Think about it, what does the real state of an organization look like? It should look like this:

The expression that is more in line with the scene should be like this: Zhang San and Li Si of department A have a good relationship, so Zhang San gives Li Si a higher 360-degree evaluation score and closer cooperation, and at the same time, Li Si is also the nephew of the boss……

However, we don’t think that we will turn the original network-like organization into a family layer:

Zhang San, Li Si, Wang Wu, and Zhao Liu are formatted in a kind of bureaucratic relationship, and their contact, private relationship, and implicit relationship when performing tasks all exist in the minds of managers and employees, but they can never be reflected in the structure of this bureaucratic system.

However, the linear diagram of the hierarchical system is only a special case of the real network diagram, as long as the connection of the network diagram is disconnected, it is a linear structure diagram. However, exceptions are not a substitute for the whole.

So why would an enterprise adopt a simplified linear diagram to present an otherwise complex network diagram?

The reason is simple, human rationality cannot deal with the original “complex, dynamic, and connected” network diagrams, but it can deal with linear graphs, because linear graphs are “simple, static, and isolated“, which is easy to handle.

In the same way, the bureaucratic system is simple, static and isolated, which is easy to manage, but it is “not real“, which is a way that has not been possible before.

The attribute of “manageable” is not an end in itself, but a means.

The means are often alienated, the same is true of management, many times managers will alienate management into an end, gradually, enterprises are no longer managed for the sake of business, but for the sake of management, management for the sake of power, and the bureaucratic system is naturally a power structure.

At this point, management begins to become a kind of shackles, and the organizational rigidity brought about by management makes enterprises enter the “innovator’s dilemma”, thus missing out on new business development opportunities, which has been repeated over and over again in history.

We need another solution, of course, we need to turn to machine intelligence, although human intelligence can’t process network diagrams, but machine intelligence can, and once the solution becomes a software tool, in fact, the complexity is the calculation process of the machine, but the human operation is very simple and easy to use.

Before understanding the solution, it is necessary for us to return to the essence and see “what is enterprise, business and management” as it is, so that it is possible to look at management, see management clearly and find solutions from another perspective.

1. The essence of the enterprise

In his book 《Origins: The Big History of Everything》, Christian reveals the fundamental law of all things: everything is made up of information and energy.

Businesses are no exception, of course, but in business, the word energy should be replaced with “resources”. For the sake of simplicity, the “information” here is also regarded as a resource, an intangible resource.

In 1937, the economist Coase published a paper called “The Nature of the Enterprise”, which was regarded as one of the cornerstones of the new institutional economics. Coase believes that the essence of the enterprise is a mechanism for resource allocation, and the enterprise and the market are mutually replaceable resource allocation methods. The difference between an enterprise and the market is that an enterprise can better allocate resources and reduce transaction costs through internal management (where transaction costs include the costs of searching, negotiating, communicating, and executing in the transaction process), while the market needs to complete transactions through a price mechanism.

Based on this, we can believe that the essence of enterprise operation is the process of “resource allocation and flow” in the process of satisfying customers.

This argument is so critical that it will be used throughout the article.

2. The essence of business and management

What are the things that need to be done at the most abstract level for “enterprise operation”?

The answer is: Decision-making, Management & Execution (Business).

More specifically, the decision is “what to do”; Management and execution are all about “how to do business”, but execution directly affects business, and management indirectly affects business.

What is the essence of the core business activities of the enterprise as “R&D, production and management”?

As mentioned above, since the essence of enterprise operation is “the resource allocation and flow process in the process of satisfying customers”, then “decision-making, management and execution” are naturally part of the “resource allocation and flow process in the process of satisfying customers”.

Thus, we can have the perspective that the essence of business is “the process of “flowing” resources in the process of satisfying customers“. The flow here involves transformation, for example, the transformation of scientific knowledge into technology, the transformation of raw materials into finished products, and the transformation of finished products into marketing information.

If this flow process is presented in the form of a business organization, then it must be because of the complexity that requires “the distribution of tasks, the execution of people, and the support of skills”.

It is precisely because of this complexity that “decision-making and management” is necessary to facilitate the effective execution of business and to make the “allocation and flow” of resources more successful to meet customers.

And what is the essence of management activities that support business development?

I believe that the answer could not be simpler, and its essence is “the process of resource allocation in the process of satisfying customers”.

The relationship between the two is that “business is the essence, and management is the means“.

The road to simplicity, the above truth sounds simple, but extremely profound, it exists in the daily life of the enterprise like air and water, but it is extremely easy to alienate.

