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Jane Collier Rafael Esteban
ABSTRACT. Organizations in changing environments need to become flexible, responsive and participative. We develop an understanding of governance in these organizations by drawing analogies between organization theory and theories of nonlinear dynamics. We identify freedom and creativity as driving principles in ‘chaotic’ participative organizations, and explore the ethics of their exercise within organizational communities of practice, communities of discernment and communities of commitment. KEY WORDS: chaos theory, creativity, differentiation, freedom, governance, integration, open systems, organizational change, participation
rather that, as a chaotic principle, it is entirely compatible with order, and that the survival of organizations in a turbulent environment depends precisely on the extent to which freedom can be harnessed creatively in purposeful and responsive interaction with a changing environment. We describe this process metaphorically in terms of accessing the order in chaos by a process of ‘taming chaos by chaos’, and we argue that it is this process which represents governance in organizations which are genuinely participative. The paper develops a model which illustrates this principle, suggests organizational characteristics which contribute to its realisation, and identifies a framework for analyzing the ethical aspects of participative governance.
1. Introduction The last ten years has witnessed a profound shift in theoretical and practical understandings of ‘organization’. The shift from mechanistic models of organization, which design freedom out of the system because it represents ‘disorder’, to participative ‘organizing’ models which harness freedom 1 and its potential for creativity,2 is compared in this paper to the movement from a linear dynamics which seeks to control all sources of non-linearity to the discovery of the potential ‘usefulness’ of chaotic behaviour. This paper suggests that freedom within organizations does not imply disorder, but
Jane Collier is University Lecturer in Management Studies at the Judge Institute of Management Studies, University of Cambridge. She is Editor of Business Ethics, a European Review. Rafael Esteban M.Afr. is Lecturer in Missiology at the Missionary Institute London.
2. Governance The academic literature on governance can be divided into two broad streams. The first of these understands governance as the co-ordination of productive activities and the transactions necessary to exchange their final products. In the case of simple economic systems governance is automatic, because production and exchange function by means of well-developed social relationships. In other words, simple economic systems are ‘self-governing’. However, once simple systems become complex3 governance requires formal institutionalisation. Complex economic systems may in general opt for governance either by the market or by hierarchy.4 In theory market governance functions in an automatic manner, but Coase (1937) argued that markets cannot be relied on as effective mechanisms of governance due to the
Journal of Business Ethics 21: 173–188, 1999. © 1999 Kluwer Academic Publishers. Printed in the Netherlands.
174 Jane Collier and Rafael Esteban However. 1962). 1985) and to take advantage of the system. opportunism which leads to failure on the part of managers to maximise shareholder returns – i.. non-transparency of information vital to shareholders. uncertainty as to future outcomes. bounded rationality which reduces the ability of agents to interpret market signals (Simon. economics-driven and thus impoverished (Turnbull. inequalities of power in boardrooms. Reasons for market failure include economies of scale and externalities. it is possible for those under authority to be opportunistic (Williamson. competence limitation and the structuring of information (Alchian and Demsetz. which need to be protected by managers who act on their behalf.S. but they also include asymmetric information in the market (Williamson. The ‘transactions cost’ view of governance is well enshrined in the economics literature. which have been triggered by a variety of issues – merger mania. 1997). The overall objective of hierarchical control is to ensure that those with property rights – i. This view sees governance as concerned with the control and regulation which needs to be exercised in order to ensure that the interests of stakeholders as ‘principals’ costs of making and monitoring the market transactions necessary to support production and exchange. In fact. 1985). the company is taken over. These ‘transactions costs’ arise because of the existence of what we now term ‘market failure’. and the firm’s management is ousted by the new owners. 1991). 1972). Complexity. owners of capital – get the maximum possible return on their investment. The resulting ‘moral hazard’ and ‘adverse selection’ (Akerlof. 1970) will give rise to agency costs because of the necessity to provide incentives and monitor agent conduct ( Jensen and Meckling.e. it is of little use when we come to try and understand governance as an organizational reality essential to corporate survival and success. associations (Hirst. To the extent that the provisions of these contracts are implicit (Kay. 1995). reneging and other self-serving behaviours. 1995). Gregg and Machin. human property rights remain vested in employees. The rational basis of hierarchy stems from the fact that within firms self-organization has little chance of fulfilling the necessary co-ordinating functions due to system size. some deliberately created (Blair. The second view of governance is pragmatic in that it has emerged over the last decade in response to concerns in both the U. However. restructuring. is both rationally and legally supported. and its understanding of responsibility and accountability so narrow as to be inappropriate in any but the most ‘hard-bitten’ organizational setting.e. its view of relationships cynical. Nor is the ruling view of governance ethically sensitive. but they are not fully specified. and the U. clans (Boisot and Child. owner interests – will be effectively punished by the operation of the ‘market for corporate control’ whereby owners sell their shares. 1996). suspicions that accounting and auditing procedures are inefficient in exposing corporate weaknesses. fat-cat salaries for top management and directors while workers lose their jobs (Conyon. 1979. However. 1996). its conception of human nature is deeply pessimistic.K. so that contracts are necessary to establish conditions of employment. it can be argued that the presupposition of universal opportunism on which this view is grounded has had negative and damaging effects in those organisations where it has been introduced by consultants as a ruling assumption (Ghoshal and Moran. some structural. and a host of other problem. . or networks (Craven et al. Governance by hierarchy. Alternative modes of governance exist in a multiplicity of world-views and social mechanisms – communities. 1976). It can also be argued that the perception of governance as confined to the options of market or hierarchy is culturally specific. 1993) as opposed to explicit and enforceable. 1957) and asset specificity due to small numbers (Williamson and Winter. which involves “the supersession of the price mechanism” (Coase. These contracts are formal in the legal sense. inadequate information and uncertainty as to future outcomes render governance by the market inefficient and hence inappropriate.6 The fact that information is asymmetric as between ‘principal’ and ‘agent’ makes possible shirking. complexity (Simon.5 The legal basis of hierarchy is to be found in the property rights vested in the owners of productive capital. 1996). 1994). 1937).
