Organization rethinking

Rethinking organization 6 inputs

Rule # 1 Efficiency is the goal

The management model that predominates in most organizations has its roots in the early 20th century. At that time, management innovators were focused on the challenge of achieving efficiency at scale. Their solution was the bureaucratic organization, with its emphasis on standardization, specialization, hierarchy, conformance, and control. Source : http://www.managementexchange.com/blog/m-prize/management-20-challenge

Source The secrets to successful strategy execution. Harvard Business Review, June 2008. http://hbr.harvardbusiness.org/2008/06/the-secrets-to-successful-strategy-execution/ar/1 Most important for efficient strategy execution

Creativity Efficiency Creative company Bureaucratic company Innovative company Hierarchical company

Self control Market Few controlling layers Mature Bureaucracy Unmature Bureaucracy Many controlling layers High degree of controlling detail Low degree of controlling detail

Source : W. Richard Scott, 1981. Human relations Organization as a big family Organization as a machine Contingency view Organization as a living organism Organization as a loosely coupled network Social actors Rational actors Open system Closed system

Redefinition of rule # 1 What if creativity was the goal?

Source : http://www.managementexchange.com/hack/%22quests%22-organizing-principles A person, who is excited about an idea, tries it out.

Source : http://www.vijaygovindarajan.com/2009/08/innovation_in_a_reset_world.htm Efficiency Creativity

The successful organization of the future will have two
organizational structures:
A hierarchy.
A more teaming, egalitarian, and adaptive network.
Both are designed and purposive. While the hierarchy
is as important as it has always been for optimizing
Work, the network is where big change happens. It
allows a company to more easily spot big opportunities
and then change itself to grab them.
Source : John Kotter. http://blogs.hbr.org/kotter/2011/05/two-structures-one-organizatio.html

Rule # 2 Hiearchies are prescribed

Power for decision making is centralized at the top

Uncertainty avoidance Power distance France China

What about letting hierarchy develop naturally? Redefinition of rule # 2

In any Web forum there are some individuals who command more respect and attention than others - and have more influence as a consequence. Critically, though, these individuals haven’t been appointed by some superior authority. Instead, their clout reflects the freely given approbation of their peers. On the Web, authority trickles up, not down . Source http://blogs.wsj.com/management/2009/03/24/the-facebook-generation-vs-the-fortune-500/

Uncertainty avoidance Power distance UK, USA, Scandinavia

Number of management levels Rule of thumb Source : Mr. Lars Kolind. http://kolindkuren.dk/2008/11/03/v%C3%A6kst-i-krisetider-ledelse/#comment-166635 Maximum 3 management levels. Up to 2000 people Maximum 2 management levels. Up to 200 people 1 manager. Up to 20 persons Number of management levels Number of people

Rule # 3 Information flows vertically

In large organizations, resources get allocated top-down. Source : http://blogs.wsj.com/management/2009/03/24/the-facebook-generation-vs-the-fortune-500/

By commanding, assignments are coordinated fast.
By commanding, conflicts are ended fast.
Source : Malone, Thomas W.: The Future of Work, p. 53. Benefit of one-way communication: Time savings

What if information flows freely ? Redefinition of rule # 3

Source : ” Harnessing the power of informal employee networks, 2007.” The Mckinsey Quarterly, November 2007.

Source : http://www.realinnovation.com/content/c090209a.asp

Rule # 4 Centralization

Source : Malone, Thomas W.: The Future of Work, p. 53. Managers may become bottlenecks due to information overload.

Badly judged centralization can stifle initiative, constrain the ability to tailor products and services locally, and burden business divisions with high costs and poor service. Insufficient centralization can deny business units the economies of scale or coordinated strategies needed to win global customers or outperform rivals. The management dilemma Source : https://www.mckinseyquarterly.com/Organization/Strategic_Organization/To_centralize_or_not_to_centralize_2815

If you answer no to all 3 questions, do not centralize Source : https://www.mckinseyquarterly.com/Organization/Strategic_Organization/To_centralize_or_not_to_centralize_2815

Redefinition of rule # 4 What if people took as many decisions as possible themselves?