It is easy to forget that in the process of enterprise operation, management is only to make the business run better, but the vast majority of enterprises will fall into the dilemma of management for the sake of management at some stage.

Therefore, every enterprise has to face such a problem: how not to let management become an excessive shackle to hinder the development of business?

On this point, let’s start with a typical scenario.

3. Typical scenario analysis: strategic management

Strategic management is an extremely important management behavior, but also very complex, this matter, is related to the lifeblood of enterprise development, because the direction is right, not afraid of the road, the wrong direction is a hundred mistakes.

To put it simply, the process of strategic management requires “models and data”, and specifically, “models” are divided into three aspects: strategic decision-making, plan execution, and evaluation and adjustment.

Strategic decisions should consider both the long-term mission and vision, medium-term trends, and the short-term status quo of the enterprise. Plan implementation needs to consider the formulation of indicators, the communication of indicators, and the implementation of control; Evaluation adjustments need to consider performance evaluation, indicator adjustment, and strategic change.

For example, if a strategy is decoded into a plan, which contains strategic themes, goals, and indicators, and is weighted, the system of indicators can be distributed to people in various departments. As in the classic case of Mobil:

In order to make people better execute, they also need the support of organization, mechanism, and culture, for example, how to set up the relationship between power and responsibility? How can we evaluate and motivate more effectively? How is the collaboration mechanism designed? How is the process designed? Wait a minute.

Then, it is the business activities, and the implementation process will definitely generate data, and in the process of strategic management, it is also necessary to make timely adjustments according to the data generated in the implementation, so as to refresh the strategy.

So, how does this strategic management process become shackles?**

A “model” without “data” cannot guide specific practice, or in other words, the practice process is actually the process of “model fitting data”.

Just to name one.For example, “strategic decision-making” needs to be defined in at least three parts: mission vision, trends, and the current state of the company. Among them, the mission and vision will not change easily; The trend is external, and it is possible to recognize macro, industry, competition and customer changes with the help of analysts and relevant data services of consulting firms; However, it is very difficult to understand the current situation of the company.

It is impossible for the decision-makers to know everything in the front line of the enterprise, and their information comes from the reports of the management. There is no need to worry too much about the analytical skills of the management, a master will definitely be able to see the essence more clearly than more people.

The key question is whether there are three of the following:

• Is the data collected to reach the conclusion of the report very one-sided and not three-dimensional?
• What if you can get more comprehensive and three-dimensional data, but managers can’t process it?
• Enterprise development is a dynamic process, and how to process these dynamic data in time and form decisions?

The first is the issue of “data”.

On the one hand, data collection is not easy in the first place, and many enterprises do not have complete business information, or they are discrete and offline. At the same time, it is difficult to obtain business information from the enterprise as HR and VP in charge of human resources.

On the other hand, it is also difficult for traditional management “models” to process real networked data, because they can’t process it, and they won’t deliberately collect it.

The second point is the “model” issue.

First, as mentioned above, the limitation of “human rationality” is that the reality is networked, but human rationality cannot process networked data.

The current information technology means only to move the models of evaluation experts into the computer system, which can improve efficiency, but machine intelligence has not been able to make up for the lack of human intelligence, because the calculation process in the existing HR information system, calculator/excel can also be done, but it needs to be manual.

What kind of machine intelligence can be regarded as a fundamental compensation for human intelligence? What humans can’t handle manually with a calculator counts. For example, if the networked data of an enterprise organization can be processed by machine intelligence, it is a paradigm shift to the management model.

Second, the basic approach in the field of management consulting is to use the “job analysis” model to process data in the field of HR. For example, job analysis, it operates like this: clearly define the technical level (knowledge and skills), problem solving, responsibility, working conditions and other elements of a position, each element is divided into several levels, and then give a certain score (that is, weight), and then analyze and score each element of the post one by one, and finally add it up to get the total score of a job. The total score for each post determines its position in the job sequence.

Most of the data here are “category data”, such as traditional “text data” such as education, reputation, personality, experience, etc., as well as “sorting data”, such as proficient> proficient> knowing, director> manager> specialist, etc., they will eventually be quantified into salary or salary structure through the job rating model and become “quantitative data”, but from category data to sorting data to quantitative data, at least 2 levels have been skipped. At present, the consulting company has not been able to distinguish between the above three different data, thus lacking statistical scientificity, and this quantitative process is mainly based on the experience of evaluation experts.

Therefore, the existing model cannot handle more comprehensive and three-dimensional data.

The third point is the issue of “data and models”.

