Chaordic Organization

A chaordic organization is a form of organization formulated by Dee Hock and others in forming the VISA organization (Hock, 1999). The term 'chaord' is formed from the words 'chaos' and 'order'. In the formation of the VISA organization, a means was designed to allow for the simultaneous cooperation and competition of the member banks of the VISA issuing network. This was necessary for the scale and universality needed to make credit cards usable in any geography and to provide low costs of processing each transaction. Dee Hock's vision of this type of organization was largely, but not fully, achieved by the VISA organization at the time it was first formed.1

The mix of chaos and order is often described as a harmonious coexistence displaying characteristics of both, with neither chaotic nor ordered behavior dominating. The chaordic principles have also been used as guidelines for creating human organizations -- business, nonprofit, government and hybrids—that would be neither centralized nor anarchical networks.2

Characteristics of Chaordic Organizations3
  • Based on clarity of shared purpose and principles
  • Self-organizing and self-governing in whole and in part
  • Exist primarily to enable their constituent parts
  • Powered from the periphery, unified from the core
  • Durable in purpose and principle, malleable in form and function
  • Equitably distribute power, rights, responsibility and rewards
  • Harmoniously combine cooperation and competition
  • Learn, adapt and innovate in ever expanding cycles
  • Compatible with the human spirit and the biosphere
  • Liberate and amplify ingenuity, initiative and judgment
  • Compatible with and foster diversity, complexity and change
  • Constructively utilize and harmonize conflict and paradox
  • Restrain and appropriately embed command and control methods.

Creating a Chaordic Organization4
There are several writings about how to create a Chaordic organization. They all consider values, principles and empowerment of the people working in this organization.
  • Develop a statement of the organizational values: Create a joint statement of the organizational value. The value is not an instruction of what we need to do as an organization. It is a vision of what we are going to become. A challenging but reachable future supported by all stakeholders of the organization.
  • Create a set of organizational principles: Jointly define the rules and principles of working together. A description on how to behave and how to collaborate. Not enforced like procedures, rather stated like a manifesto of collaboration. Also state how to disagree and use this conflict in a positive way. The principles define how to organize, structure and operate within the organization.
  • Ensure collective ownership by the people participating in the organization: The organizational values and principles need to be owned by all people within the organization. They have to be aligned with their personal values and believes and stimulate a collective positive attitude towards these values. Involve everyone in the organization with the Chaordic concept and make sure to show this is not just a vague concept but real working practice. The important difference here is that the implemented rules, structures and systems are aligned with natural believes of the people working in the organization. So they can agree with the principles instead of submitting their believes in favor of the organizational rules.
  • Be prepared to challenge and change everything: Create a constant state of organizational flux. Consider the organization as a living organism and see how it reacts on changes and challenges. Be prepared to change everything: from structure, systems, rules and management. Discover organizational structure. Support emergent movements and facilitate individual growth of the people in your organization. Consider change as a new way to improve and learn new things.
  • Nurture innovation: Nurture innovative concepts and ideas. Create space for these ideas to grow, challenge them in a positive way and do not hinder them with rules and demand for results. Consider everybody in the organization as a potential participant for innovation. Make sure you remove boundaries and create a safe environment to experiment. Learning form failure and improving on successes.

Too much chaos and nothing gets done, people lose faith and ultimately become apathetic. Too much control and they feel stifled and want to revolt, or leave. Where’s the sweet spot? The diagram below explains the various system states and identifies the place where the system has enough strength to tolerate risk, and enough openness to respond to change.5

Image
source: Listening2Leaders.com

Why are chaordic organizations important today?6
Specialists in management innovation, organizations must give priority to the concept of the chaordic organization for the following reasons:
  • Scale: Given that we have now reached a world population of six billion people in a world that is ever more interconnected, it becomes more and more clear that no mechanical, top-down organizational structure based on control can be effective. On this scale, the only effective organizations imaginable are those that are biological, guided by organizing principles, and that count on the full potential of people to think, to create, and to self-organize.
  • Complete democracy: As with nations, so too in companies, the concept of democracy develops step by step with the evolution of technology. Organizations that are responsible for themselves, societies that are responsible for themselves, equality, an emphasis on cooperation, everyone serving and everyone served—the concept of chaordic organizations has everything to do with these ideas. It is a means to make the ideals of democracy and humanity tangible, for the first time in history …
  • Human expression: Mechanical, standardized, and limiting organizational structures will never succeed in dealing adequately with questions of human motivation. In principle,there are always
    fundamental limitations.The most legitimate source of motivation—space for creativity—is always controlled, limited, and subject to imposed, unnatural standards. Chaordic organizations have great potential for enabling human creativity to go beyond its current limits. In fact, if we don’t contaminate chaordic principles with the fears inherent in management processes based on control, there will be no limit to what human beings can create.
  • Essential values, today: Autonomy, freedom, respect – values that people more and more genuinely value – real freedom, real human respect are much more in line with chaordic principles than
    with the more traditional forms of organizational structure. In traditional organizations, these values are always “under pressure,” given little quarter, limited. This occurs naturally, on the one hand, given that control is, by definition, the limitation of the space for free action. On the other hand, such values are also limited through abuse of power, creating “underworlds” in the organization, organizational politics, unethical agreements, the absence of transparency, etc.
    5. The Age of Knowledge: In an age in which all human knowledge will be available to whomever needs it, it is fundamental that space for people be available, that it exist. Not to provide such a
    space would be an enormous waste of human potential. The principles of chaordic organizations ensure the existence of such spaces. Traditional organizational structures that fragment work in principle limit space, and thereby reduce the area available for action (on the presumption that its employees don’t have the necessary knowledge, or sufficient potential to create what is needed).The assumption is that their employees are not capable of thinking, and that they are there to carry out what has been thought of by others, their “superiors.” Chaordic organizations honor people who think.In fact, they honor and respect everyone.


See Also»

Chaordic Leadership

Organizational Culture

Accountable Care Organization (ACO)

Causal Model of Organizational Performance and Change




References»

1Definition of Chaordic Organization Create Advantage
2What is Chaordic Organization? Wikipedia
3Characteristics of Chaordic Organizations P2P Foundation
4How to create a Chaordic organization? Robbrecht van Amerongen
5Balance – Chaos Versus Structure Listening to Leaders
6Why are chaordic organizations important today? Paricenter


External References»

  • The Chaordic Organization: Out of Control and Into Order Ratical.org
  • Building a Chaordic Organization Lead MCG
  • One from Many: VISA and the Rise of Chaordic Organization Dee Hock


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