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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Tuesday, April 25, 2006

"Natural Organizations" and the Pull Economy

Here's a good post by Dave Pollard: "Natural vs. Monolithic Organizations." Some of Pollard's contrasts parallel David Bollier's distinction between the push economy and the pull economy, which I discussed in this post: "Distribution of Capital and the Pull Economy." And the "natural vs. monolithic" and "push vs. pull" dichotomies also go well with a discussion in an old post of mine contrasting the thought of Schumpeter and Galbraith to that of Barry Stein: "On the Superior Efficiency of Small-Scale Organization." Anyway, check out these dimensions of contrast in Pollard's post:

3. Approach to Problem-Solving:
Natural Organizations: Enable understanding to emerge, identify adaptive approaches
Monolithic Organizations: Analyze, prescribe reality-changing solutions

Monolithic organizations are always looking to change reality: the market, customer attitudes, employee motivation. They believe that through analysis you can obtain a complete understanding of the dynamics of a system, enough to be able to prescribe solutions that will change behaviour. Anyone who has worked in any organization for a long period comes to learn that it is people who make the organization and its culture, not policies, systems, practices and 'leaders'. Natural organizations allow an (always incomplete and ever-changing) understanding of the dynamics of the system to emerge over time. They know things are the way they are for a reason, and they pay attention to it and then mutually agree to change themselves to adapt to the system.

6. Means of Communicating Offers & Information:
Natural Organizations: Virally
Monolithic Organizations: Through persuasive propaganda

The adversarial relationship of monolithic organizations with customers and everyone else also manifests itself in communication style. Advertising, bullying, shaming, one-upmanship and other propaganda techniques are used to bend the will of customers (and regulators). This inevitably backfires when these techniques are recognized for what they are (and it succeeds temporarily only because of the cleverness of the communications in disguising this propaganda as something else (I've often wondered how advertising and PR reps are able to sleep at night). Without the budget or the stomach for such techniques, natural enterprises must rely on more creative and less manipulative ways to get their messages across. They have learned, for example, that messages from happy customers and happy employees have enormous propagational power and endurance. But since they're satisfying an identified need rather than trying to artificially create one, their communication job is much easier to begin with.

8. Approach to Achieving Economy:
Natural Organizations: Innovation
Monolithic Organizations: Standardization and scale

Monolithic organizations have to acquire size and scale to operate economically. And they need to standardize products and processes because they cannot tolerate the inefficiency of diversity. They are constantly striving for elusive 'best practices'. By contrast, natural organizations operate economically by continuous innovation. They appreciate that the market for most of what they produce is finite, so rather than trying to squeeze more profit out of a product that is nearing the end of its life cycle by slashing costs, they instead identify new untapped needs of customers and innovate to satisfy those needs.

10. Approach to Making a Living:
Natural Organizations: Identify & satisfy needs
Monolithic Organizations: Create & satisfy needs

If you're a large, monolithic organization, you have huge fixed costs to cover, and may well feel that you don't have the luxury of waiting for new customer needs to be identified. Such organizations tend to try to 'create' needs by appealing to the vanity or status-seeking of customers. Such needs are generally incremental to already proven products -- new styles, colours, additional features added, but no real new needs met. By contrast, natural organizations start by doing their homework to identify, on a continuous basis, real untapped needs as they evolve and emerge, that they have the competencies and passion to satisfy. In many cases the customers don't know exactly what they need -- it takes imagination, creativity, foresight and collaboration to come up with bold new ideas that can satisfy a need that, while very real, may not yet be well articulated. That's real innovation.

11. Approach to Operating and Managing Risks:
Natural Organizations: Improvisational
Monolithic Organizations: Pre-emptive

The size and rigid structure of monolithic organizations makes them hugely risk-averse. Because they are inflexible, they try to anticipate risks and operational problems before they happen. This is largely futile despite the massive amounts many such organizations spend trying to do this, because this pre-emptive effort is necessarily focus on identified types of risk. As we keep learning, from Enron, asymmetric 'warfare' of all kinds, and unforseen natural disasters and diseases, many risks simply cannot be anticipated or prevented. Natural enterprises have learned to take a more improvisational approach to risks and operational problems, learning how and with whom to collaborate and ideate to respond quickly and effectively when such problems arise.


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