It’s about “time”, it’s about prediction, prediction is decision-making, and the accuracy of prediction depends on the quality of the model and the data, and the model needs to be able to handle the data in the “time” dimension in addition to dynamic data. Obviously, the intelligence of today’s management software does not help managers to predict, it is only responsible for calculating the results of the input data, and then relying on the human brain to predict.

The above three problems are the culprits that make management the culprit of shackles. It makes it difficult for decision-makers and managers to comprehensively and truly see the overall picture of management and discover the essence of management problems, and it is difficult to make correct decisions and formulate more reasonable management methods, for example, how to organize, command, coordinate and control more reasonably? And how to evaluate and motivate correctly? Wait a minute.

Because, whether it is from a local perspective of the enterprise, or the limitations of human rationality, or the inability to deal with dynamic data, will make strategic decision-making, management, and execution are faced with some hidden risks, and the risk avoidance is extremely dependent on bosses and managers like Kazuo Inamori who believe that “there are gods on the scene”, and they need to go beyond human reason and use some “mysterious” power to make decisions, plan and execute.

Such “mysterious” forces are not mysterious, they are human intuition. Entrepreneurial intuition is extremely important, especially in the early stages, but can the decision-making, management and execution of the business rely solely on intuition as the business begins to grow and even mature?

The answer is obvious, no.

And the end of human rationality is the beginning of computational rationality (AI). For example, this year, the emergence of chatGPT has made human beings further feel the limitations of human intelligence, and machine intelligence is to surpass human intelligence to a certain extent.

Therefore, how we use machine intelligence to make up for the inherent lack of human rationality will become the winner or loser of the operation of the enterprise organization, because managers do not have a clear grasp of the current situation of the enterprise as they think, and cannot rely only on intuitive judgment and decision-making in everything.

The world is changing so fast, the above problems have become the fundamental problems faced by all modern enterprise management, the key is how to solve the problem?

4. The Complex Scientific Perspective

As mentioned in the above “essence of business”, we can break down the actual operation of an enterprise into four elements: tasks, resources, people and skills. You need to explain why these four elements are:

• “Tasks” are the link between “management (planning)” and “decision-making”;
• “People”, “skills” and “resources” are “tasks”.

The first sentence should be understood as follows: strategy not only tells the company what to do, but also tells the company what not to do (tasks); The same is true for business models; The same is true for mission and vision (if the company really has a mission and vision instead of a slogan). The first step in strategic management is to develop a business plan, possibly using a BSC (Balanced Scorecard), which ends with clear tasks.

Therefore, decision-making and management affect the execution mechanism of the enterprise, but the way they affect it is ultimately between “tasks, people, skills, and resources”.

In fact, we all know very well that the real operation of the enterprise organization is never a bureaucratic system, but a network. Moreover, the operation of the real organization is not exactly presented according to the organizational chart, and the informal organization in the enterprise will have a strong influence on the actual operation of the organization.

So, how does this real network manifest itself?

Consider building a complex network where employees, tasks, resources, and skills are nodes. The node-to-node connections are as follows:

Consider building a complex network where employees, tasks, resources, and skills are nodes. The node-to-node connections are as follows:

• The connection between employees is the relationship of “collaboration and reporting” between employees.
• The connection between tasks is the relationship between tasks and tasks.
• The edge between skills is the “help” relationship between skills;
• The edge between resources is the relationship between resources and resources.

At this point, we look at management from the perspective of “complex science”, and the schematic diagram is as follows:

Management is actually the “control of the allocation and flow process” of the four elements of “people, skills, resources and tasks”. For example, mission, vision, strategy, plan, organization, etc. are essentially “allocation”, while leadership, values, corporate culture, performance, system, command, coordination and control are all “control of the flow process”.

At this time, the “importance of nodes” in the network is actually about the importance of “things and people”. The node importance of the network can be calculated separately, which is exactly what complex science has solved. Applying complex networks to the development of an enterprise organization is tantamount to a paradigm shift. Don’t look at it as complicated, in fact, after converting to a software product, the human operation is actually very simple.

So:

• What exactly is a complex network?
• Why does it reflect the real business situation?
• How is it different from the conventional wisdom?
• How should it be applied to human resources and organizations?

Let’s reveal them one by one.

4.1. What is a complex network?

Let’s use a not-so-precise but vivid analogy, basketball.

Basketball is such a team sport, five people, let’s assume A, B, C, D, E.

Here we can understand basketball as a “resource”, and the essence of playing basketball is to “flow the basketball to the basket”.

The 5 different color nodes represent 5 players, black (player A), red (player B), purple (player C), blue (player D), and green (player E). There are directed edges between the two nodes, and the color is the same as the starting point of the edge. For example, the black edge between A and B refers to the edge from A to B, specifically indicating the number of times A passes the ball to B. The number of connections between players is the number of successful passes.

