Book Notes #29: Organize for Complexity by Niels Pflaeging

Title: Organize for Complexity: How to Get Life Back Into Work to Build the High-Performance Organization
Author: Niels Pflaeging
Year: 2014
Pages: 142

Ever sat in a meeting and thought, “There must be a better way to run this place”? You’re not alone.

In Organize for Complexity, Niels Pflaeging takes aim at everything we assume about management, leadership, and how companies should function.

This isn’t just another book about workplace improvement—it’s a complete rethink of how organizations operate in a world that’s fast, unpredictable, and deeply human.

If you’ve ever wondered why so many workplaces feel slow, inefficient, or soul-crushing, this book delivers answers—and a hopeful path forward.

As a result, I gave this book a rating of 8.0/10.

For me, a book with a note 10 is one I consider reading again every year. Among the books I rank with 10, for example, are How to Win Friends and Influence People and Factfulness.

3 Reasons to Read

Book Overview

Imagine walking into your office tomorrow and realizing that everything we’ve learned about managing people might actually be holding them back. Not just slightly outdated—but completely off-track.

That’s the punch this book delivers, right from the first page. Organize for Complexity isn’t a book about small improvements.

It’s a call to rethink the very foundations of how we work, lead, and build organizations. And once you’ve read it, you won’t look at org charts, performance reviews, or Monday morning meetings the same way again.

At the heart of this book is a bold but surprisingly intuitive idea: the management practices we’ve inherited were built for a different time, and they’re no longer fit for the world we live in today. Picture the early 20th century—factories, assembly lines, workers who weren’t expected to think but only to execute. That’s where our model of “management” was born. Taylorism divided people into two groups: the thinkers (managers) and the doers (everyone else). For a while, it worked. But in today’s complex, fast-changing world, this model is cracking under its own weight.

Pflaeging doesn’t just tell us that the old system is broken—he shows us why. He describes the “three gaps” that plague traditional organizations: the social gap between people and management, the functional gap caused by silos and departments, and the time gap between planning and doing. These gaps create inefficiencies, kill motivation, and make organizations slower and dumber—right when they need to be fast and smart.

But this isn’t a doom story. It’s an invitation. What if we stopped managing people and started trusting them? What if we designed organizations like living systems, built on teams that think for themselves, respond to real-world signals, and operate with autonomy and shared purpose?

That’s where Pflaeging’s alternative takes shape: the Beta organization. Instead of hierarchies and bosses, we have cells—small, cross-functional teams that own their work and are directly connected to the market. These teams don’t wait for orders from above. They’re not “empowered” by someone else—they already have the power. The structure is flat, the roles are fluid, and leadership isn’t about control—it’s about shaping the system, fostering relationships, and creating clarity.

What makes this book so compelling is how it peels back the layers of things we often take for granted. Think of performance reviews, budgets, KPIs, or org charts. Pflaeging calls these “X Tools,” relics of the command-and-control era that assume people are lazy, need incentives, and must be watched to perform. But when you look at companies like Toyota, Handelsbanken, or Trader Joe’s—real-world Beta organizations—you see something different. Employees make decisions. Problems are solved quickly. Customers are happy. And the culture? It’s alive.

One of the most memorable moments in the book is a story about Goetz Werner, founder of dm-drogerie markt. He realized he was a better leader not when he gave his employees answers, but when he sent them away with better questions. That’s the essence of leadership in complexity—not solving everything, but enabling thinking everywhere.

Throughout the book, there’s this refreshing tone of clarity and conviction. Pflaeging doesn’t sugarcoat things. He compares modern management to medieval medicine—bloodletting and rituals that do more harm than good. And just like the Renaissance ended the reign of the quack doctor, he believes it’s time we end the age of managerial quackery.

Some key concepts include:

Design Principle Alpha: This is the dominant model in traditional organizations, rooted in the ideas of Frederick Taylor and scientific management. It separates thinking from doing, placing managers above workers in a strict hierarchy. Alpha organizations are built around central control, functional departments, fixed planning cycles, and the assumption that people need to be told what to do. It may have worked in the industrial age but is deeply incompatible with today’s complex, fast-changing environments.

Design Principle Beta: The alternative to Alpha, Beta organizations are structured as decentralized, self-organizing networks of teams (called cells). These organizations are built for complexity: they emphasize autonomy, shared responsibility, and market responsiveness. Instead of control, they rely on transparency and trust. In Beta, everyone thinks and acts, and leadership is distributed. It’s a living system, not a machine.

Sphere of Activity: This is the identity-defining boundary of an organization. It represents who the organization is, what it stands for, and why it exists. It includes shared principles, values, business purpose, and internal culture. It acts as a container for the decentralized system and provides orientation for decision-making without the need for top-down rules.

Cell Structure Design: In Beta, work is done through autonomous, cross-functional teams called cells. Each cell operates like a small business with direct responsibility for its work. Cells can be peripheral (facing the market) or central (supporting internal services). This structure replaces traditional departments and allows the organization to respond to change much faster.

Strings: Strings are the informal and formal connections between cells. They represent collaboration, communication, and coordination across the network. These relationships create tension and alignment—much like the strings in a mobile sculpture—providing the structure with flexibility and stability at the same time.

Market Pull: Instead of relying on top-down plans, Beta organizations are guided by market pull—signals from customers, competitors, and society. These inputs drive change and adaptation. It’s the external environment, not the internal hierarchy, that determines direction. This ensures relevance and agility in a dynamic world.

Complex vs. Complicated: Pflaeging makes a crucial distinction: complicated systems (like machines) can be controlled through planning, while complex systems (like organizations) are unpredictable and must be navigated. Treating complexity as if it were merely complicated leads to failure. Complex systems require distributed intelligence and adaptable structures.

The Three Gaps: Alpha organizations suffer from three major disconnects: the social gap (between managers and workers), the functional gap (between departments), and the time gap (between planning and action). These gaps create delays, inefficiencies, and dehumanization. Closing these gaps is essential for real performance.

Theory X vs. Theory Y: These two opposing views of human nature were introduced by Douglas McGregor. Theory X assumes people are lazy and need to be controlled. Theory Y sees people as self-motivated and responsible. Alpha organizations are built on Theory X assumptions, while Beta systems trust in Theory Y and design for intrinsic motivation.

