Built for Speed

July 11, 2011
Searching for the right corporate model, companies are flattening structures and increasing autonomy.

Diversification versus core business. Hierarchy versus matrix. If the last few decades of the previous century resembled a game of musical chairs in regard to organizational structure, companies today are putting less emphasis on grand realignments and more on shaping companies that can flourish in a fast-changing business environment.

Companies are flattening their hierarchies and decentralizing because they understand that "to be fluid is to better," says Don Mroz, director of Post University's MBA program. "A lot of the larger organizations are trying to mimic the smaller guys who can move so much quicker."

The value of moving quickly in a complex world was underscored by a study conducted last year by the IBM Institute for Business Value. The study, "A New Way of Working: Insights from Global Leaders," states that industry leaders will be organizations that are "agile enough to adapt rapidly as, not after, situations change." Hampering agility, the study found, were three "capability gaps":

Process and skill reconfiguration -- Business processes must "have enough intelligence built in to sense when conditions are changing, analyze alternatives and help workers alter course." The study points out the advantages to a manufacturer if it can detect supply interruptions and have systems that "automatically identify alternative providers in other parts of the world. ..."

Broader and more embedded collaboration -- Many companies do a reasonably good job at internal collaboration, the study found, but fail to facilitate sufficient external collaboration or embed collaborative practices into normal work processes.

Integrated, real-time information for decision making -- Information in many organizations can be overwhelming and promises to keep growing, the study noted, as "processes and systems -- both natural and man-made -- become increasingly instrumented with billions of sensors and smart devices at work." That increases the need for a strategy that makes sense of it and delivers information to people in a context they can easily use.

New demands on companies also are impacting job roles. At the senior level, Mroz points to the growth of titles such as chief networking officer and chief innovation officer. The changes are not only in the C-suite. Mroz says companies are also giving midlevel managers more decision-making latitude. "We need to be closer to the customer," he points out. "How can you do that in a centralized organization?"

See Also:
The Four Reasons That Companies Fail

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