Why people may experience more or less happiness working in different companies and in different positions? How enterprise design can contribute to the happiness at work challenge?

The Individual Happiness Flow

The best moments usually occur when a person’s body or mind is stretched to its limits in a voluntary effort to accomplish something difficult and worthwhile. Optimal experience is thus something that we make happen.

… I developed a theory of optimal experience based on the concept of flow — the state in which people are so involved in an activity that nothing else seems to matter; the experience itself is so enjoyable that people will do it even at great cost, for the sheer sake of doing it.

Mihaly Csikszentmihalyi. Flow (Harper Perennial Modern Classics) HarperCollins.

We may illustrate the idea of the flow using findings by Mihaly Csikszentmihalyi and holistic aspects technique.

What is important in the Happiness Flow principle?

• To get the flow happen, we are to establish connection between Dreaming and Being, the world of ideas and the world of reality;
• It should be two-way traffic. We land idea into reality using Mastery and promote tangible results of our activity into Dreaming using sense of Purpose;
• We connect some domain in Dreaming with a domain in Being by the flow. The domains should have stable boundaries to let us focus. It means our Autonomy in the flow.
• Both Dreaming and Being may use different thinking modes. We can define Mastery by appying “How and What” thinking in Dreaming. Purpose focuses on “Why and Who” in Being;
• Flow assumes established cycle of Purpose and Mastery. The cycle might be broken in many ways, including lack of Autonomy (connection points in Dreaming or Being are not that stable);
• There is an assessment point (usually in Dreaming) to decide if we still want to continue the flow. Happiness means that each iteration of the cycle brings us closer to implementing initial idea in reality. When the iterations give us no updates (idea’s implementation seems perfect enough and there is no desire to change something), happiness is complete but short: the flow stops with positive outcome;
• The flow should run quick enough with little latency in switching between Mastery and Purpose to bring happiness effect.

Using Hierarchy for the Flow setup

Establishing flow means we are able to reach the heaven of our idea and connect it to the earth of our reality. If the idea flyes quite high, it could be not that easy challenge for one person. That’s why people practice different techniques of standing on someone’s shoulders.

In organizational world we talk about hierarchical principle instead of human towers.

In simple case we may think of this model as a startup. One person focuses on understanding the idea, another person cares about its implementation. Indeed they should understand both domains to establish shared flow, but usually there is a specialization in roles. Ichak Adizes calls these roles as Entrepreneur and Producer.

Having two persons on board raises question of several happiness assessment capacities /points /approaches. Each member of the organization has its own view to its own happiness. One of the points may get a status of the integral happiness applied as a corporate level indicator (usually that on the top). This is the very moment when happiness of organization members may begin to differ from the official integral one.

Startups are lucky to have quite short flow chains because they involve just a few people. That’s why the most tricky question for startup is right level of synergy between Enterpreneur and Producer. If both are great in their roles, the company flow runs fast (cash flow may be not that fast here).

Hierarchy at Scale

Using hierarchy for reaching quite ambitious idea from the earth is just one side of the game. Another one is implementation scale (see human tower image above: nobody never stops on having just one person standing on someone’s shoulders).

Chain of Command and Control. Assembly Line. Solid Flow

While company gains their maturity, its idea may raize the bar as well as implementation target becomes more demanding. As a result, the gap between idea and implementation requires more efforts for keeping the flow stable and reliable.

Standard approach here may be associated with Assembly line and layered organization design. One more metaphor considers the layers as floors in a corporate building. Top company dreamers work in penthouse, performers are on the ground floor in production workshops.

At this evolution stage company focuses on scale, “What” question for Mastery, and “How much” answer for reporting as Purpose reach. Keeping initial company success and supporting appropriate flow at scale is a key challenge.

What about personal happiness in the layered design?

It seems only two categories of persons have chances for keeping some sort of happiness in this org design: those who are on the top and those who are on the ground.

Top persons formulate the general idea for the company and get full information about results reached. They have priviledge to compare common results with idea and decide about changes required. They process their hapiness assessment on behalf of the whole company, so they may associate their own happiness with that one for the company.

Another part of the hapiness equation requires converting Mastery into purposeful results. In the multilayered org design it can’t happen fast from the top perspective. Sometimes it even may result in specific behaviour of top managers.

Bob [Business Builder as archetypal role] battles relationship issues, both at work and at home. This is typically because he is driven, impatient, motivated, and always on the go. The challenge is that everyone around Bob isn’t like him. Think of Bob as a high-performance Ferrari, going 140 miles per hour. As he goes around a bend, he finds an employee going 25 miles per hour and saying, “Hey, can you slow down and help me?”
“Are you kidding me?” Bob thinks to himself.

Joe Abraham. Entrepreneurial DNA: The Breakthrough Discovery that Aligns Your Business to Your Unique Strengths.

People on the ground floor use their Mastery to get tangible results. But their issue in closing the personal flow is exactly opposite: they are far from reaching the overall idea and can’t compare what was indended with what they do. That’s why they are forced to reduce /substitute the general idea to their tasks.

Persons in the middle positions lack both priviledges. They are far from closing ther working flow both for idea and for reality. They might feel like bank clerks who work with client’s bank accounts. They see amount changes but have no direct relations neither to profits not to spendings.

But anyway, layered company design creates important capability: it enables the core flow with controllable connection quality between the idea and its implementation.

Functional Decomposition. Units and Departments

What if we try to resolve happiness issue for persons in the middle? What for? Because of general principle: if you want to improve company flow, look for solution in terms of improving personal flow of company members.

Hierarchy model we deal with focuses on “What” question. It corresponds to tangible stuff first of all, so it’s quite natural for hierarchies to think in terms of skills and organizational functions. What if we grant persons in the middle a sort of ownership based on specific skill or company function?

What we get is functional decomposition of the company, where persons in the middle are Heads of units and departments.

Such a change raises Autonomy of the Unit Heads significantly. It allows natural projection of the company idea /goal to their unit and grants them their happiness assessment capacity. Now it’s clear how to compare what they wanted for the unit (Plan) with what they have got (using predefined KPIs, Output).

As any other company, Haier passed this evolution stage as well. With good understanding of this org transformation’s Why and Purpose.

From Solid to Fluid Flow

Does the functional decomposition give expected improvement of the company flow? The answer as usual depends on company’s environment.

