Feb 18, 2014

Aesthetics and insights in an organization chart from the past

Mckinsey Quarterly published an article by history professor Caitlin Rosenthal about the first modern organization chart, and included visuals of the authentic drawings made by Daniel C. McCallum in 1845. McCallum was in charge of the operations in the New York and Erie Railroad, one of the world’s longest rail systems.
While increasing use of the telegraph gave the organization enormous amounts of data, it also added complexity and information overload to the railroad’s operation. There was a need to improve the processes for organizing the newly available operational information, and for acting on it in a timely manner. McCallum crafted a new design for the organization’s structure that reflected his approach to how operations should function. This is considered one of the first data driven organizations, and the beautiful graphics that documents his organizational plan is considered one of the first modern organization charts.
A few things that caught my eye in the article and McCallum’s work(I do recommend reading the full article):
The drawing was inspired by nature, and shaped in the form of a tree: The roots represented the board of directors and the trunk represented McCallum and his chief officers. The five railroad tracks and the personnel operating them were the tree’s branches and leaves. As the author points out, this illustration is very different than today’s static hierarchical pyramids that we are all familiar with. The tree metaphor might lend the chart an artistic and archaic look, however the actual principals it depicts are actually pretty familiar in modern, data driven organizations.
McCallum’s depiction of the organizational pyramid is inverted from what we see in most organization charts: Rather than being a top-down illustration, it is a bottom-up depiction. This is not just for aesthetics - it also means something about the responsibility given to the branches and their personnel. Authority was given to the people who worked at the lines themselves - they possessed the knowledge which was critical to the operations and could use information in real time. Decisions didn’t have to go all the way up to top-leadership (or down, to the trunk and roots, if we go with McCallum’s take). Loops could be closed fast, giving the right people down the line “ownership” of their domain - which is a also modern management approach. The article refers to McCallums approach as a reversal of hierarchy, an interesting concept to consider in modern organizations as well.
In the tree-like organization chart the trunk and roots of the chief officers and the board still matter greatly, as they do in a real tree. They give a foundation and stability with their experience, strategy, and direction - but they do not need to approve the time-critical operational decisions. Together with the decentralization of decision making, McCallum insisted that targeted metrics will be reported to the board of directors. This allowed the board, with its finite capacity, to receive relevant and actionable data. This was supported graphically as information flew through the branches to the bark and reached the roots.
In the case of the New York and Erie Railroad, the novel information technology (the telegraph) allowed for new capabilities and opportunities of increasing the scale of the organization in ways which were not possible before. However, in order to effectively seize this opportunity, the organization itself had to change. And not just that organization, all organizations would have to eventually change in order to effectively deal with the paradigm shift that information technology brought forth.
Nowadays there seem to be numerous changes in the way we work and communicate. There is a great boom of technological innovation, which in turn leads to change in culture, work habits, legislation, as well as in individual and organizational behavior. Like the introduction of the telegraph, some of these changes represent revolutions that could, and possibly should, foundationally change the ways that organizations are structured and how information flows within them. Examining some of these and the reasons why they might lead to paradigm shifts in organizations will be the topic of my next post.

1 comment:

  1. Very interesting! I have also recently found a website that shows what is an organizational chart and I find it very helpful when making my org charts!