Thoughts about The Occupy Movement (2/2)

Part 2: The Classic Model Corporation vs. the New Model Corporation

In my previous blog post I briefly looked into the Occupy Movement's organisational structure and how it might be represented as a network model. In this second part I will first have a quick look at classic model corporations, and then see what key characteristics a new model corporation might have.

The Classic (Old) Model Corporation

Pick any corporation at random** and if it includes more than one person it is a safe bet that it has a vertical, top-down -hierarchy where the people at the top have more power and control than people below them. This kind of organisational hierarchy is the same as the Tree topology (and a Tree without branches is a Line).

It is also likely that the people at the top are enjoying higher salaries and better benefits than people at the bottom, and in itself this is understandable: in many cases the people at the top made the initial investment in time, money and hard work (not to mention personal risk) to get the business started and then nurtured it to become a growing business with job opportunities for other people, thus also benefitting the society. Few would argue against the founders' right to claim a financial reward for their work, investment and risk.

And yet, as a corporation grows in size so typically does the gap between the top and the bottom. This becomes a special grievance with older corporations where the founders are no longer around and people begin to think that the current top management has not earned the right to receive millions in stock options, salary and other benefits solely by virtue of their position within the organisation, as opposed to actually improving things - especially if the corporation is laying off people or having other troubles at the same time.

(** In case you randomly picked a corporation with a matrix organisation please toss it away and wipe your hands clean. Matrix organisations obscure responsibilities and confuse matters of authority, and any corporation that has elected to utilise this organisational model deserves all the misery, confusion, frustration, angst and failure that follows.***)


(*** Its employees, on the other hand, don't.)

Vertical Hierarchy as a Social Structure

In a society vertical hierarchies can be seen e.g. in representational democracy at the best and in autocracy at the worst, so it is no wonder we see most corporations organised after the same model: the CEO sits at the top (or the Board of Directors, if one insists), and either micromanages everything or governs through directors and managers below him. The people at the top govern the organisation while the people at the bottom tend to handle the heavy lifting that keeps the business afloat. The people at the top determine who does what, and how they are compensated for their efforts, and in many cases also has control over how the careers and professional skills of the people below them are being developed.

And here's the rub: when people are given power over other people it is expected that they also assume responsibility over the same people. A good leader takes care of his/her people and encourages them to improve themselves by offering them opportunities and space to grow, and by rewarding success. The worst leaders are selfish exploiters who do not care what happens to people below them, as long as they personally prosper. Unfortunately I think there are too many of the latter kind in the corporate world.

It is also common that people who have power and wealth prefer to distance themselves from people who lack either. By doing so they lose a powerful resource, as the organisation's low ranking people often have the best understanding of practical problems and possible solutions concerning everyday busines operations, but without a practical way of communicating with the organisation's higher layers, this knowledge and the possibility of new innovations is lost (hint: suggestion boxes and other anonymous, impersonal methods simply do not work). Each managerial layer between employee and CEO increases abstraction and ambiguity as the message is repeatedly summarised and modified; signal-to-noise -ratio deteriorates.

For example, once when I was working as a consultant in a large international mobile phone manufacturer I counted thirteen layers of management between me and the CEO, and I don't think I was even at the bottom of the organisation. I often wondered how much of my key findings document would have remained if it had been sent up through the management by the time it landed on the CEO's table.

Having said that, I do not mean to imply that the classic organisational model is flawed. When the chain of command and issues of authority and responsibility have to be clear, the classic organisational model is often the preferred one. In an ideal situation it enables leaders to make quick decisions, and it naturally filters and aggregates information as that information travels upwards so the leadership is not overwhelmed by details. Unfortunately situations are rarely ideal and as the organisation grows and people change positions, problems begin to appear.

It also important how the people on top handle the people below them. The classic model can work very well for everybody involved when people matter: consider enlightened despot, the ideal wise, all-powerful ruler who cares for the people, while at the same time keeping society's wheels rolling. In modern times welfare capitalism plays an important part in people's lives, in the sense that corporations provide their employees with quality welfare services for free, in order to keep them happy and healthy since happy and healthy employees are more productive and loyal. This can be vitally important in those countries where government cannot or will not offer welfare services for all citizens - it can be a great recruitment tool, too.

