Fall of the hierarchy. Who really rules in your company?

Today’s hierarchical business management models require major changes or at least some degree of tweaking. After all, we are facing a market whose ground rules are created by innovative organizations that promote a new approach to both clients and employees.

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Norbert Biedrzycki hierarchy organizational networks

 

Accept that people are key

The companies that succeed in the global marketplace tend to operate on the assumption that the services demanded by today’s clients need to be as personalized as possible and that truly valuable employees will not necessarily trust artificially-developed corporate value systems. Such employees will contest such values just as they will established procedures (often for a good reason). As we contemplate the changes we wish to make to streamline operations, we should place particular emphasis on relations among the workers. The culture of start-ups, which are small businesses geared to creating innovative products, centers on selecting the right business partners and workers. Start-ups commonly believe that their success depends on the people. And if the people in an organization have been poorly selected, even the best idea is doomed to flop. Today, this approach inspires both managers and recruiters in top organizations.

 

Find true bonds in an organization

The managers and recruiters are the ones who need to answer the question that in fact everyone who believes in effective changes in business organizations should ask themselves: What brings people together? How do some people become opinion makers for others? How to spot natural team leaders? What sources do employees go to for information and which sources do they ignore? One question seems to sum up all the others: what true bonds hold together the structure of a well-working organization?

Even if such questions sound overly general, recent studies find that it is not the questions that are wrong but rather the answers to them. How does one explain that the Fortune 500 companies lose at least US$ 31.5 billion annually due to poor knowledge flows among their workers.

 

Noticing the deficiencies of hierarchies

Large organization systems established before the digital age have always relied on a simple model of corporate efficiency. Some of their core values focus on combating the competition, pursuing maximum profit and managing the company by objectives from the top down. Such classic priorities are commonly underpinned by rigid managerial hierarchies. Power concentrates in the hands of team leaders. Other team members operate at a single hierarchy level. They are convinced that only a small handful of executives can affect the company and the way everyone else does their jobs. A survey of managers in a typical company that employs this model would readily suggest the need to flatten tall structures and inspire collaboration across functional boundaries. It would also be likely to show that a stiff hierarchy stands in the way of exchanging information and transferring knowledge. Top-down information flows have only one source (the management) which draws all the wrong conclusions from the data streams generated below. Distortions in information flows result from the company diverging from original precepts in its operation.

 

Noticing the networks

Will the above observations, which are increasingly more obvious for any manager, suffice to truly overhaul an organization in an innovative manner? Probably not. After all, the root causes of problems are somewhat more complex. Still, realizing the problems is a major step in the right direction. Consider the status quo referred to at the outset of this article. Today’s management theoreticians posit that large organizations have a formal order (created by its authors) and a hidden (actual) one built in parallel by the workers. The actual order is all about interpersonal relations, authorities and leaders, acquiring information, resolving problems, setting goals and finding ways to succeed. As a consequence, a large proportion of work and collaboration takes place outside of the formal structures. It is these informal relationships and processes that become the actual bond that drives a company to succeed. The workers and managers use their experience to develop their own ways to communicate and make key decisions. In reality, we are seeing an organizational network which is none other than a structure of actual relationships established among the workers. Across the “hard” formal line structures run stronger (although hidden) ones which create more or less durable networks. The “linchpins” in these networks are the actual architects of corporate success. Viewed in this manner, the formal organization chart gives way to collaboration networks in which the workers are the builders of their own unique ways of going about their business. And theirs are often the most adequate responses to the market and the challenges posed by the competition. Such responses are in fact critical for the survival of the conservative organization.

 

Use the knowledge to change

If we agree that the above model describes the actual state of affairs, we will provide the manager with powerful information. The realization will of course lead to further questions. For instance, to what extent should such “spontaneous” links among the workers be allowed to flourish? How to organize “from scratch”, around a prescribed objective, a community of individuals who rely on their own experience at work?

Without a doubt, by appropriately examining the actual relations in a company and honestly answering the above questions, an organization will be enabled to succeed in devising an innovative structure. A fair analysis of the network will release the knowledge once locked in the company and help promote new actual leaders who already play a key (albeit informal) role in existing teams. Finally, the whole process may propel employees to become more engaged and the organization to become more flexible. After all, it is the organization that is the greatest value in today’s market.

 

The future of organizations

It is high time for organization managers to admit that their knowledge of their organizations may well be incomplete. Organizational models rely on networks of links outside the formal structures. Such networks have their decision-making hubs, their interest groups and knowledge centers. In managing companies, I often encounter all of the above. Is that wrong? Not really, that is simply the way things are. Organization theory and diagnostics increasingly seek to explore such ad hoc relationships. I firmly believe that the role of an organization’s leader is to build the kinds of environments for its workers that will support them in bringing to life projects, ideas and strategic initiatives within the framework of the natural links that evolve among them. Many multidisciplinary teams have been much more successful than homogenous groups within specific departments. Organizations managed from the network perspectives are the future. They are simply more effective. Google has discovered that long ago.

 

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13 comments

  1. John Accural

    I always imagined a future where humans would work side-by-side with androids. Occasionally one of my android coworkers would come to me and say, “Hey, I got this birthday card. Can you tell me what it’s a picture of?” and I would say, “It’s a cartoon doggy wearing a birthday hat.” and the android would say. “Cool, thanks. Does it look happy?” And I would say, “Yeah, pretty happy.”
    And thus I would prove my continuing usefulness in a world run by machines.

    I may need to rethink my vision of the future 🙂 Nuts, it’s scarry

  2. TommyG

    A matrix organizational structure is one of the most complicated reporting structures a company can implement. Modern companies should be organized along the projects

    • Norbert Biedrzycki  

      Thank you. This is what I believe modern organizations should focus on going forward. Most efficient organizations (Google, Zeta) are already there

  3. johnbuzz3

    Hierarchical organizations are usually “expanding” fast by buying others, whereby short-time profit is preferred to sustainability, renewability, creativity and innovation! Collaborative organization cannot be stopped and will lead to a new way of working and collaborating where profit and greed will have been put to rest in order to unleash the full potential organization

  4. TomK

    Google might be a row model here. As a project/ initiative related organization they excell here

  5. TomCat

    If you really want transformation it has to come from the inside-out. This can only been done by living the change. This is the transformation process of organization, processes, people. Deep transformation starts at the top, not with the whole organization. What I see that change plan is first sold to management and then, immediately, rolled out in the organization. But this is very difficult

    • Norbert Biedrzycki  

      Change management is one of the most important skill nowadays. Correct the process is very difficult but reward might be huge as well. Organizations tend to be more flexible and tend to adopt to the changes much faster than previously

      • Adam T

        Do we need a humans to manage other humans? AIs will begin to sense and use all our five senses. The sense of touch, smell, and hearing will become prominent in the use of AI. It will begin to process all that additional incremental information. Start to manage people by the machines. Do we need any of organizational structures for that?

        • Norbert Biedrzycki  

          To set a goals, overall direction – yes

        • JohnE3

          But what about machines becoming as creative as us humans? Right now this sounds like science fiction but rememeber what we thought of machines 5 years ago comparing to recent development