Transorganizations: Managing in a Complex and Uncertain World
The use of single organization management paradigms and practices are becoming increasingly more limited and limiting.
We are witnessing a major confrontation to the rugged individualistic managerial and organizational thinking and practices. Our societies are becoming more urbanized, our institutions more complex, our industries more interdependent and our decision models more non-linear. A great deal of how we view and think about ourselves, organizations, and the world around us is influenced by singular cause and linear thinking. Many of our prevailing managerial metaphors and models are inherited from an information and resource sparse world which was simple and disparate. Independent and stand-alone organizational thinking is no longer adequate.
Management in a connected, interdependent, and information intensive world requires new thinking and innovative approaches. The increasing interdependence and complexity of organizations and institutions call for transorganizational thinking. It is broad thinking that extends beyond classical views of organizations and industries as independent and stand-alone entities. It is appropriately grounded in integrative multifaceted and multi-discipline general systems thinking.
New and emerging transorganizational opportunities and forms are evermore present. New age of highly interconnected complexes such as Google and Facebook appear quickly. Their dominant view of the world and themselves is transitional and transactional. They expand and change in a dynamic pervious transorganizational world creating and capitalizing on unfolding opportunities. They create the new normal and understand that margins of error are narrow and laws and natural selection creates obsolescence at ever faster pace.
In this transorganizational world there should be little surprise that events in one region of the world can have impactful transorganizational consequences globally. Bank failures in one region impact economies across the globe. Impact of isolated decisions can ripple and surge quickly and with unexpected results across global transorganization systems. Leadership and management in our transorganizational world require fresh new thinking and perspective. Time and again transorganizational thinking enables transorganizational entities to capitalize on opportunities and deal with threats and disruptions. The complexities of our unpredictable world provide immense opportunities and deadly failures. This article explores the emerging world of transorganization systems, aspects of their characteristics and dynamics.
Transorganization systems are abundant. Today’s interconnected communications and transactional systems extend beyond the classical views of organizations, environment, and interorganizational relations thinking. Transorganization thinking spans beyond the notion of organizations as network of sequential events and consequences or flow of goods and services of Veblen and boundaryless organizations.  Transorganizations are composed of multitudes of interacting institutions, industries, regions, organizations, and interest groups. As complexes, their impact and influence pulsate through large systems. They can impact the internal functioning of any single organization cross functionally driven by the change induced complexities in environment. Similar to a quantum field, they are comprised of energy charged dynamic matters with plasma like fields.
Often, transorganizational dynamics emerge by implicit or explicit common, symbiotic, interdependent, or even oppositional goals of multiple entities. They can instigate, lead, follow, or shadow local or global trends. Transorganizational leaders are capable of large cross institutional and organizational understanding for quick large scale action and change.
Transorganization forms are diverse and broad. The European community is a huge transorganization system made of many transorganizational subsets of nations, industries, regions, cultures, and institutional members. They range broadly from small to large, local to global, centralized to de-centralized, and formally structured to informal. Conversely, small neighborhood councils are simpler forms of transorganizations formed to serve their immediate neighborhood community members’ needs while transacting with a host of other transacting agencies and institutions.
Other examples stretch across such large and small granular entities as the banking systems, financial institutions, health care delivery systems, government policy-making bodies, the green movement, and citizens advocacy movements. Each transorganization has its own unique clusters of features, members, resources, relations, activities, stage of development, processes, structures, and purposes. Some are more structured and long enduring than others. Each can be thought of as an ecosystem platform in transition. Transorganizational types, forms, and dynamics are diverse and vast.
When purchasing a product or service, we may be successfully engaged in transacting at a transorganization systems level. The simple transaction may involve credit card companies interlinked with multitudes of transorganizations: Financial, technological, logistical, inventory control, regulatory, governmental agencies, legal entities, and others. Yet, we see it as a simple and singular bilateral interaction—a purchase.
