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Global Journal of Flexible Systems Management

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10-11-2023 | ORIGINAL RESEARCH

Ecosystems and Agile Organizations: The Transition to Spontaneous Order

Authors: Esteban Pardo-Fernández, Miguel A. Alonso-Neira, César Martínez-Meseguer

Published in: Global Journal of Flexible Systems Management | Issue 1/2024

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Abstract

This article provides a novel analysis in the field of management and business organization. The innovation lies in evidencing the remarkable capacity through the emergence of unplanned spontaneous orders to originate highly efficient and effective management systems. Its main proposal involves examining the applicability of the contributions made by the Nobel Prize winner, Friedrich Hayek, in the realm of spontaneous orders to the field of business management and organization. The significance of this idea lies in the fact that by knowing and understanding the functioning of such orders, which arise in complex social systems, can facilitate a smoother and more successful transition from conventional hierarchical and pyramidal models to the new paradigm of agile and flexible organizations, which possess a greater ability to adapt and manage new information.

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Some examples of companies that are looking for new forms of organization and are cited recursively for their contributions in this regard are Amazon, Google, Alibaba, Haier, Tesla, ABB, or Virgin.

While Hayek didn’t realize the practical application of his studies to organizations and businesses, it is undeniable that his contributions in this field can provide the necessary theoretical foundation for the proper development of agile organizations in their various forms.

Concepts coined by economists such as Friedrich Hayek and philosophers such as Karl Popper describing this phenomenon.

The concept of order has two meanings in this respect: On the one hand, the spontaneously generated order (studied by Hayek in his several works) and, on the other hand, the order produced by a deliberate organization. Both have well-differentiated regulatory standards and features, but sometimes they overlap and mix.

Bennis (1966) coined at the management level concepts such as “organic-adaptive structures,” “ameba,” “microcosms,” “open-system,” “temporary,” or “connected groups.” These concepts suggest that an agile organization emerges through evolutionary processes rather than being designed from scratch or following a predetermined methodology.

VUCA is an acronym for Volatility, Uncertainty, Complexity and Ambiguity.

We want to stress how Cetin and Tolay (2022, 1131) reference the study conducted by Ganguly et al., (2009, 412), which examined twelve descriptions between 1991 and 2005. This study highlights three key characteristics. In our perspective, two of these attributes are inherent in the concept of agility: “speed” and “responsiveness,” while the third is the “focus on customer needs.”

Also called cells (Aghina et al., 2017), nodal firms (Prahalad and Krishnan, 2008), or MOEs (Hamel and Zanini, 2018).

Not in the sense of having simply delegated certain functions and decision-making capabilities, but in the sense of having genuine freedom coupled with the corresponding assumption of responsibilities.

To understand how these units work, the analysis of the Haier company by Hamel and Zanini (2018) is very illustrative.

In this regard, E. Schmidt, former CEO of Google, quoted by Yeung and Ulrich (2019, 140) states: “Google is run by its culture and not by me.”

An example is the phrase of the famous businessman Henry Ford (1863–1947): “Any customer can have a car painted any color that he wants, so long as it is black.” Retrieved from https://bit.ly/45bsdJE

The birth of this mode of consumption was already identified by Toffler (1970, 227) and has been developed by several authors such as Prahalad and Ramaswamy (2004), Schmitt (2006), Prahalad and Krishnan (2008), Ramaswamy and Gouillart (2010), Pine II and Gilmore (2011), Watkinson (2012) and Kalbach (2015).

Consumer is considered not only as an individual, but as a human person with a whole series of distinctive singularities from the rest.

Paradigm that is centered on the company’s creation of value, while consumers are merely recipients of that value. This paradigm enabled vertical and centralized organizational forms.

Thus, we can find: (1) Authors who focus on the digital nature of networked organizations without clear boundaries: “networked organization” (Miles and Snow, 1992), “network orchestrator” (Häcki and Lighton, 2000), “creative web” (Conklin and Tapp, 2000), “virtual corporation” (Davidow and Malone, 1992; Siebel and House, 1999), “Boundaryless Organization” (Ashkenas et al., 2002). (2) Those authors who highlight their dynamic character of forming value chains for specific projects or temporary solutions: “Adhocracy” (Toffler, 1970), “Hollywood Organizations” (Ricart et al., 1999). (3) Finally, those who emphasize their self-organizational capacity by identifying it with living organisms: “The living company” (Brown and Eisenhardt, 1998; de Geus, 1997; Pascale et al., 2000; Rivelino et al., 2023), or “learning organization” (Senge, 2006).

The objective conception of value had as its main defenders David Ricardo and Karl Marx and was continued by the ‘Neoricardians’ like Piero Sraffa and Luigi Pasinetti, among other authors.

In this sense, Mises advanced several decades before some of the main contributions of management did.

This action is nothing more than the exercise of the entrepreneurial function implicit in any human action, that Mises took as the starting point in economics. Business function is nothing more than the ability to choose between ends and means, and its action always generates new knowledge.

The ideas proposed by Damasio (2011 [1994]) and Polanyi (2009 [1966]) fit with Knight’s (2014) concept of business judgment. Knight explains that the businessman or manager, when exercising their function, do not make computational calculations, but estimates based on their own intuition and experience, on their business judgment, which they can only confront with a constant process of trial and error.

The standards are being adopted and agreed upon a selective process of evolutionary learning (Hayek, 1978) depending on its usefulness and effectiveness in achieving the objectives pursued in each circumstance.

Knight also argued that the origins of the economic problem were change and uncertainty and that the knowledge needed to deal with them could only come from maximum exploitation of the human mind.

Selznick (1997 [1957], 21) states that this process is the one that makes the organization an institution, preserving the “uniqueness of the group.”

For a further exploration of this idea, we recommend Canals (2010), who examines the infeasibility of devising a predetermined plan aimed at profit maximization. In this regard, he challenges Friedman's notion (1970) that profit maximization stands as the sole objective of the firm.

This is what characterizes firms such as Amazon, Google, Alibaba, Virgin, Haier, or Tesla. They are not defined by their resources (which constantly vary), but by the manner (shared with their founder or founders) in which they recognize opportunities where others do not.

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Title: Ecosystems and Agile Organizations: The Transition to Spontaneous Order
Authors: Esteban Pardo-Fernández
Miguel A. Alonso-Neira
César Martínez-Meseguer
Publication date: 10-11-2023
Publisher: Springer India
Published in: Global Journal of Flexible Systems Management / Issue 1/2024
Print ISSN: 0972-2696
Electronic ISSN: 0974-0198
DOI: https://doi.org/10.1007/s40171-023-00358-9

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