At Haier, each unit regards itself, and is evaluated, as an independent business earning a profit or loss. Managers are there only to make sure that the [self managed] units get what they need. If managers do not help the self managed units well, people can vote managers out. Source Zhang Ruimin. http://management.fortune.cnn.com/2011/07/15/zhang-ruimin-managements-next-icon/

Today, the average manager in Google’s product-development group has more than 50 direct reports, and for some leaders the number tops 100 . Source : Hamel, Gary: The Future of Management, p. 111.

# 1: Purpose What is meaningful. # 2: Mastery The urge to get better. # 3: Autonomy The desire to be self directed. 3 factors lead to better performance and personal satisfaction: Source : Daniel Pink. http://www.youtube.com/watch?v=u6XAPnuFjJc

Hierarchies Markets

Many changes Few changes Many and powerful stakeholders Few and weak stakeholders

Source : W. Richard Scott, 1981. Human relations Organization as a big family Organization as a machine Contingency view Organization as a living organism Organization as a loosely coupled network Social actors Rational actors Open system Closed system

” What if many tasks currently done by large companies were done instead by temporary combinations of small companies and independent contractors? Taking this idea further, what if most businesses consisted of one single person?” Source : Malone, Thomas W.: ”The Future of Work”, p. 74.

Strengths of markets
Efficiency People move to assignments where they generate value for others.
Flexibility Anyone can work on any aspect of the problem.
Motivation High autonomy to decide things individually make people work hard.
Source : Malone, Thomas W.: The Future of Work, p. 106.

Rule # 5 Specialization

Each worker does specialized operational assignments

In a sense, the crowning accomplishment of the hierarchy and its management processes is the enterprise on autopilot , everyone ideally situated as a cog whirring on a steady, unthinking and predictable machine. Source : John Kotter. http://blogs.hbr.org/kotter/2011/05/two-structures-one-organizatio.html

Source : http://www.janbosch.com/Jan_Bosch/Presentations_files/ESA2010-Keynote.pdf Someone else’s job

Specialized work becomes routine .

Source : http://www.realinnovation.com/content/c090209a.asp

Source : http:// www.pixelio.de/details.php?image_id =316694&mode=search

Specialization prevents people from doing more jobs which could create more value. Source : Malone, Thomas W.: The Future of Work, p. 53.

” The old organizations are breaking down, because if everybody is doing a well-defined task and job requirements change, people do not know what to do anymore – nor do their bosses. And today’s fast-moving, competitive markets will not let you hide this kind of ignorance inside your organization.” Source : Abell, Derek F.: Managing With Dual Strategies, p. 129.

Source : http://www.youtube.com/watch?v=UKl1pjhQJaI

What if every person worked on many different things that they find meaningful? Redefinition of rule # 5

Source : Tom Malone. http://blogs.hbr.org/video/2011/07/the-future-of-work-20.html

# 1: Purpose What is meaningful. # 2: Mastery The urge to get better. # 3: Autonomy The desire to be self directed. 3 factors lead to better performance and personal satisfaction: Source Daniel Pink. http://www.youtube.com/watch?v=u6XAPnuFjJc

Tasks are chosen, not assigned The Web is an opt-in economy. Whether contributing to a blog, working on an open source project, or sharing advice in a forum, people choose to work on the things that interest them. Everyone is an independent contractor, and everyone scratches their own itch. Source Gary Hamel. http://blogs.wsj.com/management/2009/03/24/the-facebook-generation-vs-the-fortune-500/

Rule # 6 Standardization

Structures and processes are VERY important

Task Process Structure

Structures, processes, plans, budgets, templates, guidelines, and rules uphold standardization

Command and control management establish and keep regularity and predictability in operational work

Redefinition of rule # 6 What if products and services were individualized / personalized to create more value for the individual customer?

Organization rethinking

by Frank Calberg Services on Aug 29, 2011

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Organization rethinking — Presentation Transcript