Informal Structure: The informal structure is the real way people get things done—through relationships, peer networks, and unspoken norms. It often contradicts the formal org chart, but it’s more powerful. Beta organizations recognize, support, and lead through this informal layer rather than ignoring or suppressing it.

Value-Creation Structure: This refers to the structure through which actual work and customer value are delivered. In Beta, this is built around cells that own processes end-to-end. In Alpha, it’s obscured by departments and bureaucracy. Understanding and organizing around value creation—not job roles—is essential for performance.

Center and Periphery: The periphery includes teams and individuals in direct contact with the market (like sales, support, and service). The center provides support services (like HR, IT, finance). In Beta, the periphery leads, and the center serves. Decision-making happens where the knowledge is, not in the ivory tower.

Social Pressure: In self-organizing teams, performance is driven not by bosses or metrics but by peer-to-peer accountability. When everyone can see what others are doing, and when results are transparent, social pressure becomes a powerful force for excellence. It’s not about fear—it’s about shared commitment.

Consultative Individual Decision-Making: Instead of top-down or consensus decision-making, this method combines speed with inclusiveness. A person is chosen to decide on a matter. Before deciding, they consult with relevant peers, experts, and those affected. Then, they make the decision and the group aligns behind it. This allows for agility and responsibility at once.

The Three Rs of Leadership: To lead in complexity, leaders must shift from commanding to supporting learning and transformation. The Three Rs are: Relate (build human connection), Repeat (create new habits through ongoing practice), and Reframe (help others see situations in a new light). These actions replace fear and control with learning and growth.

X Tools: These are management tools built on Theory X assumptions: performance reviews, targets, incentives, strategic planning, org charts, job descriptions, and more. These tools assume people can’t be trusted, need constant supervision, and won’t work unless rewarded or punished. In Beta, these tools are discarded in favor of principles, trust, and transparency.

Roles vs. Positions: Instead of fixed job positions, people in Beta organizations hold dynamic portfolios of roles. Roles evolve with needs and capabilities. This fluidity allows people to grow, learn, and contribute in multiple ways without being boxed into a single title or job description.

Organizational Transformation: Transformation isn’t about tweaking structures—it’s about changing the entire model from Alpha to Beta. It requires collective reflection, shared learning, and emotional transition. Everyone in the organization must participate, not just executives. It’s not a project with a deadline; it’s an ongoing process of redesign and reinvention.

Letter to Ourselves: This is a powerful tool in Beta transformation: a written manifesto created by the organization, for itself. It documents what the organization believes in, why it exists, and where it wants to go. Creating this letter together helps foster clarity, unity, and purpose.

Crosswind Sensitivity: Startups often succeed not because of their business model, but because they operate like informal, Beta systems. As they grow, external pressure (“crosswind”) pushes them toward bureaucracy and Alpha behaviors, weakening their culture and agility. Recognizing and resisting this shift is crucial to staying adaptive.

Culture as Shadow: Organizational culture isn’t something you can manage directly. It’s the shadow of the system—the result of how things are designed and led. Instead of trying to change culture with posters or training, Beta organizations work on the system itself. When you change the way people work, culture changes with it.

Double Helix of Change: True transformation requires changes at both the structural and personal levels. The organizational system must evolve, and individuals must also go through emotional transitions. These two strands—structural and emotional—intertwine like a double helix. Transformation only works when both are addressed.

BetaCodex: This is the name Pflaeging gives to the principles behind Beta organizations. It’s a set of ideas for navigating complexity, replacing hierarchy with networks, rules with principles, and control with transparency. The BetaCodex is not a method—it’s a lens for seeing and designing organizations in a more human, dynamic way.

What’s powerful is that this book isn’t just theory. It’s deeply practical. It shows how to start redesigning the system—starting from the edges, building small, self-managing teams, and rethinking everything from hiring to strategy. It’s not about adding complexity. It’s about embracing it—and designing organizations that can handle it without falling apart.

In the end, Organize for Complexity isn’t just about organizations. It’s about people. It’s about trusting that most of us want to do good work, be part of something meaningful, and solve problems together. The question isn’t whether we’re ready for that shift. It’s whether we’re willing to let go of the habits and systems that no longer serve us.

If you’ve ever felt that work could be better—not just more efficient, but more human—this book will feel like a breath of fresh air. It doesn’t offer easy answers, but it gives us something more valuable: a new way of seeing, thinking, and building the future of work.

Chapter by Chapter

Chapter 1 – Complexity: Why It Matters to Work and Organizations

This chapter sets the stage for the whole book by tackling a big question: why is complexity such a big deal for how we work and organize ourselves? Niels Pflaeging dives into the history of management and shows how outdated our organizational thinking has become in today’s complex, fast-moving world.

The Legacy of Taylorism

The story begins with Frederick Taylor, the father of “scientific management.” His big idea, back in 1911, was to divide the workplace into two groups: the thinkers (managers) and the doers (workers). Managers would plan, control, and decide, while workers would execute. This approach, known as Taylorism, became the foundation of modern management and helped boost efficiency during the industrial age.

But here’s the catch: what worked well in predictable, stable environments doesn’t work in today’s complex world. The same principles that once made factories efficient now cause waste and frustration. Pflaeging calls this system “Alpha” and argues that it’s completely out of sync with the needs of modern organizations.

The Three Gaps of Management

To explain why traditional management fails, the author introduces three gaps:

1. The Social Gap – Top-down hierarchies kill natural social pressure and dialogue, replacing them with fear-based leadership and number-chasing.
2. The Functional Gap – Dividing work into narrow functions creates silos and the need for excessive coordination, rules, and control.
3. The Time Gap – Splitting planning and doing causes delays, confusion, and the need for more bureaucracy.

These gaps don’t help people, customers, or companies—they just create waste in the name of control.

From Simplicity to Complexity

Pflaeging then shows how markets have changed. During the industrial era, things were simple: mass markets, little competition, and lots of stability. Alpha worked fine then. But since the 1970s, we’ve entered the age of global, dynamic markets where customization, speed, and adaptability rule. These conditions bring complexity, and Alpha management becomes a bottleneck.

