When I left off last week, I concluded that the structure of an organisation dictates who has decision making or funding authority. And it is these key individuals that then create the organisations culture and strategy. I wanted to state this more formally, and after several attempts arrived at the following:
*Kane's Law states:
"The structure of an organization dictates the distribution of power, decision-making authority, and the organization’s capacity for innovation or adaptation. Without addressing structural patterns, efforts to change systems, culture, or power dynamics will be superficial and ultimately unsustainable."
With Kane's Law, the relationship between structure and power is central to an organization’s functioning and evolution. Organizational structure determines who holds power, how decisions are made, and the ability to adapt or innovate.
Here's a closer look at how structure and power interrelate:
1. Structure Determines Who Holds Power
- Hierarchical Structures: In traditional hierarchies, power is concentrated at the top, with decision-making flowing downward. Lower-level employees have little influence, and authority is centralized among a few positions (e.g., CEOs, VPs).
- Flat/Distributed Structures: In contrast, distributed structures spread power more evenly, allowing decision-making to occur at various levels without constant approval from higher-ups. This fosters a culture of empowerment and autonomy.
Implication: In hierarchical systems, power is concentrated, while in distributed structures, it is shared, creating different dynamics of control and influence. Shifting power requires structural change.
2. Structure Influences Decision-Making Authority
- Centralized Decision-Making: In hierarchical organizations, upper management controls decisions, often causing delays as multiple layers of approval are needed. This hampers responsiveness to changes or innovation.
- Decentralized Decision-Making: In distributed structures, decision-making is delegated to those closest to the work, resulting in faster, more agile responses based on direct engagement with the problem.
Implication: Structural design affects who has decision-making authority and how quickly decisions can be made. Decentralized structures align power with the need for flexibility and speed, essential for innovation and adaptation.
3. Structure Shapes Power Dynamics and Resistance to Change
- Power Inertia: In hierarchical organizations, middle and upper management often resist change as it threatens their control. Structural shifts, such as decentralizing decision-making, redistribute power, which can cause pushback.
- Adaptive Organizations: In adaptive structures, power shifts based on expertise and project needs. Leadership is more fluid, enabling the organization to respond to changes without significant internal resistance.
Implication: Structural rigidity fosters resistance to change, while flexible structures allow power to shift as needed, reducing friction during transformation.
4. Structure Affects Organizational Capacity for Innovation
- Innovation in Hierarchical Structures: Hierarchical organizations tend to innovate more slowly because decision-making is concentrated at the top, and those in power often resist changes that challenge the status quo.
- Innovation in Flat Structures: Flat structures empower teams to innovate without needing approval from higher authorities. Decisions and ideas can emerge from any level, fostering quicker and more widespread innovation.
Implication: Innovation is closely tied to organizational structure. Decentralized structures foster creativity by distributing decision-making authority, while hierarchical structures tend to stifle innovation by concentrating power.
5. Structure and Accountability
- Centralized Accountability: In hierarchical structures, accountability often follows the chain of command, where leaders are responsible for the performance of those beneath them. This can result in a lack of ownership at lower levels.
- Shared Accountability in Distributed Structures: In flat structures, accountability is shared across teams. Empowered teams are directly responsible for the outcomes of their decisions, fostering a stronger sense of ownership.
Implication: Structure dictates how accountability is distributed. In hierarchical structures, accountability is top-down, while in flat structures, accountability is shared, leading to greater engagement and responsibility.
Relationship Between Structure and Power
- Structure defines power: In hierarchical organizations, power is concentrated, while in flat or distributed systems, it is shared.
- Decision-making flows from power: Centralized structures favor top-down control, while decentralized structures enable faster, more flexible decision-making.
- Power dynamics influence change: Structural rigidity protects existing power holders, whereas distributed structures facilitate innovation and adaptation by allowing power to shift more easily.
- Innovation depends on power distribution: Decentralized structures foster innovation by allowing power and decision-making to occur at various levels, whereas hierarchical structures often stifle creativity by centralizing control.
Kane’s Law posits that an organization’s structure determines how power is distributed, which in turn shapes decision-making, innovation, and adaptability. Changing an organization’s structure, particularly moving from a hierarchical to a more distributed model, fundamentally redistributes power, impacting how quickly decisions are made, how innovative the organization can be, and how well it adapts to change.
Next week I'm going to look at some other important but lessor conclusions that naturally follow on from Kane's Law.
*I tried different names for this idea including "Mar's Law", "Mar's Maxim", and "Kane's Conundrum". In the end, I was happiest with a simple, direct name without any pretense ... hence "Kane's Law"