Template:M intro design org chart

What you see is all there is.

— Daniel Kahneman

Der Teufel mag im Detail stecken, aber Gott steckt in den Lücken.
“The Devil may be in the detail, but God is in the gaps.”

—Büchstein, Die Schweizer Heulsuse

Org chart
/ɔːg ʧɑːt/ (n.)

A formal portrait. A still life. A glib schematic that tells you everything you don’t need to know about an organisation, but which it treats as its most utmost secret. The org chart is a formal diagram that places everyone in a logical, hierarchical relation to everyone else, reporting lines radiating out and down from the the splayed fingers of the chief executive officer. It is a centrally-sanctioned, aspirational, blueprint: to the executive suite what the “built environment” is to the town planner: a plausible account of how the organisation is meant to work.

Form, not substance

But organisations have a way of frustrating their executives’ best-laid plans, just as cities delight in upsetting their urban planners’ platonic aspirations. This is not an accident but necessary consequence of forward motion into an uncertain future: an organisation that devoutly obeys its present operating manual is, to all intents and purposes, on strike. That is, in fact, the definition of a “work-to-rule”.

For an organisation is what it does, not what it is. What it is, when not doing something, is a dematerialised pile of papers.

Org charts say as much about what an organisation does as an ordinance survey map does about what the weather will be like, or how people will behave if it rains. Being static, they speak to what is meant to happen in an expected future that behaves according to the historical model. They cannot accommodate contingencies, opportunities, and unexposed risks. They contain only the vertical communication channels that personnel are meant to use to respect the firm’s governance structure, not the lateral ones they must use to move the organisation forward, much less the informal ones they do use, because they want to, and because — to hell with the rules — these have proven the best way to get anything done.

We should not underestimate the importance of the “want” in that calculus, by the way: we always have a choice as to whom we call to progress a given task. All other things being equal, we choose those who we have found to be helpful, co-operative and imaginative over those who tend to be defensive, hostile, boring or stupid. It is reflexive: “no good deed goes unpunished”: over time, popular staff field more calls, get more experience, build better networks and give better outcomes: “want” converges with “need”. Lesson: if you want to get ahead, don’t be a dork.

In any case, these vital informal communication channels rarely run along the formal lines of the org chart. Why would they?

What you see is all there is

Yet management is obliged to focus on this formal, static structure, made flesh in reporting lines, because that is all it sees. Consider an imaginary employee: Dan Grade.

Dan is an ED in the risk team. The CEO can’t see what everyone knows: that Dan is the go-to guy for dumb questions, sensible takes and tricky escalations. He’s also an agreeable chap: he has been in the organisation twenty-five years, runs a tight ship, holds a trove of institutional knowledge and personal capital which he applies deftly to managing risk, tamping flare-ups, calming intemperate traders and heading off incipient trainwrecks while patiently educating generations of grads, juniors and, frankly, his own line management in the mystical ways of sound of risk management, all the while maintaining and heroic sense of composure and superhuman tolerance for tedium, time wasting and petty initiatives foisted on him by middle management. Dan does all this so well that he rarely comes to the attention of anyone important. From the eagles nest, he’s just tiny, fungible node in the thickets of branches fanning out across the valleys and plains of the org chart chart below. Only his reporting line and salary is “legible” from the executive suite. They can count and optimise the spans and layers, of which he is part, and attribute to them the profits and losses of the organisation even if, in practice, they don’t map awfully well, but they have no clue as to what he does to move the organisation on.

Closer at hand, there are hundreds people — all of them indistinguishable nodes on the org chart, of course — who know the place would fall apart without people like Dan.

Management can’t see people like Dan. It can’t see how many people go to Dan — how vital an informal node in the operation he is. Management only sees reporting lines: the most sclerotic, rusty and resented communication channels in the organisation. Reporting lines are the “keep off the grass” signs; vain attempts to coerce inferior modes of communication over better ones, for if formal reporting lines really were the best lines of communication, you would not need to coerce them: they would just happen, the same way lateral communications naturally flow into Dan.

Since they don’t, management exhorts line managers to meet weekly with their directs, populating standing agendas to furnish management information and statistics fit for injection into opco decks and RAG dashboards of handsome looking but, given the circumstances of its generation, basically useless data.