Complicated vs. Complex

This part is key. The author makes a distinction between complicated systems (like machines) and complex systems (like living organisms or organizations). Complicated things follow clear rules and can be controlled. But complex systems are unpredictable, full of surprises, and can’t be “managed” the same way. Treating complex problems as if they’re complicated is a critical mistake.

Why Mastery Matters

In complexity, the focus isn’t on finding the perfect method or tool. It’s about who solves the problem. We need people with mastery—those who understand situations deeply and adapt skillfully. Problem-solving becomes a matter of communication, not instruction.

Fixing Systems, Not Just Symptoms

Another powerful point is the difference between symptoms and root problems. Organizations often react to visible issues—bugs, mistakes, delays—without understanding the deeper messes underneath. Using tools to fix surface-level problems (Pflaeging calls this “activism”) often makes things worse. Instead, we need to look for the root causes and deal with the system as a whole.

Systems Thinking Over Fragmentation

Trying to improve parts of a system separately doesn’t work in complexity. It may even make things worse. What truly helps is improving the interactions between the parts. This is the essence of systems thinking—and it’s also what real leadership is about.

Why We Struggle to Adapt

Lastly, Pflaeging explains why many organizations keep failing to adapt. People have grown up with the Alpha way of thinking. Their instincts and “reflexes” are tuned to a different world. Even when markets change, people tend to keep doing what once worked, not realizing that success came from a match between behavior and context—not the behavior itself.

In short, this chapter breaks down the roots of modern organizational failure. It argues that managing complexity isn’t about better tools or more control—it’s about changing our thinking, re-training our reflexes, and trusting in human mastery. It’s a call to stop managing symptoms and start redesigning the system for the world we actually live in today.

Chapter 2 – Humans at Work: The Secret Ingredient

This chapter dives into what makes people tick at work—and why understanding human nature is the real key to building high-performance organizations. Niels Pflaeging challenges the outdated assumptions many leaders still hold and calls for a radical shift in how we see and support the people behind the work.

Theory X vs. Theory Y

The chapter opens with Douglas McGregor’s classic distinction between two views of human nature: Theory X and Theory Y.

Theory X assumes people dislike work, avoid responsibility, and only act when threatened or bribed. It sees humans as lazy by default. Theory Y, on the other hand, suggests that people actually want to work, take responsibility, and find purpose—if the conditions are right.

Pflaeging points out a funny contradiction: most of us see ourselves as Theory Y people, but we often treat others as if they were Theory X. This gap isn’t just ironic—it’s damaging. When we assume the worst in people, we build rigid systems of control. The result? Demotivation, inefficiency, and wasted potential.

The Problem of Naive Cynicism

Why do we fall into this trap? The author calls it “naive cynicism”—we judge others based on their behavior without considering the context that shapes it. We see someone act passively and assume they are passive, instead of asking what kind of system they’re stuck in. And when we design organizations based on these flawed assumptions, we end up with environments that make Theory X behaviors more likely.

The big message here is that any serious work on leadership, systems, or performance must start with a shared belief in people’s potential. Without that, nothing else makes sense.

Why Leaders Can’t Motivate

One of the boldest claims in this chapter is this: leaders can’t motivate people. Why? Because motivation is already inside every person. It’s not something you can hand out—it’s something you either support or suppress. At best, leaders can create the right conditions for people to feel connected and energized. At worst, they end up de-motivating their teams by trying too hard to “motivate” them with bonuses, goals, or pressure.

Motivation, Pflaeging argues, comes from alignment with purpose and meaning. When people feel their work matters, they connect with it voluntarily. That’s where real performance lives.

The Damage of “X Tools”

If we keep designing for Theory X, we’ll keep using what the author calls “X Tools”—practices that assume people are lazy, untrustworthy, or need to be controlled. Think performance appraisals, individual targets, budgeting, 360° reviews, pay-for-performance, strategic planning, dress codes, and forced rankings.

The chapter lists dozens of these tools, arguing that they do more harm than good. They are relics of an outdated worldview, and they often block the very performance they aim to encourage.

Understanding Preferences and Diversity

The author then explores Carl Jung’s idea of personality preferences—how people make decisions, perceive the world, and interact with others. These aren’t rigid traits but tendencies. Some people are more introverted, others more extroverted; some rely on facts (sensing), while others trust intuition; some decide with logic, others with empathy.

In complexity, these differences aren’t just interesting—they’re essential. Teams that embrace behavioral diversity can tackle problems in richer ways. But this only works if there’s mutual understanding and self-awareness.

Beyond What We Can See

Behavior is what we observe. But behavior is shaped by deeper layers: preferences, motives, and competencies. Motives are stable and deeply rooted. Preferences can shift over time. Competencies can be developed through learning.

Yet most organizations only focus on behavior, often judging people unfairly based on what they see. To build complexity-robust organizations, we need to go deeper—understanding what drives people, not just how they act on the surface.

The Myth of Individual Performance

One of the most striking insights here is that individual performance is largely an illusion. Value in organizations doesn’t come from solo stars—it comes from interactions. Salespeople rely on procurement, logistics, finance, support, and so on. No one acts alone.

Focusing on individual performance not only misses the point—it demoralizes people and kills team spirit. True performance is collective, and that’s where leadership should focus.

Different Ways of Connecting

People also connect and communicate in different ways. The chapter introduces several archetypes, inspired by thinkers like Karen Stephenson and Malcolm Gladwell: hubs, gatekeepers, connectors, mavens, salesmen, and pulsetakers. Each plays a unique role in the social fabric of an organization.

Understanding these roles helps leaders tap into the hidden power of networks, not just formal hierarchies.

From Knowledge to Mastery

Finally, the chapter explains how learning really works. Data and information are passive. Knowledge requires learning and reflection. But mastery—being able to solve new, complex problems—only comes from practice. This is what organizations truly need today, yet many chase fads like big data or analytics instead of building human capability.

