Why E2.0 and Social Business Initiatives Are Likely to Remain Difficult


Horizontal networking often creates dissonance in the vertical enterprise

The vertical structure of knowledge did not foresee the coming of horizontal networking tools now shaping today’s workplace.

Today, there’s a lot of chatter about bottom-up versus top-down, the collective wisdom of the organizational crowd, and various related themes.  However, there’s also ongoing dissonance or competition between the methods behind structured, highly-defined organizational forms and activity and the growing world of hyperlinked flows in which knowledge and meaning are built layer by layer, exchange by exchange (all those hyperlinked interactions that increasingly make up what we call “knowledge work”) which social computing enable.

At the heart of the issue is the way work is designed and the organizational structure that contains the work.  A primary tool in designing work and structure is job evaluation (and derivatives like accountability mapping and redundancy analysis).  The methods used today were created in the mid-1950’s and haven’t changed much since then.  Their core assumptions are directly derived from, and have helped embed, Taylorism at the core of the modern organization.

I don’t mean job evaluation as in assessing a person’s performance on the job – I mean the function usually managed by HR departments that ‘measures’ or ‘weighs’ jobs, and assigns them to levels and pay grades based on job “weight” with respect to skill, effort, responsibility and working conditions (the legal criteria for assessing pay equity). I believe that these tools and their underlying assumptions are used to create the skeletal architecture of hierarchical organizations, the pyramid we all know.

Dissonance in job requirements

The methodology of job evaluation is a very useful place to look at some of the key critical reasons for the ongoing dissonance and resistance to change we are seeing and will continue to experience.  The methodology of job evaluation situates jobs in the organizational hierarchy and creates pay grades, pay practices, thresholds for entry into bonus schemes and often is the main criterion for distinguishing between management and non-management jobs.

Fundamentally, job evaluation (work measurement in the professional jargon) relies on the core assumption that knowledge is structured, and used, hierarchically.  It follows that she or he (and the job requirements) who has more of the knowledge —on paper—is she or he who deserves to be “higher up” in the organization.

Redesigning work requirements

There are four or five major, well-known methodologies for measuring work.  They all use very similar factors (sometimes described a bit differently semantically, with a couple more or less factors or sub-factors) and they all essentially measure the same thing.

These fundamental principles of work design need to be examined and re-conceived if the significant power of social computing is ever to be realized. As an example I will use the measurement factors used by the Hay Guide Chart Method, as I know them the best.  I have also worked with the other major methodologies – they are essentially all the same: the Aiken Plan, and the Towers Perrin and Watson Wyatt job evaluation methodologies (now Towers Watson) in the past.

The Hay Method describes work as having three phases—input, throughput and output—and it employs three core factors to measure that input/throughput/output:

1.  Know-how (input) – knowledge and skills acquired through education and experience.
2.  Problem-solving (throughput) – the application of the said knowledge to problems encountered in the process of doing the work.
3. Accountability (output)- the level and type of responsibility a given job has for coordinating, managing or otherwise having impact on an organization’s objectives.

There is a fourth factor called working conditions, but in many cases this is treated almost as a throwaway factor, especially when it comes to knowledge work.  It typically relates to physical factors such as lighting, air-conditioning, the presence of fumes or chemicals, outdoor exposure, dangerous physical conditions, unusual exogenous stress, etc.

As noted above, the core assumptions of these methods are derived from the philosophy of Taylorism (aka scientific management) and the divisions of labour and packaging of tasks that have underpinned the search for efficiency and scale ever since the beginning of the 20th century. On the face of it, they seem eminently reasonable and the Hay Method (and the related ones cited above) have since the mid-50’s largely served organizations quite well for segmenting and dividing labour, identifying necessary expertise and specialization and, in effect, designing one or another particular hierarchical pyramid.  Today these methods are put into practice along with other key assumptions from that industrial era when organizations grew and prospered – mid–50’s to approximately 2000.

