“It is not the components of a system that generate the properties and behavior of a system, but the relations among the components that do. It is the swirling mass of relationships within and among the elements that matter.” Stem Cells as Metaphor Implications for Organizations and Organization Development By Steven W. Page Stem cells are a useful metaphor for organizations. The metaphor evokes a conception of organizations as a pattern of relationships established to create value. The pattern of relationships that is established, in turn, determines the forms of value that are created. This model addresses gaps in our understanding of organizations and OD. It provides a rationale for how value is created collectively. It also integrates critical human, social, and cultural factors involved in value creation. In what follows, I first present a model of organizations. Then I develop the stem cell metaphor, translating the properties that stem cells possess to the context of organizations. The article concludes with the implications for OD and a look at the strengths of the metaphor. A Model of Organizations Mary Jo Hatch (1997) has provided a useful model of organizations (see Figure 1). Figure 1: Structure of an Organization The model characterizes organization structure as a dynamic pattern of holistic relations. Adapted and modified from M. J. Hatch (1997 p. 15) Stem Cells as Metaphor: Implications for Organizations and Organization Development 29 Table 1: Structural Elements of Two Different Organizations Structural Element Small Town Church Multinational Corporation Physical Structure Stand-alone church Geographically dispersed office buildings (Core) Technology Spiritual guidance, religious instruction and services, charitable efforts Financial services Social Structure Hierarchical, authoritarian, specialized church personnel plus unspecialized congregation Matrix, decentralized, networked, encompassing thousands of employees and tens of thousands of shareholders Organizational Culture Based on shared religious beliefs and practices; dedication to spiritual wellbeing of parishioners Based on shared identification as part of a particular business organization, common practices and policies; dedicated to increasing profitability and share price Organizational Environment Local small town Global Hatch distinguishes five broadly conceived structural elements that together form the overall structure of an organization: physical structure, technology, social structure, culture, and the organizational environment. This overall structure, comprising both tangible and intangible elements, forms a complete organizational system. Table 1 illustrates how this generalized model applies to two specific but very different types of organizations: a local small town church and a large publicly held multinational corporation in the financial services sector. This conception of an organization reinforces important notions about value creation that have been largely neglected in management and organization research. One such notion is value creation as a complex collective enterprise (Bridoux, Coeurderoy, & Durand, 2011). This model also explicitly recognizes the critical human, social, and cultural factors in value creation that have been neglected at the firm level of analysis (Kianfar, Milana, & Smith, 2010). The structural elements that comprise an organization are mutually influential and ultimately inseparable. They are in constant interaction. It is the elements plus the interactions that constitute an organization. A fundamental insight from systems theory undergirds this model. It is not the components of a system that generate the properties and behavior of a system, but the relations among the components that do. It is the swirling mass of relationships within and among the elements that matter. An organization 30 OD PRACTITIONER Vol. 44 No. 2 2012 reduced to simply these elements, and absent the mutually influential relationships among them, is something considerably less than an organization. This understanding of organizations is still not commonly reflected in the literature. Clegg and Hardy (1996) note a clear division in the field of organization studies reflected among all the contributions to The Handbook of Organization Studies. They observed that contributions fell into either structuralist or culturalist camps, with each failing to account for the other. Other scholars have noted the same division (Lane, 2001). The structuralists stress organization structure yet downplay the agency of people. The culturalists emphasize people and their cultures and the centrality of actors and action to organizational life. Both perspectives are accommodated by Hatch’s model and the stem cell metaphor, which integrate actors and action with organization structure. The environment is considered an integral component of an organization’s structure in this model. It surrounds and encompasses the other components. It is therefore not limited to an organization’s “internal environment.” An organization is dynamically related to a broader environment. The broader environment of course includes the competitive environment populated by other organizations in which an organization participates, but also the local environment in which the organization operates, and the natural environment accessed by and affected by the organization. Stakeholders are part of organization structure. It should be noted that in Figure 1 Society appears as a component of the environment. Society is subsumed as an element