Organizational Structure: The Biology of Great Organizations

In this article, you’ll learn about a new way of thinking about organizational boundaries; one that helps connect what’s inside the organization with what’s outside it.

You’ll also get a new framework for thinking about the way organizations engage customers, partners, and other organizations. It draws deeply on lessons from biology and the amazing ways that the cell uses its organizational boundary to remain autonomous, yet deeply interconnected with its surrounding environment – an apt metaphor for the highly networked world of the modern organization.

Boundaries define what we are… and what we aren’t.

Put on your geek goggles for a bit, we’re about to take a short dip into some basic cellular biology. Don’t worry though; I think you’ll find the ride worthwhile.

Membranes 101: Essential Organizational Structure

Boundaries are a very clever biological innovation for separating an entity from its operating environment. There are lots of theories about exactly how biological life first started using boundaries, but it’s pretty clear that the cell was the most successful early adopter of this very ancient technology. Cells are the basis of all life on earth – the fundamental building blocks of every living thing that surrounds you.

Membranes are the cell’s organizational boundaries; what separates it’s innards from the outside world. Cellular membranes are made up of two layers of molecules, bound together like two Oreo cookies with a top torn off and their frosting insides smushed together (but maybe not quite so tasty). The unique construction of this Oreo-like barrier makes it really good at keeping what’s supposed to be outside the cell outside outside the cell, and what’s supposed to be inside it, inside it. If it didn’t perform this boundary function well, the membrane would fail at its most basic job: keeping the cell autonomous and distinct from its surrounding environment.

So, we’re basically talking about a wall, but the cell’s membrane isn’t just any wall; it’s a super smart one. In fact, the membrane is such a smart little wall it may very well define the cell’s intelligence. You see, the membrane acts as a barrier to only certain types of things that aren’t good for the cell, while permitting other things that are good for it to pass through its walls. That filtering ability is what makes the cell semi-permeable; kind of like a good bouncer deciding who does – and doesn’t – get into a club.

The membrane does more than simply control the physical flow of molecules and ions in and out of the cell though; it’s also acts as a sophisticated signal processor to help the cell experience and interact with the world around it. This signal processing ability comes courtesy of a specialized set of molecules inside the membrane, called receptors. You can think of receptors as little antennas embedded in the membrane with some parts exposed to the outside world and some embedded inside the cell.

Each receptor is uniquely structured to detect a particular type of molecule outside of the cell, and when it does, that receptor triggers a signal that it directs into the cell. That signal stimulates the cell to respond to whatever it’s detected outside. This process is known as “signal transduction” and it’s how receptors transform signals from the external environment into appropriate responses from the cell.

The cell’s response to external signals can take many forms, but one of the more interesting ways the cell responds is by creating its own information that it then transmits back into the environment for other cells to receive. This cell-to-cell communication enables a wonderful diversity of interactions and collaborative responses to the environment. These biological “conversations” of cellular networks are essential to life, and at the heart of a new understanding of living systems just now emerging in systems biology.

The “Cellular Business”

Still with me? Good. Let’s take a break from the biology lessons and bring this all back to organizations. As you were reading the above passage, you may have already started seeing analogies between how cells collaborate and the way organizations connect and engage with people and other organizations outside their organizational boundaries.

An organization operates with the same underlying tension a cell does – the tension of maintaining itself as a distinct entity that is at the same time completely interconnected with its surrounding environment.

Companies need their own decision-making structures and processes to maintain their autonomy and independence. The best performing companies have a strong sense of organizational self awareness; they stay on mission and remain focused on their core competencies – that is to say, their unique capacities to create and monetize value.

At the same time, organizations exist within a surrounding environment that ties them to a range of actors and factors outside of their direct control. They cannot (usually) control their customers or the marketplaces for their goods and services. Like the cell, they are completely dependent upon their environment for their continued survival. So, while high-performing organizations have strong, internally-defined identities, they also know how to orient their operations in ways that align with the realities of the world outside. They have the equivalent of receptors for sending and receiving information to and from their surrounding environment. They also have the ability to filter what comes in and goes out of the firm, whether that’s incoming supplies, outgoing products and services, new employees, ex-employees, injections of capital and even the way new ideas are absorbed or rejected.

This tension, this beautiful tension that exists between what’s inside the organization and what’s outside it, is, in many ways, what defines the organization – it’s what makes it work. It is this ongoing, non-stop exchange of information, ideas, people, goods and services that animates the organization; it’s what gives it life. When that flow ceases to function, so does the organization.

Open for Business

New tools bring new processes; new processes bring new strategies; and new strategies often bring new philosophies. We live in a time of tremendous technological change – and the network is the heart of it. Networks connect us in powerful ways that simply did not exists just a decade ago. Organizations are racing to keep pace with this network revolution, overhauling organizational processes and strategies with the help of legions of social media and other kinds of consultants.

In the wake of these innovations, a new view of the organization is now emerging. This new philosophy of the firm is a mixture of ideas, ranging from the focus on openness in books like Charlene Li’s “Open Leadership” to the focus on living systems in the works of Margaret Wheatley. It is a philosophical shift away from earlier organizational metaphors that saw the firm as self-contained, vertically integrated, machines. In its place is a new view of the organization as on open, living system that is inherently social. For a deep dive into this organizational paradigm, check out the concept of “autopoiesis” (special thanks to Fritjof Capra for introducing me to this idea in the book “The Web of Life”). Yes, “life” is the new metaphor for organizations; you can see it at work in some of the new ideas for product design based on biomimicry and in the new grassroots movements for turning business into a force for building local, living economies.

The boundary between what’s inside and what’s outside the firm is where the future of organizational thinking now lies. Understanding how organizations connect with their surrounding environments sheds a great deal of light on what makes them succeed and and what makes them fail. Organizational boundaries are the bridge between organizational development and the new field of engagement.

The membrane is a powerful metaphor for the way modern organizations connect with people, organizations, and their environment more generally. The membrane is semi-permeable, which means it is discriminating about what gets in and what goes out – a great way to think about the kind of intelligence that organizations need to build into their connections with the outside world.

This intelligence of the membrane is a metaphor for something very specific and very real. It’s something that exists in every organization, but I’m going to save that part of the story for a follow up post. In the meantime, do a little thinking about membranes on your own … and let me know what you discover.

For more on organizational membranes, check out “The Biology of Organizational Intelligence – It’s People.”