Changing assumptions about knowledge

These methods set out a fundamental, foundational assumption about the nature of knowledge. They assume that knowledge and its acquisition, development and use is relatively quite stable, that it evolves quite slowly and carefully and that knowledge is based on an official, accepted taxonomy – a vertical arrangement of information and skills that are derived from the official institutions of our society (Jane Jacobs has a fair bit to say about this in Chapter 3 titled Credentialing vs. Educating in her last book Dark Age Ahead, as do others like John Taylor Gatto and Alfie Kohn, and as does David Weinberger’s Everything Is Miscellaneous – the power of digital disorder).

Above I have offered an example (paraphrasing the Hay Method’s semantic scales for measuring a job’s knowledge).  It describes a vertical arrangement of Know-How (knowledge) and the method creates, supports and sustains vertical reporting relationships.  The other two factors (problem-solving and accountability) derive from, and reinforce, the know-how factor. For example, the rules of job evaluation are such that you cannot have a problem-solving or accountability factor assessment that is of a higher order than the know-how slotting.

The definitions of the know-how (knowledge and skills ) factor levels are paraphrased from the semantic definitions on the actual Hay Guide Chart.

A – Unschooled and unskilled
B – Some school, some skill
C – Basic high school, routine work
D – Vocational school, community college, trades, senior administrative
E – University graduation, senior trades, managerial (reads the books)
F – University plus 10 years experience, grad school (puts the books to use)
G – Deep knowledge and expertise (writes the books)
H – God (has others write the books)

These methods did not envision or foresee the Web, hyperlinks and the exchanges of information which have spawned and carry the bit-by-bit layering and assembly of knowledge and peer-to-peer negotiation of results and responsibilities we are seeing emerge with greater frequency in this new networked world.

Multiple ways to structure knowledge

We are beginning to understand that the main way we have structured knowledge is only one way, and that this way is captive to core assumptions about the ordering and classification of information as created by some of the great thinkers, organizers and classifiers of information and knowledge who helped build up our growing understanding of the world around us (Linnaeus, Darwin, Dewey, etc.).

What we have developed into solid and maybe seemingly unassailable beliefs about knowledge are built upon the principles we have inherited from a time when human progress benefited greatly from regular and related discoveries about the world around us, both natural and man-made.

For example, it’s clear that there was a proliferation of written / printed material from the 1600’s through the 1900’s, containing amongst other things much codification of discoveries of the knowledge we use today in a wide range of domains and disciplines. More and more (too much ?) of this knowledge is accessible very rapidly on today’s Web in ‘fragments of one’ (nod to Dave Snowden’s assertion that the brain works most effectively with fragments of information) connected by search engines, hyperlinks and a range of easily used publishing platforms.

So … now let’s look at how information is shared and exchanged in order to build and use knowledge amongst networked individuals or groups.  The use of knowledge in a networked context is very often much more horizontal, sideways and based on accessibility and collaboration – much more so than is the (official) use of knowledge in formally structured hierarchies.

Linked knowledge

What we know today is that people with vastly different types and forms of knowledge can be or are linked together for a wide (and potentially limitless) range of purposes (though clearly we are learning quickly about the limits to cognitive attention as lessons in social cognition surplus are offered up to us almost every day).

In networks-of-purpose, addressing Purpose A connects individuals with Skill and Knowledge Set B, Interests and Knowledge Set B, and Connections and Knowledge Set C (and of course the second-order concentric ring of connections each of them brings to any given network in which any of them participate). Each of them subscribes to different sets of feeds and has access to different sources of flows of information than each of the others, but can forward to all those in the on-purpose network anything that comes across their attention that may be pertinent to the purpose at hand.

In the dynamics of attention, flow and circulation of pertinent and relevant information such as this comes the power of social computing that KM practitioners may have been noticing as Web 2.0 tools, service and capabilities become more firmly ensconced in knowledge work in the guise of platforms for collaboration—the domain increasingly called Enterprise 2.0.

I think it is (very) safe to say that problem-solving or accountability is assigned or accepted in that situation based on negotiation of ‘who knows what’ or ‘how to get something done’, and often a call (Tweet, blog post, Skype chat, email) is put out to find and access some additional skill or knowledge that is required, and accountability is negotiated based on the constraints of the purposeful activity at hand.

Any of us familiar with medium to large sized organizations can begin to see, I believe, that the fundamental Taylorist assumption that knowledge is structured vertically and put to use in siloed pyramidic structures and cascaded down to the execution level must be straining at the seams in the increasingly highly-connected social networks in which many people work today.

