Today we are transitioning from a hierarchical society to a network society that favors peer-based relationships. The network society does not automatically privilege rank, so in cases where
Peer-based organizations will have a competitive advantage over rank-based companies in the network society. With help from the work of Manuel Castells in The Rise of the Network Society (1996) we can identify some of the characteristics of this kind of society:
No single centralized authority, but multiple centers of decision making that are globally interdependent
Different, yet parallel, paths of systems and processes making the network society resilient yet incredibly
Ability to expand without limits and to innovate without
Open communication and information
Belief that process is more important and powerful than position, and that the key resource is
Networks apply the logic of peer-based management for decision making and for the meaning of individual identity and human relationships in organizations ”fundamentally different from the management logic in rank-based organizations. It's commonly said that you lead people and manage things, but I suggest that leading, as we understand it today, is a rank-based practice that will no longer serve our social and organizational contexts. In peer-based organizations, the practice of management will exclude
Logic is the explicit or implicit set of norms or rules with which we judge and make decisions in organizations. Depending on whether you make rank-or peer-based assumptions, you will use specific criteria in making critical decisions. Frequently these criteria are left
Rank-based logic regards leadership as an opportunity to be
positionsare reserved for the select few who climb to the top of the organization.
Everyone is invited to be a mentor to others and a creator of value, to participate in decision making, and to share in the exercise of power.
Rank-based logic creates an exclusive club. Your identity and value arbitrarily follow from your position in the hierarchy, and you genuinely relate only to those of the same rank. To support this club, organizations select individuals, put them through "cookie
Peer-based logic creates an inclusive, participatory organization. There is no sense of a "top" of the organization and no exclusive club to belong to or protect. In the absence of rank, all
"Command and control" is the key phrase in rank-based logic.
Power is defined as command and control over things and people.
Power is defined as influence on things and people.
Rank-based logic seeks to coerce cooperation. Yet commanding a subordinate produces only compliance and dependence. Again, because of rank, the meaning and value of your life are falsely determined by how many people are above you and therefore can command and control you, versus how many people are below you, meaning you can command and control them. Such
One company that puts peer-based logic into practice is Motek, a twelve-year-old software company based in Beverly Hills, California. At Motek, all
Peer-based logic posits that influencing others creates commitment ”practicing the power of subtle influence evokes cooperation within the organization. Respect and commitment from others, as determined by the integrity of your choices, are what genuinely give meaning and value to your life. At W. L. Gore &
"Dominate and you will win" is the attitude of leaders who use rank-based logic.
You must dominate, intimidate, and use fear to motivate employees.
Getting things done is the natural
pathfor people; people are self-motivated.
An extremely bright and dedicated executive called me one day. He was the vice president overseeing the software engineers in his organization. He told me that his engineers were unmotivated and not committed to the company. He wanted to give them an ultimatum: Either pledge commitment to the company or leave! I persuaded him to meet with me first. Over
We discussed an alternative strategy where I would facilitate a peer-based team analysis of their situation and possible solutions. He agreed to the meeting and to approach it not as the leader who would tell them what to do, but as an associate who was asking for their participation in solving a common problem. I enjoyed two fabulous days with him and his team of engineers, and we made real progress in creating a dynamic and successful peer-based team.
With rank-based logic, everything is in
People are selfish and unwilling to share.
People are willing to cooperate and share with those who cooperate and share with them.
Rank-based logic characterizes people as basically selfish and unwilling to share their resources, knowledge, or time. So you must ruthlessly
Peer-based logic characterizes people as altruistic and
Motek, for example, gives every employee, after ten
There is no sense of community in rank-based logic.
People at work are just
replaceablecogs in the machinery of business.
People are by nature social animals who seek and enjoy working with others.
With rank-based logic, people see work as a
Author Jason Jennings, in a USA Today (2002) editorial, said that many leaders believe downsizing in tough economic times is the right leadership thing to do. Citing a major 2002 research project of The Business Roundtable on the relationship between layoffs and productivity, Jennings challenges this conventional wisdom. The research revealed that the world's most productive firms make an explicit promise never to balance the books through layoffs. Instead, they look for more creative ways to cut costs and increase demand.
After evaluating the finances of more than 4,000 public and private firms worldwide, my research team and I settled on 80 that topped their peers by every reasonable measure of productivity. Simply put, these firms sold more, spent less and made more profit per employee than their competition, year after year.
The most striking trait these 80 productivity superstars shared was their
passionate oppositionto layoffs, even when the economy was in the dumps. Consider Nucor, America's largest steel maker, which manufactures rolled steel and steel joists. Nucor has reduced the time it takes to produce a ton of steelfrom 11 hours to 30 minutes ”while increasing its earnings for 30 years in a row.
In line with this study, peer-based logic
Rank-based logic produces a serious imbalance in the way rewards are distributed.
Those higher in rank are entitled to a far greater share of the organization's resources in the form of compensation than those lower in rank.
Distributing the organization's resources more equitably in the organization will generate far greater returns to everyone in the long run.
Rank-based logic asserts that the large and growing gap between the salaries of the top executives and those of the frontline workers is natural and justified given the disparity in contributions leaders make compared to everyone else. It asserts that there is nothing anyone can do about the gross disparity in pay and compensation between the top and bottom of the organization ”that's just the way the game is
Peer-based logic retorts that this attitude is a result of the myth of leadership and does not reflect reality ”that the growing gap in salaries is a serious threat to the long-
Epidemiologist Richard Wilkinson has spent a lot of time