Here, a team network has been built. According to the calculation method of complex networks: we can calculate the connection direction, number, frequency, distance and other dimensions of each node and other nodes, what can these data represent?

Here’s an example.

Wu Jiang, a teacher from Wuhan University, did a study on the “2017 NBA Finals Team Decentralization Level and Performance Research”, and he built a complex network between the Warriors and the Cavaliers, as shown in the following figure (the Warriors on the left and the Cavaliers on the right):

This is how the two teams were connected in the 2017 Finals, and he proposed some metrics based on the concept of complex networks, as follows:

The most critical is the “weighted directed node entropy”, which expresses the degree of centralization of the team, and it is obvious that the Cavaliers have a very high degree of centralization, mainly concentrated in James and Irving. The Warriors have a relatively high degree of decentralization, at 1.37, 1.31, 1.17, 0.99, and 0.88, which can quantitatively judge the degree of centralization, cohesion, resilience, and breadth of collaboration of this organization.

Note that this contrast, which is quantitative, is a number, which is a fundamental difference. For example, if I were to calculate who contributed more to the Warriors that year? And Curry and Durant’s data on the bright side are actually similar:

But is that enough to show that FMVP should be Durant? In fact, this is the question that has been discussed until now: Durant or Curry, who contributes more? Who deserves FMVP?

The reason why it is difficult to compare is that the potential influence of a player on the game revealed by the traditional data dimension cannot be calculated, and at this time, “weighted directed node entropy” is another dimension of evaluation.

If we want to calculate the performance of a team, we only need to combine some of these indicators to get it.

Now, let’s jump out of the basketball team and back to corporate organization.

If the contribution of employee A and employee B has been calculated through the complex network to be 0.43658 and 0.54123 respectively, and then assuming that the income generated by the project participated by employee A and B in a certain quarter is 1 million yuan, then, if the contribution of employee A and employee B is multiplied by the revenue, it can be easily concluded that employee A contributed 436,580 yuan and employee B contributed 541,230 yuan, as follows:

Then, the employee’s contribution is quantified, and it is easy to observe how much the performance of employees A and B is different, how to implement incentives such as compensation, and when HRD reports to the boss and the boss asks why, this confidence is based on numbers and cannot be argued.

The enterprise organization is naturally much more complex than the team, and the resources transmitted by the team are unchanged and have always been the ball, while the form of the resources transmitted by the enterprise is very complex, and the degree of support and loss is also very different.

However, one thing is the same, either support or attrition.

If the enterprise organization is also built into a complex network, then the direction, number, frequency, distance and other indicators of the connection will build a much more complex network than the team, and each new indicator is a new perspective for the organization, which is the implicit perspective that has not been observed before, and these perspectives are actually very likely to affect the core force of the organization’s development.

As an example, if we express the results of a certain operation (large project sales) of an enterprise organization as a network diagram like this:

Then, with directions, numbers, frequencies, distances, and other metrics calculated, you can imagine what insights you might never have gotten before.

The answer to this question will be revealed one by one in the future. In order to facilitate understanding, the number (degree), frequency (intermediary centrality), distance (proximity centrality) and other indicators of complex networks are not used to express the calculation results of complex networks.

In addition, if this computing process is turned into a software product, the operation process will become very simple, and in this case, it will easily help managers establish a “second brain of managers”.

Below, I will not talk about these indicators directly, but rather help you understand “what is the value of a complex scientific view/why can it reflect the real business situation?” How is it different from the conventional wisdom? How does it apply to an enterprise organization?” and so on.

4.2. Why do complex networks reflect real business conditions?

Returning to the essence of enterprise operation, it is “the process of resource allocation and flow in the process of satisfying customers“, then, when the organization is transformed into a network diagram, every node, whether this node is a person, a skill, a resource or a task, every time node A is connected, whether it is from B->A, or from A->C, it is a connection with A. A connection means that there is a flow of resources to or from A in a real business activity.

Of course, we can judge the importance of a node by each inflow or outflow situation, because every connection means that A exerts its strength, and the more times and frequencies of connections, the more important it is, and the stronger its strength.

For example, the number of connections in the figure above shows that “Sales A has completed the task of the project leader” is more important.

If we build a personnel network on the basis of the task network, then the network diagram becomes a two-mode network, plus the skill network and resource network, then the nodes in each type of network are expressed as different contributions/importance of different node attributes.

As long as the network relationship between the four elements of “people, skills, resources and tasks” is presented, the connection between them is the result of “resource allocation and flow”.

