Organisational Dysfunction of the Day

The market we think we shape

Context: The organisation is genuinely engaged with its market. There is a customer advisory board that meets twice a year. The head of product speaks at industry conferences. The company publishes case studies, contributes to working groups, and has a reputation for being thoughtful about the space it operates in. Leadership talks about being a market shaper, not a market follower. Internally, roadmap decisions are still driven by competitive analysis, quarterly OKRs, and what the sales team is hearing from prospects. The advisory board gives feedback on features that have already been decided. The conference talks describe what the company has built, not what the industry needs. The working groups produce documents nobody implements. The organisation is present in the field. It is not shaping it.

OST explains: An open system survives by maintaining an active relationship with its environment, not just absorbing signals from it but acting on them. Most organisations in turbulent fields are reasonably good at the first: they scan, survey, monitor, and respond. What they systematically underinvest in is the second: actively shaping the field. Responsiveness alone is reactive. The US auto industry watched fuel prices rise, saw consumer values shifting, and kept building SUVs. The signals were there. The field was not taken seriously as something to act on, only to respond to. In turbulent conditions that gap is fatal, because the field changes faster than any planning cycle can track. Shaping a field at its fullest means contributing to conditions under which customers, partners, and the broader system can develop sustainably. That requires treating the future as a puzzle to be explored together, not a problem to be solved internally. The advisory board, the conference talk, the working group document are all problem-solving instruments. None of them is puzzle-solving. The organisation is not shaping its environment. It is describing it, at a safe distance, and calling that strategy.

#OpenSystemsTheory #SocioTechnical #OrgDesign #strategy

Organisational Dysfunction of the Day

Permanent urgency

Context: Everything is urgent. The backlog is full of high priorities. Every quarter brings a new set of critical initiatives. People are context-switching constantly, barely finishing one thing before the next emergency arrives. There is no time to reflect, refactor, learn, or plan properly. Leadership acknowledges this is not ideal but frames it as the nature of the industry or the market. The pace is presented as a sign of ambition. People are tired in a way that a long weekend does not fix.

OST explains: Permanent urgency is what a DP1 structure produces when it has no mechanism for deciding what not to do. Prioritisation lives above the team: someone outside the group determines what is critical, and the team executes. When everything coming down is labelled urgent, the team has no structural way to push back, because pushing back requires owning the goals, not just the delivery. The six psychological requirements for productive work include adequate variety and continual learning, both of which require time that is not committed. A team running at permanent capacity cannot learn, cannot reflect, and cannot improve. It can only execute until the people in it stop being able to. The exhaustion is not a sign of ambition. It is a sign that the structure has no off switch.

#OpenSystemsTheory #SocioTechnical #OrgDesign #agile

Organisational Dysfunction of the Day

The learning organisation that doesn't learn

Context: The organisation has committed to becoming a learning organisation. There are lunch-and-learns, communities of practice, knowledge-sharing sessions, and a learning management system with hundreds of courses. People are encouraged to spend time on development. A few do. Most do not have time, because the work does not stop. The knowledge shared in the sessions rarely changes how the work is done. The retrospectives identify the same issues quarter after quarter. The post-mortems produce action items that get deprioritised. The organisation talks about learning continuously. Its structure ensures it mostly does not.

OST explains: Genuine organisational learning requires three things that DP1 systematically prevents: people must be able to set their own goals, receive accurate feedback on their work, and act on what they learn without waiting for approval from above. In DP1, goals come from outside the group, feedback travels up the hierarchy before it can be acted on, and changes to how work is done require sign-off from management. The result is that learning happens individually and occasionally, but rarely changes the system. DP2 is inherently a learning structure: self-managing groups set their own goals, own their feedback loops, and control how they adjust their work. Learning is not a programme they attend. It is what the structure produces continuously. The learning management system is not the problem. It is a symptom of an organisation trying to buy learning that its structure prevents.

#OpenSystemsTheory #SocioTechnical #OrgDesign #leadership

Organisational Dysfunction of the Day

Pay and reward

Context: The organisation has moved to agile, reorganised around product teams, and invested heavily in the transition. The teams have more autonomy, shared goals, and genuine collective accountability. The work feels different. Then the bonus cycle arrives. Individual targets are reviewed. Personal ratings are assigned. The payout is calculated per person based on their individual performance. Some team members did less visible work that was essential to the group. Others were more prominent but depended heavily on the rest. The bonus does not know the difference. Within a few weeks, the behaviour shifts. People start making sure their name is on the right things. The team dynamic that took a year to build quietly corrodes. The reward system has spoken, and it was louder than everything else.

OST explains: Pay and reward systems are one of the most powerful structural signals in any organisation, and almost all of them are built on DP1 assumptions: individual performance ratings, bonuses tied to personal targets, pay bands linked to seniority and title. OST's support congruence principle is precise about this: the rest of the organisation, including how people are paid, must support the teams as they are designed. If the team is supposed to share accountability for collective outcomes but is rewarded individually, the reward system will win. It is a stronger structural signal than any value statement or team charter. The DP2 alternative is pay for skill rather than pay for position: people are compensated for the range of functions they can perform for the group, which incentivises learning and breadth of contribution rather than territory protection. It also removes the basis for individual ranking within the team, which in a genuinely self-managing group is not only unnecessary but structurally corrosive. The bonus did not break the team. The design of the bonus did.

