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Organizational Productivity:

Modeling the Interrelationship of Organizational Culture, Intellectual

Capital and Innovation

Russell S. GonneringDavid Logan

SwarmFest 2014

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“All models are wrong...but some are useful”

George Box Science and Statistics. J. Am. Stat. Assoc. 71, 791-799 1976).

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Why do some organizations just seem to perform better than most?

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It’s a group effort!

Mihaly CsikszentmihaliKeith Sawyer

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We Call That Group Effort “Organizational Culture”

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• Pattern of adaptation based on shared purpose, values, history, identity and future.

• Language, particularly generative, future-based language, is a primary means of establishing this shared experience

• A “Cultural Meme”, Increasing Returns, Positive Feedback

Organizational Culture

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Empiric Study• 10 years

• 24,000 people

• 2 dozen organizations

• Organizational Development Surveys

• Burke’s Cluster Analysis of Interviews

• Sociograms

• Confidential Self-ratings

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Logan, et al

• 5 Stages

• Dynamic, Internal and External Influences

• “Linear” Progression of Culture, but Path-Dependency!

• Nonlinear Progression of Performance

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Can’t Skip a Cultural Stage!

Nonlinear Jumps in Performance

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CSSSA 2012

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Probability of Stage 4

0"

0.1"

0.2"

0.3"

0.4"

0.5"

0.6"

0.7"

0.8"

0.9"

Configura5on"

1M"

1W"

1E"

2E"

1M1W"

1E1M1W"

2W"

3W"

2M"

1M2W"

4W"

1E2M2W"

5W"

2E4M4W"

3M"

4M"

6W"

4M4W"

7W"

8W"

2E4M4W"

2E4M8W"

E: Executive; M: Manager; W: Worker

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Science 1997;276:122-126

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PLOS One, March 27, 2013

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Model Evolution

• Productivity

• Close structural holes-”Triading”

• Values

• Purpose

• “Perspective”-Innovation

• Dunbar’s Number

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Starting Point

• Agents: number and role; culture, values, purpose, depth and breadth of knowledge, perspective (stochastic assignation)

• “Inverse Flocking Probability”

• Closure of Structural Holes-”Triading”

• Economy, General Tuner, modifiers of cultural exchange

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Starting Point

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Model

• 200 time ticks

• Agents meet in time and space

• Exchange culture and knowledge according to formula

• Additional stochastic “education” and “disillusionment”

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Exchange

!

Peer/Peer (Same Cultural Stage)

RM: role modifiers

Nonpeer: Magnitude Change

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Model - Culture Transition

• Stage 1 = < 20

• Stage 2 = 20 - 39

• Stage 3 = 40 - 59

• Stage 4 = 60 - 79

• Stage 5 = 80 and above

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Model

• Agents can advance in culture or “die” (culture < 20)

• New agents added at Organizational Culture thresholds (expansion/merger)

• Limited to 100 (Dunbar Number)

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Productivityy = k xα

y = Organizational Productivity k = Complex constant made up of Organizational Culture, variance of Values and Purpose, Innovation (variance of Perspective) x = Intellectual Capital (Organizational Knowledge x variance α = .75

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Productivityy = k xα

• Intellectual Capital is analog of mass in allometric scaling model

• Only indirectly dependent upon population

• k is not species-specific but related to Organizational Culture and ability to operationalize that Organizational Culture

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“Triading”

• Closure of structural holes

• Initiated at Organizational Culture thresholds

• All agents of “Triad” share in cultural/knowledge exchange

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Baseline: Stable though 1,200 ticks

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Inverse Flocking Probability

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Baseline, 200 ticks, no Triading

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Probability of Reaching Stage 4 Culture

All 2 Executives + all 4 Managers = 0% 2 Executives + 4 Managers + 4 Workers = 20%2 Executives + 4 Managers + 8 Workers = 55%

0"5000"10000"15000"20000"25000"30000"35000"

0" 20" 40" 60" 80"

Organiza(onal+Produc(vity+

Organiza(onal+Culture+

Organiza(onal5Produc(vity+Final+Culture:+56.46+

Organiza1onal4Produc1vity"

0"5000"

10000"15000"20000"25000"30000"35000"

0" 20" 40" 60" 80"

Organiza(onal+Produc(vity+

Organiza(onal+Culture+

Organiza(onal5Produc(vity+Final+Culture+:+63.08+

Organiza1onal4Produc1vity"

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Triading

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Probability of Reaching Stage 4 Culture

Baseline with Triading = 95%

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Baseline “Attractor”

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Triad “Attractor”

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Climbing the Mountain

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• Dynamic external influences

• Effect of new leadership

• Disruptive innovation

• Interrelationships?

Future Directions

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Thank You!

Contact me for further information:rsgonnering1@me.com

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