These results can be analyzed, and more precisely, the “contribution and importance” of each node can be quantified, which is the problem that complex science solves.

So, how does the view of complex science differ from the traditional view? It is mainly reflected in three aspects: cognitive mode, quantitative mode and prediction mode.

4.3. Different ways of knowing

Albrecht von Haller, the father of modern physiology, said that nature connects all things in a network rather than a chain. However, since human language cannot handle a few things at once, humans can only follow in a chain.

For example, the article you’re reading now is essentially a web of concepts (languages), but my writing can only be done in a linear way. Cognitive scientist Stephen Pinker has already summed it up: the difficulty of writing lies in the use of a tree-like structure to embody the linear expansion of sentences.

In other words, people need to simplify things before the brain can react, and linearity is a simplified way of processing, but the real world is originally complex, and the consequences of simplified processing must be the distortion of facts. Isn’t it because the linear approach is inefficient or even wrong?

For example, when a software company wins an enterprise customer, the process is often like this: project – sales – pre-sales – product – research and development.

In this business activity, there will be a lot of transfer of project data, and the process of transmission is the process of subjectivity, that is, the process of data distortion. From the perspective of the network, it would be:

But the human brain can’t process mesh data, machine intelligence can.

In this way, the first-hand raw data transmitted around sales will minimize the process of informatization (subjectivity) and enhance the degree of digitization (objectification), which is an extremely simplistic networked perspective.

In other words, if we use a little bit of “networking”, the data distortion of the overall project will be greatly reduced.

Thus, “networking” itself is actually a restoration of the real world as it is. The brilliance of this approach is precisely that we begin to restore the facts themselves. The essence of “networking” is to respect factual data.

However, as mentioned above, the human brain does not have the ability to process networked data at the same time, and AI is an extension of the human brain, and “the end of human rationality is the beginning of computational rationality”, and it has a way to present the organization that was originally a network directly to you from the beginning.

The enterprise organization is never a linear bureaucratic system, it is originally networked, so we need to use more advanced methods to express the real appearance of the organization.

That’s the difference in the way of cognition.

4.4. Different ways of quantifying**

Still cite the management analysis case of the project of key customer sales:

The above is a one-model network, that is, a task action item that sales performs when making this project, where each task is a node, and nodes support or lose each other. The size of the nodes, the thickness of the lines, the distance between the nodes, and so on are all measures of the contribution and importance of the task.

This is just a one-mode network, if we can project all the relationships between people, skills, and resources, and become a multi-model network:

What will we find?

The contribution and importance of people, tasks, skills, and resources are clear and clear, and they are presented in numbers:

At this time, let’s take a scenario example: if we want to do a performance appraisal, we only need to “multiply the value of the contribution to people by the income/profit” to get a real contribution that is more in line with the facts, rather than relying too much on people’s feelings and impressions. As a result, the basis for “how to evaluate this employee” will be as hard as financial data.

Using this quantitative approach, an HRD no longer has to struggle to prove to his boss why his performance plan is reasonable, just as a CFO never needs to explain to his boss why the financial plan is reasonable, because that’s the numbers, and the evidence is overwhelming.

Moreover, this quantitative method is based on the facts of the company’s operation, and does not rely entirely on feelings.

If the “significance” of each of these elements can be quantified, as long as it is multiplied by the revenue/profit generated by the project, then the value created by this element will be directly reflected in the company’s revenue or profit. How does this result differ from the results of traditional analysis?

For example, 360-degree evaluations are often used for performance appraisals, which directly affect employees’ earnings, and are often qualitatively analyzed first, followed by quantitative scoring and weighting.

This quantitative approach is not essential, because it does not focus on income as the core of contribution; It doesn’t fully respect the facts, it’s more by feeling.

This kind of analysis process is mixed with too many deviations, for example, A is not used to B, so it is completely possible and realistic for A to give B a low score, while the other C is a relative of the boss because of a good relationship with A, but things are not done well, and A gives C a high score, so that the really capable employees can not be reused. It is not that nepotism is necessarily wrong, but that enterprises cannot only “use relatives without virtue”, so we need to make an assessment of “contribution and importance” based on the facts of enterprise operation.

That is, looking at the organization from the perspective of “resource allocation and flow in the process of satisfying customers“, and the value created by employees in the process of allocation and mobility, it is far more reasonable to evaluate it by one or two orders of magnitude than to rely on feeling scoring and evaluation. Because it is not a two-level process from “categorical data” to “quantitative data”, this process does not artificially classify and form “categorical data”, but directly converts the original factual data sorting into “quantitative data”, and its scientificity has been greatly enhanced.

