05 March 2015

Predicting Organizational Dynamics—Empirical Validity of Valence Theory

Good theory does three things:
  1. It explains observed phenomena and behaviours.
  2. It makes (testable) predictions of future behaviour.
  3. It enables one to derive new behaviours and phenomena in response to new circumstances.
(You might ask, what’s the difference between thing 2 and thing 3? The second case predictions are based on situations that one could anticipate or conceive. The third case deals with situations that are completely from out of the blue, which is increasingly what we face in our contemporary world.)

As organizations and intra-organization behaviour have become more complex, academics, organization development practitioners, consultants, and managers seek new models to explain, predict, and derive what happens, will happen, and could happen in organizational contexts. Over the past fifteen years or so, it is increasingly common to use the metaphor of communications networks – roughly modelled on the Internet – to describe organizational dynamics. Information flows within organizations no longer strictly follow the hierarchical chain-of-command first described by Henri Fayol back in 1916 (in French; 1949 when translated into English as General and Industrial Administration). To model the complex, interconnected feedback and feedforward loops that occur throughout most large organizations, and indeed, the social graphs of informal teams or spheres of influence, adopting a network theory of contemporary organizations seems to be a useful thing to do.

As an aside, there are two complementary thoughts on theory: The first says that, although all models (theories) are wrong, some are useful. The second says that all models (theories) are right—until they’re not. It is indeed useful to bear both of these in mind so that one resists the temptation to substitute the model for reality (leading to very problematic “abstract empiricism”), and understands that any model has its limits of applicability (i.e., the trick is to know when to stop).

In particular, a network theory of organization would predict that if a person becomes a blockage or impediment in information flow or effectiveness, the network would “route around” – that is, avoid involving – that person. Indeed, that is what often happens. It follows that if that obstreperous person (and their department, if they are a manager) were eliminated, the adapted flow would simply continue and the organization itself would not be expected to undergo any substantial change. After all, the information flowed before; it can flow afterwards, relatively unchanged and unimpeded, all other things being equal.

Valence Theory predicts something else. Valence Theory defines organization as “that emergent entity resulting from two or more individuals, or two or more organizations, or both, that share multiple valence relationships at particular strengths, with particular pervasiveness, among its component elements at any point in time.” The five Valence relationships are: Economic, Affective (socio-psychological), Knowledge, Identity, and Ecological. There are two forms of each valence – fungible and ba – that respectively account for more traditional, bureaucratic, administratively controlled, and hierarchical organizations, and “connected relationship” organizations that are more consistent with the ubiquitously connected and pervasively proximate reality in which we live.

A Valence Theory conceived organization is potentially always in flux based on the precise nature of the relationships at play at any time (and the relationships themselves interact in ways that are not deterministically predictable). In a practical sense, however, given a more-or-less stable cohort of actors (staff personnel and those external actors with whom they interact), and more-or-less established relationships, the organization would usually exist in a state of stable homeostasis. One of the predictions that Valence Theory makes has to do with changing members: When people arrive or leave the organization, relationships and their interactions necessarily change. Valence Theory predicts that the organization itself necessarily changes, even in the absence of any other change-initiating impetus.

One could see an organization changing if, for example, a relatively (hierarchically) senior person were to change. Conventional thinking would say that a relatively lower-level (again, hierarchically speaking) person coming or going would not be considered as important enough to initiate a substantive organizational change—even though complexity thinking might suggest otherwise (based on the principle that in a complex system, small perturbations can initiate substantial systemic effects). Valence Theory, on the other hand, predicts that any change of members necessarily changes the organization because the nature and quality of (the Valence) relationships necessarily change.

Consider the case of the aforementioned troublesome person around whom information flow re-routes. Valence Theory would predict that if that person were to leave, the relationships would necessarily realign to such an extent (because they had been, colloquially speaking, so bent out of shape that they would have no choice but to realign) that the organization would experience a clearly observable change. That change would occur seemingly of its own volition without the organization having to undergo an explicit change initiative or a formal re-organization (which often changes very little, in actuality—deck chairs, meet Titanic...).

I recently had opportunity to observe this precise phenomenon occurring in a live environment. At the “Fair Contest” company, there was a mid-level manager who was responsible for a support function, nominally acting as an internal supplier to the line business departments. This manager happened to possess characteristics that, taken together, would characterize that person as a “dark triad personality.” For numerous reasons, people in other departments learned, over time, to effectively marginalize that person and avoid using that manager’s department or resources, choosing instead to “route around” that department and obtain their own, usually external, suppliers. Suffice it to say that the department enjoyed very little credibility at Fair Contest.

A network model of organization would predict that the departure of the dark-triad manager should not necessarily result in a substantive change, since the other, relatively autonomous managers would continue to use the services they had come to know and rely upon. (Note that budget was not a determining factor between using internal and external resources.) Valence Theory, on the other hand, would predict a substantive change in organizational trajectory because of the resulting major realignment of relationships, and consequential organizational reconfiguration of valence relationship dynamics.

Last fall, the dark-triad manager was, in fact, fired for cause (apparently not directly related to their narcissism, psychopathy, or Machiavellianism). In the relatively short period between then and now, there has been a significant, beneficial shift in organizational trajectory in both tactical operations and strategic positioning even though none of the many changes which occurred had been specifically planned. In fact, they can be well explained as the result of realigned valence relationships among members that, in turn, reconfigured organizational dynamics. The departed manager – true to their narcissistic character – was heard to say that the Fair Contest Company had made a big mistake in letting them go. Nothing could be further from the truth, even though no one had anticipated the magnitude and positive significance of the ensuing changes. No one, that is, except Valence Theory.

Valence Theory called it.

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