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Redrawing Org Charts; Rethinking Organizational Boundaries: Opportunities for Organizational Design in Today’s Virtual Workplace
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Redrawing Org Charts; Rethinking Organizational Boundaries: Opportunities for Organizational Design in Today’s Virtual Workplace

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This white paper is about “virtual organizations”; why they are an emerging trend, what this means for organizations and their personnel, and how Organimi can help successfully bridge some of the gaps …

This white paper is about “virtual organizations”; why they are an emerging trend, what this means for organizations and their personnel, and how Organimi can help successfully bridge some of the gaps and challenges we see organizations facing in managing this transition to “virtual”.

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  • 1. Virtual organization is to the advanced enterprise of today what division of labour was to the mill and factory of the early industrial revolution… As in Adam Smith’s day, a new principle of organization is transforming the market economy, and re-shaping social institutions in the process. Innovations in computer and communications technology have made virtual organization practicable… The economic advantages to be reaped by adhering to these principles assure their eventual dominance over traditional management ideas… As virtual organizations take hold, life as we know it will be utterly changed. — Abbe Moshowitz Virtual Organizations (2002) These words, written a decade ago, came late in Professor Moshowitz’s career. He had already spent over 30 years reflecting on how organizations work, evolve, and impact on society around them. What was interesting to us about his research1 was not just the depth of his study of the relationship between technology innovation and organizational evolution, but the impact of this relationship as a leading agent of change, transforming our societies. Readers who have teens texting on smartphones will relate! This white paper is about “virtual organizations”; why they are an emerging trend, what this means for organizations and their personnel, and how Organimi can help successfully bridge some of the gaps and challenges we see organizations facing in managing this transition to “virtual”. Redrawing Org Charts; Rethinking Organizational Boundaries: Opportunities for Organizational Design in Today’s Virtual Workplace White Paper Series Organimi Inc. © 2012-­2013. All rights reserved.www.organimi.com
  • 2. The Challenges of Being Virtual. Are You Ready for Them? Is the way your organization “works” changing, compared with even a few years ago? Is your company using or experimenting with Twitter, LinkedIn, Salesforce.com, GoToMeeting, Google Apps or other cloud based services? Do you have a mixture of full and part time employees, contractors, consultants and temps all trying to work together? Does your firm have challenges around employee engagement and workplace morale? Are concerns about “productivity”, “efficiency” and “cost reduction” at the top of the list in weekly management meetings? If you answered “yes” to these questions, we believe Organimi may be able to help. A Continuum of Organizational Evolution: From “U” to “M” to “V” Do you think of “virtual organization” as a type of firm, or as a way of working? We think “both”. How firms are organized, and how they operate, have both changed significantly since 2000. In the 19th century, the unitary organizational model (or “U model”) prevailed. Businesses were single product, and often single location, in focus. Their organizational models emphasized functional competencies, such as sales, production, and finance. Those that expanded were focused on maximizing profit by achieving “economies of scale”. It was during this period that organigrams – or organizational charts -- first emerged. Org charts were a by-product of railroads – one of the great innovations of the 19th century incidentally – and their need to organize geographically dispersed US operations. Org charts were paper based, and “low tech” by modern standards. But they were effective in organizing operations and helping firms achieve larger scale. Technology innovations applied to business such as these also resulted in significant social transformation. Think of mail order catalogues and standard time, for example. In the 20th century, as organizations increased in size, scale and complexity, the multi-divisional model (or “M model”) was popularized at organizations like Dupont under Pierre Dupont and General Motors under Alfred Sloan Jr. -- considered by many to be pioneers of the modern industrial organization. This organizational innovation involved substituting autonomous operating divisions or business units within the firm, organized mainly along product, brand, or geographic lines, and each with their own functional competencies. Global consumer products companies like Procter & Gamble, Johnson & Johnson, and Kraft, and industrial giants like General Electric, 3M and Ford, are all products of this era of multi-divisional organization. This evolution was made possible in part by the separation of managerial expertise (the “act of managing”) from operational execution (the “act of doing”). Large organizations also found it desirable, in the interests of business expansion, profitability, and innovation, to diversify into new business areas and across new regions of the globe in the pursuit of profit. 2 Organimi Inc. © 2012-­2013. All rights reserved.www.organimi.com Organimi White Paper Series