of the environment in Hatch’s model. I have singled it out and added it to the model to highlight its increased prominence in our thinking about organizations. To be relevant today, any model of an organization should encompass all of an organization’s stakeholders (Sachs, Groth, & Schmitt, 2010; Schneider, 2002). Society is increasingly considered a stakeholder, and the environment, if not actually a stakeholder, is also being increasingly accounted for in the stakeholder approach (Henriques & Sadorsky, 1999; Phillips & Reichart, 2000; Polonsky, 1999). The most commonly agreed upon definition of stakeholders suits the model of organizations considered here: stakeholders as the groups and individuals who can affect or be affected by the organization (Freeman, Harrison, Wicks, Parmar, & de Colle, 2010). By considering the various elements that comprise an organization and stressing their mutually influential and interdependent patterns of relations, we sense what the structure of an organization really is. It is not composed of discreet parts and solid boundaries. Rather, an organization’s structure is a dynamic pattern of holistic relationships. This is a view of organizations as organizing. An organization’s structure is a plurality of elements that occur together as depicted in Figure 1. None of the elements is ever absolutely stable. It is the pattern of co-occurrence of the elements and the shifting interrelationships among them—all of them—as they co-adapt, which defines the overall structure of an organization. The functioning rodent heart I saw started out as a heart that had been thoroughly drained of all specialized cells. This left only a white gelatinous heart shaped structure that was quite dead. By introducing the stem cells to the heart structure, A Description of Stem Cells the cells were induced to do what comes naturally to them. They set upon a course In January 2008, stem cells made newspa- of becoming increasingly specialized (the per, TV, radio and internet news all over the process of differentiation), resulting evenworld with headlines such as “Researchers tually in a reconstituted and beating heart. Grow a Beating Heart” (Greenfieldboyce, Scientists are now able to induce 2008) and “‘Spare part heart’ beats in lab” something akin to the reverse of the (BBC News, January 13, 2008). Sensationprocess of increasing specialization. ally overstated as this sounds, I myself Specialized adult cells can actually be visited the lab of Doris Taylor, PhD, the “reprogrammed” genetically to assume a Director of the Center for Cardiovascular pre-specialized stem cell-like state. This Repair at the University of Minnesota, new type of stem cell is referred to as who along with her colleague Harald Ott, induced pluripotent stem cells. MD, led the research effort resulting in the Stem cells serve to repair and regenerheadlines. At Dr. Taylor’s lab I witnessed ate. “Aging,” Dr. Taylor said, “is a failure one of the most incredible sights of my life. of stem cells.” Stem cells help to keep our Suspended in a tall narrow cylindrical glass organs and tissues healthy by repairing container was a beautiful pink living, beat- damage, even regenerating new tissue and ing rodent heart. It was from Dr. Taylor that organs. With these properties, the ability to I learned most of what I present here about induce already specialized cells to become stem cells. Table 2 (next page) lists the unspecialized holds immense promise. If I properties of stem cells and implications have a critical problem with my own heart, for organizations and OD. The properties for instance, then it may be possible to are discussed in more detail in the followreprogram adult cells from my heart to deing section. differentiate into stem cell-like cells. These One property in particular marks cells from my own heart should be able to stem cells as remarkably different from all then get to work specializing to repair damother cell types. Stem cells are not specialage and regenerating tissue without any ized. Each of the more than 200 other cell threat of rejection. types found in the adult human body are All of these special properties of stem specialized, playing a specific role in form- cells have important implications for orgaing muscle tissue or a particular organ, nizations and the practice of OD, covered a neuron, skin, bone, etc. Stem cells are in the next section. But first, there is even highly plastic. They are able to differentiate, more to appreciate about stem cells. Not or turn into, these other specialized cell only are stem cells an unspecialized pool types. This is what is meant when stem of potential able to become other types of cells are referred to as potent (all terms in cells, but they are capable of dividing and italics appear in Table 2). Stem cells begin renewing themselves for far longer periods as potential, not yet serving a specialized of time than specialized cells. Stem cells function as do all the other types of cells have a remarkable capacity to self-renew and surrounding them. Stem cells can remain increase their number. They get used, but in a quiescent, meaning non-dividing, they do not get used up. When a stem cell unspecialized state for many years. When divides, it either divides into a couple of stimulated, or induced, they can proliferate, new stem cells, or, when a specialized cell increasing their number by creating other type is needed, it divides into one stem cell stem cells. Or they can be induced to speand another cell. This other cell, as Dr. Taycialize into