Social computing – first dissonance, then participative flow ?

Thus, it seems clear that the introduction of wikis, blogs and RSS feeds (and now micro-blogging a la Twitter) for project work, for analysis and planning, for research and development and for other knowledge-intensive work is likely to introduce some reasonable levels of dissonance into the common and accepted organizational dynamics (or “organizational sociology”) of formal, traditionally structured organizations.

This is an area where David Weinberger’s phrase from the Cluetrain Manifesto — “hyperlinks subvert hierarchy” (or expose it, which may be better)—is likely to have real impact.

Take Weinberger’s additional concept of first- , second- , and third-order organization of emergent knowledge (outlined in his “Everything Is Miscellaneous”), combine it with hyperlinks and spaces designed for interaction based on core usability principles and you have a potent recipe for looking at the design of socially-networked work groups.

In some senses, we’ve been here before … social interaction with other knowledge workers is the foundation of (for example) Fred & Merrilyn Emery’s theory and method of Participative Work Design and is at the heart of socio-technical systems (STS) methodologies for organizational development and change.  These theories and methods by and large reflect “getting the whole system into the room”.

Of course, with the arrival of the Internet and the advent of the interactive participative environment that is generally called Web 2.0, “the room” is larger and “the whole system” increasingly does indeed mean everyone, or at least the whole of the organizational crowd that makes up that organization.

Reams have been written about the Internet’s potential to democratize the access to and use of information. It does seem clear that the use of the Web, collaboration platforms, software-as-a-service, and cloud-based social computing by organizations that see information, knowledge and responsive innovation as mission-critical are core factors enabling the growth of network-based ways of creating pertinent and useful just-in-time knowledge and putting it to work.

Vertical knowledge disrupted

This causes dissonance and ambiguity because typically performance objectives, job assignments, compensation arrangements and bonus schemes are generally almost always predicated on causality derived from the vertical arrangements of knowledge and its use in planned and structured initiatives.  As more and more knowledge work is carried out by people communicating and exchanging information using hyperlinks in social networks (where knowledge lives ) and routing it to where it is needed at any point in time, vertical arrangements of knowledge are disrupted, if not subverted.

Call for organizational redevelopment

Based on the notions I have explored above and in previous writings, I believe there is a rapidly-growing need for what I call eOD (enterprise Organisational Development).  With greater fanfare It’s also been called Social business. As social business initiatives continue to proliferate, I cannot see how the latent dissonance I have tried to articulate will be avoided. I think it will have to be addressed by using new design principles for knowledge work.

Many parts of knowledge work have been routinized and standardized with the ongoing marriages of business processes and integrated enterprise information systems. What has not changed much yet is the adaptation of structures and culture to permit easily building flows of information into pertinent, useful and just-in-time knowledge, or fanning out problem-solving and accountability into networks of connected workers.

I think many executives and senior managers sense massive challenges to the power and status relationships (the core of yet-to-change organizational structure) that exist in most of today’s larger organizations.  This sense of a growing challenge is behind many senior managers’ and executives’ struggles to understand or become enthusiastic about the possibilities of Enterprise 2.0.  There is no Guide Chart yet about networked know-how, problem-solving or accountability.

Never mind that there is much rhetoric about the need for leadership at all levels, or about the empowerment and democratization of workers in organization X or Y.  Performance management, grade levels and compensation have yet to recognize how work gets done in networked environments and in a networked world.

And if any of you have any experience with performance management programs or in assigning someone in a job to a different grade level, or in making changes to levels of pay or bonus schemes, you know what a minefield those can be.



Will you be able to design jobs in the future? For those who get into the networked way of working there will be more intrapreneurial behaviours. How do you encourage them and allow more people to work that way? Is that job design or more akin to Dave's ideas about knowledge ecologies?


Hard questions, Euan.

I don't want to degrade your interest or attention by trying to give any flip answers or shoot from the lip .. so let me think on them for a while.

One thing comes to mind, though … starting (probably) with the generation younger than you or I (or maybe two), people have been being told "follow your passion and the work / money will come". Which is a bit trite, really, but also contains a kernel of truth. Plus, it's hard for many people to identify clearly their passion and / or purpose, and of course what if there isn't really any work to which to apply that passion or purpose.