• If the company still works in stable enough mode aiming just repeat their success and scale the operations with low changes in way they work, then yes. Functional units improve personal flow of their Heads and grant them with ability to make standard decisions fast. And assess hapiness at their position.
• Good news is ability to establish strong standards for skills and internal org functions. It allows being immune to acquisitions of less mature companies, pass it without loosing operations quality (stunned fish story at Haier)
• If company’s environment becomes turbulent, they may get all negative effects of functional decomposition design known nowadays as sins of hierarchy: silos wars, caring about own hierarchical position more than about solving non-standard problems, etc.

Does it mean that hierarchy is broken and should be throun away and fogotten as a wrong way?

Definitely no. It a method was designed to work in some conditions and worked well there, conditions changed and prevented the method from effective working, it does not mean we need new one. The only thing is: we can’t make the method working well in updated environment, if we stuck on previous principles.

Functional decomposition follows the “What” question, focus on skills, quantitative measures and generating Output. To raise the bar we should change the culture to deal with “How” question, focus on expertise, solving problems by customer’s request and creating Outcome.

As a temporary design solution for culture switch, Units may start an internal service game, where unit subordination changes from Plan->Implementation relation to Problem-> Solution.

But problem hierarchies seems to be unstable. The services tend to avoid intermediaries (especially if the company encourages this behaviour).

The Lines of Busines Story. Matrix fluids

The story of units playing services converts into a story of service lines. Some of them are exposed to exteral market(s). They are Lines of Business or Company’s Verticals. The others have no external exposure. They serve Verticals and may be referenced as Horisontals, Shared Services, etc.

In my mind, this is still hierarchy, where top level switched from command and control into new mode. Now it looks to bring synergy to cooperation beween Verticals and Horizontals, keeping their eye on global map of company environment and formulating strategy. Now it talks not in terms of Plan, but in terms of external and internal problems and our solutions.

Why is it so cool?

• Heads of Lines of Business now have the same structure of hapiness assessment as company head before. The same effect is for Heads of Shared Services. But it does not contradicts any subordination logic now.
• Verticals and Horizontals have shorter decision sequence than the whole company had before, so they support faster flows.
• It makes personal flows of the company members working faster and thus more comfortable in general.

Organisations actually consist of one or more value streams that deliver products. These move side by side, through each other and sometimes even against each other. It’s like a river that moves calmly in some places and is wild in others. So these value streams all go their own way, all have their own flow.”
Hans van Bommel. Flow is a revaluation of the existing organisation

Definitely, the Lines of Business approach is not the only way to create a fluid flow in a company. It just gives a quite simple example for creating the fluid effect.

Introducing Lines of Business is great step in evolution, but it does not solve all future problems in org design. In big enough company a Line of Business may look like a company itself, having the same org desing issues as it was before: silos, fixed mindset, etc.

Reversed hierarchy. Ecosystems and Platforms

It’s quite evident strategic move to allow any Line of Business applying the same trick, which converted a company monolyth into a set of independent Lines of Business. Because of general principle: if you want to continue improving company flow, look for solution in terms of improving personal flows of company members. First of all, by improving their Autonomy, Mastery and Purpose.

Haier’s evolution says even more persuasive on this stage because they have passed it in reality.

When the number of emerging “lines of business” aka ZZJYT teams (at Haier) with direct exposure to market was quite small, it worked as expected bringing more Autonomy to company members.

From some moment internal competition of these teams added significant extra overhead to their activities. To overcome this effect, Haier applied the most powerful approach available: culture evolution. “How” question, focus on solution and expertise were replaced by “Who” question, focus on user scenarios and trusted relations. It turns from playing independent service providers competition into “company as ecosystem” design.

If we are adding too much energy to a fluid flow, it boils and transforms into a gas, becoming an air flow.

But this should be another part of the story.

Final notes

• Hierarchy is always a backbone for the company. It is responsible for stability, including holistic one: keeping a company as a stable whole.
• Stable whole means “no lost principal parts”, not “no changes at all”.
• Low change pace allows having solid hierarchy with solid flow (core company lifecycle). If company grows in scale, it leads to having people in the middle levels with uncomfortable personal flows. It pushes the company to make its evolution and change the core flow to make it better fit to people’s personal flows (if they’d like to follow natural way of evolution)
• If the change pace becomes high, it requires company to change its dominant culture and core flow type: from solid to fluid.
• Hierachy should learn to support different types of the company flow to play its stabilising role successfully.

1. Observe: Flow vision

What is the Flow idea?

There a lot of approaches to the Flow idea, but today we focus on the case as follows.

“If people can work in Flow and set the organisation in motion, they do it by performing their job based on a shared understanding of the direction in which their organisation moves. Achieving this state of Flow is quite a challenge for any organisation. It demands the commitment of all its workers. Organisations actually consist of one or more value streams that deliver products. These move side by side, through each other and sometimes even against each other. It’s like a river that moves calmly in some places and is wild in others. So these value streams all go their own way, all have their own flow.”
Hans van Bommel. Flow is a revaluation of the existing organisation

Viability aspects

We are going to talk about evolution of viable structures, not about scientific abstractions around this.

Visionary guide to Viability: primary holistic aspects

The most direct way to get visionary image for a viable entity is in using holistic aspects and tetradian value model.

• Classical aspect: sequential thinking, tangible value;
• Smart aspect: rational thinking, smart choice, virtual value (the Flow mentioned above starts here!);
• Adaptive aspect: relational thinking, trust, relational value;
• Visionary aspect: imaginative thinking, asprational value.

To get the Flow vision implemented (not invented!) we should go visionary way of innovation adoption.

How to behave like Visionary?

The OODA cycle stands for idea implementation and landing idea’s high vibration into reality of tangible world. An mindful reader may find that this article follows the OODA scheme in the titles of its sections.

Classical maturity as an evolutionary backbone

Classics works with the most stable things with low change. That’s why people usually use them to navigate or to define something as having specific form.

Holistic Maturity. Classical aspect: business-body building

Classical Value Stream works like a stream from which the river (Flow) begins.

Why Value Stream is slow in terms of change pace?

Work handover between teams with different thinking modes is very complex and demanding operation. Classical approach requires doing this at the whole scale of organization to approve any significant change.

Matrix: Simplest Flow with several similar Value Streams

Lines of Business model is a set of independent Value Streams. Matrix assumes that the Streams have similar structure and are supported by shared services.

Programs may work as classical version for lines of business for projects (line = stream, something sequential).