The New Model Corporation

This is not about some non-profit legal entity but a full-blooded limited liability enterprise that exists to make profit. So what might the key characteristics be?

The Occupy Movement seems to have a self-organising horizontal hierarchy that considers all members equal. So instead of having leadership as a fixed position anyone can step up and try to convince others by making a good case in front of them. The executive authority belongs to the group as a whole - the General Assembly - and all members in the group have an equal voice. Positions within the group organisation are not assigned but instead people are allowed and encouraged to assume responsibility where they can make a meaningful contribution.

Characteristic #1: Since everybody has an equal vote and an equal share of responsibility, it follows that everybody in a new model corporation has an equal share of the company stocks.

Corollary: When a new member joins the company others must relinquish an equal portion of their personal shares so that the new member can have an equal standing, and share responsibilities and rewards alike. From this it also follows that company shares should not be owned by people who are not actively involved in the company's daily operations.


Characteristic #2: Instead of meeting once a year, the shareholders should meet regularly in order to set policies and to make executive decisions. A good frequency for these general assembly meetings might be once a week when things are running smoothly.

Note: This is akin to most agile project models. For example, in Scrum the team meets every day to coordinate their efforts and share key information, and most organisations would agree that it is good to have similar meetings at least once a week.

Corollary: The company should be careful not to grow too large too fast, and to be mindful of personalities that do not mesh, otherwise there is a risk of losing the ability to make decisions. The risk of this can be mitigated by moving from consensus decisions to super-majority decisions (e.g. 90%-60% majority). This is a trade-off between simplifying the decision-making process by lowering majority limits, and increasing the risk of degradation of group unity.


Characteristic #3: As tasks and duties are not assigned to individuals by others, the group must be mindful of who is invited or otherwise allowed to join the company: it is not enough for new members to have valuable skills and knowledge, they must also have the right attitude, the ability to identify what needs to be done, and a willingness to assume responsibility for getting those things done.

Corollary: While a person might be invited to join the group for a specific thing that person can do, the group also must allow that person to grow and take part in other activities as he/she learns new skills and finds meaningful ways to contribute.


Characteristic #4: Teams are formed ad hoc as new functions and areas of concern are identified. A team exists as long as it is needed, group members are free to join and leave teams according to their ability to contribute and group members can be part of multiple teams as long as they can keep themselves productive. The general assembly has the authority to form and dismantle teams, while each team has the authority to organise itself into sub-teams as they grow in size and complexity as a way of managing the work load.

Corollary: A project team is an obvious example, but other corporate functions can be handled by ad hoc teams as well, e.g. Human Resources, Accounting, IT Support and so on. Although group members are free to participate in multiple teams people like to focus on what they are good at. However, by allowing and encouraging people to become involved with other teams the company as a whole can benefit from know-how that might be missed in a classic model corporation.


This is hardly a complete list of possible new model corporation characteristics, but I would call it a start. I might return to the subject later, but in the meanwhile all comments are welcome.

Thoughts about The Occupy Movement (1/2)

Part 1: Few Observations about the Movement's Organisational Structure

The Occupy Movement has been spreading around the world rallying people to against economic and social inequality, and perhaps rightly so. For example, a little while ago EOCD published a study Divided We Stand: Why Inequality Keeps Rising that shows that the gap between rich and poor has been growing wider for decades in most countries (while in those few countries where the gap got smaller the gap had been ridiculously wide to begin with).

What I have found especially interesting is how the Movement is self-organising and self-directing: there seems to be no central leadership that is telling people what to do, where to go or how to handle matters big and small. The people as a whole do all that for themselves and quite effectively, too; everybody is allowed and even encouraged to voice their views and suggestions on various common issues as well as take part in getting things done. This model of horizontal organisation challenges the classic vertical organisation model that we all know well from the military, politics and corporate life.

