SOFT GOVERNANCE AS A WAY OF COMPLEXITY MANAGEMENT
According to sociologist and management cyberneticist Helmut Willke the first task of management is related to context management. Context management requires the consideration of interrelationships of organizational units and the relevant environments of the organizations. This is in line with the intrinsic logic of operative closeness (Maturana & Varela, 1984), according to which an understanding, description and management of organizations requires insight into the internal dynamics and the consideration of organizational contexts. These are defined, for example, by the societal, technological, economic, ecological, and political/legal (STEEP) environment (Willke, 1998, p. 45).
Sociologist Dirk Baecker (2003) describes the necessity of cooperation as the "revolution of organization." This revolution transforms a recurring concept of the 19th century ("those who work, produce") into a new one ("those who work, communicate"). According to Dirk Baecker managers have to identify changes in the environment with the aim of transforming the corporate vision, the roles, strategies, procedures and production of the organization in order to respond to these new challenges.
The second task of management is to establish internal transformation processes to enable organizations to utilize their present capabilities to implement necessary changes into their everyday routines. These changes should allow the organizations to achieve their final visions.
The third task of management is to proactively involve itself in trans-organizational cooperative networks in order to shape the future by framing the environmental context on ecological, economic and social levels. To successfully frame environmental contexts managers have to involve themselves in transorganizational policy initiatives on both a national and international level. Thus, organizational success directly depends on effective communication inside and outside of organizations.
J. Clyde Mitchell (1969) points out that interdependent dynamics exist between (1) consciously implemented network substructures; (2) network activities; and the (3) evolutionary dynamics of internal and external networks. Consciously implemented substructures (see Figure 20.1) such as '"coordinator" and "steering group" allow the INNOnetwork to incorporate strategic goals and act as interventions for organizational systems. Substructures are aimed at "steering," "learning," "change" and "inventing." While activities initiated by substructures convert targets into results, unintended outcomes emerge within and beyond the network substructures. Interdependent dynamics, thus, generate outcomes that go far beyond consciously-intended goals.
That is to say, networks as tools for soft governance cannot be copied from one context to another or serve as "best practice" examples. Instead,
Figure 20.1. The Swarovski INNOarchitecture of tasks, roles, and annual planning.
they are a framework useful for how to think (not what to think) and need to be tailored to the specific underlying organizational context. As such the design and structure of any network ought to be customized to the capabilities and needs of the entire organization.
Furthermore, Sydow and Windeler (1999) outline that communication patterns of networks differ from typical routines of hierarchical organizations: (1) they decrease opportunistic behavior in favor of increasing mutual economic and social relationships with long-term cooperation; (2) they demand negotiations between network partners while keeping a balance of individual interests and network benefit; (3) they foster moving from competing relationships to cooperative relationships, which is an investment in trust-based communication; (4) they build on long-term partnerships aligned by a common vision and intrinsic values of all network partners involved; (5) they establish an openness for the unusual and the new; (6) they allow for the building of suitable network structures, roles and processes according to specific network targets and activities.
The use of generalized empirical values and experiences (in face-to-face relationships) make networks a tool for governing complex social systems.
As mentioned above, the success of organizations depends on a fruitful cooperation with internal and external stakeholders and, thus, communication enables individuals and organizations to create something which cannot be created individually. The purpose and motivation for cooperation stem from an increase in productivity, which arises from dealing with opportunities and crises through the pooling of complementary interests and resources (Grossmann, Lobnig, & Scala, 2007).
What Do We Understand By Soft Governance?
Governance is, so to say, the process carried out by government in the sense of a specific mode of management. The term "soft governance" emerged from policy consulting representing the attempt to intervene in complex social systems which cannot be steered by top-down management. It aims at establishing attractive frameworks for both innovative and effective "business" operations (Willke, 2004) and drives system transformation via strong, leading visions, values and trust-based negotiations (Rhodes, 1996). One impact of "soft governance" is that it strengthens self-management and self-responsibility of all the participants involved. Another impact is that it addresses a time-limited and context-specific "optimum" in balancing contradictory logics inside and outside of an organization via different management instruments.
Focusing on process quality we can see that soft governance works through communication and trust. It enables negotiation and consensusmaking in spite of existing contradictions. It also strengthens self-management and the responsibility of teams and organizations by individuals anticipating and acting in their respective roles as they work toward a joint future.
Besides specific regulations, taxations, and funding programs on the policy level, effective communication structures can act as attractive frameworks offering an innovative environment for increasing knowledge, productivity and economic success.
Internal and external network structures can be seen as one specific tool of soft governance as they combine external and internal participants and actions in an unexpected and new way. This allows the social system (e.g., enterprise, network organization, cluster, etc.) to observe former "blind spots" (e.g., gaps in knowledge or opportunities, etc.), to learn how to learn (Willke, 2004) and to circumvent rigid patterns without eroding existing structures. In contrast to counseling processes or change projects, network structures have to exist not only for some months but for several years to create a practical benefit for all organizational units and individuals involved. This paper will describe the benefit of a specific internal network implemented at Swarovski between 2007 and 2011 to enhance the company's innovation capabilities.