Using Matrix way brings some important things:

1. improves hierarchy: reduces the length of sequences for decision making;
2. prepares the company for culture transformation: changes principle org agenda from dancing around the only core value chain to solving problems in some market domains (by the Lines of Business).

Cross-disciplinary teams

In small organizations independent Value Streams may easily have different structures and may be referenced as cross-disciplinary teams. The only question is their ability to have independent but purposeful collaboration driven by their market domains and by solving their customer’s problems.

Why Flow is the stage next to classical maturity?

We may consider classical Value Stream as a sort of Flow as well. Stable, slow enough, focused on scale, but still. A sort of Solid Flow.

Classics usually deals with the only option which is accepted as the best practice available. Smart approach is built upon optionality and smart choice. Having several options simultaniously and ability to decide free. That’s why the Flow paradigm should be Smart one, a next evolutionary step beyond Classics.

Is there any life after the Flow?

Sure. The Flow model assumes that we create some independent Value Streams and let them interact in multithread mode. After our organization learns doing this, we may allow emergent Value Streams take place playing ecosystem.

2. Orient: elements of Flow culture

Classical business: Industria /Diligence as a core virtue for industrial revolution

Ability to create full-fletched value streams is an essence of Industria and a core prerequisite for any org evolution.

Sins and Virtues as the principal holistic aspects for the Industrial Age

Lean: become ready for independent purposeful Value Streams

Even having the only one primary value stream, organization may enable shared purpose mode by supporting bottom-up thinking. Lean culture makes it perfectly. Small teams may afford doing this on the go (that’s why people prefer small teams to get adaptability). At scale, it requires to be ready with shared purpose culture.

Agile thinking for opportunity driven behavior

If business was too rational, no new opportunities arrived. If we want streams to live independently and purposefully, they should have internal business acumen to catch their opportunities.

3. Decide: Flow Architecture

Just some topics and link with no idea of full coverage.

Domain-driven Design and Team Topologies

Link 1: Architecture for Flow — Wardley Mapping, DDD, and Team Topologies — Susanne Kaiser — DDD Europe 2022:

Flow at Scale: Platforms and Ecosystems

Link 2: https://boundaryless.io/

4. Act: Let it Flow!

Haier and Rendanheyi

Haier passed perfect evolution switching company focus from classical value stream (Earth element) to smart Flow (Water element) to adaptive Flow (Air element). Fascinating reference model to study all kinds of the Flow and their natural evolution.

Haier. The Rendanheyi evolution story

Other cases

There are a lot of stories about Flow at enterprise. For example, one may look at boundaryless.io.

Flow Manifesto https://flowmanifesto.io/

To get this idea correct for organizations, it would be great to understand it for individuals (in-dividuals = we treat them as a whole without considering any internals) first.

According to the seasoned researchers (hope there is no need in direct references here. Just point to works by Mihaly Csikszentmihalyi), the Flow is tightly related to such a strange essence as happiness.

Let’s note that happiness and happens are of the same root. It does not work in a simplistic way, say “happiness sometimes happens”.
If we look at the topic through holistic modeling with minimalistic style, just remember that we are living both in realities of being and dreaming, take basic Flow terms (attention, autonomy, mastery and purpose) and voila: the core diagram of the Flow is ready.

#Attention defines specific domains in #Dreaming and #Being we pay our attention to within current Flow: Idea and Reality. #Autonomy is related to our ability to deal with the Idea and Reality domains effectively (fast and independent enough).

#Mastery focuses on the Idea and implements it in the Reality (somehow, depends on mastery level).

#Purpose is an ability to translate what we get in Being into appropriate ideation in Dreaming.

What kind of Flow is it? We may compare it with electricity. To get an electric flow we need:

• some voltage or difference between potentials of two points (here we have the difference between Dreaming and Being accompanied with the Idea and Reality domains working like the two points;
• connection between the points to enable the electric flow. In our case Mastery and Purpose serve like this.

When we assemble the schema, it enables the Flow iterations.

Are we happy after such an iteration? There are some options for the Happiness Assessment point:

• Not happy at all. The purpose statement we have got is too far from the initial Idea and no motivation to continue. The Flow even does not start: resistance is too high (low Mastery or sence-making Purpose), our connection (attention) is weak or there is no enough voltage (the Idea is not that high and inspiring);
• It seems worth trying and getting into the next iteration. We update our idea, level up our Mastery a bit and see what the Flow brings;
• We might say yes! We are there! What we get seems to be what we dreamed. The short happiness of completion, because now there is no need for more iterations. We just need to catch the next idea worth paying attention.

Final notes:

• It’s a very simple and optimistic version designed for individuals. Intentionally simple and intentionally optimistic.
• There are plenty of ways to break the Flow. Or having no Flow at all. It’s out of our agenda for now. Hope the diagram assists in thinking about this.
• We will definitely reuse this simple construct for working with more complicated models.

The exercise is to look at the map, formulate and answer questions. For example:

• What is the main topic and general mission for the Industrial Age?
• Which culture may support this mission?
• Why the struggle of opposites principle is embedded into the core pattern?
• Which thinking mode may dominate in this architecture?
• etc.

After that, please proceed with more questions and answers:

• Do we still employ this architecture?
• Could it support being high-performing? Being Smart? Being Adaptive?

Hope you may like this game.

A. Let’s start with principles.

0. Lean principles and core meanings

What can the Lean word tell us directly?

lean (1)

verb [no object, with adverbial] be in or move into a sloping position:
• (lean against/on) incline from the perpendicular and rest for support against (something);
• [with object] (lean something against/on) cause something to rest against.

noun
a deviation from the perpendicular; an inclination:
the vehicle has a definite lean to the left.

ORIGIN from an Indo-European root shared by Latin inclinare and Greek klinein.

lean (2)

adjective
1) (of a person or animal) thin, especially healthily so; having no superfluous fat:
• (of meat) containing little fat: lean bacon.
• (of an industry or company) efficient and with no wastage: staff were pruned, ostensibly to produce a leaner and fitter organization.
2) offering little reward, substance, or nourishment; meagre: the lean winter months | keep a small reserve to tide you over the lean years.
3) (of a vaporized fuel mixture) having a high proportion of air: lean air-to-fuel ratios.

noun [mass noun] the lean part of meat:
the man who eats no fat and the wife who eats no lean.

