Home Business Systems of Agreements, Part 1

Systems of Agreements, Part 1

As I noted before, my favorite description for the underlying nature of organizations is “a system of agreements.”  But before we can really talk about systems, we need to talk a little more about what we mean by “agreements.”

When I just googled the definition of the word “agreement,” the following was returned:

  1. Harmony or accordance in opinion or feeling.
  2. A negotiated and typically legally binding arrangement between parties as to a course of action.

This was exactly what I was hoping for.  Two distinct meanings, both of which are essential to the success of human systems.

The first definition emphasizes a state of relationship that already exists. The harmony of opinion or feeling can be the result of a common process or it can be accidental.  It can be trivial or profound.  Formally acknowledged or implicit.  A logical conclusion or an unarticulated sense of things.  It doesn’t even have to be fully recognized by the parties.  It just has to be a fact.

The second meaning of agreement is defined by the process that gives rise to it (negotiated) and the form it takes (arrangement).  It is focused towards the future, maintaining alignment over time.  It is tested in action, not just in spirit.  It can even be legally binding among the parties.

The two definitions are not mutually exclusive, of course.  The most easily reached agreements (second definition) are those based on already existing agreement (first definition).  Communities and enterprises seem to function most smoothly when there is significant agreement (first definition) among members, with a sufficient number of agreements (second definition) to deal with outliers and free-riders.

Agreement (first definition) cannot be imposed.  It is either present or it isn’t.  It can change over time.  And it’s often hard to tell whether agreement is real, since it is based on an internal state of mind.  People can have an incentive to have others think they are in agreement when they’re really not.

Agreements (second definition) are designed to be enforceable in some way.  A prescribed action is taken, or it’s not.  There are objective tests whether an agreement is kept.  Of course, it’s hard to specify all of the desired actions prior to an activity, especially a complex one.  So, again, it’s highly valuable to have agreements (first definition) backing up agreements (second definition).

Common Snags

Not paying attention to both of the meanings of “agreement” generates a lot of problems.

Change management efforts that focus entirely on an enterprise’s or community’s culture (first definition) but which don’t create an aligned set of policies and practices (second definition) will generate anxiety, frustration and ultimately failure.  Many consolidation or merger plans have failed because they focus so strongly on efficiencies and controls (second definition) that they forget that they need to get the human buy-in (first definition) necessary to make these systems work.  Even efforts that are aware that they need to work on both definitions of agreement fail because the culture of enterprise (first definition) are cultivated through one process while the policies and practices (second definition) originate through a separate process.  Yet, if the agreements (first definition) and the agreements (second definition) in both processes don’t fully align and reinforce each other, then conflicts and contradictions can result that stifle productivity and undermine trust.

Online communities and their hosts can run afoul of these misalignment, too.  Clay Shirky, in his book “Here Comes Everybody,” provides several examples — from America Online to HSBC Bank — where hosts tried to change usage or privacy policies (second definition) when the users were actually operating, and generating value, because of a set of implicit bargains (first definition) that worked for them.  It didn’t work.  They lost far more than they gained.

Face-to-face communities are not exempt, especially when they put hopes in “community-wide planning processes,” as commonly undertaken.  The diversity of a city is so great that there is very little that everyone agrees about (first definition).  Making decisions always entails a balancing (or ignoring) of different interests.  At best, you get agreements (second definition), but usually you just get winners and losers.  In small towns, it’s not much better.  There may be more expressed agreement (both first and second definitions) because of conformity pressures, but when push comes to shove, the real underlying disagreements erupt and derail cooperation.

Aligning Agreement with Agreements

It’s not a particularly new notion that implicit and explicit agreements need to be aligned for any community or organization to work at their best.  But our success at doing so has been less than glowing.  We’ve got a long way to go.  (My personal viewpoint is that it has a lot to do with the structure and nature of our dominant corporate forms — which were born in the age of monarchy, and suffer from some of the same limitations when facing a modern and global social and economic environment.)

Unfortunately, you can’t fully align agreements — in the real world, not just on paper — without embrace simultaneously embracing and honoring the natural disagreements that are equally present within our communities and organizations.  For that, we need a systems approach, which I’ll take up in Part 2.



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