#OpenSystemsTheory #SocioTechnical #OrgDesign #leadership

Organisational Dysfunction of the Day

Designed to undermine

Context: The organisation has restructured into self-managing teams. The design work was done carefully: clear boundaries, whole tasks, and genuine coordination within the group. For a while, things improve. Then the friction starts. The annual performance review asks people to describe their individual contributions. The career ladder requires becoming a team lead to get a pay rise. The bonus is tied to personal targets. Hiring is run by HR using job descriptions written for roles the new structure no longer has. Training budgets are allocated per person, not per team. A senior developer joins and immediately starts protecting their turf because their title and seniority depend on being the expert. Six months in, the team is drifting back toward the old behaviour. Nobody changed the structure. The support system did it for them.

OST explains: DP2 requires that the systems surrounding the organisation reinforce its design, not contradict it. Performance management, pay structures, career paths, and hiring practices are all built around DP1 assumptions about individual accountability and hierarchical progression, and they will quietly pull against any DP2 redesign. They do not need to be actively hostile — they just need to keep rewarding individual behaviour in a structure that depends on collective behaviour. OST is explicit that DP2 cannot be introduced in parts of an organisation while DP1 remains in the rest; that mixed mode is not a halfway house but laissez-faire, and it is maladaptive. The support systems are the clearest proof. They belong to the DP1 organisation and reach into the DP2 teams every review cycle, every hiring decision, every pay round. A DP2 structure surrounded by DP1 support systems is a plant in the wrong soil. The roots have nowhere to go.

#OpenSystemsTheory #SocioTechnical #OrgDesign #agile

Organisational Dysfunction of the Day

Career paths

Context: A good developer joins the organisation. They are technically excellent, collaborative, and genuinely invested in the work. Two years in, they get a nudge from their manager: it might be time to think about a senior role, maybe a tech lead position. The path is clear. Individual contributor, senior IC, tech lead, engineering manager, director. Each step means more responsibility, more pay, and more status. Each step also means moving further from the work they loved and closer to the coordination and control functions that DP1 requires. Many take the path not because they want to manage people but because it is the only path available. Others refuse it and hit a ceiling. A few leave for organisations that offer something different.

OST explains: The bureaucratic career ladder is one of the primary mechanisms that keeps DP1 in place psychologically. It converts the organisation's need for coordination and control into an individual incentive structure: accept constraints on your autonomy today in exchange for advancement tomorrow. Over time, this produces a management layer of people who were excellent at the work below but whose promotion removed them from it, and a technical workforce that either climbs reluctantly or opts out and stagnates. In DP2, the ladder largely disappears because management functions are distributed into the self-managing groups. This is liberating but genuinely disorienting for people whose professional identity is structured around it, and organisations that move toward self-management without addressing career expectations tend to lose precisely those most invested in the old structure. The transition requires a different answer to "where do I go from here?" — one built around depth of skill and breadth of contribution rather than ascent through a hierarchy DP2 does not have.

#OpenSystemsTheory #SocioTechnical #OrgDesign #leadership

Organisational Dysfunction of the Day

Budgets are bureaucracy

Context: The organisation has restructured into product teams. They have autonomy over their work, their roadmap, and how they collaborate. Then comes budget season. Each team is asked to forecast its needs twelve to eighteen months ahead, justify them against business cases, and compete with other teams for a finite pool of money. The forecasts get approved or revised by people who are not part of the teams. Mid-year, priorities shift. Some budgets get cut. Others get reallocated through a process that the teams do not control. The autonomy on paper meets the finance department in practice. Everyone knows which one wins. The team owns the product, but not the resources that decide what the product can actually become.

OST explains: Whoever controls the allocation of money controls the structure, regardless of what the org chart says. A DP2 design with DP1 budgeting is not a DP2 organisation. It is a DP1 organisation with self-managing teams operating in the spaces that money has decided in advance. DP2 requires that groups control the resources for their own work. That is what it means to own the whole task. What OST does not do is prescribe how this should look in a given organisation, because OST is a conceptual framework, not a recipe. A preset model handed down would itself be a DP1 move — exactly the kind of imposed design the theory argues against. The methods OST provides, Search Conference and Participative Design Workshop, exist to help an organisation work out its own answer, not to deliver one. Beyond Budgeting, developed in part by Norwegian practitioner Bjarte Bogsnes, is one practical attempt to separate the decisions about goals, resources, and evaluation that the annual budget collapses into one. It moves in the right direction. But the answer to how money should flow in a self-managing organisation is one that each organisation must design for itself, using its own people. The structure of money is the structure of the organisation. Both have to be designed together, by the people who will live with the result.

#OpenSystemsTheory #SocioTechnical #OrgDesign #leadership