The Oxford English Dictionary

B. What are the Lean principles? Preferably we would like to get a non-biased generic version. Here is a good candidate.

C. Lean assumes strong focus on Value. We definitely should be equipped with powerful Value model to make our job effectively.

Let’s investigate an evident hypothesis: different value aspects may create different meanings for Lean.

1. Classical approach to Lean

As usual, classical approach may be easily identified by classical key words such as resources and processes.

Lean is a way of thinking about creating needed value with fewer resources and less waste. And lean is a practice consisting of continuous experimentation to achieve perfect value with zero waste. Lean thinking and practice occur together.

https://www.lean.org/explore-lean/what-is-lean/

Spending less to get more is a great motivator for Business Builder. It looks even more promising to engage workers (employees) into this game.

The only question is: Why would employees take care of this? Business Builder owns the enterprise and benefits from reducing costs. Less costs means higher margins. And what about employees and their wages?

There are some typical answers to the question for classical approach.

1. Bonuses. Waste reduction may cause additional bonuses for those who make the reduction happen. It rarely works, because it’s too hard to create valid mapping between waste reduction actions and overall business effect. There are always too much problems, which may convince the top management to cancel bonuses this year moving expectations to some foggy future.
   BTW, Lean as an offering little reward, substance, or nourishment /meagre sets strong contradiction to an idea of the bonus-driven approach.
2. Shared Ownership. There are different shades (aspects) of ownership at enterprise. If an employee feels some sort of ownership, it may give much stable base for thinking about being lean and caring about waste in particular.

The shared ownership culture may be supported from outside. I think that Toyota’s success was significantly empowered by family-like culture and life-long employment traditions in Japan.

Lean approach does not work by selling it as new fancy best practice and modern org toy for employees. It should be true culture of respect to bottom-up ideas and collaboration between all chains of the corporate value stream.

If the Lean movement has genuine basis, it may bring expected result. To be effective, it needs proven best practices to follow.

We know that the best practices are usually processes.

These are some of the most common Lean process improvement techniques you can use:

Kanban — As a visual process workflow tool using boards, Kanban allows individuals and teams to establish a shared understanding of organization’s processes with the aim of effective work management.

Hoshin — Mainly used for strategic planning, Hoshin is a Lean process improvement tool that empowers organizational communication when it comes to setting objectives and achieving them by getting everyone on board to work towards a common goal.

5S — This refers to the systematic approach to organizing workplaces through visual management practices by applying these 5 principles: Sort (seiri), Set in order (seiton), Shine (seiso), Standardize (seiketsu), and Sustain (shitsuke), which were originally pioneered by Toyota Motor Company.

5 Whys — As a common root cause analysis tool, the 5 Whys method is also good for Lean process improvement. By simply asking the question “Why?” typically 5 times, organizations can reach or identify the root cause of a problem which can help apply lean thinking and practices.

Six Sigma — Six Sigma focuses on near-perfect quality and the elimination of variation and helps enhance Lean process improvement through a data-driven approach to eliminating errors and defects to aid problem-solving.

Plan-Do-Check-Act (PDCA)and Define, Measure, Analyze, Improve, and Control (DMAIC) — When looking into a holistic approach [Please note: it differs from what we assume as the holistic approach. ST], these two tools can be used for problem-solving and eliminating waste in business processes.

Gemba Walk — This is a workplace walkthrough method used to observe employees, learn about their tasks, and see where the “actual work” happens. Doing this helps organizations see processes in action and identify areas for improvement using Lean principles and productivity enhancement efforts.

[https://safetyculture.com/topics/process-improvement/lean-process-improvement/]

Classical Lean cares about a core value stream. It is inspired by an idea of making both value creation and value protection /implementation a two-way traffic road empowered by mutial respect and collaboration between those who are in top and subordinate positions.

The top and subordinate positions are not necessarily defined by a power hierarchy (though it’s a frequent scenario). It may depend on a responsibility zone within the value stream: the top guys contribute to the value stream before the subordinates take their thinking excersise.

2. Smart approach to Lean

Smart means intelligence: expertise based choice and problem solving. It comes into her power when 1) running the core value stream goes into backgound, 2) understanding and solving customer problems becomes a priority.

The Smart approach works in the inside-out direction.

As any smart person may pretend he is the smartest in his domain, an enterprise may be driven by similar motto as well. Indeed, there is no need to be the smartest one, though playing in the top league assumes something close. Usually it is enough to be better than others to win current contest of solution providers.

“Understand your customers better then they do” may work much better than simplistic competition like “My solution is better than theirs”. Just because it keeps focus on customers, not on own ambitions.

Why do we consider this generic smart approach as Lean? Could someone be Smart but not Lean?

I would propose defining lean here as “incline from the perpendicular and rest for support against something”. The perpendicular stands for some exisiting practice, something to lean on is your expertise /solution.

We get: Smart Lean is “incline from existing practice and rest for support against your expertise /solution”.

Let’s look at the Lean canvas template to see the Smart version of Lean.

What may keep us smart and lean?

the Smart:

• focus on problems and solutions, including ours and existing alternatives;
• follow the grey thinking lifecycle (time from problem to market): define virtual value of our efforts (domain knowledge, problems worth solving) >> architect solution with predicted competitive advantage >> implement the product >> market rollout with various customer and adopter segments >> get feedback and re-define the value.

the Lean:

• Know the market category and domain we play at;
• Understand an existing practice under our analysis and why the practice is so important for customers;
• Create Value Proposition to incline from the practice and lean on our solution /expertise: why, how and what it does take.

I might guess a global example (but please forgive me this mental exercise if I am wrong from your viewpoint). In my mind, Google as a company seems to be too Smart to be significantly Lean. Their solutions goes from very smart inside and often are based on huge expertise and lots of information, much more than on caring on customers. Their particular solutions are perfectly smart and intellectually perfect. Each particular solution may set valid OKRs inspired by customer needs.
But I can’t unsee their corporate culture as running global experiments in dealing with information rather than solving someone’s problems.

It might be great. Nothing but a global mission. Nobody is pre-supposed to be obligatory Lean. It seems to have some standard consequences, but the choice is free.

3. Adaptive approach to Lean

The difference between the variative and the adaptive is not evident and hard to catch sometimes. I would propose to see the Adaptive approach as the Smart (variative) one turned outside-in.

Often the Adaptive way is being compared against classics, not against intelligence (smart).

