Shaping the organization to deliver value

The large organisation in the modern era has delivered profound changes to society, to the way we work and live, and to the way we think. Indeed, the large organisation has enabled major economic development across the globe.

Some of this growth has come about by changes in scale. That is, smaller organisations have become larger, local organisations have become international and so on. In other cases, strong CEOs have shaped the way organizations operate via their personalities and passion for the business.

But many organisations have taken a more systematic and measured approach to the way they are shaped, and therefore how they go to market.

Take the example of Alfred Sloan at General Motors in its earlier years. Amongst other things, Sloan is attributed with the introduction and rollout of the divisional structure in the auto giant. This structure provided a strong focus on semi-independent divisions of activity around product groups in the same industry. Each of the divisions had a degree of autonomy, but were required to meet various performance criteria and outcomes. Many organizations have successfully implemented such structures over the years, and continue to do so.

The conglomerate organization took this concept to a new level again. They comprised semi-independent divisions, but usually based around different industry segments. General Electric is an example of such a structure.

Over the years, various forms of structure evolved. The customer-focused organization became strongly in vogue in the 70s and 80s. Remember Jan Carlzon the CEO of Scandanavian Airlines. In shaping his customer focused enterprise, he re-drew the organization chart as an inverted pyramid – customers were positioned at the top and he (the CEO) was at the very bottom. This was not just powerful imagery, but it also heralded some fundamental culture and behavior changes. The notion of flatter structures and so-called de-layering of organisations was a strong flavour of organization change in the 90s in particular.

Later, the process driven business was on the scene to provide a more seamless approach for customers and stakeholders alike. Functional excellence almost became a cause celebre as major ERP systems enabled dramatic process standardisation and best practice to be embedded into areas such as finance and accounting, human resources and supply chain. Oil companies, major freight and transport businesses and defence organisations have developed global models which are strongly hinged around this concept of process excellence.

So where to from here? What organization shapes will work into the future, and what will be the nature of the organisation?

The challenge now is that technology has changed the game. Yes, we now have much greater transparency, access to global markets, and data and amazing analytical tools to facilitate better decision-making. Yet, technology places unprecedented pressure on how our organisations operate and how they will evolve.

Think of a sailing ship going into unpredictable weather. Maintaining the same rig and type of sails will simply not be good enough. The skipper will need to change sails make other adjustments to meet the conditions.

Likewise, organisations have entered unpredictable waters which are also changing with speed. Relying on the old trusted models will be tempting, but these alone will not suffice.

As we look ahead and consider the impact of technology, continuing gloabalisation and the overall speed of change, I see three areas in particular that need to be embraced for flexible and successful organisations of the future:

Customers

The “customer of one” is rapidly emerging and will be dominant within a few years. The “personalized” voice of the customer will not only be heard more strongly, but the customer view will strongly influence the shape and nature of the organisation that delivers the products and services. This is more than the customer-focussed organization – this is the customer shaping organization of the future.

People

The people in organizations will be far more about driving change rather than simply implementing change advocated from above. Flexibility in shaping and delivering outcomes will be the expectation. Organisation culture, structure and measures will change accordingly. The people organization of the future will have a different shape and way of operating.

Stakeholders

Stakeholders across the board will be far better connected and knowledgeable about a wide range of customer and organisation issues. Therefore they will be able to bring influence to bear in many different ways. The transparent organization of the future is already emerging thanks to social media, and this can only accelerate.

These major changes are rapidly accelerating towards us. Dealing with them demands changes in the way we think about the problem. As Albert Einstein once said, “The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.”

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