1995. Both models share two common deficiencies. have taken this approach. 1995) with the duty of sustaining corporate assets and acting in the interests of present and future stakeholders. and their rights and wishes as principals respected (Demb and Neubauer. opportunistic managers and institutional investors who have a fiduciary duty to ensure returns on their clients’ money. (d) The ‘political’ model of governance envisages active investors mustering voting support from dispersed shareholders in order to change corporate policy (Pound. like Newtonian physics. On the contrary. however.S. Greenbury and Hampel committees in the U.. and who on the other hand have to balance the expediency of ‘voice’ against ‘exit’ in their relations with companies.K. represented by the voice of Bob Monks in the U. 1995. imply managerial altruism. 1992). 1997). which he terms ‘relationship investing’. to remove the institutional obstacles to proper accountability. or their regulators. The negative side sees good governance as dependent on the ability of companies. 1992) Governance as control and regulation has negative and positive aspects. 1997). but assumes that their interests are served primarily by wealth maximisation (Donaldson and Preston. the thrust of the ‘model two’ view is aggressive in that it seeks to achieve the protection of interests of one kind or another. The first is that they neglect the contextual realities – cultural.e. but it does not. the model assumes that there will be a strong relationship between the success/profitability of the organization and managerial satisfaction in terms of achievement and selfactualisation (Davis et al. We now address these issues. and the organisational world they describe has. and global – which must inevitably introduce context-specific factors into any governance situation.7 This ‘pragmatic’ view of governance is represented in the literature by four types of approach: (a) The first of these is the narrowly specified ‘finance’ view of governance based on the premise that the fundamental concern of governance is to ensure that those who finance the company get a proper return on their investment (Shleifer and Vishny. corporate governance theories The model of organization which underpins both ‘co-ordination’ and ‘control-and-regulation’ . as the mechanism whereby key principals can be held to their responsibilities. that responsibility and accountability are two-way. 3. there is the more positive ‘activist’ view. An example is provided by the increasing incidence of ‘shareholder activism’ at corporate AGMs. another aspect of this is the position taken by the financial institutions who on the one hand have a fiduciary duty to their own clients. increasingly limited applicability to the reality of a changing world. On the other hand. The organisational perspective of 3. as might be expected. The Cadbury. and that governance. An alternative version sees those in power in organizations – i. The second is that the model of organization on which these views are based. both directors and managers – as ‘trustees’ (Kay and Silberston. technological. Whereas the basic stance of the ‘model one’ view of governance is defensive in that it is concerned with combating opportunism. p. Monks refers specifically to shareholder activism. as “the relationships among various participants in determining the direction and performance of companies” (Monks and Minow.Governance in the Participative Organisation are safeguarded by corporate ‘agents’. (b) The ‘stewardship’ model of governance sees managers as ‘stewards’ or caretakers of organizational interests. 175 (c) The ‘stakeholder’ view of governance widens the constituency of interests to include stakeholders other than shareholders. 1) should involve all key stakeholders in ensuring good management and corporate competitiveness. 1994).. This view is based on institutional assumptions of publicly traded securities. unitary boards. Jones.