In Chinese, an “entrepreneur” and a “business owner” may be easily confused, but what they involve and imply are worlds apart. Business owners focus on the business, while entrepreneurs focus on the users. Business owners take on the mission of creating the perfect products and services, while entrepreneurs set out to deliver the best user experience. Size and profit are the business owners’ proxies for success, while user resources and loyalty are entrepreneurs’ true north. Business owners wield the sceptre of power through management and control, while entrepreneurs work up magic through self-organisation. It takes thousands of people to make one successful business leader, but each innovative individual can become an entrepreneur. As the Buddhist saying goes, “Break open a dust particle and release the three-thousand-fold sutra scroll.”

Zhang Ruimin, Haier CEO

Minnaar, Joost; de Morree, Pim; van der Lecq, Bram. Start-up Factory: Haier’s RenDanHeYi model and the end of management as we know it (p. 211). Corporate Rebels Nederland B.V.

It may be valid classic-vs-adaptive analysis to highlight core features of being adaptive, but this comparison is not that effective from evolutionary viewpoint. Ignoring the smart stage of evolution makes it much harder to follow the success story with the Adaptive Lean model.

Hair’s Rendanheyi (especially version 3.0) is a perfect example of the Adaptive Lean driven by ecosystem, not by solutions and expertise (a smart way).

The Adaptive way leans on expertise and solutions, but the purpose for leaning is defined outside-in (from shared awareness about user preferences), not from inside-out (from own expertise) nor from inside-in (business builder’s perspective).

The Adaptive way may become actual to overcome excessive internal competition being thrived due to the Smart approach domination.

Advanced Lean is very a profound Lean stage. It requires long evolutionary way to catch this wave.

4. Visionary approach to Lean

Finally, let’s look at the Lean concept by visionary eyes. Now we consider the story in terms of the holistic aspects.

1. The Lean principles emphasize that the story concerns core value streams, which are of sequential nature. That’s why looking at the classical holistic map is natural start point.
2. The Lean agenda proposes replacement of one-way blue and red cycles of classical thinking and doing with two-way roads. It requires rethinking the top-bottom paradigm and relations and introducing new culture of distributed value ownership and collaboration.
3. This new culture is impossible without deep synergy between Business (classical enterprise thinkers) and Delivery (classical enterprise performers /doers). At each holistic level.

4. Different enterprises may focus on the different value aspects: from tangible assets to intangible ones, including virtual, relational and aspirational things. In all those cases the Lean essence looks similar.

Lean always talks about understanding the status quo for a core value stream and considers purposeful options to change it to lean against something new (process, solution, shared purpose of user preferences, etc.)

5. Summary

So, what is Lean? It is both thinking and doing practice for redefining core value stream. Focus on different value aspects generates different Lean aspects.

Classical Lean aspect

Tangible value: resources, skills, sequential processes, standard output and quality, measurement and data.

Lean definition:
1) (of an industry or company) efficient and with no wastage: staff were pruned, ostensibly to produce a leaner and fitter organization.
2) offering little reward, substance, or nourishment; meagre.

Keywords: eliminate waste, do more with less, continuous process improvement, shared understanding of organization’s processes, just-in-time, six sigma, gemba walk along the value stream, organizational communication when it comes to setting objectives.

Smart Lean aspect

Virtual value: information, problems and solutions, expertise, knowledge and architectures.

Lean definition: Understand your customers better than they do to solve their problems.

Keywords: customer problem solving, intelligence, solution architecture, center of excellence, competency center, unfair advantage (see the Lean Canvas concept).

Adaptive Lean aspect

Relational value: trusted relations, partnership, opportunities and culture of openness and positivity.

Lean definition: having a high proportion of air.

Keywords: customer /user ecosystem, self-organization, self-development, mass business partnership.

The Smart approach corresponds to the West as a Wu Xing’s cardinal direction. The Adaptive approach means the East. That’s why it is very promising to look for the related case studies and adaptability metaphors in eastern cultures.

Thinking the West way, “having a high proportion of air” resonates in the context of a vaporized fuel mixture for engines.

Thinking the East way, Air may be mentioned as a terrestial element of adaptability and global changes delivered via natural ecosystem of mass micro transactions. It looks at the Earth outside-in and stands for relational aspect of value.

The Haier’s Rendanheyi model is very useful case for the Adaptive Lean reference.

Visionary Lean aspect

Aspirational value: being a part of global whole, holistic view to the context, global trends.

Lean definition: a deviation from the perpendicular (status quo);
a purposeful inclination.

Keywords: primary holistic antidote to hierarchy, well-balanced core value stream, synergy between idea and its implementation, between business and delivery, between Innovation and Performance Zones.

It’s quite easy to lean against the Earth. Leaning on the Water is the next stage. The champion league nowadays is definitely about lean against the Wind (Air).

As usual, it’s better not to mix up the tools for different purposes /aspects. Knowing own focus on a specific value aspect allows understanding what kind of Lean you do need and which dominant tools and processes to use.

There is no need to favor the dominant Lean aspect and reject others. We should support any aspects which have been working under the hood of our enterprise.

Ordinary people (playing ordinary roles) use standards.
Scientists and Architects prefer patterns, abstractions and architectures.
Leaders /Designers lean on principles.
Visionaries have a privilege to observe holistic aspects.

Let’s look at these different ways for defining primary things in some context. It’s a quick overview, not a complete guideline.

Ordinary way: Standard. Chain. Be simple and sequential

There is no better option for being simple than explaning in sequential steps:

• There are A, B and C here.
• Here are the steps you should repeat: 1, 2, 3, 4 and 5.
• etc.

As you know, the most tangible world natively accepts sequential thinking mode.

That’s why to provide any guidance easily understandable by anyone, we should use simple steps and options with clear processing order.

Any simple plan is a set of actionable steps to reproduce. We know than in real life plans may be not that useful because of external uncontrollable changes. But in any context with any change pace there are stable things, which may define a backbone or skeleton. Sequential approach works fine for them.

One more aspect to keep in mind here is tangibility. If we need real simplicity, our steps should be sensable and approachable at the lowest possible level of senses.

With no surprise classical way of being utilizes sequences of actions. Our basic reflexes work this particular way.

Not only classical models benefit from sequential models. Each holistic lifecycle includes standard set of sub-aspects. One of the sub-aspects is red and assumes natural sequential thinking. To integrate with it, we should use some value chain as a common backbone.

