Interacting Flows: Value, Authority, and Communication
I've been thinking about a number of "flows" within organizations — the flow of authority, the flow of value, and the flow of communication — and how they interact. I have a few ideas and a lot of questions today. No answers.
The flow of authority is defined by the organization's formal hierarchy. Authority is the organization's permission to allocate its resources. People higher in the hierarchy have greater authority. That is, they have permission to allocate more resources.
The flow of value is the circulatory system of the organization. The organization functions by arranging the flow of value within and across its boundaries. Across the organization's boundaries, products and services flow out to customers; and money flows in. Profits flow out to investors; investment capital flows in. Money flows out to suppliers; materials and tools and services flow in. As long as each flow creates value for each person who participates in the flow, the organization sustains itself.
Within the organization, value flows from group to group. Each group acts as internal investors, customers, and suppliers for others. As long as each flow creates value for each group, the organization thrives.
Here are some questions I'm pondering: How do these flows relate to each other? How do they interact? What are the effects of different ways of relating and interacting? What kinds of interactions lead to a healthy organization? What kinds lead to organizational illness and death?
Communication flows along both kinds of channels. It flows up and down the hierarchy, and it flows through the networks of internal and external investors and customers and suppliers. It flows from one channel to the other, allowing the flow of value and the flow of authority to inform each other.
What happens when communication flows less readily along each path? One kind of blockage is when communication flows more readily within a group, but not across the group's boundaries to related groups. This is the familiar stovepipe or silo problem.
What other kinds of communication blockage are there? Are there organizations, for example, in which the people in each group communicate readily with their internal customers and suppliers, but not up and down the authority hierarchy? What do those organizations look like?
What other kinds of flow are there? How do they relate to the flows of value, authority, and communication, and to each other? What are the characteristic symptoms of blockage in each flow?
I suspect that thinking about flows can help us identify ways to increase an organization's health.