Belbin. Governance is exercised by the few in the interests of the few. rather than seeking to respond to it. to transform it. It will react to change by attempting to ‘manage’ the environment. and mechanistic. the reengineering of bureaucratic structures – because it has been proved to be ineffective in a climate of continual change. and thinking and doing constitute separate tasks done by different people at different levels of the organization. Environmental turbulence has forced organizations to abandon the strategic ‘linear’ planning which relies on forward projection – in particular. 1986). 1996). combined with the continuous drive for quality improvement and innovation.10 However. they must be maintained as ‘closed’ systems. One of the effects of the shift to more flexible structures. and this requires a shift from ‘tightly coupled’ to ‘loosely coupled’ organisational structures – in other words. 1997) has shifted the centre of organizational gravity to the boundaries of the organization. and where change has become overwhelming to the point where traditional linear organizations have become dysfunctional (Ghoshal and Bartlett. so that the synchronicity of linear organizational systems becomes in practice dependent on the extent to which they can be insulated from disruptive external influences. Product change and the drive for quality have forced organizations to adapt in ways which have triggered both profound structural changes and fundamental theoretical and practical reassessment of the assumptions and values on which traditional organizational structures and functions have been built (Bartlett and Ghoshal. to greater flexibility. authoritarian. In other words. increased communication possibilities. responsibility is limited to the duty of senior managers to ensure the rights of shareholders to the best possible return on their investment. Globalization.176 Jane Collier and Rafael Esteban as ‘flux and transformation’ (Morgan. 1996). and accountability is narrowly specified in terms of owner-manager relationships. Regional trading blocs have led to freer flows of goods and services and increased global competition for market shares. it becomes anachronistic in a world where the organizational environment is no longer static. and the construction of self-managed teams where control and co-ordination are located with the people who actually do the work (Aughton. 1998). But this model is now no longer 3. adversarially and competitively. and any loss of control carries the risk of ‘disorder’ which threatens established structures and modes of functioning. In a changing environment mechanistic linear models of organization and associated understandings of governance based on Newtonian logic are no longer appropriate.9 Order is seen as contingent on the maintenance of control. 1998) and the importance of “knowledge power” (Grove. The whole idea of ‘organization’ is more accurately defined as ‘organizing’ in situations where advances in information technology allow ‘knowledge’ workers to work anywhere and anytime without supervision (Tetenbaum. Such organizations are ‘tightly coupled’ integrative systems. where control is maintained by monetary and non-monetary sanctions. It follows that the ‘linear’ organization will perceive challenges arising from changes in the external environment as threatening its stability.11 Organizations now have to learn and plan as ‘open systems’ in order to survive. but has become ‘turbulent’ and is experienced . technological change and financial innovation have introduced flexibility into world economic structures. views of governance is hierarchical. appropriate The above ‘stylised’ view of organization represents the reality of complacent organizations which are functional only when the environment is static and “control” is complete. Knowledge and information in these organizations belong to the privileged. In tightly coupled systems such a threat is unlikely to arise from within the organization. 1994.8 This “snapshot” view of the mechanistic organization can be conceptualised in terms of a linear system. has been the implemention of more participative ways of organising. so that decisions are always made at least ‘one-up’ from the level on which they are implemented. 4.
This in turn involves transforming management practices and reforming workplace processes and procedures so that organizational members can use their own intrinsic motivation to learn. the notion of ‘organizing’ is no longer associated with ‘structuring’ into some fixed pattern of order. Authoritarianism is replaced by a leadership which facilitates self-management. Characterisations of the ‘traditional’ organization rely on the evocative power of Newtonian mechanistic thinking and linear dynamics. Responsibility and accountability are thus shared by all stakeholders. but rather to an analogical mode of representation which highlights the relational aspects of a complex organizational reality (Tsoukas. These needs are not simply for products. and thereby increase productivity. The metaphor for the tightly controlled organisation is the machine (Morgan. practices. and by alienation in the sense of separation from the outcome of their efforts (Bushe. The participative organization is more complex. The overall aim is to create an organizational climate that supports and enhances human productivity and creativity. relationships. 1962. between the organization and the environment. 1996). 1986): this metaphor enables us to ‘see’ the organization as through a lens in a way which is both cognitive and emotional (Black. Learning is an integral part of organizational processes: people learn together and teach each other. Creating a participative organization involves fundamental changes in every aspect of organizational life – in structures. An analogical . 1996). competences and leadership (McLagan and Nel. 1991). and does not lend itself to simple metaphorical description. Personal autonomy combined with the common identity which develops in a task environment of shared responsibility and ‘ownership’ of work leads to the satisfaction of affiliation and achievement needs. the point of encounter. to improve. develops a symbiotic relationship with it. When responsibility for the control and co-ordination of work is located with the people doing the work those people are ‘enabled’ in the sense that they are given back the autonomy which in linear organizations is taken from them by fear. efficiency. The centre of organizational gravity and the focus of organizational ‘meaning’ is located not at the core of the organization but at the interface. Modelling the participative organization We need a heuristic by which to understand organizations which are both participative and open to the environment. 236). but actually ‘take part’ in every aspect of its existence. 1997). The quality of adaptiveness will pervade the whole of the organization. The environment then becomes no longer something ‘other’. their commitment to the organization and service to the customer (Pojidaeff. The dualism of thinking and doing is replaced by a fusion whereby decisions are made by those who implement them. but an integral part of the organization.13 Participative organizational processes create flexibility: this in turn allows the organization as a system to become adaptive and ‘open’ rather than rigid and ‘closed’. The key characteristic of that interface is the notion of adaptiveness. 6. privileged information by managerial transparency. by oppressive supervision. but for quality. service. by mindless control procedures. In other words. The organization responds to and interacts with the environment. in such a way that both are transformed. to a growth in self-esteem. An organization becomes meaningful in the measure that it answers adaptively to the needs existing in the environment. 1994). p. so that knowledge belongs to all. The participative organization12 In participative organizations people are not merely ‘part of ’ the organization. innovation. 1996) and a release of human potential and creativity which can enhance organizational effectiveness. but rather with the generation and facilitation of relationships (Wheatley. and ultimately to a shared leadership (Kanungo and Mendonca. Control is replaced by trust. values. non-invasive use of resources. Havlovic and Coetzer. to achieve. self-actualisa- 177 tion.Governance in the Participative Organisation 5. so that there will be a continual process of ‘re-organizing’ in order to keep pace with changes in the environment. and collaborative partnerships with stakeholders. pay systems.