Classical (ordinary, sequential) way to see primary things

• Works perfect for:
  - stable things with low change pace
  - newcomer’s orientation
  - defining system backbones /skeletons
• It is based on a number of options /steps /primary things (usually just a few);
• The steps are actionable /approachable;
• It’s a sequence: we always know where to start, what’s next and when to stop;
• The chain of steps may be changed but usually it is about standards, which are quite stable things;
• Cardinal direction: South;
• Element (Wu Xing): Fire.

Rational way: Patterns. Choice. Be smart and use expertise to make decisions

The central idea of rationality is a smart choice between options. Smart assumes intelligence, which gets us back to choosing the one from available options or making rational decisions. The decisions should be optimal (based on total comparison) and based on expertise.

If someone asked me about value chain analogy for the smart approach, I would mention decision tree concept. It uses boxes and arrows as the chain does, but there are always several arrows to choose from to determine the next box to go.

Is the decision tree the unique model to mention here? No, for sure. Being unique is a very rare thing in the rational world. There are a lot of models with multiple boxes and arrows to play with. For example, neural networks, which form a basis for artificial intelligence, are designed exactly in this manner.

Decision trees may be created both for automatic processing (aka machine learning and artificial intelligence) and for manual decision making.

Smart way goes inside-out. We have some options to choose from and to make the decision (inside) to see its consequences (out).

Rational (smart) way to see primary things

• Smart way looks for problems and solving algorithms;
• Works perfect for:
  - things with medium change pace
  - expert’s orientation
  - defining customizable solutions
• Smart visualization should start with a problem statement (a sort of question to answer) and than provide options to go next;
• It’s always about rational choice. If our current state (within the algorithm) assumes several options to go next, it should be accompanied with a rational decision rule based on someone’s expertise or experience. It may be user decision or probability model trained on data.
• Cardinal direction: West;
• Element (Wu Xing): Metal.

Adaptive way: Principles. Win-Wins. Ecosystems and Platforms

Adaptive way is related to both options and choices but primary aspect is trusted relations here. It works outside-in.

Smart approach may be associated with a fight. There are two options to choose from: either win or loose. Adaptive ecosystem stands for win-win relations. Adaptive transactions are the Quick Wins (Quick Win-Wins) where each side of the equation is supposed to get their value.

It is about enabling new opportunities rather than fighting with problems or competitors.

The simplest example of an ecosystem is a marketplace. Producers and consumers look for a deal. If number of producers is small, it’s a deficit economy. Classical environment. If number of products is not big enough, it’s competition and consurrency. Smart world.

Adaptive ecosystems assume both a lot of products /solutions and mass consumer demand.

We may reference a lot of cases where adaptive approach serves as a way of being, where traditional product development (based of product strategy) is replaced with platform development (based on platform transactions). It changes a form of market exposure significantly, but keeps internal thinking mode qualitatively unchanged.

Genuine adaptability assumes switching to adaptive thinking (driven by interactions with users) and smart platform being.

The only case I may mention here is Haier’s RenDanHeYi. It is really driven by principles not by patterns learned.

Please keep in mind that Adaptive way is related to RenDanHeYi version 3.0 only. Previous versions are necessary evolution stages, which cover other ways of org thinking.

Adaptive way to see primary things

• Adaptive way follows ecosystem power and adapts with no fighting or competition. To benefit from swimming we should stop fighting with water;
• Works perfect for:
  - things with high change pace
  - leader’s orientation
  - supporting win-win transactions
• Adaptive way of thinking is defined by ecosystem. To create ecosystem, we should know ecosystem principles: shared purpose, its partners and members, principal arenas, how to engage people (pull in, match and facilitate).
• Cardinal direction: East;
• Element (Wu Xing): Tree.

Visionary way: Holistic Aspects. Maps

Visionary way is to create global map for a context and help with identifying what is really important there.

There are a lot of models working this way. Let’s start with the OODA cycle. Here you see both holistic aspects and sequential approach. As we already know, it gives great useful view to a backbone of management.

We should definitely mention Wardley Maps. It introduces Map concept and designs specific map using two holistic sequences: classical being as a value chain and classical thinking as an evolution.

SImon Wardley works with holistic aspects in analytical manner. He looks at the value chain through evolution options for its components.

That’s why this approach has strong holistic basis and posesses great potential energy for bringing value to its users.

What about a visionary story nobody have narrated yet? Let’s try it with the case of Toyota way.

It is worth separate article to visualize the Toyota way (and the Lean approach) properly. Now let’s just put it as an image of new way for Business — Delivery collaboration.

Toyota transformed classical top-down sequential working.

In classical paradigm Business is responcible for top-down thinking, Delivery implements the plans by going bottom-up.

At Toyota they leave the value chain unchanged, but now Delivery participates in generating vision and formulating shared purpose (bottom-up way in Thinking). In their turn, Business interacts with Delivery to guide them along adopting business ideas (top-down way in Doing).

It adds horisontal interactions between Business and Delivery (White and blue collars) and introduce new culture. There was no chance to copy this approach as a set of step-by-step instructions, because of non-sequential nature of these changes.

One more holistic map follows the Golden Circle by Simon Sinek. It is quite generic to be applicable to each and any context. The only important thing we may propose here is to add a green aspect, which was missed (Who clause).

Missing green aspect may be not an error. It could be done intentionally. There are many cases, which mix blue and green aspects to form a combined element:

• Entrepreneurship (blue) and Leadership (green) often unite with generic name of Leadership;
• So as Strategy may assume both Vision and Strategy;
• There is a grue color as a mixture of blue and green with long philosophical tail.

It may be promicing to dive into the topic in detail.

Next model to demonstrate visionary approach is the Five Powers by Geoffrey Moore. It grants us a sequence, which is use by investors to develop their ideas. Investor role usually plays outside-out. Investor communicates top-down (others adopt these ideas in more tangible forms, here adoption cycle emerges), which is a standard way for visionary doing.

Geoffrey Moore created one more model for visualizing internal context of an enterprise. It creates holistic map of 4 zones with no predefined lifecycles.

Finally, let’s remind the SCAN framework by Tom Graves to work with complexity. It gives holistic mapping for complexity with perfectly defined aspects.

Visionary way to see primary things

• Visionary way looks for primary aspects of the context and their interaction;
• Works perfect for:
  - getting holistic context views
  - owner’s orientation
  - defining principal trends and growth directions
• Cardinal direction: North;
• Element (Wu Xing): Water.

