I just ran across this article written in the middle of 2002 for my first version of the wirearchy.com web site, and subsequently published as a “thought leader” article on HR.com.
Just thought I’d share it with you, in order to show how much and how little things have changed since then. Some of the statements refer to ancient stories like Enron, the fall of Arthur Anderson (remember that firm ?), WorldCom, etc., all events that are of minor importance compared to the turbulence all around us these days.
It’s astonishing, really, to look back and see how the business issues current in 2002 just got bigger and worser .. there’s a lesson in there somewhere.
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Transparency and Trust – Wirearchy and the Emerging Business Environment
November 2002
In an organizational world of constant e-mail, customers who are connected via the Internet, and with ready access to any information that must be disclosed publicly, the issues of transparency and trust have leapt into prominence over the past year or two.
Several of the Wall Street brokerage firms suffered significant public embarrassment due to the widely publicized stories about high-profile analysts who publicly urged investors to buy stocks (maintaining that the stocks would outperform the market), while internally swapping e-mail messages that went something like “I wouldn´t touch this dog of a stock with a ten-foot pole…it´s a piece of crap“.
By now, these stories are legend. The average investor is just coming to terms with the fact that their retirement plans may have been postponed by 10 or more years. Many of these investors are employees of the companies whose stocks have plummeted in value. They´ve been scammed…many executives have been lavishly paid over the last five years, and now the shares held by small investors or in pension plans are almost worthless, or at least certainly worth much less than a short three or four years ago.
The White House and Wall Street are worried about the average investor trusting the stock market, and may be relying on the return of greed to “save” the economy. The reasoning goes like this: “if we can make the stock market look like it´s safe for investors by passing a corporate reform bill, and maybe jailing a few of the worst offenders from Enron and Adelphia and WorldCom, and if we can help the stock market indices start moving up again, then maybe the economy will be righted and we´ll escape with our reputations more-or-less intact.”
The access to information enabled by the Internet and millions of Web pages won´t go away, and it may prove very difficult, if not impossible, to control the medium to the extent that corporate hierarchies will be able to escape increased accountability.
The signs are everywhere. A recent Fortune magazine cover boldly stated: “You Bought…They Sold” portraying pictures of corporate executives that profited from stock options during the period 1999 to 2001; options on stocks that are now often worth 90% less than they were during that time period, stocks that are a significant proportion of many peoples´ retirement portfolios.
An even more recent cover of Business Week magazine calls for a large scale revamping of corporate governance and the composition, structure and accountability of corporate boards of directors. The conditions faced by corporations these days are significantly different than they were five years ago. People and information are connected via the Internet, and short of significant changes to the regulation and use of the Internet, these conditions will not revert to the cozy conditions pre-1995.
Corporations will either have to embrace transparency and trust, or develop alternative methods to regain some degree of secrecy and control.
If it´s transparency and trust they opt for, then organizational cultures, structures, practices and procedures will have to reflect a shift from hierarchy to wirearchy. Strategic information will need to be shared with employees and stakeholders, and improper or illegal activities will not be able to be hidden.
Wirearchy can be defined as “a dynamic two-way flow of power and authority, based on knowledge, trust, credibility and a focus on results, enabled by interconnected people and technology“.
The two-way flow of power and authority implies that customers and employees, armed with information and knowledge, can make choices and exert influences in ways that were not possible before. If knowledge is power, then organizations face a future in which their offerings, brands and practices are much more transparent than ever before. In order to be effective in that future, they have to be clear, and they have to be open – they have to be able to withstand the scrutiny.
What does this mean for employees in the interconnected workplace of today and tomorrow?
First and foremost, it means that they will need and want to believe in their leaders and their organizations. Recent surveys have begun to state that the levels of distrust and cynicism by employees towards corporate leaders have been mounting rapidly. Perhaps what´s keeping a wholesale revolt at bay is the fact that many people are more concerned about security than they are about standing up for their principles, to the extent that they keep quiet and don´t quit their jobs.
Surely this is not a good state of affairs for motivated and productive employees. No doubt many human resources professionals are feeling the brunt of employees´ concerns, and wondering what the events of the past year mean for the various initiatives they have initiated and have stewardship of.
How can an awareness of the potential of wirearchy help here?
Intranets and interconnectedness can be used to address and ensure openness and clean, clear and consistent communications. Coaching programs and management development initiatives can be reviewed to ensure that they are solidly grounded with respect to the emerging business environment.
Connections with customers can be enhanced, and the messages about what an organization offers can be made solid and trustworthy. Employees can be helped to feel pride in what they do, and in the organization they work with…if they know and believe that the organization and its leaders are aware of and prepared to face the requirements for transparency and trust created by the new conditions of an interconnected business world.
The arrogance of traditional hierarchy, and the distrust and cynicism it breeds, can be transformed by acknowledging and using the principles of healthy communications, trust and credibility offered by the emerging organizing principle of wirearchy.
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Tags: wirearchy, hierarchy, organizational change, continuous learning, connectivism
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