Leaders are spending more time and energy figuring out the best way to organize their companies to compete and win. According to a 2016 Bain study, 85% of executives said that internal obstacles, not external ones, keep their companies from growing proﬁtably. In many ways, the problem makes sense – the roots and logic that underpin our organizations date back generations, to mechanical models designed to drive scale and efficiency. Doing today’s work more efficiently and cost effectively at scale remains critical. But how do we simultaneously build and adapt new organizational forms that enable us to compete and win in the face of disruptive technologies, growing customer power, and hypercompetition?
To date, the fix has been the matrix, something we’ve all accepted and learned. But is extending and mastering the matrix really the answer to building in the speed, customer centricity, creativity and experimentation that’s now required? Or, have we stretched the limits of our current organizational models?
Consider the following: organizational network expert Rob Cross points out that the time workers spend in collaborative activities to accomplish their work has ballooned by 50% in the last decade (HBR 2016). And his research – done across more than 300 organizations – shows distribution of this cross-boundary collaborative work is often extremely lopsided. In most cases, up to 35% of revenue-producing, value-added collaborations come from just 5% of employees. Do we have the tools to know who and where these valuable contributors are and make sure they aren’t overloaded?
A cross-organizational study by John Seely Brown found that managers and employees were spending as much as 60% of their time on ‘exceptions’ not anticipated by established processes. As Brown points out, processes rule when environments are stable. But when organizations are confronted with rapidly changing circumstances and emergent opportunities, people improvise. While seductive, the idea of reengineering current processes to meet the new complexity probably isn’t the answer. A recent report put out by the Bersin group highlighted that Cisco studied its organizational structure and found that the company already had more than 20,000 teams, with many people sitting on multiple teams at the same time. This is the new norm.
The collaborative intensity of how work is done continues to grow. As does our need to get closer to our customers, move knowledge to enable breakthrough results, and make faster decisions to capture value in shorter cycles. In response, we continue to stretch the matrix and make greater use of cross-boundary teams. While our organizations are morphing before our eyes, our performance and reward systems, decision frameworks and the concepts of organizational design, such as hierarchy, layers, and span-of-control, are still geared to the formal organization structure – functions and geographies.
I worked with Rob Cross recently at a large, global manufacturing company with a rich history. The experience reminded me of the power leaders can derive by taking a fresh look at their organization through a different lens. Looking at the organization through an organization network analysis can help illuminate how work gets done; identify decision bottlenecks; highlight less visible boundary spanners; and unmask the knowledge brokers that are key to innovation. It can also unearth points of collaborative imbalance and overload.
As leaders, we are well aware of the market challenges and, as the Bain study points out, that internal obstacles are becoming serious constraints. But getting data and seeing the organization through new lenses – networks rather than hierarchy, connections instead of layers, and span-of-influence rather than control – is one way to help us better understand the obstacles and their impact.
We need new ways of thinking about organizing people and mobilizing resources to compete and succeed. The notion of networks isn’t the whole picture, but it is a useful part of how we might begin to reconceive of and design our organizations for what’s next.
Michael Canning is global head of new businesses at Duke Corporate Education.