  • 3. We have all experienced the significant resulting growth in global economic expansion and integration across industries, countries and entire regions of the globe. The corresponding social transformation has also been significant. In the same way, the 21st century is witnessing a new form of organizational architecture – the “virtual” organization, or the “V model”. Since 2000 we have seen that this model has already successfully competed with traditional large-scale businesses, disrupting marketplaces and driving some traditional players out of business. It has even begun displacing traditional M model architectures within multinational companies themselves, in the same way these displaced and superseded the earlier U forms. “Business process outsourcing”, “offshoring”, “nearshoring”, “centers of excellence”, “partner ecosystems” -- the modern business lexicon is full of the jargon describing the many faces of the “virtual organization” architecture. Leading the way to the “V model” in a variety of industries are companies that were considered “pesky start-ups” or “fads” only a short while ago. Companies such as Google, Amazon, Facebook are now some of the most influential brands on the planet. Today’s start-ups could become the Google or Facebook a decade from now as the “V model” frees them from the geographical constraints of the previous model. They can hire or engage the best people available anywhere in the freelance economy to achieve their business objective, not just the best people that happen to live where their office is located. They can reach a global audience of buyers, quickly and cost effectively, at a fraction of past costs, aided by technology. They can construct and effectively manage complex global supply chains using the same virtual tools for connectivity, communication and collaboration. Books as diverse as The World is Flat, Collapse and Wikinomics speak to the social, economic and technology transformations under way.“Virtual” has become its own meme in areas as diverse as virtual reality, virtual memory, virtual teams, virtual offices, and “virtual economy”. But we feel that not enough attention is being paid to thinking about what virtual organizational architectures will mean for organizational design, and for all of the people working in and around them. Since so many of us define our value at least in part by what we do at work, and since our most significant relationships outside the home are those who we work with, this seems to us to be an important question. An entire industry of “cloud based” services providers have now emerged to challenge traditional technology providers, and disrupt traditional business models, in law, in accounting, in manufacturing, in marketing, in education, health and many other manufacturing and services industries. The virtual organizations we see today, made possible by the significant changes in transportation, computing and communications technologies, are fundamentally changing the way firms organize and operate. 3 Organimi Inc. © 2012-­2013. All rights reserved.www.organimi.com Organimi White Paper Series
  • 4. What are Yael Zofi, in A Manager’s Guide To Virtual Teams, has written a very helpful guidei for business managers who want to become more effective managers of their far-flung teams. In her book, she describes best practises for organizations to follow that deal with key issues of managing virtual teams – such as trust, conflict management, communication, and accountability for deliverables. Her book speaks to the emerging paradigm of virtual organziations, and the new kinds of social issues it creates for teams working “virtually”. Yael’s interests are inherently social, and focused primarily on interpersonal and behavioral factors. She deals with the human aspect of the virtual workplace. She defines virtual teams to mean those where two or more individuals are working together remotely. We have all experienced that. More of us are now experiencing it more often. And working with more than one organization at the same time. Moshowitz, an academic who thought deeply for 40 years about the underlying social, political, economic, technical and philosophical implications of this transition. In his book, Virtual Organizations, Moshowitz, described the essence of “virtualness” as the separation of means (managerial planning) and ends (production implementation and execution). He noted the increasing ability of global organizations to “switch” across any number of different internal and external methods, aided by technology, to achieve their objectives. Moshowitz saw virtualness as the capability of an organization to consistently obtain and coordinate critical competencies through its design of value- adding business processes and its governance of internal and external constituencies to deliver differential, superior value in the market place. Moshowitz saw emerging over the past 30 years, the trend that we are experiencing now, over a decade later, as a commonplace phenomenon. But what do we notice, and what does this tell us? The first thing we know is that this trend is pervasive - organizations and organizational structures are changing everywhere around the globe, whether in the private sector, in government, in education, or in not for profit domains. We can see this simply by the way people work in them and interact with them. Take the increasing delivery of government and educational services on line for example. Where is the evidence? It is no surprise that the organizations that were “closest” to the technology and communications revolution were first in, and remain “all in” on promoting the virtual organization archetype. These include organizations offering virtual goods (Microsoft’s software), virtual services (Google’s search results), or virtual access to physical goods (Amazon) or physical services (Expedia’s flights and hotel rooms). However these innovations have also given rise to new innovations across the entire industrial landscape, from transportation through logistics to retailing to media to medicine to government and education. With “telecommuting”, “business process outsourcing”, “managed services” and the “cloud” entering daily use, these innovations, and this overwhelming sense of “always on, connectedness” is now firmly entrenched. Being “plugged in” from wherever we are is an entrenched part of our workplace reality. The second thing we know is that this change is inevitable. It is a self-reinforcing and amplifying trend, feeding on the underlying business imperatives and technology drivers that enabled it in the first place. It is yet another of the many examples of the “network effect” at work – a concept coined by Theodore Vail, the President of Bell at the turn of the 20th century, and popularized more recently by Robert Metcalfe, one of the pioneers of the Internet, as Metcalfe’s Law. The network effect is based on the positive, mutually reinforcing relationship between a product or service and its usage. The telephone, the fax machine, the Internet itself, the smartphone, are all examples. This network now applies to virtual organizations themselves and their expansion. What we see now is an entirely broader and deeper transformation under way, where more and more organizations are connecting virtually, and creating virtual ecosystems, with employees, suppliers, contractors, and customers. Virtual Organizations anyways? 4 Organimi Inc. © 2012-­2013. All rights reserved.www.organimi.com Organimi White Paper Series
  • 5. Why are Organizations Going Virtual? This trend is global… but why is it happening? Most people associate it with corporations and their insatiable quest for ever greater productivity and profits. In reality, it may be the case that the driver is more primitive: it could be that organizational survival is what makes this trend something that will not go away. To survive and thrive organizations need to eliminate friction and cost elements in all aspects of their operations. We may not care in big picture terms about the survival of old style organizations….but we all know what happens if our employer goes down, and it is something in general we like to avoid. “better resource utilization, superior products and services strengthened managerial control over means and ends lower costs across the board, with reduced marketing & sales, production and administrative costsii Being “virtual” is now “virtuous” for organizations because it provides a superior economic model for them to achieve efficiency, productivity and, ultimately, profit. • cash balances at record highs; • organizations are not investing • growth rates in many sectors are slow; with intense competition • profit maximization is driven primarily by • extracting cost. • OECD organizations leveraging “process outsourcing”. • emerging market organizations mirroring best of western models and even leapfrogging them. Going virtual means: • ageing workforces with many extending their planned retirement age. • ambitious young workers trying to enter the workforce with advanced tech skills. • significant debt loads and unemployment, despite skills mismatches and demographics. • “Road warriors”, “Office hotels” and “Telecommuting” are commonplace. • increasing skills gaps are forcing creativitiy for solutions. • declining internal engagement and trust levels across organizations • commuting times to work getting ever longer. • cloud based services and utilities with always on accessibility • time compressed and budget constrained IT organizations • rapid expansion in untethered mobile devices as wireless goes supernova • bring your own device works for you and the company • social media meets business = social business applications Organizations are adjusting to an entirely new business climate Workforces are changing like never betore Technology is relentlessly connecting everyone and breaking down barriers of all kinds AREA EXAMPLE 5 Organimi Inc. © 2012-­2013. All rights reserved.www.organimi.com Organimi White Paper Series