cells needed for maintenance lor put it, “commits,” meaning it starts off or repair. down the path of specialization. Through this process, we get specialized cells on an as-needed basis, and stores of stem cells are replenished and remain available for future needs. Stem Cells in an Organization What is the equivalent of stem cells for an organization? What in any organization serves as a pool of readily available potential that can be stimulated to specialize in order to maintain, repair, regenerate and even reanimate an organization? Commitment and structure. To describe how stem cells go from being potential to something specialized, Dr. Taylor explained how stem cells are induced to “commit.” The specializing, repairing, and regenerating come later; commitment comes first. Commitment requires something specific and concrete to commit to. In the case of the reanimated rodent heart, stem cells committed to the heart structure that had been drained of cells. What they specialized into was entirely dictated by the heart structure. What is akin to stem cells for an organization is, like stem cells, something that is unspecified and unspecialized, mere potential until it is committed to a particular structure—a particular organization structure. The organization structure determines the course of commitment. Stem cells at work in organizations: potential value becomes created value. All organizations are constituted and sustained in order to create value. This is true however value is construed in any particular instance. Without the intent to create something of value, an organization has no purpose to exist. And without actually creating sufficient value—value greater than the opportunity cost of all the tangible and intangible resources used—an organization will cease to exist (Khurana & Nohria, 2008). An organization may get off the ground through sheer moxie and ample funding, but it will inevitably fail unless it actually turns intent to create value into real created value. Value as used here assumes two distinct states. First, it is an intention; it is potential. As potential value, value is in a pre-formed state. Potential value is the Stem Cells as Metaphor: Implications for Organizations and Organization Development 31 Table 2: Unique Properties of Stem Cells and Implications for Organizations and OD Unique Properties of Stem Cells Unspecialized Implications/Relevance For Stem Cells For Organizations For OD Stem cells are potential; not (yet) having turned into a specialized cell type. Value exists in potential form before it specializes to become particular forms of created value. Look beyond current forms of created value and current structure to consider value and structure afresh. Things can always be different than as they are currently. Each structural element of the organization accesses potential value. And each structural element plays a fundamental role in determining the created forms of value. Potential value can be tapped and value creation channeled along a different path by changes to the structure of the organization. However, unquestioned or unquestionable values and assumptions - hidden or explicit can severely limit options for real change. What are these values and assumptions? Do they need to be made explicit? Can they be “reprogrammed” or modified to serve needed change? Potent: able to turn into other cell types The specialized form they eventually take is not predetermined. They can become whatever type of cell is required. Value creation can be other than it currently is. The possible forms potential value may take are not predetermined. The structure of the organization is the determining factor. Take an honest look at the value created and the structure of the organization. They are tightly coupled. How is the particular structure of the organization determining the kind of value created? Organizational structure is also not predetermined. Is more or less of a certain kind of created value what is required? Completely new kinds of value? What structural changes would this require? Able to differentiate: able to specialize A stem cell undergoes a multistage process to turn into a particular specialized cell type Organizational structure determines the path potential value takes to become particular forms of created value. Value only takes on the form that the structure allows. When it is decided that change to the organizational structure is required, the interrelationships among structural elements must be considered. It must not be forgotten that change to any structural element affects the whole system’s pattern of relationships. Beware unintended consequences of structural changes to one element affecting value created by other elements. Able to commit When called to action, they set off on a particular developmental trajectory, eventually becoming a specialized cell type. Organizational structure is determined by making committed choices deliberate and conscious, or otherwise. The organizational structure, in turn, is what potential value commits to. Determine the various kinds of value created by the organization. How are various types of value ranked in terms of more and less valued forms? Who benefits from the created value? Which stakeholders do not? Can be induced to specialize Incoming signals stimulate them to start to specialize, and signals continue to prod them to keep the process of specialization going. Signals sent by and determined by the organizational structure cause potential value to specialize into particular forms. What