The Future of Organizational Structures

Firms are usually born out of an underlying customer need that hasn’t been adequately met. The journey continues as the firm grows its CUSTOMER CENTRIC FOCUS, utilizing small self-organizing teams that continuously engage with the customer and adapt the firm’s offering accordingly to achieve success.

Inevitably in this journey, the firm grows into a larger organization and it is at this point the focus becomes the ORGANIZATIONAL STRUCTURE. This seemly sudden shift is an odd one. It’s almost as if the focus on organizational structure reflects a certain level of MATURITY; a sense of we did it, we’ve accomplished LEGITIMACY. And in some respects, now, it’s the organizational chart that becomes a way of achieving the goals for the firm. Lost is the customer centric focus that enabled the firm to grow in the first place.

As time goes on, executives seek to rekindle the approach that made them successful. But their focus is on the wrong question, how to design a structure for a customer-centric organization.

The solution is NOT IN THE ORGANIZATIONAL CHART; it is not about shifting who reports to whom or where certain departments should be, the solution is not about adjusting the levels of bureaucracy. We believe the focus needs to return back to the customer; what do they need, what is lacking.

To meet these needs, we believe the organization needs to rely on agility and it needs to run as a NETWORK of self-organizing teams. This isn’t to say the organization needs to revert. There is still a need for the organizational chart. In an unadulterated sense the organizational chart would be for administrative purposes only. But the work will be done once again in self-organizing teams and groups of teams that operate as a network; collecting feedback, developing insights, and arranging resources to achieve specific goals that address specific needs of the customer.

It was a mindset that enabled the firm to be customer centric and grow to the levels it is at. It’s NOT the organizational chart that fueled this growth. The organizational chart promotes rigidity, it enables bureaucracy and results in wasted efforts that determine internal matters like department budgets and resources, it fails to invest in the capabilities required to actually grow the organization and develop a sustainable competitive advantage. IT IS THE ANTITHESIS OF AGILITY. And it is the return to agility that needs to be embraced in order to foster continued growth, especially during times of uncertainty where customer needs are dramatically changing.

But agility on its own may not be enough. Organizations can sense and seize the market continuously adopting to the environment but it comes at a toll. Eventually the purpose, the mission becomes too distance and removed from the current operation. Furthermore, agility is geared towards achieving specific objectives and not towards long term strategy, those in an agile mindset typically fail to ask the question, “What should we be doing?”.

Perhaps the bureaucracy can provide a purpose. From a top-down bureaucratic perspective what is clear is the mission, the goal of the organization. Being MISSION DRIVEN establishes a direction of where the organization is heading or wants to move towards, it answers the question “What should we be doing?”. The bureaucratic perspective also brings in discipline, and it plays a key role in evaluating the performance against clearly established metrics but more importantly against the mission itself.

THIS MIX OF AGILITY AND BUREAUCRACY can get us closer to the finish line, but it is not enough to cross it. To meet these needs, we believe the organization needs to run as a NETWORK of self-organizing teams. This isn’t to say the organization needs to revert. There is still a need for the organizational chart. In an unadulterated sense the organizational chart would be for administrative purposes only. But the work to needs to rely on agility and it will be done once again in self-organizing teams and groups of teams that operate as a network; collecting feedback, developing insights, and arranging resources to achieve specific goals that address specific needs of the customer.

Organizations need to embrace the power of networks and run their departments as such. It was after all the customer centric focus that was realized through small self-organizing teams that paved the way for successful growth. The network coupled with a mix of agility and bureaucracy can capture the best of both worlds; keeping the overall mission and legitimacy of the organization while having the customer centric focus.