In summary, this chapter is a powerful reminder: organizations are human systems. And humans are not cogs in a machine. To build truly high-performing environments, we must start with better assumptions about people, let go of the old control tools, and invest in relationships, diversity, and continuous learning. When people feel connected, trusted, and seen for who they are, that’s when real potential gets unlocked.

Chapter 3 – Self-Organizing Teams and the Networked Organization

This chapter introduces one of the book’s most important shifts: moving from old, rigid structures to flexible, self-organizing teams. Niels Pflaeging explains how to design organizations for complexity by focusing on real teamwork, peer collaboration, and decentralized communication.

Chunking and the Power of Teams

The chapter begins with a concept borrowed from cognitive science called “chunking.” It’s the idea that our brains naturally group related things together into a unit—a chunk—so we can make sense of complexity. Pflaeging applies this to organizations, where each “chunk” is a cell—a team with its own identity and boundaries, like a living organism within a bigger system.

These cells make up a cell-structure network, and the boundary around them is what he calls the Sphere of Activity. This model helps us think about teams not just as groups of people, but as organic units that interact with purpose and structure.

Alpha vs. Beta: Two Ways to Organize

As in previous chapters, Pflaeging contrasts two organizational models:

• Design Principle Alpha follows the traditional approach: people are grouped by function (marketing with marketing, IT with IT) and work in parallel, often competing rather than collaborating.
• Design Principle Beta is the alternative: teams are multi-functional, made up of diverse individuals who work together across functions, towards shared goals. This is how real teams function—interdependent and aligned.

In short, Alpha groups by sameness; Beta builds around collaboration.

From Control to Connection

One of the biggest mindset shifts is about control. In Alpha, control flows top-down through bosses, rules, and job descriptions. In Beta, teams self-regulate based on shared goals, mutual trust, and radical transparency.

Pflaeging prefers the term “socially dense market-organization” over “self-organization” because what matters most is the social pressure created by close-knit teams working visibly and transparently. This kind of pressure isn’t about fear—it’s about shared accountability and commitment.

How to Create Productive Social Pressure

The chapter gives four steps to make social pressure work:

1. Let people belong to a small, meaningful group.
2. Give them shared responsibility for common goals.
3. Make all information open within the team.
4. Share performance comparisons across teams.

When these elements are in place, social pressure becomes a positive force—much stronger (and healthier) than hierarchy.

It’s About Team Empowerment, Not Individuals

Another key insight: empowerment is often misunderstood. True empowerment doesn’t come from making individuals “feel powerful” in a system that still limits them. It comes from designing teams that actually have power—decision-making authority, clarity, and shared goals. That’s the only way to thrive in complexity.

A Paradox That Pays Off

Here’s something that might seem counterintuitive: when leaders give up power and decentralize decision-making to teams, they actually gain more credibility and influence—not less. Letting go of control isn’t losing status; it’s gaining relevance in a system built on trust and performance.

Communication Without Managers

Pflaeging also challenges how we think about coordination. In Alpha organizations, communication across teams happens through managers—a slow and expensive process. In Beta, communication is lateral: team to team, peer to peer. It’s faster, more responsive, and more human. Especially in complex markets, centralized coordination just isn’t sustainable.

Departments vs. Cells

To wrap up, the chapter explains the difference between departments and cells. Departments are built on functional specialization. They require constant vertical and horizontal coordination, which creates friction. Cells, on the other hand, are cross-functional teams that own and execute business processes directly. They don’t just sit in the org chart—they do the work together.

In summary, this chapter is a blueprint for building a networked organization—one that replaces hierarchy with trust, silos with collaboration, and micromanagement with real ownership. It’s not about having more rules or better tools. It’s about redesigning how we work together, starting with the team as the basic building block of value creation.

Chapter 4 – Organizations as Systems: Designing for Complexity

In this chapter, Niels Pflaeging asks us to completely rethink how we see organizations. Instead of imagining them as pyramids with managers on top, he invites us to see them as living, interconnected systems—networks where value is created through relationships, not rules. It’s a shift from rigid control to dynamic interaction, and it’s essential for any organization that wants to survive in complex, fast-changing environments.

The Pyramid Problem

Most companies still operate with a dominant mental model: the organization as a hierarchy or pyramid. In this model, managers sit at the top, steering everyone below them through rules, commands, and targets. Pflaeging calls this “Design Principle Alpha,” and he argues it’s fundamentally broken.

The pyramid looks neat on paper, but in reality, it doesn’t reflect how people actually work or how value is really created. Most of us already sense this. The problem isn’t just with the leadership—it’s with the entire design, especially the “boxes and wires” that define how people are grouped and how information flows.

A Better Way: Networks, Not Pyramids

Now enter “Design Principle Beta”: the organization as a multi-layered network. In this model, there is no center of control—just a web of individuals and teams interacting dynamically. Some of these connections are informal (think watercooler chats, workarounds, alliances), and others are value-creating (how teams actually deliver results).

Here’s the catch: your organization already functions like a network beneath the surface. You just might not allow it to work that way officially. That’s where the tension lies.

Informal and Value-Creation Structures

Pflaeging makes a key distinction here. There are two critical, overlapping systems in every organization:

1. Informal structure: This forms naturally through human interaction—gossip, resistance to change, support networks, and peer pressure. It’s how people really work.
2. Value-creation structure: This is how the organization actually delivers results—through teams working together, often in ways not reflected in the formal org chart.

In Alpha organizations, the value-creation structure gets suppressed by rigid bureaucracy. But in Beta organizations, it’s recognized and supported as the true heart of the system.

Center vs. Periphery

To understand where complexity lives, Pflaeging introduces another important idea: the split between the center and the periphery.

• The periphery is the part of the organization that interacts with the market—salespeople, service reps, customer support, etc. This is where learning and responsiveness happen.
• The center supports the periphery. It includes roles like innovation, strategy, and internal services. These aren’t in contact with the market but should act in service of those who are.

This isn’t about location—it’s about roles. The key insight is that decisions should be made as close to the market as possible. In dynamic markets, centralized decision-making simply can’t keep up.

Why Centralized Control Fails

In Alpha organizations, decisions follow a rigid sequence: the market sends a signal, information travels to the center, the center decides, then commands are sent back. This works (barely) in stable environments. But in fast-changing contexts, the center loses its information advantage, and delays and mistakes pile up.

