Essential Balances in Organisations

Interview by: Frank Turley

With:              Ivo Velitchkov

Date:               September 2019

Essential Balances in Organisations

Frank: Let’s start directly with what are Essential Balances in Organisations?

Ivo: We are used to call organisations only the formal ones – companies, agencies, institutions, clubs. But this form of production is quite new, hardly a couple of centuries old. If we look a bit broader at things that have organisation, not only at those that are organisations, we can learn a lot. And there are good and bad news here.

Frank: What are the good ones?

Ivo: It turns out that organisations have common ways of functioning and remaining viable. So, the good news is that we can learn from thousands of years of evolution. What I find fundamental and yet largely ignored, are three essential balances that are common for organisms and for organisations and doesn’t depend on size, and – when it comes to organisations - whether they are hierarchical or flat, or what is their business model.

The bad news is that although the balances are common and only three are essential, there are infinite ways to maintain them. We cannot extract best practices and develop methodologies.

Frank: How can we use this knowledge then?

Ivo: To develop different thinking habits. I like the glasses metaphor here. We put on a new pair of glasses and we look at our organisations through them.

Frank: What’s the benefit of that?

Ivo: We can diagnose quickly when something is wrong, in the sense bad for the performance and viability of the company. More importantly, we can diagnose it early. As Machiavelli wrote in 16^th century - “in the beginning a disease is easy to cure but difficult to detect, while in the course of time, it becomes easy to detect but difficult to cure.

Frank: Does it mean the skills you teach are only good for diagnosis?

Ivo: Not only. They are applicable for both diagnosis and design.

Frank: And what are actually these three balances?

Ivo: The first balance is between autonomy and cohesion.

If there is not enough autonomy in different parts of an organisation, it is not effective, does not adapt quickly enough, and it won’t be resilient. But if there is no cohesion, the organisations are inefficient. They grow silos which pursue their own continuation and growth at the expense of the organisation.

Frank: So, the organisation is either in balance or not. And there is one such balance for each organisation?

Ivo: Unfortunately, not. That balance needs to be kept at various levels. Which means, there are many nested balances. You see, we think because we create organisations, we control them. But in fact, they have a mind of their own. That’s the first complication. And the second is that one organisation is made up of many nested and coupled organisations. And all these organisations have a mind of their own too, which makes them unpredictable. In other words, teams, projects, programs, units, departments, subsidiaries, they all need to maintain the balance, this one and the other two. By the way, although my focus is on the organisations, the importance of that balance does not stop at that level. Beyond organisational level the autonomy is exercised as the freedom of market initiative and action, and cohesion as coordination and regulation. Interestingly, the balance works not only at organisational and market level, but also – if we zoom in – we see it at personal level.

Frank: That’s very interesting. I’m curious to know more how the balance works at personal level, but we’ll leave that for another time. You said, it works equally at project level. For an agile team, there is a lot of autonomy, and no hierarchy or reports to bring cohesion. Then how the balance is achieved?

 Ivo: The cohesion of an agile team comes from the fixed size of sprints, retrospectives, roles and so on. Being agile does not guarantee balance. An agile team may or may not be able to maintain the balance. That’s not well understood. I see dysfunctional agile teams look for the problem at the wrong place like not following properly some kind of agile practice.

Frank: I see. Now, can you tell us about the other two balances?

Ivo: The second balance is that of stability and diversity.

Stability in organizations is dynamic, yet viable organisations have the ability to maintain it, and to re-establish it when it is disturbed. When valuable people leave, others are recruited. When market share shrinks, new services are added, or new markets are explored. When a competitor is using and benefiting from a new technology, that or a better one is being adopted. But when organisations are disturbed in a way not experienced before, the balance can only be restored using novel means. That’s one reason for the need for diversity. It could be a diversity of different kind – people, ideas, experiments. Note that that’s not the typical way of looking at diversity, you know, as something solving an ethical issue or – worse – as a compliance problem.

Frank: What’s the third balance?

Ivo: The third balance is that between exploitation and exploration.

On one hand, it’s a popular resource allocation dilemma. Should you exploit a resource, refine a technology and extend the offering to the existing clients? Or should you look for alternative resources, new technologies, and explore new markets? But it is equally a viability strategy. An animal needs to eat (exploit) to have the energy to look for more food (explore). A company needs a flow of resources now, so that it could finance research and innovation to ensure its viability in the future.

Frank: What’s the typical disbalance here?

Ivo: Organizations tend to over-exploit and under-explore. That’s natural: the expected results from exploitation are usually known, while the potential results from exploration are always unknown.

Frank: You are going to do a master class on that topic during the PMI Fair next week. What would that be and why you called it BIO?

Ivo: Yes, this will be a condensed 90 min version of the workshop, specially designed for the PMI fair. BIO stands for “Balances in Organisations”. With “bio” I’d like to emphasise the importance of understanding organisations as living beings.

Frank: Before the interview you told me that you are also writing a book.

Ivo: Yes. It’s now the fifth year I’m delivering this workshop but there are many important aspects and details that cannot be communicated this way. They are in the book. It will be published next year.