are the action inducing signals sent by the organizational structure? What different signals need to be sent if more or less of certain kinds of value or different kinds of value need to be created? continued next page 32 OD PRACTITIONER Vol. 44 No. 2 2012 Table 2 continued Unique Properties of Stem Cells Proliferate Able to be derived from adult cells-to become induced pluripotent stem cells Implications/Relevance For Stem Cells For Organizations For OD They increase their number by dividing into more stem cells that remain unspecialized. Stress can inhibit the process, and some comforting and awareness increasing practices can stimulate it. For whatever need, potential value can remain ever available - potential begets more potential. Is creation of the kind of value desired by the organization being inhibited by the active and collaborative construction of value killing practices, attitudes, and beliefs? Non-stem cells can be induced to mimic the unique properties of stem cells. They can then serve to heal, cure, and regenerate tissues and organs just like stem cells. By suspending existing assumptions, and ties to particular policies, practices, and other structural elements, new forms of value creation can be considered and made possible. Potential value will replicate and remain available unless stress crosses a critical threshold and constrains or kills replication. Has the amount of stress due to uncertainty, conflict, or the inability to adapt to changing circumstances - inside and outside the organization - crossed a critical threshold to become damaging? Transformational change is always a possibility. How can leadership be assisted to assume a fresh perspective? Asses the degree to which experience can be set aside by leadership and others in the organization to consider and effect fundamental change. Is the organization ready and willing to make an honest analysis and consider alternatives and deep structural change if required? Able to self-renew indefinitely They remain perpetually fresh and available by dividing into genetically identical copies when they are needed. Once value specializes into particular forms, it is no longer plastic and available as potential, but a pool of potential value is still readily available. If the organization is unable to set aside commitments to current forms of created value and current structural constraints, it cuts off any signals that lead potential value to take on any other forms than it already does. The pool of potential value will be refreshed, but if change is needed, potential value will still commit to the outmoded structure. The pool of potential value could be available to take on whole other forms of created value if allowed. Able to repair and heal and stave off debilitating effects of aging Stem cells keep supplying fresh healthy cells to maintain the body in a healthy state or to repair damage to restore the body to a healthy state. Capabilities can be built into the organizational architecture to help the organization remain resilient, nimble, and adaptable. Does the organization have mechanisms in place to facilitate critical self-analysis? Does the organization scan the internal and external environment to spot opportunity and trouble? Are strategies adaptable to changing circumstances? Does the organization encourage and practice real participation, transparency, innovation? Is critical information readily available to people throughout the organization? All help an organization to maintain viability, repair and renew. Able to regenerate tissue They specialize to repopulate damaged tissue with healthy cells, and even to regenerate entire organs. Deep structural change is the route to transformational change. The value that is created changes when the structure changes, not vice-versa. Dramatic change, even whole system change, is always possible, but it requires strong leadership. Alignment throughout the organization for transformational change is greatly facilitated when everyone understands how value is created and circulated. Everyone contributes to the creation and circulation of value. Running Foot 33 equivalent of stem cells in an organization. There is also created value: actualized value that started as potential value. In terms of the stem cell metaphor, created value is differentiated value. For potential value to become created value, it undergoes a process akin to specialization by stem cells. Created value is specialized value derived from potential value. Just as the introduction of stem cells to the rodent’s heart structure led the stem cells to specialize in quite specific ways, the structure of an organization causes unspecialized potential value to differentiate into specialized value. Signals sent by the organization’s dynamic pattern of holistic relations induce potential value to specialize into specific forms of created value. Once induced, the organization’s dynamic pattern of holistic relations channels the path of value creation. Ideally, organization structure leads potential value to differentiate into forms the organization needs to survive and thrive. The particular forms of value created by an organization are those allowed by the structure of the organization. Value creation is not necessarily about wealth creation, although that is certainly possible. Value can be defined in innumerable terms referring to both tangible and intangible benefits. It can be measured in concrete terms such as profit, revenue generation, zero defects, return on investment, cure of illness, or authoring