Organizational Intelligence - Does Size Matter?

On a Linked-In group discussion (CBDI Forum), Richard Gilyead asked some excellent questions about organizational intelligence, and I'm going to post an edited and expanded version of the discussion here.

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Richard started by asking

Does size matter? Do organisations with "thin skin" have a better ability to sense and respond? Is it inevitable that organisations will develop "thicker skins" as they grow?

Of course it has long been a popular idea that large organizations should behave like small organizations, while small organizations have problems of their own. I believe we can use organizational intelligence as a "lens" to attain a more precise understanding of some of the things that get lost as an organization gets larger, and use this lens to try and preserve and restore these elements. Meanwhile, a small organization is more dependent than a larger one on the knowledge and intelligence of its business partners and other members of its ecosystem, and it is useful to pay explicit attention to these aspects of its external relationships.

Richard then asked a follow-up question

What aspects of cohesion should be emphasised to preserve small organisation benefits as they grow? 

I think this should be a vital question for enterprise architecture (even though enterprise architects mostly work in large organizations, it's surely never to late to ask it), and I don't think there is a one-size-fits-all answer.

An organization makes a strategic choice (whether consciously or unconsciously) about the kind of "structural coupling" that matters. For example, a high-tech start-up company may be physically located near a university campus, and the founders have good personal relationships with researchers at the university. This will help the organization remain close to technological trends, but possibly at the expense of developing a broader understanding of market opportunities. At some stage the venture capitalists may persuade them to move their head office closer to the customers and/or to bring in new executives whose personal network faces in a different direction. Meanwhile, a different company might be dominated by supply chain and distribution issues, and for that company it will be these relationships that are most strategically significant.

The point is that this "structural coupling" affects many aspects of organizational intelligence: the events and trends that the organization can respond to, knowledge flows, innovation and organizational change. Which brings us back to the question of stability - where are the fixed points around which organizational systems (including formal information systems and services) can be built, and where are the points where flexibility is required. This is not a new question, but the organizational intelligence "lens" provides a new way of thinking strategically about the implications here.