The relevance of organisation design in the digital era

Organisations go through various phases of re-organising themselves. These events are often heralded as helping to get closer to customers or re-alignment of skills or a strategic re-structuring for the future. Communications teams are usually working overtime in these situations to ensure the right messages are shaped and delivered to the organisation and to the market. These events almost always occur as a new CEO is appointed so that the organisation is shaped in the way the new CEO wants to drive it.

There was a time when the organisation structure represented the way the place actually worked. That is, information and authority were both arranged hierarchically, and the flow of communications up and down the line also followed this pattern. The organisation structure was effectively the way of doing business. Flow of information from customers through to various parts of the business and back again could be slow and tortuous.

But information systems changed all that. As big systems came of age 15 or so years ago, no longer did the vertical flow of information dictate how organisations worked. Indeed, big systems meant that more information was available to more people at multiple levels. As a result, organisations changed so that integrating mechanisms across the business, cross-functional teams and the networking organisation became in vogue. The concept of the customer centric organisation emerged.

But the internet and digital era has taken this to an entirely new level, and the pace of change continues to accelerate. Information can now be accessed ubiquitously and from multiple devices from virtually any location. Organisations have become far more connected both within the formal structure and beyond its boundaries. In turn, this has provided real-time and highly visible information about customer service levels and customer sentiment, and performance measures in many areas including suppliers. This widespread connectivity today means that traditional hierarchy is somewhat superseded in the digital era.

What does this mean for the way that organisations are designed, and how does this impact the re-structuring of businesses in today’s world?

 1. Organisation design is not dead

How the organization is shaped and who reports to whom is still a vital feature of any business. This can have a powerful impact for how customers are engaged by the organisation, how decisions are made, how talent is identified and developed, and how “pay and rations” are managed. Reporting lines also play a key role in developing future leaders and creating growth opportunities through promotion and larger responsibilities.

2. Organisation design competes head-on with people connection

The organization of today operates far more around the connection of people across the business than simply the organization structure. Employees are connected not only within their organization at multiple levels, but also with outside suppliers and stakeholders. Most importantly, employees have far more information than ever before about customer service and delivery issues, and can have visibility of sentiments from customers directly via social media or chat rooms.

3. Organisation design must embrace the agility mantra

Many organisations lament the frequency of re-structuring. Indeed, we often hear the complaint that “here we go again, yet another shifting of the deck chairs”. But in reality, frequent organisation changes provide a re-fresh and new opportunities. Provided they are adding to better customer engagement in some way, directly or indirectly, they should be a regular feature of any organisation. Agility of the organisation to absorb and grow through change is an important feature of success.

Whilst organisation design may not be on quite the pedestal it occupied in years gone by, it remains an important part of the mix in the digital era.

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4 Comments

Filed under Organisation capabilities

4 responses to “The relevance of organisation design in the digital era

  1. Matt, given that millenials have so much capacity to process that they can require much more managerial time than previous generations (if you’ll permit me that stipulation), what are your thoughts about org structures today and how they embody management leverage?

    • Bill – a consequence of your point about capacity to process and with information becoming more unstructured (eg customer information), the currents of change in an organisation swirl around faster and with greater complexity. I think that management structures today lack the flexibility to deal with this, and are lagging in coming to grips with this issue. Too much organisation design thinking is grounded in the past and geared to pushing organisation structure “out” to the market, rather than allowing flexible designs to be “pulled in” from market needs

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