The essence of the evaluation of the importance of “things and people” here is to evaluate the true value of “the efficiency of the allocation and flow of resources in the organization” of the two.

Therefore, looking at the organization from this perspective and assessing the importance/strength of “things and people” is the core of the core. From this perspective, from the perspective of the efficiency of the flow of information and resources, putting core resources on important things, and then using important people to do important things, is actually the secret of enterprise efficiency.

4.5. Forecasting is different

Humans are at the top of the food chain because they can create knowledge and form predictions. Human beings are always predicting, and ancient Chinese society used the Book of “Yi jing”, which is an inaccurate prediction method with a low amount of information, and now more scientific prediction is used.

How is it different?

It emphasizes quantification and experimental/empirical evidence, quantification that we have talked about above and will not repeat itself.

Scientists create advanced knowledge to guide human practice by doing experiments in the laboratory, which is already very vividly demonstrated in the natural sciences. However, in the field of social sciences, it is not sufficient.

There is no doubt that the disciplines of management and organization are based on economics and sociology, which are also not easy to experiment. In addition, companies are in an unpredictable business environment, and it is more difficult to do fieldwork and empirical evidence like anthropology and sociology, and then research and analysis.

But it’s not like there’s no solution.

Simulation can be realized, and the current metaverse and digital twin are actually simulations, and after the construction of the above-mentioned complex networks is completed, coupled with the ideas and technologies of simulation, we can actually simulate the organization.

Many people may have heard of simulation, they may know it, they may be familiar with it, and it is necessary to talk about it briefly in order to take care of more readers. It was first born in the industrial sector, for example, in human factors engineering. Its cutting-edge research is human factors reliability analysis and simulation. The most mature industrial fields for the application of human factors engineering are aerospace, nuclear industry, and military industry, and their common feature is that once they go wrong, the consequences are extremely serious.

Its biggest feature is that it is indeed a digital (virtual) space, but it is a “twin” of the real (real) world, it is a direct replica of the real world, and the granularity is exactly the same as the real world, such as:

The left is the real machine, and the right is the digital machine, because the adjustment of the real machine will have a great cost and risk, so you can first transform its “twin”, which is extremely low cost and can achieve a good prediction effect.

For example, what if we are dealing with traffic, cities?

It can be deduced at a low cost in the simulated digital world, which is an extremely practical technology in the industrial world.

More importantly, in an organization, if you use the wrong person, do the wrong personnel change, do the wrong organizational development, and do the wrong performance transformation…… What they have in common is the same as that of aerospace, nuclear industry, military industry, etc., that is, once they make a mistake, the consequences are extremely serious.

As a result, simulation is particularly well suited to areas where the consequences of a mistake can be severe, and the same is true for organizational development

• Hiring a sales director is naturally important, but how important is it? Using complex networks and simulations, we can feed information about the sales director into the software, algorithmically calculate the importance of the figure, and then predict how much he will contribute and how much revenue he will bring.
• If an enterprise wants to carry out organizational development, but does not dare to make adjustments easily, it can also calculate the results of each adjustment method (expressed as numbers) by doing simulation, and directly form a comparison.
• If a person is leaving, how much loss will that person’s departure bring? If you rely on your feelings, when you are not concrete, your feelings may not be deep, and if you convert them into numbers, for example, 50 million, I am sure, you yourself will be stunned.
• The boss is especially nice to an employee, but he still betrays the boss? The boss doesn’t know why, but he can also simulate and analyze the employee’s situation, what conditions did the other party offer? The answer can also shock you, it is not a matter of money, but that I have suffered too many grievances, and I am not used to being controlled by high pressure all the time, and I hope for a better cultural atmosphere.
• What kind of real impact will it have if you want to transfer the sales director from the North to the South District? I.e., what is the potential revenue growth? What is the possible loss of income?
• ……

We can put tasks, skills, resources, and the allocation and flow of people into this complex network for simulation, and simulation is prediction.

It’s just that our traditional way of forecasting is to rely on the intuition of the brain, for example, to set a weight on an indicator, you know very well that it may be important, but the 40% weight is not a confrontational competition with other indicators, the result of the competition may be 35% in the end, your intuition is more accurate, but how do you know how much impact the 5% will bring?

Therefore, when we can simulate the organization, we can conduct low-cost experiments, and at this time, we can input the changes of the enterprise in the complex environment into the software for simulation, which realizes the purpose of dynamically responding to market changes.

The above three dimensions are examples of the difference that complex networks can bring and the application scenarios it can use in enterprise organizations, so to speak, to solve a problem that has never been solved but is very important.

