The Connected Company

Chapter 13. The future is podular

Big companies are inevitably slow and cumbersome; small companies are quick and responsive. Therefore, break big companies into the smallest pieces possible.

—Lou Gerstner

Connected companies are not hierarchies, fractured into unthinking, functional parts, but holarchies: complex systems in which each part is also a fully-functional whole in its own right. A holarchy is a different kind of template than the modern, multidivisional organization. It’s podular.

The Parable of the Watchmakers

Small, autonomous teams are the service teams of the future, the fundamental unit of an organization that makes a learning organization possible. The next challenge is putting them together into a cohesive organization that is able to function as a single entity.

In 1967, in a book called The Ghost in the Machine (Penguin Books), Arthur Koestler coined the term “holarchy” to describe systems in which each part was also a whole in its own right. The concept was inspired by a story told by systems theorist Herbert Simon, called the Parable of the Watchmakers:

There once were two watchmakers, named Hora and Tempus, who manufactured very fine watches. Both of them were highly regarded, and the phones in their workshops rang frequently. New customers were constantly calling them. However, Hora prospered, while Tempus became poorer and poorer and finally lost his shop. What was the reason?

The watches the men made consisted of about 1,000 parts each. Tempus had so constructed ...