Beta flips this completely: decisions are made at the edges, by the people closest to the action. The center becomes a service provider to the periphery—not a controller. This decentralization isn’t chaos—it’s agility.

Culture Is a Shadow, Not a Lever

Pflaeging also challenges the idea that culture is something you can “change” with posters or values workshops. Culture, he says, is like a shadow. It reflects what’s really going on in the organization. You can’t control it directly, but you can observe it—and that makes it a useful sensor.

Want to know if your change efforts are working? Watch your culture. Not the surveys or slogans, but the real behaviors: sick leave, meeting styles, how people talk, how decisions get made. That’s where culture shows up.

Delegation vs. Decentralization

Finally, the chapter ends by clarifying the difference between delegation and decentralization. Delegation is temporary and top-down—a boss gives you responsibility but can take it back anytime. Decentralization, on the other hand, is structural and permanent. It means designing the organization so teams are genuinely autonomous and integrated.

The goal isn’t to push decisions down—it’s to rewire the whole system so that work, responsibility, and decision-making are distributed in a way that fits the complexity of today’s world.

In summary, this chapter calls for a complete redesign of how we think about organizations. The pyramid model might feel familiar, but it’s not fit for complexity. If we want to build adaptive, resilient, high-performing systems, we need to embrace networks, decentralize power, trust the edges, and stop pretending that culture can be managed.

Complexity can’t be controlled—but it can be navigated, if we’re willing to let go of outdated structures and start designing for the way work really happens.

Chapter 5 – Dynamic-Robust Networks for All: This Is How You Pull It Off

This chapter is where things get practical. After building the case for self-organization and network-based structures in earlier chapters, Niels Pflaeging now shows how to actually design an organization that’s fit for complexity. It’s not about tweaking hierarchies—it’s about building a different kind of system from the ground up.

No More Departments, No More Lines

The first radical shift: forget everything you know about traditional structures. No departments, no functional silos, no shared services, no centralized staff. This is a clean break from the old model. Instead, Pflaeging proposes designing a decentralized cell-structure network—a system that organizes around value, not authority.

To build this kind of structure, four essential components are needed:

1. The Sphere of Activity – A boundary that defines identity and purpose.
2. Cells – The functional units of the network, some central, some peripheral.
3. Strings – The connections between cells.
4. Market Pull – The dynamic force that steers the organization from the outside in.

The Sphere of Activity: Who Are We?

Every self-organizing system needs a clear boundary—a sense of self. This isn’t about control, but about identity and direction. This boundary includes things like:

• Shared values and principles
• A clear business model
• The brand and what it stands for
• Cultural rituals and even memes

To make it concrete, this identity should be documented—perhaps in a “Letter to Ourselves,” a manifesto, or a culture book. This becomes the foundation for the entire structure.

Let the Market Lead

In this model, control doesn’t come from above—it comes from outside. The market (customers, owners, suppliers, competitors, society) exerts pressure and sends signals that guide the organization’s behavior. This “market pull” replaces the need for internal steering and top-down planning.

From Teams to Networks

What ties the organization together are not command chains, but strings—connections between teams. These strings create the “tension” that holds the network in place. Peripheral cells, which are in direct contact with the market, are where value is created. Central cells serve these peripheries by providing services they can’t produce themselves.

Step-by-Step: How to Build It

Pflaeging outlines a practical three-step approach:

Step 1: Start at the Edges
Begin with the peripheral cells—the teams closest to the market. These should function like mini-businesses:

• Cross-functional (at least 3 members)
• Autonomously responsible for results
• Able to make their own decisions

Step 2: Build the Center as a Service Provider
Central cells exist only to support the periphery. They should not control or decide for others. Ideally, their services are “purchased” by the periphery through internal pricing mechanisms. Examples include HR, IT, Finance, Legal—bundled into simple “Org Shops” or “Info Shops.”

Step 3: Iterate and Co-Create the Design
This isn’t a one-time blueprint. It’s an evolving design process that should involve as many people as possible. The more people engaged in shaping the structure, the stronger and more adaptive the result. Real change comes from participation, not enforcement.

Principles, Not Rules

Another powerful idea: ditch complicated rules. Replace them with a few simple, clear principles. The logic is simple:

• A few guiding principles → enable smart, adaptable behavior.
• Too many rigid rules → lead to dumb, robotic actions.

Roles Replace Positions

One of the most human and refreshing shifts in this chapter is the idea that people don’t have “positions” anymore. They have portfolios of roles. In a networked structure, people move between teams and tasks fluidly, taking on multiple roles depending on the situation.

So someone might be part of a central team (say, Finance) when supporting others, but also act as a peripheral team member when dealing with external stakeholders. Over time, individuals develop richer work lives and broader skillsets. Job titles become less relevant—what matters is contribution and connection.

In summary, this chapter shows that building a decentralized, high-performing organization isn’t just a theory—it’s something you can design. By starting with the market, empowering autonomous teams, connecting them through purpose and service, and letting people grow through diverse roles, you create a living system that’s resilient, adaptive, and deeply human. It’s not easy. But it’s doable—and absolutely worth it.

Chapter 6 – Leadership in Complexity: What Remains of It, and What Is Needed

This final chapter zooms in on leadership—not the title, but the work. Niels Pflaeging dismantles traditional leadership myths and shows what leadership actually looks like in a complex, decentralized, networked organization. Spoiler: it has nothing to do with giving orders and everything to do with shaping systems, relationships, and learning environments.

Why Traditional Leadership Fails

Pflaeging opens with a critique of what he calls the “Three Fs” of old-school leadership:

• Facts: Just give people the hard truth.
• Fear: Scare them into action.
• Force: Push them using rules, hierarchy, or rewards.

This model might seem logical, but it doesn’t work—not for real learning or meaningful change. Instead of inspiring people, it creates stress, resistance, and shallow compliance. It treats humans like machines and complexity like a puzzle to be solved with pressure. That’s why most training, change initiatives, and “hero leader” models fall flat.