4.6. Complex networks are not the same as mesh organizations

Some people may say that our enterprises are more traditional and do not need to become a network organization, and this must not be mistaken: the complex network reveals the original and real operating state of an organization, rather than expressing the organizational structure of an enterprise, and the operating state of a bureaucratic organization is also a complex network, because who will only communicate with their colleagues in the same department? How do you know the completion of task A, which resources in which departments are being coordinated? How do you know if your co-workers are related to your boss? And how do you know that some of your colleagues in department A have formed a political faction with some of your colleagues in department B? Wait a minute.

Of course, an organization may be suitable for a linear functional system, for example, traditional manufacturing, and some organizations are more suitable for network organizations, such as technology enterprises. However, you still need to understand that even a manufacturing industry like Haier can be turned into a network organization, and what really matters is not what you want your business organization to become, but what kind of environment the enterprise needs to be in order to better survive and develop.

By revealing the real operating state of the organization, and quantifying and simulating them, complex network science is essentially to let the boss and managers see the real state of the organization, and adjust it in the face of changes.

5. Why do we need to re-understand management?

Business creates value directly, and management creates value indirectly. Business is the end, management is the means.

It’s a simple truth, but it’s very difficult to manage successfully.

Why do we need to re-understand? Because, the world is changing too fast, the development of science and technology is too fast, and the transformation of productivity is too fast, and the emergence of chatGPT has caught people off guard.

If management is not re-viewed, the development of enterprises will inevitably not keep up with the changes in the world.

When business and management begin to become complex, management becomes very important, so important that it begins to fail to see the true face of business development, and management begins to override the business. In many cases, managers will alienate management into a purpose, manage for the sake of management, and the reporting level is more important than the business, and the power is more important than the business……

The organizational rigidity brought about by management has led enterprises into the dilemma of innovators, thus missing opportunities for new business development, which has been repeated in history.

Managers hate history repeating itself, but it keeps repeating itself.

At the beginning of this article, we mentioned three chronic problems of “how management can become shackles and affect business development”:

• Is the data collected to reach the conclusion of the report very one-sided and not three-dimensional?
• What if you can get more comprehensive and three-dimensional data, but managers can’t process it?
• Enterprise development is a dynamic process, and how to process these dynamic data in time and form decisions?

We need to look at the business as it should be holistic, quantitative, dynamic and predictable.

This is conducive to lower cost and more efficient management and innovation.

From the perspective of complex networks, the above three questions are fundamentally answered, namely: different cognitive methods, different quantification methods, and different prediction methods.

In response to these three problems, we are solving them through algorithm and product innovation.

It’s called: Valor.

6.Valor

A complex network can be calculated to obtain many metrics about nodes, such as degree centrality, intermediary centrality, proximity centrality, number of cores, and centricity.

Let’s not understand these terms for now. Rather, it is necessary to understand that each of these indicators is a quantitative result of the importance of the node, and according to different business scenarios, different indicators can be used to measure, and quantitative results can be obtained, which cannot be explicitly observed from the previous management perspective.

And, importantly, this calculation process does not need to be solved by the human brain, but is easily handed over to the Valor intelligent tool, which is simple and easy to use, so Valor is also a “second brain of managers” that can be called at any time.

The point is, how can a complex network be translated into private network computing in an enterprise organization, which is a general-purpose network?

In this complex network, the degree centrality, intermediary centrality, eigenvector centrality, proximity centrality, kernel number, centrifugation, etc. of nodes can first fully reflect their economic attributes, because even social and political attributes must serve the basic economic attributes most of the time.

In Valor, it is expressed as: the essence of measuring the value of talents in terms of business income/profit.

Therefore, when we know the results of an organization’s work, we can reverse the true value of these talents, tasks, skills, and resources as nodes, that is, the contribution/importance. Like what:

• Degree centrality is high? Very well, this person must have a lot of contacts with other people, information, resources, and he is likely to be suitable for coordination.
• Is the intermediary centrally centralized? Very good, this person is very frequent with other people, information, resources, and its irreplaceability is very high, so although from the perspective of “real”, combined with the characteristics of corporate culture, values, and limited management positions, it may not be possible to promote him, but more incentives must be given (money, training, honor, etc.), because from the perspective of “should”, this person must be reused.
• Eigenvector centrality is high? Very good, although this person is low-key, but the potential connection with other people, information, and resources should not be underestimated, and he is the object of potential talent and promotion, and at the same time, there may be the possibility of forming a political faction.
• High proximity to centrality? Well, this person is very fast in the transfer of information and resources, so it should be in a hub position, and he will be closely connected with everyone in the future, for example, the assistant general manager.
• ……

This is where it all unfolds.