have unpredictable outcomes in terms of system effects. In other words. But at the same time high levels of differentiation create a need to integrate across the organization in order to continually ‘align’ with organizational purpose. In differentiated organizational structures agents have autonomy and the opportunity to respond to the demands of the environment within the context of relationships which serve to maintain organizational purpose and integrity. Organizations in a rapidly-changing environment mirror the characteristics of open systems (Beinhocker. sought to dictate the conditions of its interaction with an environment which was stable (“you can have any car so long as it is black”). the radical thrust of differentiating co-exists with the conservative process of integrating. The ‘mechanistic’ organization. 1980). This implies that metaphor and analogy can assume a significant role in the creation of knowledge in that they may bridge the gap between Kuhnian paradigms and puzzle-solving activities by providing a strong conceptual foundation for “communities of theorists subscribing to relatively coherent perspectives” (Morgan. complex and uncertain environments organizations have to be able to differentiate in order to attend to all the elements of their environment (Lawrence and Lorsh. Flood and Jackson.14 There is thus a cognitive development which takes analogical perception forward from insight to the creation of conceptual models which with further insight can become isomorphic with the object of understanding (Tsoukas. 1962. In dynamic. or more properly ‘complexity theory’. although rule-governed. 1997). and by so doing generates not merely insight but also the framing of further questions (Black. Secondly they are complex systems – groups of agents whose interactions. The key feature of ‘open systems’ is that they generate the conditions for their survival and renewal by interacting with their environment. open systems thinking is a heuristic methodology rather than a privileged account of reality. where the growth of complexity of life forms happens by a process of simultaneous differentiation and integration. in spite of the apparently chaotic pattern of interaction. 1969). Firstly they are open dynamic systems in the sense that patterns of interaction with the environment are continually changing. and in turn they learn from experience and continually adapt model does not simply provide ‘mental pictures’. by contrast. Organizations as open systems mirror this biological process analogically. and it gives full weight to context (Garnsey. 239).14 The grounding for this approach is initially to be found in open systems theory (Scott. p. although the path over time may be characterised by ‘punctuated equilibrium’ rather than smooth progression (Polley. system plans and action in turn change the environment. p. so that from that point it may be possible to move to the development of genuine scientific models. If the rules of interaction are such that these rules evolve in response to system changes then the system is both complex and adaptive: . As in the case of mechanistic understandings of social reality. organizations as complex adaptive systems are emergent and self-organizing.178 Jane Collier and Rafael Esteban organisations learn from the environment which changes the system. it is essentially structural in that it reproduces the pattern or web of relationships in a new medium (Black. 1962. 1993). p. non-atomistic. 1992. We suggest that an analogical understanding of governance in the participative organization can most usefully be based on non-linear dynamics and chaos theory. but its value is that it is non reductionistic. Organizational members are collectively entrusted with the care of the two complementary ‘referential’ aspects of the organization – the interaction with the environment and internal interactions. and as a culture of control.16 The best examples of complex adaptive systems are to be found in the natural world. interactions and expectations to changing the systems of which they are a part. 1998). so that the wider environment is ‘implicate’ in the system (Bohm. compliance and constraint it neither attempted to differentiate nor had it need of integration (Ghoshal and Bartlett. 607). 1980. 1997). 1991). Thirdly. 222). 1991). In the process of ‘responding’ to the demands of the environment and ‘purposing’ to reinforce integrity they contribute through their values. In participative organizations team-working and group decision-taking constitute this relational context.
with customers. In this way the initial conditions are created for the characterisation of organisational processes as ‘chaotic’. The model of organizational collaboration is thus a ‘taming of chaos by chaos’ which holds in check both the tendency to emphasise purpose at the expense of responsiveness and the impulse to respond to the external environment in a way which disregards purpose. experience. and there will be a stable pattern of action and response. with suppliers. What they do affects others inside and outside the organization. 1978. they can also be bounded or limited by what in chaos theory is called an ‘attractor’ – a pattern of variation which exhibits regularities. once established. Consider the cycle of process in complex adaptive organizations. If the response is not considered favourable agent behaviour will be modified: feedback may then be negative if the gap between desired and actual outcomes has been narrowed by corrective behaviour modification. The characteristic of chaotic situations. The CEO. 1988). These ‘strategic inflection points’ can originate with competitor behaviour. One such is Intel. In participative organizations. Schon. but as a result of outcomes agents may also choose to radically alter the basis of choice and action the next time round. reflection in action (Argyris and Schon. feedback may also be positive if agents” decisions amplify the process of change and destabilise the system. Both organizational processes – of differentiating and of integrating – will thus be non-linear and ‘chaotic’ in the sense that the outcomes in either case will be unpredictable. in terms of information which will affect future decisions and action (Stacey. the world’s largest semiconductor manufacturer. the integrative pull of organizational purpose is ‘bounded’ by the needs of the environment. but where occasional ‘change events’ which introduce a new instability can be compared to “deadly and turbulent rapids” (Grove. 1997). Many of today’s businesses can tell stories which confirm the reality of chaotic processes in organizations. but in Intel’s case they have in the main come from changes in the . that forces which push the system towards order and stability coexist with forces which push the system towards instability. In order to understand the way in which complex processes in the participative organization can be at the same time ‘chaotic’ and ‘ordered’ we need the metaphor of chaos theory. 1996).Governance in the Participative Organisation their behaviour. and thus ‘governs’ the chaotic process. is that small changes may have unpredictably large consequences. If the response is considered favourable by the agent. the behaviour and action will be repeated. immediately and over time. These ‘creative’ responses to a changing environment will by their very nature involve an element of unpredictability. values. producing ‘bounded chaos’. Andrew Grove.19 The system continually changes. 18 In the model outlined here. and these effects ‘feed back’. This will then constitute ‘double-loop’ learning. In participative organizations we may expect that both negative and positive feedback processes coexist. rational understanding and the rules and roles relevant to their situation.17 Chaotic processes are set in motion at the 179 precise point in time when the nature of the relationship between the counteracting forces of stability and instability changes. although chaotic processes appear random and subject to ever increasing variation (as in the frequently-quoted example of meteorological effects). whether because of external change or by virtue of organizational learning. since chaos and disorder are not synonymous. The differentiating responsiveness to the environment is ‘bounded’ by organizational purpose. compares the situation faced by companies today to the flow of a river where change is continuous. its sense of competences. However. It is important to note that the fact that organizational processes are chaotic does not imply that they will be disordered. 1987). However. Both positive and negative feedback may generate simple ‘single-loop’ learning. aspirations and culture. but in such a way as to remain congruent with its already established identity. purposeful and responsive processes as sequences of ‘random’ variations shape themselves as ‘attractors’ inside boundaries which function as “basins of attraction” (Gleick. Agents take initiatives based on motivation. chaos is ‘bounded’ by the way in which each organizational process acts as ‘attractor’ for the other.
