Creativity and innovation are fueled by the intelligence of people who have the freedom and right to express their ideas. No centrally conceived design can produce both the freedom needed to empower individual intelligence and the rapidly changing network of interconnections needed to bring free thinkers together in coordinated action with an intense focus.

• How can we nurture the creativity and intelligence of our employees?
• How can we integrate their individual ideas, inspiration, and analysis into rapid decisions and actions and coordinate them to create value for customers?
• How can we build organisational intelligence?

We cannot design intelligent organisations – we must grow them through the convergence of market and community processes. To grow intelligent organisations, seven conditions must be established, based on freedom of choice and democratic participation.

1. Widespread truth, measurement, and rights
People can’t make responsible choices if they don’t know what’s going on. Bureaucrats tend to hoard information as a source of personal power. The intelligent organisation creates a rich bath of “lavish communication.” This requires: full financial information, training all employees how to read financial statements; regularly posted measurements for all activities; open discussion of strategic options and competitive situations; talk of how each part fits with the whole; freedom of speech, press, and e-mail; and the right of inquiry, learning to pursue the mission and best serve customers.

2. Liberated teams
Behind nearly every recent innovation, from quality to re-engineering, is the superior effectiveness of teams. Teams are the basic building block, the “cell” of the intelligent organisation. To reap the benefits of autonomous, empowered teams, we will need: team choice of task, partners, members, and connections; whole-team measurement and reward; training in self-management processes and whole-business judgment; coordination by the team, not from the level above; and integration of the team purposes with a larger worthwhile purpose.

3. Freedom to be enterprising
Intelligent organisations release the innovative energy of individuals and groups by preventing monopolies of power from squashing them. They use the integrated intelligence of internal market systems to bring forth the highest and best use of internal resources. The way to cure corporate bureaucracy is to break up functional and staff monopolies and to then allow internal markets the free choice between different providers to sort out what works within the mission and values of the organisation. If you need software programming from within your organisation, a choice between alternative suppliers of software service will eliminate the bureaucratic response of, “we can get to it in two years” and replace it with, “we want your business – what do we have to do to get it?”

4. Justice and equality
The democracy needed to use the creativity of all members involves their direct personal participation in designing the factors that affect their work. Liberated employees must be trusted to pursue the good of the system. They won’t if the system is not just. They won’t if inequalities are so great they feel cheated. They won’t if the few are allowed to dominate the many, as they are in bureaucracies. Organisations designed to bring out the responsibility and intelligence of every member will depend on internal systems for guaranteeing justice. They protect employees from imbalances in power and establish local systems to adjudicate disputes. Internal “laws” are needed when actions repeatedly benefit the part at the expense of the whole. Justice and a body of internal “law” create the context in which the many actions of enterprising individuals and teams lead to a coherent order and productive outcome.

Rather than depend on bureaucratic supervision to prevent abuses, intelligent organisations grant freedom limited by clearly stated laws and an effective justice system. The result: more freedom for innovation and better control.

5. Processes for self-management
Involvement and self-management only happen when processes are in place to support them. There is a rush of innovation in this area – in new ways to involve more people in decisions and to focus energy on what will serve customers and the business environment rather than internal politics and internal convenience. Effective self-managing processes engage people in collaboratively managing the whole.

Egalitarian teams innovate effectively because all voices are heard and respected. The result is more new ideas implemented and fewer unthinking mistakes. Intelligent organisations find ways to involve all employees in creating the larger context for their work. As much as possible, consensus and consent guide the design of the policies and institutions needed to steer the organisation toward fulfilling its common mission. The result is systems, strategies, and policies respectful that employees need to be productive and to keep trying new ideas to flourish in a constantly changing world.

6. Voluntary networks
To have a flexible and responsive organisation, intelligence must flow from every member – every person interacting in such a way as to create knowledge that is rapidly disseminated and applied. Only a voluntary network can forge all the links needed for such massive interconnection. No management could design a network of this fluid complexity. It has to be spontaneously created by the choices of all the people establishing the connections they need to get their work done.

Learning networks are most often established from informal connections. People create learning networks by choosing who to learn from and partner with. Network connections that require more extended services or the delivery of a steady stream of components need more formal support, such as accounting mechanisms for one unit to pay another for services rendered.

7. Limited corporate government
No society of any size exists without a government to ensure rights, safety and other basics of the common good. Similarly, no corporation can exist without its own “government” at headquarters. The question, then, is what kind of “government” to have? Should it be a bureaucracy – a totalitarian government where whatever the people at the top say goes? Or should the government have a more limited role – a role limited by the rights of its members and teams?

The primary role of the central governments of intelligent organisations is to create the conditions that empower those doing the work to build systems to run those businesses effectively and focus on pursuits that have positive synergy.

Bureaucracy limits the effective size of the corporate brain. Large organisations will either learn to practice the seven essentials of organisation intelligence or continue to shrink to a size suitable to an organisation of very limited intelligence. Many giant companies will die in the process, but a number will be reborn as intelligent organisations with the ability to innovate and respond rapidly, and with all the benefits of size as well.