The recent global financial crises were outcomes of dysfunctional transorganizations where some segments pursued their own self-interested goals at major costs to other segments. Their transorganizational dynamics led to the eventual breakdown of the transorganization and its ability to function. Coordination efforts and interventions of multiple governmental and private sector systems were in themselves transorganizational. The collective interventions expanded to other systems (e.g., Congress and FED interventions) were beyond any one organization’s dominance or control. They involved a multitude of interactions of collectives pursuing both common and self-interested goals.
Think about the PC industry and development of a new software application. The software may need to run on an operating system of multiple PC platforms. Lead and lag factors of innovations require that the software application be developed recognizing and conforming to future device, hardware, and software advances. Long-term users’ application, and the capabilities of value chains need to be considered and amalgamated. Value chains cover diverse and vast current and potential methodologies and processes that are transorganizational. For example, PC manufacturers rely on innovations in components, cost and time structures and of device manufacturers, advances in component making equipment manufacturing that determine the characteristics of devices that could be made, etc.
Successful software development reflects transorganizational efforts that anticipate current and future developments in PC functions, performance, and features. It involves many different communities of interests across material science organizations, hardware manufacturing, software development, intermediating transorganizational capabilities of PC manufacturers, software developers and the users’ needs and preferences. Each cluster influences the direction and feasibility of innovation and final transorganization outcomes.
The software development collectives’ influence and set direction for the technological requirements, market requirements, and host of other requirements including anticipated revenue, volume, and profitability. To assure successful outcome, a transorganizational software effort must mutually navigate its way through many factors and obstacles by creating a dynamic forward planning process. Such factors also include different technological terminologies and languages and variety of cultures and subcultural relations and processes.
Designing, developing manufacturing, marketing, and innovating new software for an existing or emerging platform or device involve plethora of entities and processes. The transorganizational dynamics require cross-organizational, cross industrial exploration and sharing of paradigms, needs, and understanding possibilities that stretch beyond any single entity’s perspective. A transorganization software development effort must consider alternative courses of action. Views, paradigms, and self-interests of disparate parties vying to pursue their own agenda need to be considered, mitigated, and integrated. It conjointly advances through reiterative processes to assess what may or may not produce benefits to the transorganization collective attempting to produce a robust and market-worthy product for a special or general application. All this must be considered while time to market and compelling value proposition of the product must be taken into account.
Creating and bringing to market the I-Phone required transorganizational thinking, competencies, skills, attitude, and aptitude. It required merging old and new technologies and knowledge, and consideration of legal, technological, economic, and market ramifications surrounding its introduction. Creating transorganizational success requires complex and multidimensional thinking and execution extending far beyond single cause thinking.
It is not a surprise that many transorganizational outcomes, successes and failures are often unforeseen by their technology savvy instigators, designers and innovators. Clearly I-phone transorganization innovation has been a phenomenal transorganizational success.
We have seen breathtaking successes of innovations and destructive failures of transorganizations such as the more visible real estate debacle of the 1990s, the technology bubble of the early 2000s, and the recent financial contagion. Transitions and ramifications of initiators are not always foreseen or clear. Claims are that managers and organizations could not see these transorganizational failures and could not anticipate the complex sets of causalities underlying these failures, and that they were beyond the control of any one organization.
Too-Big-To-Fails (TBIFs) are transorganizations which are interwoven with other transorganizational systems and the outcome of their failures make them appear vital to the economy. They possess powerful strategic transorganizational advantages through their unique and special set of competencies, capabilities, relations, and resources for offering valuable products and services. However, treating their members as single organizations along the old world single causal thinking and management is risky and short-sighted. The LIBOR (London InterBank Offered Rate) rate fixing scandal was a transorganizational event created and perpetuated by explicit and tacit arrangements and collaboration of banks, regulatory bodies, and many institutions with massive far reaching impact across the globe. Bloomberg has labeled it as the worst banking scandal yet!
Transorganizations are built on ecological platforms and when they stretch beyond the ecological limits, they risk failure of not one entity but usually a transorganizational collective. TBIF financial transorganization stretched beyond the sustainable limits of their economic, social, technological, legal, and ethical ecology platform and resulted in a system breakdown.