It is only through being responsive. 1997. To what extent is it possible to maintain an organization’s identity and direction (i. in the participative organization the capability of ‘governing’ Figure 1.180 Jane Collier and Rafael Esteban is diffused throughout the organization. repair the damage. 161). But while in the authoritarian organization ‘governing’ in the sense of steering the organization would be the exclusive responsibility of the ‘steersman’. p. and the way to do this is to create a climate where constant collaborative exchanges can take place between the holders of knowledge power at the periphery and the holders of organizational power at the centre. balance the ballast. integrity) while accepting the principle of differentiation? The answer is that identity is determined by purpose. 7. 1997. In this context. that organizations can ‘settle’ in a rapidly changing environment in the same way that a boat settles and becomes stable in a raging storm. drop the anchor to steady the ship. where Ulysses is the ‘kubernetes’ who steers between the rock and the whirlpool (Hampden-Turner. ‘Governance’ becomes a quality of the boat itself and the shared responsibility of all in it. governance can be defined as the quality or capability of the organization to ‘stay on course’ in an unstable and changing world. read the currents and the winds. ‘Staying on course’ in this context involves avoiding the two extremes – the ‘rock’ of excessive control. The metaphor is that of the Ulysses myth. The steersman keeps the rudder. adaptive and by continually learning. organization Existing models of governance – governance as co-ordination and governance as control – are essentially reductionistic in that they remove complexity. and purpose is an integrating principle in the measure that it . 121) – and reining in chaos – “clarity of direction. The trick is to be able to distinguish between change which is transitory from change which represents the beginning of a new era. 137). Governance in the participative 6. Adaptability requires continuous differentiation. 1994). and ensures that the next opportunity for responsiveness will embody the lessons learnt from the previous experience. the central issue for such organizations is the question of governance. and finally redesign the ship with the lessons learned from their last adventure. 1997. In other words. others measure the depths. This responsiveness to the needs of the environment creates a capacity for learning which develops the organization in new creative ways. is extrememly important” (Grove. In order to understand the nature of governance in the participative organization we need to use as heuristic the complexity which is of the essence of open systems. row. The model of participative governance is thus ‘cybernetic’. the lookouts look for obstacles. Grove argues that a pendulum-like swing between the two types of actions is the best way to work through a strategic transformation (Grove. The way forward then requires a combination of letting chaos reign – “resolution comes through experimentation: only stepping out of old ruts will bring new insights” (Grove. trim the sails. But continuous differentiation will lead logically to complete dispersion unless it is accompanied by a corresponding process of integration within the organization itself. p. p. which includes describing what we are going after as well as describing what we will not be going after. and the ‘whirlpool’ of excessive disorder.e. The interface with a changing environment demands flexibility and adaptability.20 industry which required them to do business in a completely different way. Cybernetic governance demonstrates the characteristics of complex adaptive systems.
It is thus the connectedness of the organization which assures that the inner coherence of its members around a developing common purpose is maintained. These characteristics are in turn based on the exercise of freedom and creativity not only in the systemic organizational sense. To borrow another concept. but also at the group level and at the individual level. which will be determined by differences in purpose. of “symmetry across scale” (Gleick. in environment and in internal practices. whereby the members “make sense” of changes happening in the organization and the environment. an organization can avoid dispersion through purposefulness that is. to achieve this practical synchronicity. In other words. by its ability to ‘align’ itself internally while simultaneously responding to challenges from the environment. or “butterfly” shape. Purpose is the essential element in the ‘foundation’ of an organization. In this way the system stays open and accountable. The dynamic unity of such a system can only be maintained by an efficient communications network which carries information flows from the interface with the environment to the inner core. In a changing environment. purposefulness and connectedness are characteristics that are not only diffused throughout the ‘macro’ level of organizational policy formulation and culture but are also embedded in all decisions and actions at all the ‘micro’ levels into which organizational life is structured. In the course of this process it is interpreted in the light of the common purpose. and from the centre of the organization to the periphery. the purpose itself becomes clarified and reinforced and then is fed back. It is connectedness and communication which allow organisational processes to assume the character of continual ‘conversations’. into the whole system. 21 However. they must have the quality of self-similarity. all levels of the organization must be ‘fractal’. reinterpreted. and give renewed meaning to organizational purpose in the light of those changes. 181 Figure 2. All members share the responsibility for the functioning of this network. 1988). In order for a responsive and differentiating organization to maintain an integrating unity of purpose the experience and the information gained by responding to the changes in the environment must be able to circulate throughout the organization. it is necessary that the particular pattern created by the interplay between purposefulness and responsiveness must be mirrored at different layers throughout the organization.22 The ‘fractal’ quality of the organization implies that responsiveness. .Governance in the Participative Organisation is shared by all the members of an organization. it is like the keel in a ship which keeps it upright in the water and determines its general direction. although it is the specific responsibility of the leadership to provide resources for its maintenance. each organization has its own distinctive pattern of chaotic processes. Figure 3. The way in which the ‘chaotic’ exercise of freedom and creativity produces the practical synchronicity of processes of integration and differentiation will be unique to each organization.
It is first necessary to note that freedom and creativity do not exist as separate organizational qualities – they are inextricably linked one to the other in a continually reinforcing interative process. since for MacIntyre ‘virtue’ is defined 8. adaptive and imaginative response to change. The more participative the organization. 187). they also form the basis of the ethical quality of participative governance. 1998). too. but rather interrelated and interdependent activities of working. freedom and creativity are not simply qualities which are exercised by individuals liberated from hierarchical controls and thus free to ‘do their own thing’. Organizational practices are not simply ‘work’. Firstly. where creativity happens. are systematically extended (MacIntyre. at the boundaries between control and disorder (see note 2). 1991). Creativity. Freedom as ‘opportunity’ represents the driver of creativity. 1985. Freedom generates creativity in differen- . knowledge and freedom is in turn allowed to function freely by means of the communication networks which create organizational connectedness and accountability.e. Freedom and creativity thus stand in a continual dialectical relationship. However. p. Sen emphasises that it is also to be seen as ‘opportunity’. Although our view of organizations in this paper has been systemic. Participation realises what MacIntyre terms the ‘goods internal to a practice’ because “human powers to achieve excellence. practices and processes (Collier. the greater the scope for the exercise of freedom and creativity. where organizational processes are driven not by hierarchical control but by the freedom of organizational members to participate in autonomous decision-taking. The ethical quality of the participative organization can be understood with reference to three frameworks of ethical thought which not only respect the particular nature of the organizational model we have outlined. Organizations are moral agents 24 not merely in the consequentialist ‘doing’ sense. in terms of outcomes produced by corporate action. that the notion of virtue gains meaning. although ethical principles. The conception of practice in this sense lies at the core of Alasdair MacIntyre’s ethics of virtue. 1992). freedom and creativity. but it also potentiates creativity in integrating. an ‘on-the-ground’ view of organizations will conceptualise them as networks of practices – technical. It is in the context of practice. immunity from interference. 1992. encouragement of risk-taking and tolerance of failure. it demands the existence of freedom in Sen’s ‘process’ sense (Sen. not only in terms of production. see note 1). These are organizations where the principle of self-organisation is generated by the creativity which exists at the ‘edge of chaos’ – i. and to pursue and achieve outcomes which they and others value (see note 1). trust. and human conceptions of the ends and goods involved”. managerial (Reed. But freedom is not simply permissive. demands an organizational climate of autonomy. but opportunity can only arise in a situation where there is knowledge. and knowledge comes into being firstly ‘on the ground’. So that it is knowledge as the fruit of creativity which generates opportunity and thus freedom: it is knowledge which creates the organizational opportunities to pursue and to achieve those outcomes which are defined as ‘valuable’ in terms of organizational purpose. the more ‘generative’ will be communities of practice. as the innovative. openness. The ethics of participative governance We have argued that participative organisations can be conceptualised as ‘chaotic’ self-organizing systems.23 in other words.182 Jane Collier and Rafael Esteban tiating. thus allowing the leadership to use the knowledge and understanding of overall organizational needs to creatively reshape the organization so that freedom and creativity are continually enabled at the interface. learning and innovating (Brown and Duguid. Freedom and creativity are not only essential elements of the self-organization which produces emergent patterns of ‘good governance’. These qualities are exercised and developed within communities of practice. are abstractions which require to be contextualised both in terms of organizational realities and in terms of ethical theories. not merely process. This ‘virtuous circle’ of creativity. but also in terms of purposes. but define and locate the significance of freedom and creativity within the ‘ethical’ organization. but in terms of the development of human capabilities. administrative.
and the responsibility is not reciprocal. The Other is other than ‘self ’. Responsibility in organizations is defined by roles and functions. Thirdly. where freedom and creativity are directed to the search for what is right and just in a climate of conflicting value stances. both personal and collective. 1989. and for which we are already responsible. In participative organizations all voices are heard. Freedom does not constitute ‘world’. because it imposes a command on me to ensure its survival and its welfare as a human person. in other words. 1994). Nor is responsibility based on Kant’s categorical imperative or revealed in Buber’s reciprocal relationships. 1998). and the meaning of this face is irreducibly ethical. but my responsibility is not contingent on who the Other is. Ethics. and ‘virtuous’ learning circles are created (Hampden-Turner. therefore. is to be found in alterity. argues Levinas. the ‘otherness’ of the Other. Responsibility is born in this encounter: this responsibility is limitless. insight and intuition (Collier. ‘Mitsein’ may engender solidarity. The underlying implication of discourse ethics is that the process of moral argumentation will generate consensus. but is continually challenged by its very nature to reflect on its origins. For Emmanuel Levinas that source is not simply to be found in our coexistence as beings in a social world where “men find themselves side by side rather than face-toface” (Hand. But participative organizations are also grounded by a more foundational responsibility. the qualities. and that with effective procedural ‘ground-rules’ for communal discernment it will be possible to achieve consensus without the necessity for participants to be ‘converted’ to the value stances of others. altruistic and charismatic leadership which is capable of nurturing the integration of a diverse and flexible organization by supporting the process of dialogue and working for the emergence of shared values while simultaneously listening to diverse view- 183 points and affirming their potential contribution to consensus (Kanungo and Mendonca. Moral argumentation takes place in a climate of openness. and to a greater or lesser extent shared responsibility for outcomes. The recognition of and respect for ‘otherness’ is an ethical ‘glue’ which in . not self-justifying. and it shapes and defines the nature of my freedom. which are necessary to sustain collaboration within communities of practice (Collier. p. This requires a sensitive. responsibility defines our freedom. 212). so that in order to understand the nature of our freedom we must seek the source of our responsibility. and constitutes ‘self ’ by its radical difference. participative organizations must become communities of discernment. and because there is no overriding set of moral principles which will inform all individual judgements. 1997). In a moral sense. without the ‘other’ ‘self ’ would not exist. The Other is encountered as Face. Secondly.Governance in the Participative Organisation as the qualities necessary to achieve the ‘goods internal to practice’. ‘freedom’ as the basis of participation within organizations is not arbitrary. a deep commitment of each member to the good of the ‘other’ whose very existence defines her own ‘self ’ and with whom she shares a commitment to the overall task. where the freedom to express views is paralleled by the obligation to hear those of others. The ethical dimension of that communication framework is found in the continual requirement to exercise moral judgement in decision-taking so that morally ‘right’ outcomes are generated. But the reality of decisiontaking in participative organizations is likely to be characterised less by consensus and more by the constructive management of value dilemmas. freedom and creativity within the participative organization must be exercised with reference to the communication framework which connects organizational ‘purposing’ and organizational responsiveness. is prior to ontology. it allows participation in a world which is already given. The source of responsibility. I exist not ‘with’ but ‘for’ the Other. in other words. but responsibility is something more profound than solidarity. The Other is not knowable because it is not ‘same’. Jurgen Habermas’s ‘discourse ethics’ (Habermas. 1996). 1993) suggests that the essence of this problem is procedural. it is my responsibility. responsibility for initiatives and achievements. so that value differences are allowed to create the richness of diversity rather than to destroy the fragility of collaboration. and where difference demands creative empathy.
generally as smaller collaborative units. Participative governance is not only effective in organisational terms. 1992) and capabilities (Sen. 3 The notion of complexity here refers both to technology and to size. In such organizations people are nurtured and encouraged to carry the attitudes and practices learned through participative governance into the complex interactions and relationships which shape human existence. Effective governance relies on the ability of the organization to trust freedom and to encourage and support the creativity of its members. where in learning to be committed to each other people also learn how to translate that commitment into their relationships with their environment. This paper has argued that participative structures are needed if organizations are to survive and succeed in rapidly changing environments. Notes Our understanding of freedom is based on that developed by Amartya Sen in his work on welfare economics (Sen. 1996). 1969). applies to organisations in the voluntary sector where hierarchy is institutionalised. The global environment of the organization is made up of the structures. The argument of this paper suggests that tightly coupled modes of organization limit the potential of human beings as 1 . 5 Again. 8 Not every organisation is a joint-stock company. 1995). Human potential can be realised in agency. 4 This generalisation characterises the ‘system’ level. 1992). the exceptions exist. Reasons for this affirming difference strengthens integration and participation. The ethical character of freedom derives from the fact that the absence of restrictions on freedom allows autonomy. (b) freedom as process. 6 Opportunism as a mode of behaviour is not confined to ‘agents’ in the principal-agent relationship. mainly through their holdings of option stock (unpublished talks to MBA students. 10 The ‘environment’ in this sense is separate and distinct from any system within it (Cabana. It is also possible to envisage opportunistic behaviour by principals. achievement and thus ‘human flourishing’. internal practices and external relationships are ethically aligned.184 Jane Collier and Rafael Esteban agents: Marx. groups. communities of discernment and communities of commitment. Sen distinguishes three aspects of freedom (a) the opportunity both to pursue and to achieve what is valued. the cooperative movement. initiative and the ability to learn in complex ways generate the self-organising properties of the organizational system (Stacey. 1992).g. Subsystems within the wider system may opt for “selfgovernance” e. 2 In organisational terms the importance of creativity is that it is the source of differentiation. and in this way supports communities of commitment. too. it is also ethical because it allows freedom and creativity to flourish in the context of organisational communities of practice. and (bii) immunity from interference. In this way. Emery and Emery. The manner of this engagement depends on systems and circumstances: one increasingly important example is the variety of ‘networking’ arrangements with other organisations designed to achieve the benefits of shared functioning while maintaining flexibility. Mondragon. or perhaps particularly. This is a more precise and therefore more useful set of distinctions than Berlin’s positive and negative freedoms (Berlin. within which it is possible to distinguish (bi) autonomy of decision-taking. 9 In linear systems relationships between variables are such that any change in one variable has consistent and predictable effects on other variables. In terms of the model presented in this paper. Systems and their environments coevolve: organisations as ‘open systems’ engage with their environment. rules and relationships which constitute its boundaries. and also to realise that the implementation of change as a process has its difficulties. This analysis also. the exercise of creativity happens at ‘the edge of chaos’ – that space between “control” and ‘disorder’ where risk. institutions. of new initiatives and outcomes. of navigation in the face of competing and conflicting demands inside and outside the organization. In such environments governance becomes a question of choice of direction. 11 It is important to conceptualise organizational change as a process rather than as a discrete ‘from-to’ event. and this is seen as an essential factor in their survival (Scott. of uniqueness. 7 More recently Monks has argued that top management is now taking the place of stockholders as owners of corporations. kibbutzim. and the actualisation of this potential contributes to the satisfaction of needs and the development of capacities (Swanton. saw the alienation associated with industrial production as limiting human freedom. 1992). Judge Institute of Management Studies).