legislation that gets passed. Value can also be described in less concrete terms that refer to things that are not as easy to quantify, but every bit as real, such as satisfaction, public order, growth and learning, happiness, feeling valued, a sense of accomplishment, or justice. In all cases, whatever the intended value may be, the intent to create value meets an organization structure. Potential value is channeled by the structure into the particular forms of created value allowed by the structure. The Effect of Structure on Value To quickly illustrate the fundamental effect of structure on value creation, consider the different structures of the local small town church and large publicly held 34 OD PRACTITIONER Vol. 44 No. 2 2012 multinational corporation presented in Table 1. The environmental, cultural, technological, social, and physical elements all come together in each case as completely different dynamic patterns of relationships. The structures of both organizations come into contact with potential value, our metaphorical stem cells, and leads potential value to specialize into quite different forms of created value. The actual value created is vastly different in each case because the structures are so vastly different. To provide but one example of the specialized value the different structures lead to, consider profit. The church is dedicated to the spiritual well-being of parishioners and mainly engaged in the provision of spiritual guidance, religious instruction and services, and various charitable efforts that serve the local community. The structure of the multinational financial services firm, however, as it was designed to do, induces value to specialize into dollars payable as dividends to holders of its publicly traded shares and generous salaries and bonuses paid to the CEO and other top leaders. The church could no more choose to hand out dividend checks to shareholders than the multinational could decide to please its stakeholders by simply sending them home feeling spiritually uplifted. Value takes on different form in each as structure allows for each. specialized forms that value will take. If this is our intention, it is important to pursue change at the level of deep structure that forces the overall pattern of holistic relationships to change. The actions we take to effect major change may prove fruitless, however, if unquestioned or unquestionable values and assumptions limit our options. Actions then may actually conspire to keep the current structure essentially intact. This would amount to rearranging the furniture but sticking to the same floor plan. It is still the same structure; it just looks substantially different on the surface. Consider the case of the multinational corporation, where a decision has been made to shift from a short-term focus on maximizing shareholder returns to a longterm focus on sustainability through the delivery of customer-focused value. This is a substantial shift in strategy that requires deep and profound changes to structure, particularly the cultural component. Simply announcing the shift, no matter by whom, how loud, and how often, will be ineffective unless accompanied by direct action to change the overall pattern of relationships that are determining the course that value creation takes. Transforming culture entails changes to incentives, policies and procedures, evaluations, the kinds of information that get stored and tracked, and the information technology used and how it is used. Stories also have to change along with organizational language, and the Organization Change and Transformation: physical environment altered to reflect and Implications for OD facilitate changes. As an alternative to reconfiguring The stem cell metaphor leads us to constakeholder relationships, a firm may sider why and how value creation could choose to retain its current definition of be other than it is for any organization. In stakeholders while substantially changing our bodies, a reserve of unspecialized stem core technological, cultural, physical, and cells is always present. If we bear in mind other social elements. This would cause there is an ever present reserve of potential the value that accrues to stakeholders to (not yet created) value available to an orgatake different forms. In either case, changnization, and that the structure of the orga- ing stakeholder relationships or keeping nization determines how value specializes, the same stakeholders but making other we quickly realize that we have choices. We structural changes, the stem cell metaphor can choose to keep the current structure encourages us to plan for deep structural essentially intact, or channel value creation change, tap potential value, and commit. along a different path, resulting in different The stem cell metaphor leads us forms of value being created. to consider the strong force that links We can change the structure of the structure and value creation—the kind of organization and thereby change the value created, and for whose benefit value is created. But what course of action does the metaphor suggest when a structure is solidly in place and values and assumptions have long gone subterranean or are stubbornly clung to, sabotaging options for substantial change? Dr. Taylor suggested that one of the possibilities for generating a healthy human heart is to start with a pig heart, which is about the same size as a human heart, and repopulate it with human stem cells. Because specialized cells always steadily replace the structure, we would