Why Companies Need to Rethink Organisational Structure
Article published on the Malta Business Weekly – 9th April 2015
Fifty years ago the editor of Fortune magazine, William Whyte, authored a book titled ‘The Organisation Man’ that defined the nature of corporate life for a generation. The book described how America, whose people, he said, had “led in the public worship of individualism,” had recently turned into a nation of employees.
Foremost among the entities that Whyte had in mind was the corporation, which he thought [assumed?] rewarded long service, obedience and loyalty quite as faithfully as did any monastery or a feudal army.
Half a century on, the organisation man is practically an extinct breed.
The archetypical ‘organisation man’ and the company that used to be most closely identified with the ‘corporate’ ethos was undoubtedly IBM. For many years its managers wore only business, dark-blue suits, white shirts and dark ties, symbols of their lifetime allegiance to ‘Big Blue’.
Many of our organisations today are built to blue prints that hark back to the 1980s and even in some cases to the days of Henry Ford.
Some of these organisational structures stubbornly stick to almost military hierarchies and chains of command and fundamentally hobble the creativity and intellectual capital within the organisation to such an extent that there are huge chunks of the workforce that live by the clock, popularly known as the ‘9-to-5 syndrome,’ with an almost drone-like sense of being. Thankfully as the inevitable generational change in leaders takes place, some organisations are becoming more chameleon-like and are responding to their changing environment.
“Responding” is perhaps the most significant word in that last sentence. It has connotations of a knee-jerk reaction which all too frequently is the case – organisations try to respond to an outside or existential threat, rather than for what should be the real reason: seizing the opportunity unleashed by new technology and access to new markets and customers.
During the last 25 years working in the ICT industry, I have observed venerable and seemingly-indestructible organisations laid low or even disappear (picture Arthur Andersen & Co, DEC, Compaq to mention but a few) and new nimble disruptive start-ups – such as Microsoft, Yahoo!, Apple, Google, Facebook, Amazon and LinkedIn that morphed into the new giants and captains of industry.
Even some of these technology superstars have in their turn started to experience near-death experiences – it took Microsoft a radical shift in leadership and vision to remain relevant in today’s world and even Facebook runs the risk of losing out as the younger ‘Millennial’ generations’ take-up of it, grows less and less. Yahoo! may have stabilised but the lustre it once had is unlikely to ever return.
So what is fundamentally wrong with these organisations – is there a natural life cycle to every organisation whatever the industry they are in?
The answer is probably yes, as an organisation matures – with its internal leadership similarly ageing – it develops a propensity to become more risk averse and manifest behaviour that resists change. Such conduct is generally also accompanied by lack of renewal of the vision and the organisation’s place in the business environment.
But putting that to one side, let’s concentrate on one really big elephant in the room when it comes to reasons for organisational change – information & communication technology. Since the 1980s and the appearance of the personal computer, organisations in traditional businesses responded by making room for their IT managers and engineers, frequently put under the responsibility of the Financial Controller. This was in itself a clear reflection of how many company leaders viewed this new ‘orphan’ called IT, as a necessary evil and expense, that had to be made, to stay in the competition against the competitor down the road.
Almost 30 years on, this same organisational structure and its errant IT ‘orphan’, have in many cases remained unchanged. We still see IT departments busy supporting frequently disconnected business applications and building server-rooms and patching that old underwriting system or core banking system that has seen far too many years on its clock. Within this status quo, IT departments have evolved into the gate keepers and some of the less dynamic ones are busy protecting turf, firefighting the odd IT issue, and largely keeping the ‘engine room clean’ – simultaneously keeping the organisation pure and uncorrupted by all this fancy web and mobile juju.
The elephant however has not stood still for the 30 years – the global reach of the internet, combined with mobile technology which has thrown a mesh over countries which lack the traditional infrastructures due to lack of investment and development, has wrought tremendous change in the way and speed we do business today. The new currency of trade has been for some years now – information. And yet, far too many of our organisations are not geared to turn that currency into wealth and new investment.
How can an organisation with a low-pay grade IT technician, bearing the title of ‘System Administrator’ or ‘IT manager’, shoved under Finance and Administration departments, expect to have the creative juices to capitalise on new opportunities, which inevitably almost always need information to happen?
So here is my clarion call to all those companies out there busy building organisations on a 30+ year blueprint: STOP NOW. You need to radically rethink your organisations. Just creating a new department called eCommerce or hiring a social media administrator is not going to hack it.
You need to challenge the way you have always done things and define new roles which you’ve probably never even heard of – such as Chief Data Officer, Customer Success Teams and Data Scientists – and look for ways to fuel up your business with one of its two greatest assets (the other I would posit is its people!).
The information can come from within, but some of it indeed may come from outside. Having the alchemists that can concoct brews of mixing your data in with external data (in a safe and secure manner, mind you!) can uncover new avenues of business growth.
The side effect of all this, is that you could potentially seismically grow the intellectual capital of your company to such an extent that it becomes an innovator or an industry leader very quickly – because it has people within it, that are constantly on the treadmill of new visions and creativity, concocting new ways of mixing people with new technologies and social trends – without necessarily hiring more people to drive new business.
Let me give you some very simple local examples – in my day-to-day activity of visiting organisations and talking to business owners, CEOs, CFOs and CIOs, it always amazes me (or dare I say makes me want to cry) when I hear them tell me that some of their key personnel spend hours every day compiling complex spreadsheets and reports which have to be refreshed and rebuilt to capture a still snapshot of the business at a particular point in time. The technology to address that (Business Intelligence) has been with us since the 1980s. Let us say it has become affordable for SMEs since the late 90s, but yet we’re in the second decade of the 21st century and CFOs and their staff are still doing it the same way it was done back in the 1980s.
Unless we bring in strategic thinkers (not more technicians) and people with the ability to creatively use the new currency (information), our organisations cannot hope to capitalise on new growth opportunities – at least not fast enough. The same way we brought in CFOs to manage the old currency (money) and put him/her in a powerful spot in the organisational chart, we need to rethink where we put these new thinkers.
I’m not advocating new, large, hegemonic IT departments – not at all. With the plethora of services in the cloud and the consumerisation of technology as a whole, I am advocating that even your next Chief Marketing Officer needs to be tech savvy and visionary and if your current one isn’t, then it is time to move him/her over or sideways.
I believe that as for many industries, there will be a radical reduction in the average size of most organisations – the ICT sector will be no different – already significant international players such as Uber and AirBnb have rewritten the nature of organisations. I believe too, that people will remain a key asset of every organisation – perhaps there just won’t be as many of them as we are used to. So the next great seismic shift is already underway – the war for talent. But that’s a story for another day and another article.