John VerdonIn my last blog, I explored the SOM Syndrome – a dysfunctional incentive framework shaped by the career structure within a large hierarchical organization (such as a government bureaucracy) – one that can lead to a systemic ‘allergy’ to individual managers investing in prevention of problems or into long-term strategic initiatives and a corresponding systemic ‘addiction’ to crises and problems. The syndrome becomes more salient in the context accelerating change and shifting constraints of the collapse of traditional transaction costs and the increasing importance of opportunity costs.

In this post, I would like to focus on another systemic aspect of the traditional hierarchic organization that shapes incentives for managerial resistance to new ways of working.

Managerial hierarchies involve a structure of ‘property rights’ as managers are allocated resources, responsibilities and tasks/functions. Managers have budgets of human resources, funds, and other resources they must allocate to accomplish their responsibilities. Each manager has an appropriate span of control and resources are budgeted tightly or loosely according operational requirement, cultural conditions, and the personal whims of each manager. Thus management responsibilities are matched with ‘property rights’ over resources necessary to achieve their assigned outcomes and responsibilities – and deeply enculturating a ubiquitous (and thus perhaps invisible) natural sense that management needs to control resources in order to accomplish what is expected.

The career path of the management cadre is a continuous investment in attaining the mastery of the rules and tools of how things get done. One consequence of the attainment of this mastery is a deep reluctance to give up the control one has achieved over the tools, the rules and the resources. But more than the reluctance to change – which all people suffer from, is deeper, more pernicious belief that only by controlling resources can managerial outcomes be achieved in ways that their achievement can be rewarded in accountable ways. The standard truism is that: “You can’t manage what you can’t measure” and ‘You can’t measure what you can’t control”.

Control = Accountability = Performance Measures = Reward.

In the managerial frame of mind – it can be ‘unthinkable’ to engage in the ‘total uncertainty’ of committing oneself to goals that need resources beyond one’s control.

Controlling an organization (whatever the scale – from team to conglomerate) is complicated. The complications become exponential if your ‘human resources’ begin to collaborate with others outside of your ‘span of control’. This reticence to loosen control over managerial control of resources has much less to do with individual managers and leaders and much more to do with systemic consequences of organizational architecture. Although we do select and develop people suitable for the demands of a control hierarchy.

An organization that want to mobilizes knowledge, has to provide a platform for assembling knowledge networks as and where needed. To do this we need to change the ‘property rights’ that structure the allocation of resources including human and social capital.

Let’s try a thought experiment. Assume the integration of network technologies and peer production in the re-design of managerial property rights. In this way we can view knowledge networks as an organization’s common-pool resource. The table below lays this out.

Restructuring managerial property rights
JM = 70% Owned by


Running the organization – being the cog in the machine

CS = 15% Owned by

Corporate-Strategy :

Transforming the organization – refitting, longer term strategy

Heterarchy – Partnerships
CKN = 15% Owned by

Collaboration Knowledge-Networks as a Common-Pool Resource:

Providing Individual Knowledge/Skills Value as it contributes to the organization and one’s self

Responsible Autonomy

Thus, the ‘job-manager’ who’s focused on running the organization control 70% of the person’s time. Strategic requirements efforts would have 15% of person time. Finally, individual’s would own 15% of their ‘own’ time to contribute to relevant arising collaborative knowledge network needs chosen on the basis of their individual capabilities, motivations and interests.

Enabling technologies and corresponding property rights provides a knowledge mobilization platform enabling individual knowledge and expertise to be a common-pool resource from which knowledge networks can assemble as needed. This also provides conditions for a ‘work market’ that enables the allocation of motivation and engagement.

It is easy to conceive of a sliding scale of person-owned time based on experience and professional development. Time allocation can be customized based on the individual’s potential to contribute across the organization or the overarching corporate requirements related to transformation.

The benefits of restructuring the managerial property rights and creating a common-pool resource of individual knowledge and expertise would include:

  • Reduced transaction and opportunity costs and increased operational agility
  • Engagement and allocation of motivation: enabling workers to contribute where they can add most value, based on their knowledge, expertise and passion
  • Scaling integrated continuous learning
  • Extended Specialization: the specialization of talent beyond the limits of the organization’s occupational structure

It is important to note that this concept does not require all members to be equally capable of optimizing a time/space for collaborative responsible autonomy. Many personnel may not be capable or want to be more than being a ‘cog’ in the organization.


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