The “Three Rs” of Real Leadership

In place of the Three Fs, Pflaeging offers a more human—and effective—approach:

• Relate: Build relationships that inspire trust and shared purpose.
• Repeat: Make learning continuous, not one-off. Practice matters more than PowerPoint.
• Reframe: Help people see situations differently so they can act differently.

These principles don’t treat people like objects to be fixed. They treat them as capable agents in a shared system. Leadership becomes a social process—not something one person does to others, but something a system enables.

Leadership Is About the System, Not the Individual

One of the boldest points in this chapter is that leadership isn’t about managing people—it’s about improving the system. In complex environments, people don’t need a boss to push them around. What they need is:

• Transparency
• Connection to the market
• A culture of trust and autonomy

True leadership means working the system—making sure it’s designed to support self-organization, peer pressure, and continuous adaptation.

Make Team Results Visible—Forget Individual Control

If leadership is about enabling performance, then the focus should be on team results, not managing individuals. Trying to control individual behavior—especially with incentives, performance appraisals, or strict time tracking—kills initiative and motivation.

Pflaeging emphasizes a simple but powerful principle: “Everybody having fun while we are winning together.” That’s the culture leaders should build—not one of fear, but of shared success.

Rethinking Stakeholder Success

The Alpha mindset says stakeholders (employees, customers, owners, society) are always in conflict. So we prioritize one—usually shareholders—over the others. But the Beta mindset flips this.

It says value for all stakeholders is interconnected. Success comes from creating a virtuous cycle: support employees → they create great customer experiences → this strengthens society → which rewards owners. But it all starts with the people inside the organization.

Lead Informal Structure, Not Just Formal Systems

Leadership means recognizing the power of informal structures—peer groups, social connections, communities of practice. This is where solidarity, trust, and innovation really live.

Pflaeging encourages leaders to create environments that support informal learning and connection. Host open forums, build great workplaces, encourage peer networks. These “invisible” systems are often more powerful than official strategies.

Leadership Is a Role, Not a Rank

Leadership isn’t about titles. It’s a form of work. And in Beta, the real job of leadership includes:

• Creating a shared space where value can happen
• Connecting people and ideas across the network
• Facilitating dialogue and conflict
• Ensuring transparency and visibility
• Representing the organization externally
• Attracting great people and helping them succeed

In this model, decision-making authority doesn’t sit with a few at the top. It flows to whoever is closest to the problem—whoever has the mastery and context to act.

Rethinking Recruitment

Pflaeging calls recruitment the most sacred act of leadership. Yet most organizations rely on dehumanized, overly formal hiring processes that focus on generic competencies and safe choices.

In Beta organizations, hiring is social and collective. Peers—not just managers—interview candidates, look for cultural fit, and ensure mutual alignment. It’s slow, thoughtful, and deeply human. And it results in stronger, more adaptive teams.

Learning and Mastery Over Talent and Training

Instead of obsessing over innate talent or structured training programs, the focus should be on mastery. People develop mastery through:

• Practice
• Real-world experience
• Communities of practice
• Informal learning

Training budgets and courses? Often more about control than growth. Better to make learning resources available anytime, to anyone who’s motivated.

Radical Transparency as Oxygen

Information isn’t just helpful—it’s vital. Pflaeging compares it to oxygen. Teams can’t be responsible if they’re kept in the dark. He advocates for “open books,” visible results, and shared insights. Transparency fuels ambition, accountability, and trust.

Stop Managing by Numbers

Fixed targets, incentives, and performance bonuses belong to the Alpha world. In Beta, leadership is about:

• Dialogue over dashboards
• Profit sharing over pay-for-performance
• Market fit over budget compliance

Let purpose—not numbers—drive behavior.

Consultative Decision-Making

Instead of top-down decisions or endless consensus meetings, Pflaeging champions consultative individual decision-making. Here’s how it works:

1. A group agrees who the decision-maker is.
2. That person consults widely—with peers, experts, managers.
3. They listen, reflect, and then decide.
4. The group supports the decision and reflects together later.

It’s fast, inclusive, and grounded in context—ideal for complexity.

The BetaCodex: 12 Principles for Complexity

The chapter ends with a compact set of Beta values—a kind of manifesto. Just a few examples:

• Freedom to act over dependency
• Results culture over duty fulfillment
• Sharing over incentives
• Purpose over status
• Flow of intelligence over power accumulation

These aren’t just abstract ideas—they’re design principles for organizations that want to thrive in complexity.

In summary, this chapter brings everything together. Leadership in complexity isn’t about heroes, titles, or control. It’s about creating spaces where people can thrive, learn, and build value together. It’s about working the system, not the individuals. And it’s about understanding that success is collective, not competitive. If we want to lead well in the modern world, we need to let go of Alpha habits—and embrace Beta thinking fully.

Chapter 7 – Transform, or Remain Stuck: The Way Forward

This final chapter is all about transformation—not just as a buzzword, but as a real, deep, system-level shift from Alpha to Beta. Niels Pflaeging makes one thing very clear: optimizing your current system won’t get you there. You have to fundamentally change the model. And that, he argues, is both necessary and possible.

Change the Model, Not Just the Methods

Most organizations don’t need small adjustments—they need a new way of working altogether. Improving Alpha practices, adopting management innovations, or adding new tools just delays the real issue. Transformation only happens when you stop working in the model and start working on the model. That’s the big shift.

A Historical Look at Change

Pflaeging draws on Marvin Weisbord’s model to explain how our thinking about organizational change has evolved:

1. Experts solve problems (1900s)
2. Everyone solves problems (1950s)
3. Experts work on the system (1980s)
4. Everyone works on the system (2000s and beyond)

Only the last stage—everyone working on the system together—is robust enough for a Beta transformation. It’s not just about fixing symptoms. It’s about evolving how the whole system functions.

Organizations Evolve—But Alpha Isn’t Inevitable

Using insights from Friedrich Glasl, the book maps out three evolutionary phases:

1. Start-up / Pioneer Phase – Small, energetic, informal, guided by shared purpose. Theory Y dominates.
2. Alpha / Differentiation Phase – Growth leads to hierarchy, functional silos, and bureaucracy. Theory X starts creeping in.
3. Beta / Integration Phase – A return to decentralized, human-centered organizing through networked mini-enterprises (cells).

