First, in the modern enterprise management, there simultaneously exist two conflicting management needs. One is to have an equal, shared management system for innovation. The other is to have clear authority, responsibility and hierarchy among different individuals and sectors for commanding and controlling.
Second, before the emergence of Web2.0, people do come up with a lot of ways to reduce intermediate hierarchies and to increase flexibility of organization, but in practice, they cannot to meet these two conflicting management needs above synchronously.
Third, a "yin-yang" organization structure can effectively and efficiently solve that problem. Yang represents formal hierarchical organization for commanding, controlling and innovating, Yin represents informal web-based organization for innovating, and Yin-Yang represents coordination and synergy of Yin and Yang.
How to reinvent organizational structure to meet these two conflicting management needs above?
According to Chinese philosophy, everything has both yin and yang aspects (for instance shadow cannot exist without light). The duality of yin and yang is an indivisible whole. Yin and yang can be thought of as complementary (rather than opposing) forces that interact to form a dynamic system in which the whole is greater than the assembled parts.
The principles contained in yin and yang can be applied to organizational innovation as well.
So, I think that to satisfy two conflicting management needs above, each employee, including CEOs and other C-level executives, should at the same time play and coordinate well two types of roles. One is within Yang or formal hierarchical organization, the other is within Yin or informal web-based organization.
In other words, each organization should compose of two parts, that is, Yang or formal hierarchical organization and informal web-based organization, or yin and yang.
1 What functions does yang perform in organizational innovation?
With Web2.0 and digitization emerged, formal hierarchical organization does impede increasingly innovation in many aspects, like inefficient communication between sections, and slow response to change. But to most companies, abandoning entirely hierarchy, commanding and controlling will be unrealistic, or at least have long a way to go.
Furthermore, it is never necessary that hierarchy would be a barrier to organization innovation, especially under good management.
Of course, formal hierarchical organization itself needs to get flexible enough to adapt to a rapidly changing digital environment.
2 What functions does yin perform in organizational innovation?
Informal web-based organization is primarily for communicating, sharing, learning, discussing, designing, advising, surveying, testing, contesting and innovating.
First, please remember that the back-end for such Informal web-based organization should be operated by a related independent team not belonging to formal hierarchical organization.
Second, all employees working for formal hierarchical organization will be given an exclusive username, which can be traced by back-end as someone violates rules, to register in it.
Third, all registered employees are allowed to freely and willingly form a variety of interest groups for sharing, learning, discussing, contesting and innovating.
Fourth, accordingly, the back-end needs to establish a sound performance appraisal policies and procedures for each user without formal title and authority, whose influence merely derives from their contribution in informal web-based organization.
3 What functions does yin-yang perform in organizational innovation?
Yin-yang means combination of and cooperation between informal web-based organization and formal hierarchical organization.
First, all sections in formal hierarchical organization should regularly go to informal web-based organization to release some issues about management innovation, marketing, everyday operation, and business strategy.
Second, as required, all sections in formal hierarchical organization should provide necessary supports for users in informal web-based organization to innovate.
Third, link all users’ contributions in informal web-based organization with their rewards and promotions in formal hierarchical organization.