Finally

There are three entities to consider before defining way of presenting an idea:

• holisic type of the idea context (dominant thinking mode);
• thinking mode of speaker;
• thinking mode of listener.

If they are of the same type, communication task is simple.

If they differ, some sort of natural complexity happens.

Combining the three input thinking modes, we may choose one of the four ways for presenting the idea, a way of seeing primary things, which has definite chances to be successful in this particular case.

Translation of Zhang Ruimin’s Essay from January 1, 2018

…

I think what people long for is a new start, not another year to come. The ancient Chinese sexagenary cycle made up of stems and branches is more in line with this method of philosophical questioning. When heaven, earth, people, and the four seasons are in harmony, the cycle repeats itself without a beginning or an end. The ancients revered heaven and earth and the four seasons with restraint and rationality, but they always tried to master the laws of time through their diligence and wisdom. In doing so, they transformed the world to be in conformity with such laws.

The same is true for organisations. Vertical linearity in traditional management theory runs deep in Western organisations, which are motivated by their purpose of maximising shareholder value and the principal-agent incentive scheme to pursue growth until no more is possible. Eventually, they must face the inevitable fate of decay after their prime. Industrial Darwinism and the entrepreneurial spirit of “creative destruction” have contributed to the fact that the average lifespan of Fortune 500 companies is becoming shorter and shorter. The atomistic cultural genes of Western civilisation became increasingly entrenched, along with the miracle of manufacturing through three industrial revolutions. This was the trend until the arrival of the Internet and its next significant economic innovation, the Internet of Things, when the once-powerful cultural genes became an asylum of intellectual and organisational rigidities. Classical physics, based on Newtonian mechanics, allowed us to see one segment of the space-time continuum of the vast universe, yet it left a larger white space to quantum physics. In the quantum era, the system theory in the Eastern cultures will again become the light for illuminating the night sky of science and philosophy. That light has never ceased to shine.

Minnaar, Joost; de Morree, Pim; van der Lecq, Bram. Start-up Factory: Haier’s RenDanHeYi model and the end of management as we know it (pp. 214–215). Corporate Rebels Nederland B.V.

What could the quantum era mean?

Quality becomes more important than quantity. We are quite experienced with managing quantities to let it lay in the background and step down the forehand to quality topics. Understanding changes in quality goes on top of quantitative analytics. Making strategic (qualitative) transformations just in the right time gives vital advantage. No quantitative perseverance gives a key to entering next quantum level of quality by default.

No rational quantum mechanics or another intelligent approach may effectively explain it better than holistic philosophy. Especially its practical version, accompanied with organizational architecture and practical experience.

That way as Haier has been experiencing it in their RenDanHeYi journey.

There is a book to dive into the topic effectively enough: Start-up Factory: Haier’s RenDanHeYi model and the end of management as we know it.

My idea is simple: Haier demonstrates fenominal success by following the holistic evolution roadmap. The roadmap is not anyone’s invention. It is just as the holistic evolution usually works anywhere, if someone goes the holistic way.

Let’s decompose the Rendanheyi model into the evolution stages.

Classical stage

The Classical part of evolution builds the body of business. If it is done completely, it enables other stages.

Smart stage

The Smart stage trains the mind and intelligence of the organization. It institualizes independent choice and independent actors for making it in the expertise-driven (not hierarchical power-driven) manner at scale.

Adaptive stage

The Adaptive stage turns off extra rationality of the previous smart stage. It brings focus on people and purposeful trusted relations at the enterprise level.

Some notes

• The Rendanheyi story is not that simple business model to learn new glossary and new diagram with 5 steps to reproduce. It’s quite complex and sophisticated philosophy with core principles to be applied timely and accurately, having appropriate mindset pre-enabled.
• There are some separate evolution stages to pass, without any hurry of jumping into the final stage from the very beginning. It’s a path to go through and learn a lot, not just an assessment to get final grades and being certified.
• Haier has been doing their way perfectly. As Toyota did it before, Haier tells their story by example, which is very fascinating and inspiring but requires a lot of consciousness to follow it.

Using ‘corporate’ term fits perfect here because we may consider ‘corpus’ as a body of the enterprise. So, internal maturity is a story of building the body of business.

Now we are to look at the topic from the outside. The external maturity levels may be defined in some imaginary way as follows:

• Classical business: body (dominant focus);
• Smart business: body + mind (dominant focus);
• Adaptive business: body + mind + soul (dominant focus).

More practical way is to look at this through the lenses of Portfolio as a standard piece of business. It is defined in different ways for the different levels.

The external levels are based on different dominant thinking of an enterprise as a whole entity.

How can we present the essence of the external enterprise evolution?

Classical enterprise: The age of Deficit. Environment with low change pace.

• Focus on producing purposeful tangible stuff.
• Because of the deficit, all things produced usually find their consumer.
• Various chains help to establish stable ways of working: supply chains, assembly lines, delivery chains, distribution chains, etc.
• Change pace is low and could be addressed in the top-down way:
  Idea change >> functional structure change >>
  expertise change >> changes in capability, skills and resources
• Inside-in focus: all what is important both emerges and resolves inside the enterprise.

Smart enterprise: The age of Rational Choice. Environment with medium change pace.

• Focus on detecting and solving external problems.
• The archetypal nature of problem is logical and rational. It’s an essence of choice.
• Competition is based on a real choice of customer, which enterprise wants to win. There is no deficit anymore, markets are full of options.
• Value chains still work but step down the primacy to solutions: ability of solving external problems with own products and services.
• Inside-out focus: expertise and solution emerges inside of the enterprise, but problems comes from outside and its adoption too.
• Change pace is medium and could be addressed by solution customizations:
  Updated problem statement >> solution architecture analysis and update >> new version of the product >> rollout to the markets
• Strategy is a way to support smart way of working at the enterprise level. No plain plan survives in these environments.

Adaptive enterprise: The age of Shared Purpose. Environment with high change pace.

• Focus on Shared Purpose and Ecosystems of Trust.
• There are a lot of customers with unique requests and a lot of solution providers who could help them. Idea of keeping all expertise inside the enterprise fails: nobody can’t manage such a huge change flow.
• Enterprise thinking turns smart way outside-in: Expertise and consumer service is outside, value deals are inside. Both producers and consumers are independent from the ecosystem. Platform empowers them, not employs.
• Ecosystem mode pulls in producers and consumers, facilitates and matches them. Finally, ecosystem platform empowers their transactions and provides with shared awareness about what happens in the ecosystem and what could be importnant to learn for future interactions.
• Change pace is high, that’s why the change flow is resolved in mass quick transactions based not on rational choice and analysis of all options, but mostly on trust, recommendation and reputation.