Most companies naturally evolve from 1 to 2. Few manage to reach 3. The good news? You can still get to Beta through what Pflaeging calls Beta Transformation.

The Real Threat: Crosswind Sensitivity

Startups often don’t know why they’re successful. They assume it’s the product or the business model, not the informal, dynamic, human-centered way they operate. But as they grow, external pressures push them to adopt formal structures, consultants, and best practices. This unintentional shift is called crosswind sensitivity. And it drags them into Alpha mode without them even noticing.

Transformation Requires Collective Self-Awareness

To move from Alpha to Beta, an organization must become aware of itself—of how it works, what it’s losing, and what kind of future it wants. Beta transformation isn’t just a structural shift—it’s cultural and personal. And it won’t happen by accident.

The Four First Steps Toward Transformation

1. Make the Sense of Urgency Tangible
   Not just with data or logic, but emotionally. People need to feel that something must change—now, together. The story must be personal, relevant, and shared.
2. Find and Unite the Core Group
   Every organization has a group of people that matter more than others—formally or informally. They must come together as a guiding coalition to lead the transformation. Diversity in role, influence, and perspective is key.
3. Write a “Letter to Ourselves”
   This is the organization’s manifesto. It explains why change is needed, where you’re coming from, and what kind of future you want to build. It’s a shared story—and the act of writing it together is already a form of transformation.
4. Go With the Energy, Not Against It
   Don’t force change. Let it emerge by working with people’s motivation. Recognize resistance as natural. There are two kinds:
   • Tactical resistance (from self-interest): rare, needs confrontation.
   • Intuitive resistance (from fear): common, needs empathy and the “Three Rs” (Relate, Repeat, Reframe).

Transformation Is a Double Helix

Pflaeging introduces a powerful metaphor: real transformation weaves two strands together—

• The organizational change strand (culture, systems, structure)
• The individual change strand (mindsets, behaviors, emotions)

People must let go of the old, pass through a “neutral zone” of uncertainty, and then embrace a new beginning. The two change paths are inseparable—they spiral together.

You Can Make a Difference—Here’s How

No matter where you are in the hierarchy, you have influence. The Influence Speedometer is a tool for thinking about how and where you can create change:

• Direct influence = fast change
• Indirect influence = slower but still powerful
• No influence = rare, and probably not true

Pflaeging encourages everyone to:

• Start conversations
• Repurpose existing forums (town halls, events, even parties)
• Remove blockers and simplify

And always start with the question: Who can I talk to? Who trusts me? Who has influence? Then work from there.

Beta vs. Alpha: A Final Comparison

The chapter closes with a side-by-side comparison of the two models. Some of the standout contrasts:

Beta	Alpha
Alive	Dead
Surprise	Repetition
Principles	Rules
Networks	Hierarchies
Decentralized decisions	Centralized control
People first	Shareholders first
Consultation	Command
Change is emergent	Change is a project
Agile, Scrum	Waterfall, PMO
Everyone hires	HR hires
Radical transparency	Information is power

It’s not just a different way of managing—it’s a different way of seeing the organization.

In summary, this chapter is the final invitation: stop fixing what’s broken and start creating what’s needed. Organizational transformation isn’t a project. It’s an ongoing, shared, deeply human process.

It requires courage, clarity, and collective energy—but it’s entirely within reach. If you want to move from Alpha to Beta, don’t wait for permission. Start now. Start small. But start.

“Management Is Quackery”: An Interview with Niels Pflaeging

In this powerful bonus interview, Niels Pflaeging doubles down on the main message of his book: management, as we know it, is outdated and harmful. He calls it “quackery”—a leftover from the industrial age that still dominates how most organizations are run, even though it no longer fits our world.

The Quackery of Management

Pflaeging compares current management practices to medieval medicine—based on outdated assumptions, superstition, and fear. Just like bloodletting didn’t cure illness, modern management doesn’t cure the real issues inside organizations. It creates more problems: stress, disengagement, bureaucracy, and wasted potential. The tragedy? Most managers mean well—but they’re stuck using the wrong tools for today’s challenges.

Management vs. Leadership

He makes a crucial distinction: management is not leadership. Management is a system built for efficiency, repetition, and control in predictable environments. It was revolutionary in Taylor’s time, when most workers were uneducated and jobs were standardized. But now, this rigid separation between thinkers (managers) and doers (workers) has become a liability. Today’s complex, fast-moving world demands something entirely different: shared thinking, adaptability, and real teamwork.

Two Faulty Assumptions Behind Management

Pflaeging identifies two core assumptions that keep management alive—and both are wrong:

1. About Human Nature: The belief that people are lazy, need to be controlled, and won’t perform unless bribed or pushed. But decades of research—and everyday experience—show that people are naturally motivated when given autonomy, trust, and purpose.
2. About Control: The belief that the future is predictable, and that organizations can be controlled through planning, rules, and hierarchy. In reality, the future is uncertain, and complexity can’t be managed—it must be navigated.

Letting Go of the Illusion of Control

Pflaeging calls today’s management practices “Soviet economy for companies.” We cling to planning, targets, and budgets as if they can control complexity. But they don’t. They create inefficiencies and blind spots. Real performance doesn’t come from top-down control—it comes from decentralized decision-making and empowered teams.

So, What’s the Alternative? Beta

Instead of tweaking Alpha, we need to build Beta organizations—places where everyone thinks, takes responsibility, and works in networks rather than hierarchies. This doesn’t mean chaos. It means creating systems with:

• Transparency
• Shared ownership
• Team-based decision-making
• Flexibility and learning

Leadership becomes a distributed function, not a role reserved for the top.

Transformation Requires Learning, Not Just Change

Pflaeging argues that transformation isn’t about one big decision or a charismatic CEO. It’s about learning. People go through flashes of insight—moments where they realize the old way doesn’t work anymore. But between those flashes, they’ll fall back into old habits. That’s normal. So the goal isn’t pressure—it’s creating more of those flashes through reflection, dialogue, and experimentation.