  • 6. Cyberstats and Infographics: What does this all add up to? $66 Putting this all in perspective, disparate statistics can paint a picture of challenges at work, and a transformation already well under way: trillion of net worth was lost in the US from 2007 to 2009, adding up to a whole lot of cancelled retirement parties. Even as markets rebound, those losses are large and permanent for many. People are working longer because they have to. Older workers have unique needs and challenges for organizational engagement. Moving in the opposite direction, 76M Boomers will leave US workforce over the next 20 years, taking their experience and skills out of their employers in the process. How will those experiences and skills be captured and replaced, or continue to be valued and accessible? With only 46 million GenXers in the workforce, and constrained immigration environments in slow growth economies, employers will be hunting for talent and moving Millenials up into roles that they may not be well equipped for. 1.5 – 2 hrs is the average commute time today in North America. That translates to a whole lot of weeks spent on the road – usually in grinding, soul sucking rush hour traffic. Governments are fiscally challenged everywhere, meaning that even priority investments in public transit, roads and infrastructure are hard to fund. 50% of employees are satisfied with their bosses, down from 70% 20 years ago. Not surprisingly, perhaps, given that real disposable income for many in the workforce has been flat for the past decade; as have stock market returns. Only half of employees feel they know their colleagues, compared to almost 70% in the 1990s. 30% of the US workforce is now contingent, part-time, contract based, largely motivated by the drive to move compensation from a fixed to variable component of organizations’ financial obligations as a result of the economic turbulence of the past 5 years. Cloud based solutions have grown from $0 to a $10s of billions + industry in the past decade, with specialization now emerging in data, applications, platforms and infrastructure, as well as entirely new ecosystems of value adding, mostly virtual services. >6billion mobile devices as of the end of 2011, almost one for every person on the planet. You can try and tease from these and any number of other statistics insights on where organizations are heading, and where this means their people are inevitably going. Or, you can simply ask straight forward questions. We think the important first question, is to ask “how people are doing” in this fast changing work environment. In a recent report by respected employment industry consulting firm Tower Watson, “employee engagement” was explored in some detail. The report noted that engaged employees reported high levels of job satisfaction — they are satisfied with their work levels, they do not report feeling stressed or overloaded, they understand the organization’s goals and are proud of the organization they work for and believe that it shows honesty and integrity. Unfortunately, the vast majority of workers reported being not engaged at work. These findings went on to highlight that employees who lack that emotional, cognitive, and physical connection with their organization report negative feelings toward their position and organization. 41% of respondents indicated that to further their career they would need to leave their current employer. Less than 50% feel their leaders display sincere interest in them. 6 Organimi Inc. © 2012-­2013. All rights reserved.www.organimi.com Organimi White Paper Series
  • 7. What Does All This Mean for For executives, for team leaders, and for individuals there is clearly room for improvement in engagement and outcomes in the typical workplace. If it is true, as we assert, that virtual organizations are “here to stay” and will become a more pervasive part of our every day lives, and our work day worlds, what does all this mean? How do these trends and “engagement” come together? How do we close the circle, enhancing engagement across a diverse workforce in an increasingly virtual workspace? How can we help? We also believe that this transformation will require them to equip their people – their human capital – their full time, part time, contract, consulting and other staffers - for this journey with the tools they need to not only survive but thrive in this transformed work environment. Just as in the days of railroads, when the paper based “org chart” first appeared, we think that new organizational modeling capabilities are needed to support new business models and our increasingly virtual relationships in a more fluid organizational environment at work. For us, this involves re-imagining the lowly “org chart”. And delivering a robust platform for organizational modeling specifically designed for the increasingly virtual organization, and the people interacting with it. So that is what we have chosen to do, and where we at Organimi have chosen to start. Organizational Design? At Organimi we believe we are entering an exciting new period of organizational transformation that will alter the way successful firms organize and align their resources and personnel, and integrate them with their broader “virtual fabric” of suppliers, partners and customers. 7 Organimi Inc. © 2012-­2013. All rights reserved.www.organimi.com Organimi White Paper Series
