Rethinking organization 6 inputs

Organization rethinking

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6 inputs on rethinking the way work gets organized.

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6 inputs

Tradition # 1Efficiencyis the goal

Organizations were built around principles that deify conformance, control, alignment, discipline and efficiency .

The principles that organizations have at their core are antithetical to innovation.


Gary Hamel

The management model that predominates in most organizations has its roots in the early 20th century.

At that time, management innovators were focused on the challenge of achieving efficiency at scale. Their solution was the bureaucratic organization, with its emphasis on standardization, specialization, hierarchy, conformance, and control.

Source :http://www.managementexchange.com/blog/m-prize/management-20-challenge

SourceThe secrets to successful strategy execution. Harvard Business Review, June 2008.http://hbr.harvardbusiness.org/2008/06/the-secrets-to-successful-strategy-execution/ar/1

Most important for efficient strategy execution

Hierarchies are useful. They let us sort work into departments, product divisions, regions, and the like with expertise, time-tested procedures, and clear reporting relationships and accountability so that we can do what we know how to do with efficiency , predictability, and effectiveness.

Hierarchies are directed by familiar managerial processes for planning, budgeting, defining jobs, hiring and firing, and measuring results.

Source : http://hbr.org/2012/11/accelerate/ar/2







Self controlMarketFew

controlling layers



Many controlling


High degree ofcontrolling detail

Low degree ofcontrolling detail

Social actors

Rational actors



Source : W. Richard Scott, 1981.

Human relationsOrganization as a

big family

Organization as a machine

Contingency viewOrganization as a

living organism

Organization as a loosely coupled


Change # 1What if creativity

is the goal?


A person, who is excited aboutan idea, tries it out.


Efficiency Creativity

The successful organization of the future will have two organizational structures: 1. A hierarchy.2. A more teaming, egalitarian, and adaptive network.

Both are designed and purposive. While the hierarchyis as important as it has always been for optimizing work, the network is where big change happens. It allows a company to more easily spot big opportunities and then change itself to grab them.

Source :John Kotter.http://blogs.hbr.org/kotter/2011/05/two-structures-one-organizatio.htmlhttp://hbr.org/2012/11/accelerate/ar/1

The reason that innovation often seems to be so difficult for established companies is that they employ highly capable people and then set them to work within organizational structures whose processes and values weren’t designed for the task at hand.


Organizational structure needed to initiate an innovati on

Source: http://hbr.org/2000/03/meeting-the-challenge-of-disruptive-change/ar/5

Hewlett-Packard’s laser-printer division in Boise, Idaho, was hugely successful, enjoying high margins and a reputation for superior product quality. Unfortunately, its ink-jet project, which represented a disruptive innovation, languished inside the mainstream HP printer business. Although the processes for developing the two types of printers were basically the same, there was a difference in value s.

It was not until HP’s managers decided to transfer the unit to a separate division in Vancouver, British Columbia, with the goal of competing head-to-head with its own laser business, that the ink-jet business finally became successful.

Source: http://hbr.org/2000/03/meeting-the-challenge-of-disruptive-change/ar/5

Once the acquisition’s managers are forced to adopt the buyer’s way of doing business, its capabilities will disappear.

A better strategy is to let the [acquired] business stand alone and to infuse the parent’s resources into the acquired company’s processes and values . This approach truly constitutes the acquisition of new capabilities.

Sourcehttp://hbr.org/2000/03/meeting-the-challenge-of-dis ruptive-change/ar/6

Tradition # 2Hiearchies are


Power for decision making is centralized at the top


Uncertainty avoidance

Power distance


Change # 2What if hierarchy

develops naturally ?

In any Web forum there are some individuals who command more respect and attention than others -and have more influence as a consequence.

Critically, though, these individuals haven’t been appointed by some superior authority. Instead, their clout reflects the freely given approbation of their peers.

On the Web, authority trickles up, not down .


UK, USA, Scandinavia

Uncertainty avoidance

Power distance


Number of management levelsRule of thumb

Maximum 3 management levels.Up to 2000 people

Maximum 2 management levels.Up to 200 people

1 manager.Up to 20 persons

Number of management levelsNumber of people

Source :Mr. Lars Kolind.http://kolindkuren.dk/2008/11/03/v%C3%A6kst-i-krisetider-ledelse/#comment-166635

Tradition # 3Information

flows vertically

In large organizations,resources get allocated top-down.

Source :http://blogs.wsj.com/management/2009/03/24/the-facebook-generation-vs-the-fortune-500/

Although it may lead to worse results in thelonger term, there is one advantage of 1-way communication, i.e. of a managermaking commands / decisions:Time savings .

Examples of time savings:� Assignments are coordinated quickly .� Conflicts are ended quickly .

SourceAdapted from: Malone, Thomas W.: The Future of Work, p. 53.

Change # 3What if information

flows freely ?