Beta Is Already Out There

Pflaeging points to real-world Beta examples like Toyota, Southwest Airlines, Handelsbanken, Trader Joe’s, W.L. Gore, and dm-drogerie markt. In these companies, employees take initiative, customers are respected, and results come from self-organization—not top-down control. Leadership isn’t about having all the answers. It’s about helping others think better questions.

Beta vs. Alpha in Action

He shares examples of how you can spot a Beta organization:

• Employees don’t say “It’s not my job.”
• People are trusted to think and act.
• Mistakes are learning moments, not punishable offenses.
• Teams own their work, and leadership supports—not controls.

And even when Beta organizations face controversy or customer complaints, they back their employees—because autonomy is part of the deal.

Connectedness and Power Sharing

One of the most inspiring ideas in this interview is that power grows when shared. In Alpha systems, power is a zero-sum game—if I give you more, I have less. But in Beta, when more people think, solve problems, and act responsibly, the whole system becomes more powerful. That’s what real leadership looks like.

Can Beta Work Everywhere?

Yes. It’s not about industry—it’s about complexity. Whether in banking, retail, software, or healthcare, Beta principles work because they reflect how people and systems actually behave in the real world.

Education Is Broken, Too

Pflaeging even connects this to our schools. He argues that education systems still train people to obey, not to think. And organizations reinforce that by hiring based on technical skill instead of mindset or cultural fit. The result? A cycle of compliance and underperformance.

What’s Needed Now?

To break the cycle, organizations need:

• A clear understanding of the Beta model
• Leaders willing to learn, not just manage
• Guiding coalitions to drive the change (not just lone geniuses)
• Humility to admit the old ways no longer work

In summary, this bonus chapter is a passionate, no-holds-barred conversation that ties everything together. It reinforces that management isn’t just outdated—it’s actively harmful.

The way forward isn’t about optimizing old systems. It’s about learning, unlearning, and rethinking what work and leadership really mean.

Organizations that embrace this change will thrive. Those that don’t? The market will decide.

4 Key Ideas from

6 Main Lessons from

My Book Highlights & Quotes

“… Design principle Beta – following the work: Teams are multi-functional, interdisciplinary, or functionally integrated…”

“… Design principle Alpha – following functions: Groups are uni-functional, or functionally differentiated…”

“… The only “thing” capable of dealing effectively with complexity is human beings…”

“… In complexity, the question isn’t how to solve a problem, but who can do it. What matters now is skillful people or people with mastery or prowess…”

“… Working on individual parts of the system does not improve the functioning of the whole: in a system, it is not so much the parts that matter, but their fit…”

“… We cannot act on systems, leadership, performance, or change coherently if we don´t agree beforehand on the assumptions we hold about human nature…”

“… In complexity, diversity in motivations and preferences can be an asset, or a liability, depending on the level of self-reflection present…”

“… Teams are multi-functional, interdisciplinary, or functionally integrated. Diverse individuals who work in an interconnected fashion, with each other and for each other – individuals who commit to work together to reach a common goal…”

“… Culture is not a success factor, but an effect of success or failure. It is an image of the circumstances in an organization, not their cause. That is why it also cannot be influenced directly. Culture is like a shadow…”

“… By the way: an organization cannot fully know itself. Therefore, a self-description can only be developed with outside help…”

“… Culture is like a shadow. You cannot change it, but it changes all the time. Culture is read-only…”

“… The difference between rules and principles is that for setting up rules, you need to analyze every possible situation before formulating them. Rules are based on the pattern of if-this-happens-do-that…”

“… Principles are like guidelines that help you test whether your actions are aligned with your beliefs and values, or not. If not, you have to search for another way to solve…”

Conclusion

Reading Organize for Complexity feels like someone finally putting words to what you’ve sensed all along—that most of the systems we work in weren’t built for people like us, or for the world we live in now.

But instead of just pointing out what’s broken, the book lights a path forward.

One where organizations are alive, teams are trusted, and leadership is something we all share. It’s not just a better way to work—it’s a more human one.

I am incredibly grateful that you have taken the time to read this post.

Support my work by sharing my content with your network using the sharing buttons below.

Want to show your support and appreciation tangibly?

Creating these posts takes time, effort, and lots of coffee—but it’s totally worth it!

If you’d like to show some support and help keep me stay energized for the next one, buying me a virtual coffee is a simple (and friendly!) way to do it.

Do you want to get new content in your Email?

Do you want to explore more?

Check my main categories of content below:

• Book Notes
• Career Development
• Essays
• Explaining
• Leadership
• Lean and Agile
• Management
• Personal Development
• Project Management
• Reading Insights
• Technology

Navigate between the many topics covered in this website:

Agile Agile Coaching Agile Transformation Art Artificial Intelligence Blockchain Books Business Business Tales C-Suite Career Coaching Communication Creativity Culture Cybersecurity Decision Making Design DevOps Digital Transformation Economy Emotional Intelligence ESG Feedback Finance Flow Focus Gaming Generative AI Goals GPT Habits Harvard Health History Innovation Kanban Large Language Models Leadership Lean Learning LeSS Machine Learning Magazine Management Marketing McKinsey Mentorship Metaverse Metrics Mindset Minimalism MIT Motivation Negotiation Networking Neuroscience NFT Ownership Paper Parenting Planning PMBOK PMI PMO Politics Portfolio Management Productivity Products Program Management Project Management Readings Remote Work Risk Management Routines Scrum Self-Improvement Self-Management Sleep Social Media Startups Strategy Team Building Technology Time Management Volunteering Web3 Work

Do you want to check previous Book Notes? Check these from the last couple of weeks:

• Book Notes #127: The Laws of Simplicity by John Maeda2025-04-04
• Book Notes #126: Inevitable by Mike Colias2025-03-24
• Book Notes #125: Revenge of the Tipping Point by Malcolm Gladwell2025-03-21
• Book Notes #124: Radical Candor by Kim Scott2024-09-04
• Book Notes #123: The Personal MBA by Josh Kaufman2024-05-09

Support my work by sharing my content with your network using the sharing buttons below.

Want to show your support tangibly? A virtual coffee is a small but nice way to show your appreciation and give me the extra energy to keep crafting valuable content! Pay me a coffee: