"Networks of Competence"

I recently read a series of four articles by Steve Denning, Senior Contributor to Forbes magazine that validate and confirm, in my mind at least, some of the leadership concepts that I have been posting about.  The first article, "How Networks of Competence Are Crushing Hierarchies of Authority" explains the difference between two vastly different organizational structures.  The first ("Hierarchies of Authority") is the more traditional organizational structure that has its roots in Frederick Taylor's theory on scientific management (see The Principles of Scientific Management) developed in the early 20th century.  According to Denning, 80% of firms today are structured in this way, where there is a clear hierarchy of leadership with a single individual (the Chief Executive Officer) at the top.  He explains further, "There is only one genuine leader.  Everyone else in the organization is reporting to, and subject to the instructions of, someone in the level above."  The second type is what he calls "Networks of Competence" (think of General Stanley McChrystal's Team of Teams), in which "everyone can be, and should be a leader."  While only 20% of the firms today are structured in this way, organizations are starting to appreciate the significant advantages of this type of structure in the VUCA (or BANI) world of today.  "Networks of Competence" are more agile and less siloed than their counterparts.  Denning argues that employees are more engaged in these kinds of organizations.

In his second article ("Understanding Why Networks of Competence Crush Hierarchies of Authority"), Denning addresses several of the questions and criticisms that he received following the first article.  Both articles are complementary and should be read together.  Denning argues that "in a knowledge economy, decisions based on competence outperform decisions based on positional title" (that sounds a lot like the HRO principle of deference to expertise).  Denning claims that a number of high-performing organizations are structured as "Networks of Competence", or at least moving in that direction, including Apple, Microsoft, Alphabet, Meta, Amazon, and Tesla, among others.  Virtually every sector of industry seems to be moving in this direction (he provides a list at the end of the second article that provides a link to several articles/posts that he has written further comparing and contrasting these two organizational structures).

Denning highlights in the third article ("How networks of competence now dominate business"), "Hierarchies of Authority" view the organization as a machine, while "Networks of Competence" view the organization as a living organism, commonly referred to as a "Complex Adaptive System" - please see my posts "The myth of the ant-queen" and "A flock of starlings" for more on how organizations are gaining insights from the science of complexity.  He also suggests that, "even in firms that are predominantly networks of competence, hierarchy still has a role...hierarchy is needed to set up and maintain the network of competence" (see also my recent post "The Death of Command and Control").  He goes on to build upon this concept in his fourth article, "How networks of competence achieve superior competitive advantage" and provides a case study of how Amazon developed and further leveraged the concept of "networks of competence".  

Denning suggests that creating a culture of innovation, agility, and rapid decision-making is all about "generating a uniform culture that also requires a passion for creating value for stakeholders, particularly customers, autonomous self-organizing teams, and a whole set of processes that are radically different from the standard processes in hierarchies of authority." I suspect that we will see more organizations moving towards the "Networks of Competence" structure in the future, even if they aren't specifically called by that name.  These four articles are concise and clear - "Networks of Competence" are becoming more common because they are more effective than the traditional "Hierarchies of Authority".