Many of you have never heard of fractal organizations. I hadn’t until I talked to a colleague working on the Hyperloop project, which was described as a “fractal organization.” The fractal organization may be your future collaboration ecosystem. Most organizations today are top-down command-and-control hierarchies that have to grow through acquisition rather than expanding from within. Oracle is a great example of this (having just recently acquired NetSuite). In nature, mathematical constants are both random and scalable. Look at the leaves of a fern, or the organizational patterns on some seashells. Even vegetables like cauliflower and broccoli. Fractals are often thought to be infinitely complex, because, at all levels of magnification, the pattern is the same.
With about 100 years under our belts around command-and-control hierarchies, we know that they might work well for the Army but are not agile or stable enough to work well in today’s chaotic business environment. On top of that, they tend to create “silos” and foster miscommunication, and in essence are not great for collaboration no matter how good the technology.
Hierarchical organizations create harmful stress and internal competition, because there are only so many spots at the top of the organization. This causes the members to hoard information. I witnessed this directly in the big five consulting firms when I did research on them around collaboration in their organizations. The stress can cause absenteeism and employee turnover, and creative individuals got tired of corporate politics and found more creative environments.
FRACTAL SYSTEM CHARACTERISTICS
Author Janna Raye identifies the properties of the fractal system:
1 Emergence: Agents in the system interact in random ways. Interaction patterns emerge from these behaviors that affect the agents in the system as well as the system itself. A good example of this is a termite hill.
2 Co-evolution: Systems are in their own environment, as well as being a part of another, larger environment. As the larger environment changes, the system does also, but because it is part of the larger environment, it also changes the larger environment. For example, think of a person as a system in a larger system (environment) called a business. As a person changes his or her behavior, it also changes the behavior of the business, showing a co-evolution of these systems.
3 Sub-optimal: Fractal systems do not have to be perfect to thrive in their environment, and only have to be slightly better than their competitors. Putting additional energy into making the system better tends to be wasted energy, as these systems tend to trade off increased efficiency for greater effectiveness.
4 Requisite Variety: The greater the variety in the system, the stronger it is. That is why diversity in our organizations is so important — not just of races, but of thought, approaches to problems, attitudes, etc. Fractal systems have lots of ambiguity and contradictions, but rather than seeing these as “bad,” they are seen as a way to create new possibilities to adapt to a changing environment. Democracy is a good example of this.
5 Shared Purpose: Like ants, honeybees, geese or schools of fish, all of these organizations have shared purpose and shared values among all their members. These create pattern integrity, and often high levels of participation in ideas and solutions for continuous improvement, which helps with decision-making at functional levels. Leadership is universal, which enables the competition energy to be directed outward instead of inward.
6 Information Sharing: Hierarchical organizational structures cause information silos. In a fractal organization, all members share information iteratively and make decisions collectively in response to constantly changing conditions.
FRACTALS AND ORGANIZATIONAL STRUCTURES
One major feature of fractals is their “self-similarity,” meaning different sizes of similar attributes within the larger whole, ad infinitum. In nature, you can have individual actors (like a school of fish, or a flock of geese) all working together for the common outcome. Both fish and geese display interdependency, relying on each other. Systems in nature also have scalable structures at every level, and at each level, there is a different organizational pattern. Some examples of this type of system are living organisms, a nervous or immune system. a corporation, and economy or even a society.
So if this is true for mountains, coastlines, tree bark and even wiggles, why not organizations?
What this implies in organizations is the application of complex systems theory, with tight feedback loops, autonomous cooperating actors, and a simple and limited set of rules governing the system. This is the basis for the agile movement in programming today. It also seems to be one of the best approaches to how large organizations can stay creative and innovative. Fractal organizations can do so by climbing “the fractal ladder,” enabling the sustainability of innovation.
According to Raye, a “fractal” is a way of thinking about the collective behavior of many basic but interacting units, and in a macro sense have the ability to evolve over time. A fractal organization is the embodiment of “the whole is greater than the sum of the parts.”
A fractal is a pattern, a form of sustainable ordered chaos, while an organization is “an ordered arrangement of things (people).” Fractals have self-organizing principles, and fractal organizations are seen as “an emergent human operating system that mimics nature in its capacity for creativity, adaptation, vitality and innovation.”
Switching from a hierarchical to a fractal organization supports more cooperative work, provides better information flows, more room for advancement, lower turnover, and eliminates the view that there is a scarcity of resources.
People in these organizations are seen as “complex adaptive systems” and emergent behaviors arise out of organizations like this.
Self-organization is the key to self-adapting systems evolve and adapt to new challenges. In living systems, we see cooperation and symbiotic interactions (like in an ecosystem). We also see that reflected in many organizations today; for example, both Salesforce and Slack have created large ecosystems of developers that add value to the original product.
Some fractal companies are like Pixar — core leaders in the center — and all firms are arranged as arms around the leader. Then in the arms, each team has a leader, and info is funneled to the center of the organization to the leaders, needs for resources, and then allocated flow back out.
Although we are just starting to see these fractal organizations as we move from the industrial age to the information age, we are starting to see the demise of hierarchy and the flattening of organizations. One type of these flatter organizations are fractal organizations, which are inherently collaborative. This bodes well for more modern organizations that are adopting the fractal nature.
—Sources: “Fractal Organization Theory” by Janna Raye, The Journal of Organization Transformation and Societal Change. http://www.fractal.org/fractal-systems.htm