Source : ”Harnessing the power of informal employee networks, 2007.” The Mckinsey Quarterly, November 2007.

Source : http://www.realinnovation.com/content/c090209a.asp

Tradition # 4Centralization


SourceMalone, Thomas W.: The Future of Work, p. 53.

Managers may become bottlenecksdue to information overload.

Badly judged centralization can stifle initiative, constrain the ability to tailor products and services locally, and burden business divisions with high costs and poor service.

Insufficient centralization can deny business units the economies of scale or coordinated strategies needed to win global customers or outperform rivals.

The management dilemma

Source :https://www.mckinseyquarterly.com/Organization/Strategic_Organization/To_centralize_or_not_to_centralize_2815


The role of the corporate center

Value added by the center


Change # 4What if people take

decisions themselves ?

In an adaptive organization, the decision -making is pushed to the edges . This reduces communication barriers and empowers the employees on the front-line to make decisions.


At Haier, each unit regards itself, and is evaluated, as an independent business earning a profit or loss.

Managers are there only to make sure that the [self managed] units get what they need. If managers do not help the self managed units well, people can vote managers out.

SourceZhang Ruimin.http://management.fortune.cnn.com/2011/07/15/zhang-ruimin-managements-next-icon/

Today, the average manager in Google’sproduct-development group has more than50 direct reports, and for some leaders the number tops 100.

SourceHamel, Gary: The Future of Management, p. 111.

# 1: PurposeWhat is meaningful.

# 2: MasteryThe urge to get better.

# 3: AutonomyThe desire to be self directed.

3 factors lead to better performance and personal satisfaction :

Source : Daniel Pink. http://www.youtube.com/watch?v=u6XAPnuFjJc

Instead of organizing hierarchically and with different functions, organize cross functionally in project teams that change every 2 – 10 weeks.

For each project, a team member is selected as the lead who is responsible for delivering the project. This enables every person to experience leading a team throughout the year.


Hierarchies Markets



Many and powerfulstakeholders

Few and weakstakeholders

Social actors

Rational actors



Source : W. Richard Scott, 1981.

Human relationsOrganization as a

big family

Organization as a machine

Contingency viewOrganization as a

living organism

Organization as a loosely coupled


What if many tasks currently done by large companies were done instead by temporary combinations of small companies and independent contractors?

Taking this idea further, what if most businesses consisted of one single person?

Source :Malone, Thomas W.: ”The Future of Work”, p. 74.

Strengths of markets

� EfficiencyPeople move to assignments where theygenerate value for others.

� FlexibilityAnyone can work on any aspect of the problem.

� MotivationHigh autonomy to decide things individually makepeople work hard.

SourceMalone, Thomas W.: The Future of Work, p. 106.

Tradition # 5Specialization

Each worker doesspecialized

operational assignments

In a sense, the crowning accomplishment of the hierarchy and its management processes is the enterprise on autopilot , everyone ideally situated as a cog whirring on a steady, unthinking and predictable machine.

Source :John Kotter.http://blogs.hbr.org/kotter/2011/05/two-structures-one-organizatio.html

Source : http://www.janbosch.com/Jan_Bosch/Presentations_files/ESA2010-Keynote.pdf

Someone else ’s job

Specialized work becomes routine .

Source : http://www.realinnovation.com/content/c090209a.asp

Source : http://www.pixelio.de/details.php?image_id=316694&mode=search

”The old organizations are breaking down, becauseif everybody is doing a well-defined task and job requirements change, people do not know what to do anymore – nor do their bosses.

And today’s fast-moving, competitive markets willnot let you hide this kind of ignorance inside yourorganization.”

SourceAbell, Derek F.: Managing With Dual Strategies, p. 129.

Source : http://www.youtube.com/watch?v=UKl1pjhQJaI

Change # 5What if peoplework on more

different things

Specialization prevents people from doing more jobs which could create more value.

Source : Malone, Thomas W.: The Future of Work, p. 53.

Tasks are chosen, not assigned

The Web is an opt-in economy. Whether contributing to a blog, working on an open source project, or sharing advice in a forum, people choose to work on the things that interest them. Everyone is an independent contractor, and everyone scratches their own itch.

SourceGary Hamel.http://blogs.wsj.com/management/2009/03/24/the-facebook-generation-vs-the-fortune-500/

Source :Tom Malone.http://blogs.hbr.org/video/2011/07/the-future-of-work-20.html

# 1: PurposeWhat is meaningful.

# 2: MasteryThe urge to get better.

# 3: AutonomyThe desire to be self directed.

3 factors lead to better performance and personal satisfaction :

SourceDaniel Pink. http://www.youtube.com/watch?v=u6XAPnuFjJc

Tradition # 6Standardization

Structures and processesare VERY important



Structures, processes, plans, budgets, templates, guidelines, and rules

uphold standardization .

Command and control managementestablish and keep regularity and predictability in operational work.

Change # 6What if productsand services areindividualized ?