Abstract
The organizational learning imperative outlined in the previous chapter posits that, in the rapidly unfolding Age of Data, the ability of organizations to create value will be increasingly tied to their productive data consumption capabilities. Initially considered from the perspective of the learning process and its core mechanics, those ideas are examined in this chapter from the perspective of organizations seen as human collectives shaped by formal and informal structures. Set in the context of a general overview of for-profit and non-profit organizations as commercial and social units bound together by structural, cultural and formal governance and other design elements, the key organizational learning-impacting emerging trends and stressors are discussed. Those include the emergence of ‘flat’ organizational structures, best exemplified by flatarchies and holacracies, the changing face of the notions of ‘duty of care’ and ‘business judgement rule’ coupled with the rise of stakeholder activism, and, perhaps most importantly, the compelling case for de-departmentalization of innovation as a means of stimulating and sustaining greater employee involvement and problem-solving creativity.
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Notes
- 1.
There are numerous examples of chronologically much earlier localized mechanization – for instance, the Persians (present-day Iran) were using wind power grain mills and water pumps as early as 500–900 CE.
- 2.
Under the US tax law, there are C and S corporations: The former pay taxes on their income, and income received by their owners, typically in the form of dividends, is also subject to income taxes (hence the often heard ‘double taxation’ quip); S corporations do not pay income taxes, but instead their owners, who report the corporation’s income of personal income, pay income taxes.
- 3.
A quick personal perspective in regard to that customary framing of corporate shareholders as ‘owners’. It is my view that large corporations with many thousands of individual and institutional shareholders do not in fact have owners, just speculative investors. The reason for that is that, under property law, ownership entails exclusive rights in the form of possession, control and disposition or transfer, but those rights do not fully extend to corporate shareholders – in fact, the only unabated ownership-related right of corporate shareholders is the right to sell or transfer their shares. The argument that there are fairly obvious practical reasons for that abridgement of the rights of ownership is unconvincing to me because if two out of the three fundamental rights of ownership do not apply to shareholders, then neither does the label of ownership.
- 4.
It should be noted that the very flexible tax structure of limited liability companies makes it possible for those entities to structure themselves as publicly traded partnerships and have their ownership interest traded on securities exchanges.
- 5.
It is a little-known and often surprising fact that in the United States alone there are more than 500 separate federal agencies (a lot more when state agencies are added into the mix) that monitor and/or enforce a myriad of existing rules, in addition to the some 10,000 or so new rules, decrees or pronouncements that are added annually; that is why large diversified organizations need to maintain sizable departments whose whole purpose is regulatory compliance assurance.
- 6.
An intent that is surprisingly often overlooked, if not outright ignored in commercial companies, where it is quite common for a single individual to hold the post of the chief executive officer and the chairman of the board of directors. That particular practice has the effect of inescapably concentrating chief rulemaking and execution powers in one person, which in turn nullifies the very point of corporate checks and balances. The generally weak and unconvincing arguments that are offered as justification of that obvious disregard of the core principles of good corporate governance do not alleviate the potential abuse of power, which is underscored by the recurring problem of corporate governance breakdowns, with Enron, WoldCom and Tyco scandals offering some of the more egregious examples.
- 7.
Feel the customer pain, empower employees, dedicate time to innovation, develop collaborative platforms and attract good talent.
- 8.
Maximilian Karl Emil Weber (1864–1920) was an influential German sociologist, philosopher and political economist whose ideas had a profound impact on the shaping of Western socioeconomic institutions.
- 9.
In the United States, the Securities Act of 1933 and the Securities Exchange Act of 1934 spell out specific informational disclosure requirements for publicly traded companies, which ultimately give rise to what is known as ‘executive risk’, an umbrella term for threats that emanate from incorrect, misleading, incomplete or not timely disclosure of legally required financial information. Shareholders who believe that the company in which they hold stock did not fully, accurately and timely disclose pertinent information can sue (typically as a group, called ‘class’, as in ‘class action’) the directors and officers of the company for damages; on average, about 300 to 400 such lawsuits are filed in the United States annually, and to protect themselves against the cost of what is known as ‘securities litigation’, which can be considerable (the median settlement cost is about $10 million, and the top 10 most expensive ones are all in excess of $1 billion), virtually all publicly traded firms purchase what is commonly known as ‘directors and officers, or D&O, insurance’.
- 10.
The ‘business’ part of the name should not be taken to suggest that it only applies to for-profit organizations; although by their very designation non-profit organizations have manifestly fewer business-like operating aspects, non-profits are nonetheless economic entities that engage in a variety of financial transactions in the form of purchases, credit, etc.
- 11.
In a very general sense, shareholders have several delineated rights which include the right to participate in a company’s profit, the right to buy new shares, the right to vote (in a company’s annual or general meeting), the right to sue for wrongful acts (as illustrated by the earlier example of shareholder class action litigation) and the right to influence management, but that right is indirect as it is effectively limited to the election of company’s board of directors – the goal of shareholder activism is to directly influence a company’s executive management, which is not a delineated shareholder right.
- 12.
A mechanical engineer by education and trade, Frederick Winslow Taylor (1856–1915) is widely regarded as the father of scientific management.
- 13.
A learning curve is a generalized graphical representation, approximated by the so-called s-curve (sigmoid), which captures the relationship between proficiency and experience; i.e., the more someone performs a given task, the better they get at it (until a plateau is reached). The notion of economies of scale captures the cost advantages that can be obtained as cost per unit of output decline (primarily due to fixed costs being spread over progressively more units) with increasing scale.
- 14.
The name derived, most probably, from Lockheed Martin’s (an aerospace and defence company) Advanced Development Programs, officially nicknamed Skunk Works and best known for their development of the now legendary U-2 and SR-71 Blackbird spy aircraft.
- 15.
A more in-depth discussion of those influences, and the manner in which they warp subjective sensemaking is offered in Evidence-Based Decision-Making (New York: Routledge, 2019).
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Banasiewicz, A. (2021). Democratization of Organizations. In: Organizational Learning in the Age of Data. EAI/Springer Innovations in Communication and Computing. Springer, Cham. https://doi.org/10.1007/978-3-030-74866-1_2
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