Organizations as Transorganizations
As organizations become large complexes, they shift toward behaving more as transorganizations. Simple command and control organizations, when successful, quickly evolve toward large complexes. Their decision-making processes and dynamics are impacted by transactional and interdependent complexities of functions, systems, and activities both internally and externally. The command and control management techniques pervasive in small simple form firms would need to adapt to manage a diverse variety of functions and activities in responding to their external environment.
Ashby’s law of requisite variety proposes that as the external system becomes more complex, organizations develop competencies and differentiation mirroring their external environment. The simple forms facing growth and transacting with large transorganizational complexes, by necessity, develop diversity within. An internal environment will increasingly become transorganizational requiring skills and competencies to integrate diversity of specialties and unique internal competencies for organizational effectiveness. Eventually the organization made up of many interacting sizable businesses, divisions, functions, cultures, and global operations will have to develop unique internal transorganizational competencies and management skills in view of the complexities of its external environment.
In an attempt to deal with and manage the level of complexity in large enterprises, stakeholders and managers are compelled to develop transorganizational thinking and related management practices. Multi-dimensional organizational forms comprising of functions, projects, products, geographies, and customer groups interlaced and overlaid across the organization are in every day reality transorganizations designed to deal with the compelling complexity of their environment. For example, transorganization projects are formed to deal with the dynamic and changing environmental factors. For example, the complexity of transorganization form is reflected by multiple stakeholders, competitors, legal entities, environmental forces, diverse interests, and globalization.
Transorganization resources are often spread across multiple entities, businesses, communities of practice, idea leaders, and distributed systems locally and globally. The traditional management and leadership concepts and practices fall short of the reach of transorganization dynamics. For example, some distinguishing features of transorganizational thinking and practice involve innovating and building communities of interests and practices free of traditional hierarchies. They encourage entrepreneurial initiatives and invite open innovation across and beyond any one single organization’s boundaries. Transorganizational thinking lies beyond traditional management thinking and practices.
To innovate, develop, manufacture, market, sell, service, and capture value, small and large organized complexes need to harness resources and ideas, build new core competencies and alliances, and enhance their strategic advantage through transorganizational efforts. Failures result when transorganizations neglect the complexities of their situation and resort to repressive and defensive management styles that constrain learning, flow of vital information, collaboration, and innovation.
Working with Transorganizations
Transorganization systems’ domains, goals, structures and processes might be ambiguous and often not evident to those working within them. This was illustrated by the recent failures of TBIFs. Transorganization strategic thinking and management require recognizing and understanding that multiple stakeholders are and should be involved in decisions and their implementation. Participants’ goals and approaches to change may be in tacit or explicit conflict and/or agreement; and transorganizational direction is often subject to deliberate, implicit, or unchecked support, opposition or controversy of its stakeholders.
It is prudent to work toward mapping, identifying, understanding, and defining transorganizational entities, stakeholders, organizations and actors, and other attributes of those involved in a transorganizational setting.  Furthermore, it is imperative to learn and consider the existing and emerging needs, expectations, interests, resources, competencies, capabilities, directional movements, and the extent of their symbiosis, competition, compatibility and leadership styles. These determine the level of collaboration, competition, social problem solving, and opportunity seeking efforts underlying transorganizational efforts and dynamics.
Industry or institutional lobbyists are examples of entities that operate in transorganization settings. They may represent an industry where their member organizations are in competition with one another. The transorganization lobbyists find it necessary to map and grasp the transorganizational setting boundaries, breadth, and size. They identify key transorganization actors, their issues and influence. The competencies and the resources of transorganizational members are assessed, weighed and used appropriately in formation, support, and pursuit of transorganizational agenda.