  • 8. Where Does Organimi Fit in All This? Horowitz, after many years of study, came to some fairly pessimistic conclusions about where technology was taking organizations (and people). His dystopia wasn’t quite Marx, or Blade Runner, or The Matrix, but it was a fairly bleak picture. He saw what amounts to a “reversion to the mean” big-time with a feudal system of power centers created by and servicing large organizations with a decentralized, commoditized, marginalized population of worker peasants…that would be all of us. At Organimi we don’t accept that vision as inevitable. But we also aren’t complacent about where things are heading, either. As we mentioned at the outset, the “org chart” has been a tool for business planning and operational execution for over 150 years. For most of us, it has been a piece of paper, or possibly a link on an Intranet, largely out of date, and seldom used. We think that needs to change, and that organizations, and the people who work in and for them, will expect more, as the “V” organizational model comes to the fore. In the days of the traditional U or M type organization, the org chart wasn’t much thought of, or missed. It was mostly an HR tool. People worked in one organization for much of their career, mobility was limited for most of them, and, at the end of the day, for the most part they worked with people close to them in the same physical space. Work engagement “just happened”. Those days are gone. And we’re working at Organimi to bring people together, in meaningful ways, within the context of the dynamic and rapidly evolving organizational structures they work and live in. Nowadays, people move regularly, may have multiple positions and roles, and may work providing products or services to or for several different organizations, at the same time. Organizations themselves are undergoing business transformations, divestments, and other changes, on an almost continuous basis. For organizations to work effectively in this dynamic environment, we need to make a better transition than we are making. People need to be re-engaged, where they are working today; remotely, online, and often separated by time and space from their co-workers. 8 Organimi Inc. © 2012-­2013. All rights reserved.www.organimi.com Organimi White Paper Series
  • 9. What Does Organimi Do? In a business environment where the organizational and technology imperatives promote further division of labour and distance between people in the workplace, it becomes more important to create more effective, supportive, nurturing and mutually reinforcing relationships. Organimi makes this possible by leveraging the best of the technology trends, while bringing back the human face to the increasingly virtual workspace. We hope you will see that what we are trying to do is take advantage of these great technology changes – the cloud, mobile computing, and social networking tools – and create a more meaningful experience for people who work together to collaborate, online, in their workspaces… starting with better org chart. Is your organization becoming more virtual ? Do you find that you don’t know all your work colleagues as well as you would like to know them? Do you wish there was an easier way to find out what everyone does at your organization ? If so, we invite you to try Organimi. Set up your organization model in Organimi and share it with the rest of your team. If you’re being virtual from the get go, you will have a complicated team structure. Now you need a way for everyone to know each other and connect, collaborate, and communicate virtually. That’s what we do. The accessible anywhere Organimi platform for org charts and photoboards. Connects and engages your team. Convenience o Accessibility, from any device o Flexibility, use from any location o Scalability, up to any size of organization Cost Savings o Low cost deployment o Funded from opex not capex o No long budgetary approval cycles o Efficient use of internal resources Agility o Fast set up o Engaging user experience o No training or ongoing support required Some of the benefits of the Organimi cloud based platform: 9 Organimi Inc. © 2012-­2013. All rights reserved.www.organimi.com Organimi White Paper Series
  • 10. Accelerator Center 295 Hagey Boulevard Waterloo, Ontario N2L6R5 i Yael Zofi, A Manager’s Guide to Virtual Teams (Wiley, 2011) ii Reduced to their lowest common denominators of members, relations, activities and resources, Horowitz saw clear evidence not only of the changing structure of organizations, but of the primary role of technology in driving this transformation. As one commentator has noted: organizations are following systematic switching programs, whether for inputs, suppliers, production, distribution or personnel, to lower costs and increase profits. Organizational innovation now identifies the needs of production independently of the ways they can be met. This evolution, which would not have been possible without advanced information technology systems, for shifting production facilities or switching suppliers. email us info@organimi.com call us 1-877-799-2955 visit us www.organimi.com follow us @Organimi Contact us to learn more or get a free trial. Plug and play with your existing applications and services. DEVELOPMENT ENVIRONMENT API: Public API Admin: Admin website - internal Backend: Internal Data API Backend-Client: Helper Lib for backend Website: User Inface for Desktop STAGING / DEVELOPMENT SERVER (same configuration as production) PRODUCTION SERVER (name: “mongo”, type: “DB”) ORM Generated Layer ORM Extended with Organimi Business Rules BACKEND ADMIN SITE SERVER Backend Client DESKTOP UI SERVER Backend Client PUBLIC API Backend Client ADMIN UI DESKTOP UI MOBILE UI Supported browsers include: white paper designed by studio-noon.com Organimi Inc. © 2012-­2013. All rights reserved.www.organimi.com 10Organimi White Paper Series