Now this is not to suggest that there are no meaningful communications between line manager and direct report: that would be absurd. If they are both in the office, they will be constantly be in contact — one more reason working from home is not the paradigm shift some would like to believe — relaying important information to each other more or less in real time. But this will be an informal dialogue: unminuted, off-the-record, oral, instantly evaporating, plausibly deniable and, until formalised, entirely beyond the ken of the management.

Consider what it takes to formalise that live dialogue: firstly, it will be highly filtered to weed out the usual interpersonal pleasantries, low-level exchanges about the technical details various projects; updates about deal completions. Then there are the risk items: hitches, snafus and brewing ructions. This is the important stuff: here a key objective of any report is to get this information to the boss PQD so she isn’t blindsided by someone further up the chain. If someone outside your chain of command knows about this problem, you best make damn sure your manager knows it, so she can tell her knows about it, up the chain. But all this, to reiterate, is still informal, off-grid communication.

By the time that communication is formalised into the written record, it has been euphemised, contextualised, narratised and put into an absolving passive in such a way as will give little hint of the enormity of the unfolding situation whilst still allowing one to claim “I did tell you” should the crisis reach its full potential.

Thus, formal communications along the chain of command hardly help the organisation but are more or less certain to mislead it into a state of gullible complacent.

When the firm is in motion

The firm’s business only gets done when its gears are engaged. And that happens when its personnel communicate with those who are outside their immediate reporting line.

Reporting lines are a static map of the firm, configured in the abstract, when it is at rest. That is, before it does anything. This is how the machine works when it is idling.

But the organisation’s resting state overlooks its real arterial network: lateral interactions that must cross whatever boundaries management can dream up, or that leave the firm altogether: these are the communications that employees must make: between internal specialists in different departments; with the firm’s clients and external suppliers — they make commerce happen and move the organisation along. It is in these interactions that things happen: it is here that tensions manifest themselves, problems emerge and opportunities arise, and here that these things are resolved. These are not the drill, but the hole in the wall.

These are informal interactions. They are not well-documented, nor from above, well-understood. They are hard to see. They are illegible.

Yet, everyone who has worked in a large organisation knows that there are a small number of key people — the Dan Grades of the world — usually not occupying senior roles (they are too busy getting things done for that) who keep the whole place running. These “super-nodes” know histories, have networks, intuitively understand how the organisation really works, what you have to do and who you have to speak to to get things done. These are the ad hoc mechanics who keep the the eighteen-wheeler on the road.

Often management won’t have much idea who these “super-nodes” are, precisely because they do not derive their significance from their formal status, but from their informal function. They earn this reputation daily, interaction by interaction.

A bottom-up map of functional interactions would disregard the artificial cascade of formal authority in favour of informal credibility. It would reveal the organisation as a point-to-point multi-nodal network, far richer than the flimsy frame indicated by the org chart. With modern data analytics, it would not even be hard to do: Log the firm’s communication records for data to see where those communications go: who chats with whom? who calls whom? Who emails whom? What is the informal structure of the firm? Who are the major nodes?

Modernism vs. agilism

The modernist sees the firm as a unitary machine that must be centrally managed and controlled from the top: the more structure the better.

The “agilist” sees it as an ecosystem, and advocates removing layers, disassembling silos and decluttering the structure. Don’t rely on those senior managers: get rid of them.

The agile theory is that risks and opportunities arise unexpectedly, in times and at places you can’t anticipate. The optimal organising principle therefore is: give talented people flexibility and discretion to react as they see fit. Have the best people, with the best equipment, in the best place to react skilfully. Those people aren’t middle managers, the optimal equipment isn’t necessarily the one that leaves the best audit trail, and that place is not the board room, nor the steering committee or the operating committee.

It is out there in the jungle. Management should seek the fewest number of formal impediments to the creative behaviour of those people.

So to understand a business one needs not understand its formal structure, but its informal structure: not the roles but the people who fill them: who are the key people whom others go to to help get things done; to break through logjams, to ensure the management is on side?

These lines will not show up in any org chart.