Complex science is a new discipline, and some practitioners in the HR field have also paid attention to its relationship with the organization, but most of them can only stay at the conceptual level, without real solutions, cannot be implemented into products, and cannot be truly applied to the management field. Why?

There are two major problems: First, there are too many disciplines that need to be crossed, as follows:

However, most of the liberal arts students in the fields of human resources, management, and organization may focus on sociology and economics, but it is difficult for them to be good at computer science, mathematics, and simulation, and those who understand science and engineering backgrounds can rarely understand human resources, organization, management, sociology, etc. Many people do not know about emerging disciplines such as information economics and complex science, and finance and mathematics are even more difficult to touch. All in all, it is very difficult to solve this problem by crossing many disciplines.

Second, in addition to the algorithm of the complex network itself, there are actually other algorithm problems in the field of management, because business is the essence, and people are reflected in the enterprise organization because of the importance of business, more specifically, the importance of people is reflected in the importance of the tasks they participate in and the contributions of people in the tasks, and the same is true for skills and resources. So, what is the relationship between tasks and tasks? Can the importance be directly represented by existing metrics in a complex network (e.g., degree centrality, intermediary centrality, proximity centrality, number of cores, etc.)? How does the importance of the task relate to people?

Although Valor products are very simple and easy to use, the algorithms involved are actually quite complex. This matter has been solved by the Valor team, and has begun to be productized into Valor, helping managers easily calculate values that cannot be calculated by human reason.

7. How to use the conclusion of a complex network?

The design and arrangement of everything, people and organizations should serve the “resource allocation and flow process in the process of satisfying customers”, but the organization is not a thing after all, it not only has instrumental rationality, because people have subjectivity, but also value rationality, so it is difficult to design absolutely objectively.

Alternatively, the operational efficiency of the enterprise cannot be absolutely objective, and the important thing is that the higher the relative efficiency, the better the customer service and the outperformance of the opponent. Therefore, the question is transformed into how to measure the impact of “things and people” on reality with both subjective value judgments and objective fact statements, which is more important.

Again, the above case is cited.

Employee A is a relative of the boss and occupies a management position, this person has average ability, but he has the strength to influence reality, because he is likely to have more important information and resources, or the flow node of important information and resources.

Although employee B is not in a managerial position, many of the company’s affairs have to be handled by him, and the frequency is much higher than that of the boss’s relatives.

How exactly do we measure the importance of these two people? How can we better place these two people in the organization so that management can be more efficient?

For a long time, this problem could only rely on patting the head, but this phenomenon is a common phenomenon in real companies.

Here, I am reminded of Drucker’s sentence: what cannot be quantified, cannot be managed.

Therefore, for this kind of difficult management problem, the core is: how to quantify the importance of the two (i.e., the ability to influence reality)?

If we can use a complex network to calculate the importance of two people, for example, the importance of relative A is 0.43658 and the importance of employee B is 0.54123.

So, how should the boss weigh the position arrangement at this time?

Because the importance of work is clearly quantified, the only thing to consider is the weight between kinship and the development of the company, which depends on the “values”.

So, this decision is much easier than not knowing the quantification of the importance.

If the weight ratio of enterprise development to this relative relationship is 4:6, then, (B employee) 0.4_0.54123% 3C (A relative) 0.6_0.43658, that is: 0.216492% 3C0.261948, A is slightly greater than B, then the relative’s position can be temporarily maintained, but it is also necessary to make certain incentives for another employee, such as salary increases, training opportunities, etc.

If the weight ratio is 6:4, then, (employee B) 0.6_0.54123> (A relative) 0.4_0.43658, that is: 0.324738>0.174632, B is much larger than A, immediately promote employee B, adjust A’s position.

This is just one of the application scenarios, but the measurement of importance and contribution is the fundamental crux of modern management problems, whether it is the determination of the index weight when formulating the plan, or how to know how to know the good job when arranging the troops, or how to evaluate the value …… created by employees when the value is distributed

Obviously, if this problem is solved dynamically, the management efficiency will be improved by one or two orders of magnitude, and we may say that enterprise management may be able to keep up with market changes.

More importantly, through the efforts of the Valor team, the above problems have been solved more scientifically, and at the same time, the product itself is simple and easy to use, and the complex calculation process is handed over to the machine intelligence, and people only need to enter the data, click the calculation button, and view the conclusion.

Managers are welcome to turn Valor into your second brain, calculating values that were once incalculable.