eventually end up with a fully human heart. pursuit of technological efficiency, it has lost its focus on maximizing value for customers. In this case, a deliberate effort can be made to reprogram the organizational culture, highlighting customers as the primary stakeholders and focusing attention on the organization’s renewed commitment to creating and delivering customer value. Dr. Taylor says, “Aging is a failure of stem cells.” This simple statement says powerful things about the way stem cells work, and by implication, important things for organizations to consider. Stem cells The stem cell metaphor, particularly when combined with Hatch’s model of organizations, focuses our gaze on areas neglected in research and literature that merit further exploration. These are the collective creation of value; the inseparability of critical human, social, and cultural factors from value creation; and how structure, culture, and the agency of people integrate to create value in an organization. It is a new metaphor for new times, which accommodates a complex dynamic view of organizations. In organization transformation, we need to completely redefine the kind of value created, and totally reorient the organization to do so. We need to reprogram a mature (already fully specialized) state to return to a pre-specialized state. This is the equivalent of inducing pluripotent stem cells. To achieve a pre-specialized stem cell-like state, deep ties to the current structure and current forms of specialized value must be bracketed, or suspended, as far as possible. Only then can we reconsider value from its potential state. The metaphor can play an important role in making structure and created value explicit so they may be considered afresh. This may result in a decision to “reboot” (or boot) a leader, a core process or technology, a common perspective, or a cultural value or assumption that no longer serves. Perhaps one of the structural elements can be pressed into more valuable service. This is helpful, for example, when an organization realizes that in headlong are incorporated right into the architecture of our bodies. They can remain quiescent for long periods of time, until they are needed to assist with building, maintaining, or repairing. They are also capable of proliferating and renewing themselves over extremely long periods of time. These unique properties of stem cells ensure that their valuable capabilities remain available wherever and whenever. Is it possible to build readily available capabilities into the structure of an organization that allow it to continue to thrive through maintenance, repair, and renewal as the natural course— rather than through drastic episodic reactions to crises? Such properties in an organization make it resilient, nimble, and adaptable over the long-term—conferring unique competitive advantages. Helping organizations to achieve such a state is clearly a valuable service that organization development practitioners can strive to provide. Organizations can develop capacities for ongoing self- analysis (Abbott, 1990; Barrett, 2006; Porter, 1980), the ability to spot trouble and take corrective action (Landrum & Gardner, 2005; Teece, 2007), and develop responsive adaptable strategies (Bate, 1996; Hamel & Prahalad, 1994; Kaplan & Norton, 2008). Structural elements can be changed to stimulate greater levels of participation and innovation (Dutta & Lawson, 2009; Michelle & Christina, 2008; Van de Ven & Poole, 1990), and to increase transparency and information flow (Kontoghiorghes, Awbre, & Feurig, 2005; Miniace & Falter, 1996). Such capacities, if made a part of the organizational architecture, help an organization to remain viable and prosper through self-reflection and analysis, repair and renewal. Strengths of the Stem Cell Metaphor The stem cell metaphor, particularly when combined with Hatch’s model of organizations, focuses our gaze on areas neglected in research and literature that merit further exploration. These are the collective creation of value; the inseparability of critical human, social, and cultural factors from value creation; and how structure, culture, and the agency of people integrate to create value in an organization. It is a new metaphor for new times, which accommodates a complex dynamic view of organizations. It highlights the fundamental role that structure plays in value creation, turning potential value into actual value. An organization is a dynamic pattern of holistic relationships established to create value. Hatch’s model helps us to understand that a specific pattern emerges as a function of the interplay of the structural elements of the organization. The important developmental action is in this pattern of holistic relationships. The dynamic pattern of relationships along with the structural elements from which it emerges defines an organization’s structure. The stem cell metaphor helps us to understand why and how structure determines the particular forms of value created and to whom value flows. An organizational identity based on the creation and circulation of value provides a common language that fosters an integrated organizational identity. The stem Stem Cells as Metaphor: Implications for Organizations and Organization Development 35 cell metaphor prompts a common understanding of what unites us as a coherent complex organization, across diverse individuals, teams, departments, dispersed geographic locations, other organizations in the environment, and society. 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