The Structure of Organizations

We can think of the structure of an organization is a description, diagram, or map of its information flows. We can think of individual people as their information. But this is maybe too abstract; it is at least unusual. So to be more concrete let’s say the structure of an organization is: all its people, all its things (tools, buildings, equipment (what are technically called artifacts)), all its information, all information flows among its parts, all energy flows, all resource flows. All individuals and all organizations interact with things (including other individuals and organizations) outside themselves. They get energy and information and other resources from outside, and they may give out energy, information, and resources. So boundaries of organizations are fuzzy. A closed system is one in which no energy or information or resources comes in or goes out. But the only known closed system is the universe as a whole, in the sense of everything that exists. So the systems we are interested in (organizations and individuals) are not closed systems.

Information in organizations can be classified in various ways. Organizations have various goals. GM wants to design and make and sell cars, make enough money to pay employees, make profit to pay taxes and shareholders, and it wants to continue to exist. If it didn’t want to continue to exist it probably wouldn’t now exist. A model airplane club wants to give enjoyment to its members through flying model airplanes; it wants to have meetings, collect dues to pay for the club’s expenses or maybe there are no expenses. It also wants to continue to exist or it wouldn’t.

All the parts of an organization need information about what they do or are supposed to do. They need information about all the other parts they interact with. They also need energy and other resources in the right amounts to do their part effectively. The information a part has or receives or sends out to other parts cannot be perfect. It can always be better or it can be worse regarding the operation of the part. The same applies to the organization interacting with outside individuals and organizations. Better information, more accurate information, more complete information means better operation, more efficient operation of all the parts. If two individuals have the same or similar roles in an organization the one with better information can do his or her job better than the person with worse, less accurate, less complete information. The goodness, the quality of the information circulating in an organization matters to the success of the organization. Truth matters to individuals and organizations. Or it should matter if they want to do whatever they do well.

An organization will cease to exist if enough of its parts stop cooperating. People can quit a company and it may not be able to hire replacements. Some division may fail to perform its function and the whole structure may collapse. A bank may make too many high leverage loans and go bankrupt. One bank can be the trigger for the collapse of many others. Members of the model airplane club may lose their interest and the club dissolves.

So an organization can fail if some critical part fails or if a large enough number degrade their performance sufficiently. Either of these can happen because of inappropriate distribution of information and other resources. An organization (system) can fail if some of its parts work against one another. If you keep driving with one foot on the brakes and one on the gas pedal you will soon wear out your brakes, the car may crash and be destroyed, and you may be injured or die.

There are many ways a system or organization can fail or operate poorly. When we have such a failing or poorly operating human organization, we can make a revolution, change the system, if we can identify the causes of failure, (non functioning parts, poorly functioning parts, too much or too little resources going to parts, or the wrong kinds of resources, incorrect information going to some or all parts, parts working against one another, etc.), and correct the cause or causes.

To correct the cause or causes means we have to change the system. We have to fix some or all of whatever is not working well. Most often it is only a small part of a system that needs to be changed. In complex systems it is sensible to change only one or at most a few things at a time. But sometimes one or more whole subsystem needs to be replaced like some of the wild and chaotic parts of the world’s present banking and money systems.

One perhaps extreme way to change a failing system is to cause it to fail faster or abruptly or completely. For life critical systems this is dangerous. But often in failing human systems, most people may not recognize that the system must be changed. The only way to get some people to change may seem to be to cause an abrupt deterioration short of total collapse so they can then see clearly that the system is so non functional or just so plain bad that it must be replaced. In some cases a system, or large parts of it, may be on such a path to collapse that revolutionaries need do nothing. Those running the system, those who think they are benefitting from the system are so blind, are such true believers in the system, that they are unable to foresee the collapse. This may be the case with the world’s present nations/global trading/banking/corporation system. It almost collapsed in 2008 and nothing serious has been done to significantly change it.  Toward the end of World War II the war system continued to destroy people and property in many countries long after it was obviously hopeless. So in some cases the revolutionary task is to try to prevent a collapse, to divert a system away from the path to destruction. In either case it can be very dangerous.

Human organizations, human systems, have a kind of inertia. They tend to continue the way they are. They can be hard to change. They tend to resist change. There are many reasons for this inertia. One reason is the necessity for some rules, information, habits of thought whose purpose is to preserve the organization or system. Without such rules there would be no stability, no permanence, no continuity. On the other hand, the world is dynamic. The environment changes and is changed by human organizations and the environment of human organizations is mostly other human organizations except for example when an earthquake and tsunami destroys a nuclear power plant. So human organizations don’t want to change but they must because the world around them, which they are a part of, changes. Even though this is obvious, most people think statically — we mostly think of human organizations as fixed. We say human nature never changes. We say there will always be war. We say there is one fixed economic system that should never be changed. We think it is possible to find some truth, some principles, some rules, that once found, can be used forever. And we are surprised when such beloved principles no longer work.

Human thinking, especially about human organizations, human systems, is seriously deficient. Even human nature is not fixed. Human nature depends on our culture and so it too changes as culture changes. But many people assume a fixed human nature solely determined by genes. So it can take much work to change people’s minds about some very important things like war, economics, and political systems.