralized Hierarchy Low HighLow Loose HierarchyMedium DemocracyHighMedium MarketHigh LowHigh

17. Problem – Efficient Decisions Loose Hierarchies – Managers force decisions on occasion Democracies – Voting for some decisions, election of managers for others Market – People participate only when there is mutual agreement, everyone follows the rules

18. Problem – Quality and Catastrophic Loss Loose Hierarchies – Managers control of people and results (e.g. via standards), but not actions directly Democracies – May employ standards, voting, elected managers Market – Reputation systems, insurance, performance bonds

19. Problem – Economies of Scale Loose Hierarchies – Managers may force people to take advantage of economies of scale Democracies – Voting and managers may force people to take advantage of economies of scale Market – Rules encourage buyers and sellers to take advantage of sconomies of scale

20. Problem – Knowledge Sharing Loose Hierarchies – Managers provide channels and incentives Democracies – Same as loose hierarchies. Incentives may be set by voting Market – Rules provide means for protecting, pricing, and selling knowledge