Companies work in silos. I don’t mean within the companies necessarily but also externally. Before we get to the latter, let me tackle the former first with the suggestion that this is due to hierarchies. Almost all companies organize people in a hierarchy, and then run well known managerial processes (planning, budgeting, staffing, measuring, etc) with it. We have all seen so many hierarchical org charts — sprawling boxes of letters and arrows arranged in inverted pyramids — and have been through so many budget, planning, and problem solving meetings, that we take all of this as a given, as if it had existed forever. In fact, it hasn’t.
The hierarchical organization that we see today was invented in the last century, and it is an incredible invention. It can direct and coordinate the actions of thousands of people making and selling thousands of products or services across thousands of miles, and do so effectively, efficiently, and profitably, week after week after week. If you had told an average citizen in the year 1900 what this structure and those sets of processes were accomplishing everywhere today, they would have thought you daft.
But 20th-century, capital “H” Hierarchy (a sort of hardware) and the managerial processes that run on it (a sort of software) do not handle transformation well. And in a world with an ever-increasing rate of change, it is impossible to thrive without timely transformations. The data, case studies, and personal anecdotes to this effect abound.
The challenge is that, at both a philosophical and a practical level, the Hierarchy (with its management processes) opposes change. It strives to eliminate anomaly, standardize processes, solve short-term problems, and achieve stopwatch efficiency within its current mode of operating.
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. Thus, the Hierarchy ignores new opportunities that require transformation because these don’t align with its core purpose of maintenance and optimization. A market opportunity for tablet computers, for example, is more of a distraction than an opportunity to the hierarchy of a giant PC manufacturer focusing on this quarter’s earnings targets.
A main reason of this could be mental. Putting things into a flow/process creates more structured thinking and hence hierarchical. Look at the concept of value chains that presents a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes through business management and was first described by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.
The idea of the value chain is based on the process view of organizations, the idea of seeing a manufacturing (or service) organization as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources – money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.
Now, I would like to propose that we change our thinking from hierachies to networks. Partially inspired by this article, I believe that re-orgnaising our thoughts to be more focused on networks will encourage companies to recognised the different value drivers (both current and potentially) that they could leverage on. This would increase more partnerships between industries and help to provide a more holistic solution to the end consumer. more
Bringing this to your organisation would also provide some additional agility and relevancy in tackling the challenges. Companies could follow a network approach through a system of teams with representatives from all divisions and all levels, who leave formal titles at the door to participate in a decidedly anti-hierarchical forum. As the environment changes in various ways, this system senses and responds to it, and in turn creates more and more teams with volunteers to address the discrete parts of a larger change. With this network, potential opportunities and changes are identified, urgency around tomorrow’s possibilities is fostered and maintained, strategies for organization-wide changes are formed, barriers are identified and addressed, and change is achieved.
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