The Fractal Structure of the Organization
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The Fractal Structure of the Organization
Iraklis Goniadis, Business Consultant
A way to pass through 4th Industrial Revolution.
The fractal structure of the organization
The start-up model of any business initiative presupposes its clear identification and operation by people with the appropriate abilities and skills. The business model should be dynamic as it is subject to changes strategically planned or forced, due to changes in the technological, economic and social environment (e.g. due to memoranda imposing financial restrictions/financial crisis, COVID-19 crisis, etc.) with its main feature being the flexibility of the organization. As the company grows, it becomes complex in structure and complex in its operation, mandating the need for the strictest choice of partners, who must have the ability to decode and assimilate the “new”(e.g., new trend, new practice, new challenge etc.), if not to create it.
In addition to the necessity of a strict choice of partners, their functional integration into the structure of the business is also imperative, as well as them adopting its principles and culture, in which, innovation is impossible not to play a leading role, constituting its most critical ability for survival. A "sine qua non" condition for this to happen, is the establishment of meritocratic criteria based on their qualifications, keeping in mind that hiring one out of sorrow is not an appropriate criterion in the recruitment process of a business, as there will not be any for its founder or the administration in case of failure.
In the structure of such an organization, the same mentality of cooperation and support prevails throughout the horizontal hierarchy and its range of functions, without discrimination in the diffusion of knowledge and with appropriate recognition of the contribution of each one member of the organization in achieving the set goals, the organization’s as well as their own. The “whole” is aligned with (the sum of) its parts, as each department or partner has the power to confirm its positive or negative image in the consciousness of its social partners during every interaction with them. In other words, the organization is what it seems, whether it concerns its overall image, or the image of a department or the one of any individual partner who represents it in all its contacts with the public, that being the qualitative metric that reaffirms the quote "show me your friends (partners) to tell you who (what) you are ".
The organization chart of such a business could take the form of a complex system, such as that of a fractal, the main feature of which is "self-similarity". In the formula of this geometric shape, each magnification (reduction) of an increasingly smaller (larger) part reveals its identical form with that of its whole. In terms of organization with a horizontal hierarchy, when focusing on an employee (part), the image of the whole is reproduced, which predisposes positively or negatively the observer (customer, supplier, financier).
As shown in the figure above, each subset of employees (triangles α-β-γ and a-b-c) forms a team inspired by the basic principles and values of the corporate culture, it has direct and complete information (both as a receiver and transmitter simultaneously) about what is happening, having the necessary skills that it is constantly developing inside and outside the organization. Such a "pattern" of a team or any of its members, fits harmoniously into the immediately larger whole, forming the unified and uniform image of the company (triangle A-B-�").
The triangle A-B-�" presents the structure of the company as a whole, which is composed of smaller ones of the same shape (a-b-c triangle) such as, for example, the departments or directorates of marketing, production, financial management, etc. The same goes for the projects or the specific functions (triangle α-β-γ) such as product development, production line, sales, etc., for which the same conditions apply as the ones that prevail throughout the organization.. The company exchanges information with every point of contact in its external environment, information that it spreads throughout its body in order to produce new knowledge which is continuously transmitted to everyone, as shown by the cellular development of the two-way arrows in the figure.
The B-�" base of the triangle is the "vanguard" which is under the direct pressure of competition, facing the challenges of the market. The partners in the “trenches”, which require constant reinforcement with the "appropriate weapons" and the authorization of their use, are sources of immediate information. A wise management, taking seriously the suggestions and ideas caused by the friction with the competition, knowing immediately what is happening on the "front", is able to make better decisions; even by emancipating the "front line of fire" in order to prevent worse situations, given that the shortest reaction time to the occurrence of the problem mitigates the damage or completely averts it.
Having each employee participate in interoperable groups (see the figure where part of the triangle or all of it is part of a larger one, etc.) facilitates the transition to the development and production processes of a product in all its stages, as all members already know everything with regards to its creation. Familiarity with switching roles, whenever it is considered necessary or even inevitable, makes change a self-evident and hassle-free process, whether it concerns a simple job position or something even bigger, such as changing a whole business model. As a result, interoperability of groups helps avoid gaps and setbacks, disputes and conflicts where every side blames one another, adding costs that can derail the organization. In addition, the relationships between them are strengthened as well as the creative intensity that sharpens the mind, pushing it to higher levels of function and better thinking and ideas.
Creating a fractal type of organization is not an easy task as it requires a leading style and a strong management team which, not only will not be limited to the "top-down approach" but will interact with the whole "hive" as often as possible, in order, firstly, to have a direct sense/view of what the prevailing conditions throughout the organization are and secondly, to be as best positioned as possible to provide the necessary and meaningful support during the struggle of its "bees". Putting it another way, management must serve the structure to expect similar quality results in return.
A management team that stays in the rear, runs the risk of being constantly misinformed, as communication within a company is a very serious matter to be assigned only to some channels whose compliance, in any case, must be checked. In addition, alienation can provoke a challenge to leadership which, ignoring the real/actual conditions on the battlefield, is likely to wrong the fighters under whose scrutiny it is placed, after all. That is true, especially in times of crisis in which fear and uncertainty could potentially erode all employees by shaking their trust and the reputation of the company, for the restoration of which, time and persistent effort will be necessary.
Only such an organizational structure is likely to adequately respond to the competition introduced by the 4th Industrial Revolution! Therefore, its composition, in addition to being under the responsibility of the administration, is also a strong indicator of its ability to "navigate" the company in the constantly "stormy seas" of the markets!
Iraklis Goniadis (PhD)
Retired Entrepreneur & University Teacher .
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