From my associate Grant Tate. More on the importance of understanding organizational structures.
Last week I watched the latest version of the World War I classic, “All Quiet on the Western Front,” a somber and depressive story. As you remember, each side lived in deep trenches facing each other across a vast wasteland. Once in a while, one of the forces would attack the other across the landscape, but the battle lines changed less than a few hundred yards over the primary years of the war.
Many business organizations seem like that, stuck in the old hierarchical paradigm—machine bureaucracies. Even small businesses, mainly if run by older men, seem to fall into the same rut as they grow. That rut may be OK if a company operates in a stable market. But how many markets are like that?
An organization’s structure and management system must be tuned to market dynamics. If the market is flat or growing slowly, pick your structure and stick to it. On the other hand, if the market is changing rapidly, the company needs flexibility and agility.
Visionary leaders and organization theorists have employed new organizational styles in fast-growing and entrepreneurial companies. Agile organization structures are the new wave.
Agile organizations have strong strategic awareness, the ability to sense the market changes and make appropriate adjustments to company direction and execution, a flexible leadership team that can lead the changes necessary to adapt to the market, and rescue flexibility—the ability to move human and financial resources to the new opportunities. From a structural viewpoint, such organizations are often a “team of teams—a more organic rather than mechanistic arrangement. But, of course, that means all team members must know how to perform in the team environment. And leaders must be highly skilled in team leadership.
McKinsey, in their article “The Five Trademarks of Agile Organizations,” identified these characteristics:
- A North Star embodied across the organization—a solid common purpose or driving force.
- A network of empowered teams. Empowered is the keyword here. Each unit has a clear objective and targeted results
- Rapid decision and learning cycles—a learning organization
- A dynamic people model that ignites passion. An agile organization puts people at its center.
- Next-generation enabling technology. Efficient and effective communication and coordination technologies are essential in such organizations. Jira and other such applications become essential to the implementation of these concepts.
Many leaders look at this model with skepticism. “Wait a minute,” they say. Parts of my company can’t work that way. Those parts need stability and effective processes.”
That reaction suggests a hybrid model, where customer-facing units, design teams, and innovative units employ the agile model, where support functions such as finance use the stable structure. Of course, knowing how to distinguish the dividing line is vital to the organization’s design.
The pandemic accelerated our thinking about new organizational schemes, Remote and hybrid arrangements have forced us to think differently about the allocation of work. In addition, new generations of people bring new ideas and new expectations.
We must get outside our old trenches of organizational thought and find new ways to help people work together joyfully and with accomplishment.