Transorganization development and practice involve generating information, promoting courses of action for the benefit of the transorganization and its stakeholders. Transorganization practitioner’s effectiveness depends in scoping the transorganization system as a whole and its ecological platform and underlying resources, and then generating optimal strategies for coordinating and taking action across loosely and tightly linked entities using shared resources to bring about favorable change. The process is much more complex than working with a single entity where management and change processes are simple and straight forward. Transorganizational practitioners or facilitators may involve all or some of the following steps in working with their collective clients:
- What is the general nature of the transorganization?
- What are important futures of the transorganization environment?
- Who are the members?
- What are the needs?
- What are members’ characteristics, resources, competencies, influence?
- What are the transorganizational-minded subsets and groupings?
- How adaptive to change are they?
- What is the emotional tone?
- What is the intensity of members’ interest in transorganizational issues?
- What are the appropriate processes for developing a transorganization strategy?
- How best to implement the strategy?
Our earlier example of software development illustrates that an essential element of developing new software involves the formation of relevant transorganizational communities of stakeholders, experts and interested parties to collaborate directly, through intermediation or virtually. Effective transorganizational efforts lead to new shared understanding of concepts for designing and developing innovative software. Transorganization collaboration is essential for determining features, performance, functionality, touch and feel, and other attributes of the innovative software products.
The U.S. National healthcare policy and program evolved through collective efforts of the executive branch, Congress, the Supreme Court, and broad spectrum amalgamations of political and expert pundits, interest groups, and lobbyists. They shared ideas, argued points of views and debated short and long term benefits and costs in forming a plan and program. Layers of diverse transorganizations populated the field. They stretched across transorganizations such as pharmaceutical, healthcare providers, insurance providers, citizens advocates, small and large business interests, etc. The conflicting ideologies, goals, priorities, and preferences added to the complexities of the transorganization and hampered its progress. No single entity, including the U.S. President, political party, or Congress could control the outcome. At times transorganizational efforts were overwhelmed by conflicting ideologies, arguments, and discussions of healthcare related needs. Proposed options, plans, budgets, and levels of care were not satisfactory to all stakeholders.
The health care legislation transorganization faced stalemate among its many diverse stakeholders. The process grounded to a halt at times. In the face of the U.S.’ post 2008 financial crises, the health care plan was almost abandoned and lost its priority to broader economic, social, and job creation initiatives. Once it passed, it then faced opposition by dissatisfied transorganizational stakeholders who challenged the law through the U.S. Supreme Court with only limited success.
Transorganizations range from simple to complex and predictable to volatile. In our fast changing global transformation the use of single organization management paradigms and practices are becoming increasingly more limited and limiting. The field of strategic management can benefit by transorganization systems views, paradigms, and practices. Transorganization thinking requires appreciation of the complexities of the interwoven, changing, emerging relations, entities, and their cross impacts. The temporal orientation is both immediate and long; the spatial appreciation is multifaceted including geographic, cultural, social, and technological. Tolerance for ambiguity, management in the face of unknowns, capitalizing on emerging opportunities and deflecting threats and risks are the necessary attributes of transorganization practitioners who must think about the evolution and development of emerging complexities and their characteristics toward generating creative solutions for optimizing future outcomes.
The strategic transorganizational thinkers are attuned to tentative revelations of special events and their consequences. As agile learners and flexible nonlinear thinkers they are capable of taking prudent and calculated action in view of unknowns in complex fluid settings. The future complex transorganizations pose opportunities for a new breed of decision makers and practitioners. And, our future societies would be better served if managed and led using transorganization thinking, strategies, and practices.
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About the Author(s)
Kurt Motamedi, PhD, is consistently rated as one of the top executive educators and coaches in the world. He is professor of strategy and leadership at Pepperdine University's Graziadio School of Business and Management. He teaches fast-track executives and high performing leaders in the Executive MBA program and the Presidential Key Executive program. Dr. Motamedi earned his MBA and Ph.D. degrees from UCLA's Anderson School of Management and his MSEE at UC Santa Barbara's College of Engineering. His work has received national recognition from the Academy of Management and UCLA. Motamedi is a co-founder of Pepperdine's doctoral program in Organizational Development. He has published and presented more than 100 articles.