So this go me thinking and wondering if the horizontal model could be applied to corporate business? Well, I'll cover those thoughts in the second part of this entry, but first let's have a quick look at horizontal organisation models.

Modelling Horizontal Organisations

Now let's be clear about one thing first: I have not personally attended any of the Occupy Movement camps nor had the opportunity to talk with people who have so my understanding is based on second and third hand information that I have gained by reading various articles about the topic. So please, do let me know if I've gotten something wrong and I do welcome all other comments, too.

As I understand it many Occupy Movement camps tend to be organised around a general assembly where each and every person has the right to be heard as well as has a vote. This basic form of direct democracy works well up to a point (as the citizens of ancient Athens probably would agree), but begins to falter as the number of people increases: soon there are so many people who want to be heard and so many competing opinions and proposals that proceedings take too long to make practical and timely decisions.

To mitigate this the general assembly can form working groups with clearly specified tasks and goals. Any and all persons are free to join a working group they feel important. Working groups are not only responsible for handling day to day operations but can also function as a specialist group which presents their findings / results / proposals to the general assembly, which then has a focused discussion followed by a vote between clearly defined alternatives, if necessary.

This kind of organisational model can be described as a network topology and when it comes to horizontal organisations there are several topologies that can be applied. The first and most obvious one would be the Star topology where the general assembly is the central hub that connects with 0..n working groups. In this model there is no interaction between individual working groups. Working group management and coordination is relatively simple.

Another common model is the Partially Connected Mesh topology. Basically this might be the case when an individual working group splits itself to one or more sub-groups that may interact with each other while the results are presented to general assemply through the parent group.

The third common model is the Fully Connected Mesh topology, which is at the same time the purest form of horizontal organisation and the least likely option to be utilised in practice, in my opinion. It is the purest form because there is no central hub nor any parent groups, all groups are completely equal with all other groups. There is no hierarchy that would limit communication and cooperation and this is what a general assembly essentially is: all individuals are equal and connected with each other, free to interact and cooperate with any and all other individuals.

However, as stated before the cooperation becomes increasingly inefficient, difficult and time consuming as the number of connections grow i.e. the number of people increases. Eventually it becomes necessary to limit the connections which happens by forming one or more sub-groups with well-defined purpose and scope, which takes us back to the Star topology. As the organisation grows and people wish to keep operations fluid the Star is likely to evolve to a Partially Connected Mesh of one form or another.

A Bit About Group Dialogue and Decision Making

When there are tens and even hundreds of people who want to address the general assembly how does one ensure that everyone is given an equal opportunity to do so? In the spirit of total equality the group might be tempted to try shouting over each other until many voices merge into single voice (consensus) or just a few voices (interest groups) that can have a vote. It is more likely that pretty soon it will become apparent that the discussions need to be directed by a facilitator whose primary duty is to assign speaker turns and to impose timelimits. In order to further improve the proceedings the facilitator might also divide the discussion to separate topics so that one matter can be handled before moving on to another.

Would-be speakers are placed into FIFO stack (First In, First Out). In other words those who raise their hands first get to speak first.

While one person speaks the rest of the people can react and respond with a set of hand-signals. This is an excellent method for the crowd to provide direct, real-time feedback to the speaker without causing disrupting noise. People can express e.g. their agreement, disagreement, ask questions and demand missing details as well as urging the speaker to speak louder, keep to the topic or to wrap up.

Some groups aspire to become more equal than other groups so they may adopt a progressive stack, which prioritises some people over other people in the name of equality. The idea is that the minority representatives and marginalised groups are allowed to speak before the majority representatives and dominant groups. This can be a good thing if minority and majority are determined within the context of discussion instead of social status (remember: people are supposed to be equal, therefore social status should not make any difference) based on more or less fixed attributes such as their skin colour, sexual orientation, profession, gender or even age. However, in my mind, assuming the position of primus inter pares while still speaking of equality is a lie.


Well, that's the first part of my blog. The next part is a thought experiment of how a limited corporation might work if it is organised horizontally instead of vertically.

Update: Thoughts about the Occupy Movement, Part 2 has been published.