Warning

Please consider these maturity levels as a sequentional story. It’s a standard way for evolution steps. Jumping from classical hierarchy into ecosystem mode is too demanding. It needs superheros. Nobody from ordinary guys may survive in the enterprise after such a jump. There is a high risk to demage a backbone of your enterprise.
Let people grow along the enterprise gaining its maturity.

Reference models (key words to find some)

Classical enterprise

• An assembly line (from Henry Ford up to modern equivalents: value chains, corporate lifecycles, etc.)
• Top-down change managent approaches (for example, Kotter’s Change Model)

Smart enterprise

• OKRs (Google, etc.) — internal side of being Smart;
• Strategy-driven approach (a lot of various models, for example, Balanced Scorecard) — external side of being Smart.
• Product-centric operating model at scale — empowering divisions of different sizes and missions to become strongly independent, often bearing their own profit and loss.

Adaptive enterprise

• Team of Teams story;
• Ecosystem organizations (I see it as an emerging promising approach)

• initial level,
• primitive level,
• just something is well done,
• better version but not sufficient yet,
• great way to get things done (standard compliance),
• you-always-may-become-even-more-perfect level.

They have official institutions for maturity assessment and public guides for level compliance. The Capability Maturity Model is a typical reference model here.

We are not going to compete with all those models. Let’s go our holistic way as we usually do.

Internal Holistic Maturity

What is internal holistic maturity? In general, being mature means being completely developed and ready with all principal internal organs supposed to work.

There is no other holistic approach but considering this in terms of holistic aspects. The 4 primary holistic aspects are the slots to be filled in for the internal maturity.

Here we are at the ground zero level. Nothing happened yet, but life may start at any moment.

The Classical maturity story

The Corporate lifecycle by Ichak Adizes may serve as a great guide to navigate the classical part of the holistic maturity story.

First of all, let’s look at its left side, a positive way from ground zero level to the mature classical enterprise. We are not going to follow it canonically in all detail, just use it as a roadmap.

Classical Genesis. Courtship.

Natural name for an enterprise at the very start is a startup. Ichak Adizes describes the initial phase in detail. We may look at the start mode as at creating startup couple of Passion and Perseverance.

The genesis of an enterprise is a sacred time of its Idea manifestation in the tangible world.

It needs both Entrepreneur and Producer to make the startup real and charged with growth potential.

Keeping their efforts synergetic is an extremely vital key moment here, but we skip it uncovered. We may afford this because Ichak Adizes already did the description perfectly.

Custom built business

Making business body scaled enough is important. That’s why having initial focus on a tangible side of all aspects is a good idea. Classical growth is heading bottom up.

The Go-Go stage of enterprise growth means ability to scale first of all. Custom built enterprise: make it in any way which works at scale.

Product /solution. The Prime time

When an enterprise is able to scale and perform, it’s great time to raise smart side of the aspects. Architecture and Strategy come into the game.

It is not an easy stage. We are lucky to touch the principle only without any guides and how-to-s. It requires experts, architects and strategists to answer the “How” questions here.

Full house of the stable business

To make the story short and simple, let’s point to the final mode.

In the mature classical enterprise we may see all holistic aspects up and running with appropriate internal lifecycles.

Performance Zone (red) has its set of recognized best practices to follow and capabilities to make performance real at scale.

Productivity Zone (grey) is full of expertise and driven by Architecture.

Innovation Zone (blue) generates Vision and Strategic directions.

Transformation Zone (green) converts Vision into Strategic opportunities (missions), establishes appropriate Culture, Strategy and Structure to run transformations and initiatives.

Anyone knows their place and corporate function and runs it to completion.

Busines body is always a tangible structure

The bottom-up way of the classical evolution has its natural consequiences. If an enterprise has strong focus on scale and tangible results as a growth targets, it inevitably creates classical top-down structure and appropriate culture.

Yes, classical business body always looks and works like a hierarchy regardless in which terms it describes themselves. Any real Body always belongs to the Tangible world and follows its principles.

It’s just by design and definition. There are some examples of businesses which tried to start with virtual body but it anyway resulted in the classical tangible way in the end (more detailed discussion is to come in the next articles).

BTW, ‘corporate’ means body:

Corporate: from Latin corporatus, past participle of corporare ‘form into a body’, from corpus, corpor- ‘body’.
The Oxford English Dictionary

Pessimistic scenario for a classical enterprise

The Corporate Lifecycle by Ichak Adizes has another side of the story. It says that after a corporation reaches its full maturity, the fall time begins.

It is not that simple and has its “yes but” stories. Here we are not going to dive into the “yes but” cases, just focus on holistic visualisation of the fall stages. The stages are well qualitatively distinguishable, if we align them with switching off holistic enterprise aspects.

The fall begins when an enterpise loses its aspiration and sense-making in terms of Vision and Shared Purpose.

Ichak Adizes gives us well-turned names for the fall stages, which express the change essence quite well.

Let’s describe the stages in some imaginative way.

Aristocracy: There is no king to set a common direction, lords are in power to care about their own stakes and opportunities.

Recrimination: The power of rational decision makers. They can look for problems and solutions, blame for errors and mistakes with no purpose, just by abstract reasons.

Bureaucracy: The power of formal procedures and processes.
“Let’s do the things as we always do it in our corporation.”

Death: No holistic aspect has its power at the enterprise level. The business body may have some moving parts and momentum yet, but nothing happens what matters at the enterprise level. The dead horse may be running for some time.

Finally

• Holistic aspect analysis is a great tool for discovering enterprise maturity;
• There are a lot of ways to talk about the (classical) maturity topic. If we translate them into the holistic language, it becomes evident that they all usually follow the same principle. The difference is in their context and glossary in use.
• We have investigated a classical side of the maturity story. It assumes a lot of levels to pass, but from external viewpoint the classical approach is just the very first stage of evolution (to be described soon).
• There are enterprises which don’t follow the classical scenario, because they are driven by another dominant principle not by output scale. It needs another maturity approach(es).
• We have a lot to discuss there yet, stay tuned.