business units. 240). also with notions of autopoiesis. 132). 1998). so that in the case of very large organizations we are talking about e. 1985). there is a downsize to size. Johnson and Burton. 1998). 15 Arguments can be made against the use of chaos theory to model social systems in general and organizations in particular (see e.Governance in the Participative Organisation include inertia. Which of these options obtains depends on the relative strength of the relationships between the variables and the ways in which they are combined (Feigenbaum. 23 These are the ways in which the human risks of freedom are minimised. 18 Overall boundaries to chaotic processes in the model developed here are set by the limits to organisational identity on the one hand and the limits to opportunities for interaction with the environment on the other. avoiding both the whirlpool of randomness and disorder of ‘high-intensity chaos’ constituted by anarchic individualism and the rock of authoritarian control. Organizational change gives those boundaries an ‘organic’ and adaptive quality. historical constraints or ‘boundaries’. it does not have the status of scientific explanation. and weak organizational learning mechanisms.. 1995). 22 The concept of ‘fractal’ refers to the similarity of pattern at different levels of magnification. autopoeisis seems to promise little as a heuristic for social systems (Mingers. anxiety is created. 1994). p. An important requirement for the ability of organizations to learn by exercising freedom and creativity is that anxiety is contained (Stacey. If there is a combination of positive and 185 negative feedback the system may (a) return periodically to its original state. Newer. 1984). 1994. 1997. (c) be chaotic in the sense that fluctuations are random but orderly in the sense that they are “bounded”. However. It therefore implicitly assumes that the ‘organization’ is sufficiently small to function as a communication unit. where systems are self-referential. p. managerial ‘bounded rationality’. However. problems of contextual and institutional ‘embeddedness’ (Granovetter. . The release of creative energies serves also to fulfil personal needs for self-actualisation (Ghoshal and Bartlett. Organizations demonstrate a fractal quality when “an observer. thereby destroying the organisation itself. Organisational processes navigate at ‘the edge of chaos’. 1962. so that ‘constraints’ may change in a way which in turn alters the way in which organizational processes are enabled. There is a consistency and predictability to the quality of behaviour” (Wheatley. See on this general issue Miller et al. Giddens. Where feedback is always positive change is amplified exponentially and the system becomes explosive (example: revolution). chaotic systems are characterised by sensitivity to initial conditions. 1978) In other words. 1984). Resources form an overall constraint.g. smaller entrepreneurial companies are prime locations for the study of self-organisation and emergent change (Tetenbaum.g. divisions or subsidiaries. political constraints imposed by managerial elites. 1995). can tell what the organization’s values and ways of doing business are by watching anyone. when control is replaced by trust people respond with commitment and a self-discipline which harnesses their creativity in the service of the organisation. p. (b) be completely erratic. Where feedback is negative the system will always return to its initial state (example: controlled system). defined as systems through a circular pattern of interaction (Maturana and Varela. Looking at this from another theoretical angle. 16 This understanding has much in common with theories of ‘dissipative structures’ whereby random changes in a system lead to new patterns of order and stability (Prigogine and Stengers. 17 Non-linear dynamic systems can be of three kinds (Thietart and Forgues. there are links to be made here with the manner in which processes are enabled and constrained within the duality of agency and structure (Reed. 12 The following analysis argues that flexibility in responsiveness to the environment is a key characteristic – in other words. where people use their creativity and freedom for the achievement of their own agendas. In human terms the exercise of organisational creativity moves us away from the “known”. 21 Every organization works with its own concrete. 19 The participative organisation shows all the characteristics of the bounded instability of ‘low intensity chaos’: it has “global structure but is specifically unpredictable over the long term” (Stacey. 1996. (1997). whether it be a production floor employee or a senior manager. Note that in this paper chaos theory is used analogically as a heuristic to model governance in participative organizations. 20 The following three diagrams are adapted from Kapitaniak (1996). 1980). 14 “Use of a dominating system of concepts to describe a new realm of application by analogical extension seems typical of much theorising” (Black. 284). from the stability of defensive routines and preferred behaviours into a region where because the “unknown” is perceived as ambiguity and paradox. 13 It might be thought that the release of control results in anarchic individualism.
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