Hierarchy and modularity are the structural, organizing artifacts behind networks. Their impact is manifested as hubs and communities on the Internet. Understanding how they are formed, their characteristics, what factors facilitate and inhibit their growth helps knowing how technologies evolved and in turn how they shaped industries and organizations so far. Balancing the two seemingly paradoxical models has always been a challenge to any business organization and the ecosystem they take part.
The fabric of the organization of the Internet network is a cluster of nodes which is modular by construction at the base level. Modularity is measured by clustering coefficients which tells how interlinked the neighbors of nodes are. The distribution of the clustering helps understand the extent of modularity.
Highly connected nodes form hubs. Connected nodes are the connectors whose strength is measured by the number of links connecting them. This is a property of the structure of a network.
The property of modularity appears often in design discussions – whether it is computer systems design or a departmental functional design in business. The purpose is to shift the responsibility and ownership of independent actions without the intervention of the parental system owning the module. Most systems are built with the purpose of a few central themes and modules to start with. Complexity grows with building around the core, meeting the needs with scale and functionality.
A complex system - whether it is computer systems architecture or an organization of a social movement, or an operating business organization is part of an engineered structure of principles behind hierarchies and modularities. The fabric of the operating networks consists of several components operating independently as well as being facilitated by hierarchical structures and systems of people, processes, and technologies.
Several models explain that hierarchy or formation of hubs happen when clusters of nodes are linked to nest or are held together creating hierarchical clustering of modules - a generic property of real networks as well as the world wide web. For example, Granovetter’s model explains how people’s threshold values affect joining a hub for a social movement. It is difficult to predict which social movement takes off or which network will be successful in matching, segregating systems. It is not just the individual threshold values but also the group’s distribution of thresholds that matter. Airbnb and Uber are different platform businesses with their underlying operating network very different. Airbnb faced the complexity of getting people to list although there were many interested in renting. Uber and Lyft face a different kind network shifts due to the localities and people’s segregating patterns.
Observing how any complex system evolved over time gives a handle on what next for a complex system. Computer architectures - both hardware and software evolved due to inbuilt modularity. Mainframe Computers such as the IBM 360 started as hardware systems with successful attempts to separate software functionalities from the hardware. This enabled the software to run on several machines, giving way to software evolution and several devices allocated for specific functionalities. Modular approaches enabled partitioning tasks resulting in parallel computing, coordinating the system-level decisions.
While evolution is a natural and a healthy way of growing a system, the value derived from the new designs and approaches has their merits leading to the emergence of systems that cannot be envisioned from the older, evolved systems. The tradeoffs of performance, risks, dependencies increase with complexity. They are compensated by the values offered by the innovations leading to economic feasibilities.
Modularity as a basis for strong and weak ties:
The rise of the voice of the individual with the web 2.0 modular artifacts such as blogs and the collaborative networking among communities with wikis have led to various ties – both weak and strong. The small and low-level interactions collectively pave the way to stronger, self- organized communities of employees and customers inside and outside the enterprise when self-organization is viewed as a benefit rather than a risk for the enterprise. Traditional organizations are known for their hierarchical models of authority, division of labor and a foundation for a stable environment for the people. These areas of strengths need not turn to become weaknesses when the balance of central, hierarchical models and independent modular systems operating for the benefit of the work that needs to be done.
Strengths of Hierarchy and modularity - their manifestations in shaping technologies and organizations
The operating system governance, architectural decisions, and several centrally controlled system configuration management decisions are fostered by hierarchical models in computer systems. For example, traditional mainframe computer operating systems architectures evolved over time. They are the foundational ground for several capacity planning tools, automated operations tools, recovery, storage and backup, performance monitoring, job scheduling and many more - the list is enormous.
Most important points to notice are twofold.
No matter how far the distributed computing systems have evolved, there is always a place for the mainframe systems. Today’s cloud computing endeavors include Big data and machine learning which run on massively parallel computer systems and servers. When the component applications of operating systems matured enough to become independent, they formed the basis for new technologies and industries. The storage and work-related applications such as data warehousing, groupware, workflow, and document management systems evolved into systems capable to survive and thrive as industries. Data management systems capabilities have grown exponentially to analyze and provide deeper insights and augment human capabilities.
Impact to organizations:
The impact of technologies on organizations is not only shaping the way people do their work but also shaping the structure of organizations – both the technology industries and those that use them. This impact is attributed to the several paradigm shifts in the various types of technologies produced over time ranging from the vertically oriented hardware, operating systems, database and application layers of the computer systems to the horizontal PC DOS operating systems and the applications produced around it. These led to the client-server, enterprise architectures (bridging the client-server with a middle layer), followed by the web 2.0 and web 3.0 technologies oriented towards including the commons, by building and spreading the communities. Adjusting themselves to the modularity and hierarchies that technologies demanded is fundamental to the enterprise organizational structures of the internet era.
Best of both worlds for people and organizations:
I came across the word “hyperarchy” in the article by Khan, M., & Azmi, F. (2005). The authors discussed the WWW as a hyperarchy which is an “essential element of information culture” with flexible work arrangements that arise as a consequence. They warned that the organizational changes are lagging behind the turbulent age everywhere in the world. A decade and a half later, this is still a fact.
Discussing the various features of hyperarchy, the authors recommended for “Velcro organizations” which are fluid and cohesive enough to organize and flexible enough to delink for work on demand. The authors quoted Bower JL, 2003 with the analogy of how players organize for Soccer and Rugby. As in Rugby, playing Velcro hooking requires agility and strong skill set to act on demand. Rugby is not a position game like soccer.
A large group of business models of platforms is essentially "plug and play" models of organizations providing the infrastructure for producers to create and interact with consumers on top of the platform. For example, YouTube is the media platform with producers of video content plugging into the platform to create content. Consumers check in to watch the video content. Medium is the publishing platform where writers write their articles, readers subscribe to Medium to read.
Exploring the potential of several possible organizational models suitable for growing in the webspace is a continuous effort for both small and large businesses in the digital age.
References:
Linked by Barabasi, chapters
The Fourth link - pages 40 - 54
Small world
The After link - pages 227 - 238
Hierarchies and communities
https://hbr.org/2019/01/why-some-platforms-thrive-and-others-dont
Bower JL, 2003. “Building the Velcro Organisation: Creating Value Through Integration and Maintaining Organisation-wide Efficiency”, Ivey Business Journal, November/December, pp 1–10
https://iveybusinessjournal.com/publication/building-the-velcro-organization-creating-value-through-integration-and-maintaining-organization-wide-efficiency/
Baldwin, C. Y. (2019) “Platform Systems vs. Step Processes—The Value of Options and the Power of Modularity,” HBS Working Paper (January 2019).
Baldwin, C. Y. (2018) “Introducing Open Platforms and Business Ecosystems,” HBS
Working Paper (October 2018).
https://www.researchgate.net/publication/256040694_Organization_Design_for_Business_Ecosystems/stats
Khan, M., & Azmi, F. (2005). Reinventing Business Organisations: The Information Culture Framework. Singapore Management Review, 27(2), 37-62.
https://platformed.info/platform-stack/
https://stratechery.com/2015/aggregation-theory/
https://stratechery.com/2015/aggregation-theory/