Peter Cappelli of the Wharton School of Business (U of Pennsylvania) wrote a book about 15 years ago titled "The New Deal At Work – Managing the Market-Driven Workforce" which addressed this and some other key issues from a deep structural / economist -oriented way. I should go look at it again. Maybe your questions are making me do so ?

Jeremy Rifkin also wrote circa 1995 or so "The End of Work" .. much maligned, but probably ahead of his time .. another one I should re-read.

Jo Jordan

When I am putting together an HR strategy, including pay, my thoughts go in this order.

What do we have to coordinate? (Division of labour leads to a need to coordinate). The task at hand will answer the question.

What levels of skill need to be acquired within the business? We want professors to publish, for example. In a mine, we want people to learn how to coordinate mining, metallurgy and engineering. The skill acquisition needs of the particular business tell me what I must achieve with my pay scales. If I offer 40% more pay to kick up to the next level, then people will try. If I don't need skill acquisition, then of course I don't need to provide an incentive. I won't need the skill and won't pay for it.

The vertical line from top-to-bottom refers to authority – legal power. What set of statutes allows a professor, for example, to mark an essay and tell a student how good it is. Or for a miner to set an explosive and press the button. The lines of authority must be strictly maintained and are specific to a business and legal jursidiction. It is a matter of law that extends beyond the organization.

A vertical hierarchy comes about when we need to coordinate in a pyramid. When we do, then my payscales must support that structure and mustn't cut across the authority lines. If I don't need to coordinate in a pyramid, then I won't. It is an expensive way of working with everyone above a certain level 'coordinating'. I won't pay for that unless I need to. Basically, I want to keep my ratio of non-productive to productive people as low as I can. 0 would do quite nicely!

Supply networks do not necessarily change any of the above but we might be interested in making sure prices delivered within a network of farmers, say, rewards investments in the skills that are important to the network. I haven't seen any work on that issue.

Hay, btw, is rather odd because it leaves the relationship between pay and work undefined (usually exponentially increasing or a % rise from point to point). The Paterson has a better system. The horizontal axis is broken into 10 levels that have meaning in a pyramid structure and can be recognised reliably even by students. Pay increases exponentially over these 10 levels but at a constant %. When pay is logged (100=2 1000=3), then pay on levels is straight line and the slope, e.g. 1.4 shows the grade on grade increase as 40%. Pay systems are then easily managed by resetting the level for the lowest grade and new pay levels ripply through a spreadsheet at the touch of a button. Details of the pay curve vary from organization to organization and reflect its strategy. Typically though slope varies from 33% to 50% but the same % is maintained. The details are specific and are set to support the strategy.

I find the insight of Paterson valid for supply networks. A farmer who can reorganize his farm so his variability counter-weights variability in the abattoir is operating at level 6/7 (the same as a mine manager or consultant surgeon or Colonel). A farmer who can organize 100 farmers to do the same is operating at level 8/9. A quick bit of arithmetic will show you that the difference in earnings between a person starting to farm (level 4) and starting to operate effectively in a supply network approaches double. And going from starting to grasp supply networks to starting to organise them nearly doubles again. Those difference capture attention (but are nothing like what we have seen in recent years with CEOs).

Are organizations changing? Yes for sure. But the real issues are are going to be around understandind inter-organizational coordination in a supply network and working out whether mammoth organizations will have any advantage as we move into the next decade. As ever in business, the answer is always in the specifics and the way play unfolds on the day. I would rather cast my lot with a bunch of farmers working on sensible supply network sensibly. They will be around tomorrow unless we have discovered other ways to eat!


Jon –

I believe that the evolution of the enterprise has everything to do with structure and culture so this is a very important post. The reason I love networked social structures (communities) is because theoretically everyone gets more value out than they put in… the sum is greater than the parts. However, all value may not be financial AND you are right, we need a whole new way of thinking about contribution and how we assess and then reward that contribution. The value chain or organizations is recombining to create what you allude to, just-in-time problem-solving and accountability.

