The Cross-Organizational Leader Part 2: The Process

YC Ventures
Jul 24, 2017 · 6 min read

This is Part 2 of a 3-part series on Cross-Organizational Leadership. We will be releasing Part 3 on July 31. Part 1 is a Manifesto on Cross-Organizational Leadership and Part 3 is on the Practice of Cross-Organizational Leadership.

The Process

Leaders Who Go First Use First Principles*

*If you don’t know what first principles are, go back to part 1 ;)

Thinking in terms of first principles means starting with what you are absolutely sure of, and then creating from there. This includes your values and the persistent truths of whatever territory your organization plays in. This way of orienting is more difficult to do than thinking or orienting by analogy. Analogic thinking is defined by templated and patterned ways of thinking and behaving that are pre-set — all you have to do is imitate. Having something to imitate can be a huge relief to your psyche. The irony is you are playing a game that is easy to replicate and thus prone to a lot of competition and stress.

Principles, by definition, do not depend on any particular context to be true. They are true regardless of your organization’s particular contexts. When you apply first principles you are no longer completely subject to particular contexts; you create (or at least influence) context.

When you employ first principles for your organization’s initiatives you become “option rich.” You become a chooser and not a picker. Your ability to create options and choice is dependent on your ability to generate organizational scenarios based on first principles. Contrast this from analogic thinking, which aims to install a predetermined set of patterns into organizational contexts, thus limiting the number of options to the pattern set you are working with (which may or may not be appropriate for your context).

Analogic thinking is actually quite a gamble: you’re picking a small pre-set of patterns and introducing it into a new context, hoping that of the infinite number of patterns possible, it will be a match for a particular context (itself one of a multitude of potential contexts). That is why leveraging first principles is actually safer than imitation and analogic thinking; with first principles, you are eliciting patterns directly relevant to the context you want to create or influence.

First Principles of Human Organization

To introduce some of the first principles of human organization, I want to start with an old adage from management theory: structure follows strategy. While there is a lot of truth to this idea, it has limited explanatory power if we look at some of the most historically impactful transformations brought on by new forms of human organization.

Take Genghis Khan and his conquests, for example. He and his army never would have conquered most of Eurasia had he unquestioningly accepted this management idea. His army consisted of 100,000 highly skilled and mobile horsemen. At the time, his army was dwarfed in comparison to his adversaries. In this case, the structure and capabilities of his small army determined the highly adaptive and mobile strategies employed by the conquistador, which ultimately overthrew the slow and inflexible army structures of the time. In other words, sometimes structure precedes strategy.

The same goes for Steve Jobs and Apple. Had Steve never encountered tribes of hardware enthusiasts creating new structures for computation, his personalized computer strategies would never have been possible. Sometimes (maybe even most of the time), structure actually tells you what’s possible.

What you need to understand is that organizational structures and strategies are contextually co-dependent. All that means is strategy influences structure and structure influences strategy. I’d love to be able to tell you that it is simpler than that and that you can always follow the protocol strategy-then-structure. But if you’re still reading, you’re not interested in easy, you’re interested in genuine innovation which requires the more challenging task of thinking differently. To think differently, you need to start with first principles and contextualize them by generating scenarios that apply these principles to the relationship between your organization and its environment(s).

To illustrate this process (of applying first principles to contextually relevant scenarios), we are going to name three First Principles of Human Organization and demonstrate their application to a specific industry: the Chronic Fatigue Syndrome (CFS) industry. Here are the three principles:

  1. Principle of Social Contracts: the agreement by all individuals involved in organized activity and subject to socially-enforced arrangements, whether it be for profit, government or civil society (NGOs), demonstrates that those organizational arrangements are legitimate. The integrity of these contracts depend on all parties adhering to their agreements and/or the ability of parties to reflexively change agreements.
  2. Principle of Requisite Variety: the number of variables that your organization can account for and manage on the inside of its organizational boundaries predetermines the ‘worlds’ (markets or systems) it can participate in outside of its organizational boundaries. In other words, for an organization to operate optimally in its environment, it must be able to adequately respond to the problems and variations that its environment throws at it.
  3. Principle of Superlinear Networks: the amount of value creation per stakeholder in networks is superlinear, meaning asset-creation brought on by human interactions in organizations scales at a rate higher than 1 order of magnitude for every 1 order of magnitude increase in the size of stakeholder networks. The same is true of corruption and distrust: both increase superlinearly as the size of networks increase. The more stakeholders you have in your network, the more per-stakeholder productivity you can expect.

Application of First Principles to CFS industry (or lack thereof)

The principle of social contracts gives us a glimpse into the development and maturity of certain industries. Say we are looking for ways for more organizations to advance scientific innovation in the treatment of CFS. We would first recognize that most of the development of social contracts in this industry have been in the form of advocacy-based NGOs. We would see very little federally-funded research relative to the population afflicted by the condition (compared to something like Multiple Sclerosis, for instance) and virtually no business activity. This points to both constraints and opportunities for an underdeveloped specialization in health care. We would also see that the health care orthodoxies dispute the legitimacy of CFS (despite a preponderance of evidence) and thus most specialists do not recognize CFS as an official condition.

If we combine the thinking of superlinear networks and requisite variety, we know that there being a lot of opportunity to advance scientific research in CFS, the funding will likely need to come from for-profit sponsors willing to take on risk that federally-funded academic institutions are not so privy to. We know all of this because a) of the arrangement and nature of social contracts in the industry and b) the uncertainty surrounding CFS.

Because there is so little known about the variables that cause and sustain CFS, there is reason to create agendas that can uncover those variables in the first place. One of the best ways to do this is through for-profit sponsored innovation challenges. Innovation challenges are a great way to inspire teams to focus on a challenge where little is known, but give them a clear challenge with a clear outcome. Winner(s) of these kinds of challenges discover the variables that are important. In this scenario, we are leveraging the principles of requisite variety by first acknowledging we do not know what variables matter, but we can control the variable of discovering the variables that matter. That’s called going meta! And we know there is reason to make innovation challenges an attractive business opportunity given highly uncertain but untapped social contracts are more attractive to for-profit organizations than to governmental organizations or NGOs.

Last, we need the business opportunity to leverage legions of intelligent and creative individuals and teams (superlinear networks) to encourage a lot of innovation in a short amount of time. One organization taking on CFS can only do so much, but an organization that encourages and enables more organizations to form increases the amount of potential value superlinearly.

You must be disciplined in this exercise. As Richard Feynman said, “the first principle is that you must not fool yourself — and you are the easiest to fool.” If your principle can be argued, it is not a first principle.

If you do choose to take the first-principles approach to human organization, you are joining an elite group. The last piece of our 3-part series will describe what it takes to be a part of this group and do something truly special.

Did you find value in this piece? Be sure to follow our account and check back for Part 3: The Practice on Monday, July 31st. If you enjoyed this story, please recommend and share to help others find it! Feel free to leave a comment below and connect with us at www.youngcreatives.ventures

YC Ventures

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YC Ventures empowers cross-organizational leaders to optimize their multi-stakeholder decision making. www.youngcreatives.ventures

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