It's a bit of a nasty organizational hairball, particularly when you take a large enterprise and think about how to make the structural changes needed to move toward something more networked. And never mind that this change is starting by implementing technology which is the easiest part of this change and in many cases will create more, not less, organizational friction.

I believe you have to start with one small corner or an organization – we find this is often the 'social media/business/etc team'. They often don't realize they need to be cultural vanguards, innovators, and evangelists but it can start with one small but impactful change.

Ultimately, you are right. Many organizations will not get there and even for those that do, it is going to take a long time and a lot of experimentation.

Fantastic post – thank you for taking on this topic and for articulating some of the fundamental structural issues with this evolution to what we're calling 'social business'

Dan Pontefract

Had to read (and re-read) this post a few times before responding. (it was very good and very deep, so I had to process things)

I believe the notion or recommendation of eOD (enterprise Organisational Development) is noble, but what it really is advocating is the reinvention of Human Resources. (the profession and to a degree the department)

If the education vertical is now being looked at with a fresh lense (see 21st Century Learning writing, or the collapse of the Corporate University as another example) the traditional Human Resources function is also in need of a refresh or redesign.

Thus, your point about performance development is intricately linked to the HR profession and/or department. As of today, many (but not all) organizations rely on HR to carry out the PD process, etc.

If the organization were to redesign HR, perhaps the PD piece would also be included in such a redesign … therefore, addressing your eOD point.

Should there be an HR Cluetrain?

Jon Husband

< Should there be an HR Cluetrain? >

Yes, of course.

And I suspect you know or believe, Dan (as do I) that the way we design work and what "contains" it (positioning on the org chart, objectives, perf mgt schemes, bonus schemes, etc.) is a key element, if not the central element, in the way(s) the people doing that work are managed .. and thus behave.


Hmm .. Dan, the more I think about your comment, the more I think it is larger than HR.

I think what I yap about above reflects fully the way we think about work and knowledge generally, and put it into use in the sense of the architecture (both social and techies-led) of organized human activity.

By now .. 60 years on .. we just think it is the natural way to organize work. How we manage it, how individuals relate to it, and therefore whatever is an organization's culture .. follow and flow from it, basically.

Megan Murray

Jon –
I'm very much with Rachel on this one (albeit months later) when she says "I believe that the evolution of the enterprise has everything to do with structure and culture so this is a very important post." I also agree that the issues are larger than HR alone, and that HR is an incredibly important element that establishes the tone and health of the employee / organization relationship (when exactly does an employee stop being part of the organization and become reduced to employee, and who is this organization after all?). The models have to change. I'll leave modeling the where's an how's to those more expert than myself, but will also caution, models need to be human if humans are to participate. If an employee has to execute a quadratic formula to understand their value to the organization they'll likely sense the deflection.. and remember, we're talking about a relationship.

Social tools have an amazing power to magnify what already exists within a culture. I'm not at all surprised when large, hierarchical organizations find 'turning on social' problematic.
That said, we need those brave trailblazers to lead the way. To get past their awkward social youth and find some authenticity in their relationships.

I find (prepare for totally biased personal generalization) fewer and fewer of the smart people I know willing to play cog to a wheel that could care less for them. Even in the current climate. Organizations which defer to unyielding and less human relationships will be bastions of mediocrity despite their marketing dollars. Conscious employees and customers will (and do) know this intimately. Coming from that perspective I believe the comfortable (and perhaps unconscious) Taylorists will become less comfortable in time. Despite marketing to the contrary, our tipping process is still underway. As evangelists (I really do hate that word) we can show the horse the water, how lovely and clear it is. We can prove it's safe to drink and demonstrate its ability to quench thirst. We cannot however make it drink. But soon, in the planetary sense of the word, change will come.

I often wonder if the perfect tension of the current political and financial climates are keeping change happening at a pace where humans can absorb it without too much shock. Evolution baby? I've spoken with countless individuals involved in social business efforts who are seeing their worlds through a new social lens. As they wake it's harder and harder to go back to sleep.

Brilliant, thought provoking post Jon. Thanks for entertaining my ramblings here.


Thanks, Megan. Coming from someone who has as much hard-won experience as you with the issues as social tool are implemented and evolve, it means a lot to me that you think this is an useful exploration of what I think are some of the fundamental issues.


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