Blog: New age organizational structures

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New age organizational structures

With organizational complexity rising an increasing rate, is the time right for organizations to look at new methods of designing their leadership structures and hierarchies?
New age organizational structures

We are headed towards an increasingly complex world. The recent changes in our economic, political and social environments have led to the world becoming more complex where markets today are more interconnected and organizations need to find out creative and innovative ways to navigate through uncertainty and adapt to leverage changing business opportunities. The rapid expansion of technological usage has meant that businesses today need to realign themselves with changing realities, to be able to survive and at times use these changes to their benefit.  This has also been partly driven by the demographic shifts within the talent pools that companies have an access to. 

Such realignment processes for companies today is more than just an inconvenience; it has become a rite of passage that most industries would have to go through in order to survive and sustain its business operations.  One of the important factors of this realignment process for HR heads today is to break the existing mental models around the leadership structures within the organization. As the business environment changes at increasing rate, creating higher degrees of complexity, our mental models of a fixed hierarchy of chain of command, that are responsible for ensuring decisions are taken in an agile manner, quickly begin to fail. Organizations with rigid top-down power structures would soon find it adapt to business changes as such structures do not necessarily allow for decisions to be made quickly enough to keep the organization's realignment  at pace with the changing environment. 

A recent report by Forbes stated the need for a collaborative approach to solving business problems. With the concept of cross-functional teams being welcomed in companies today, businesses would gain further if leadership structures are better formed to facilitate such collaborative endeavors while ensuring business agility. The ability to collaborate is becoming a key driver of value creation. The Forbes insights report on Tooling Up for Collaboration states that companies today must call upon a wide range of resources and capabilities to deliver increasingly complex products and services amid fast-moving, highly competitive, global markets. Today's teams are growing exponentially more complex, featuring fluid, cross-functional teaming amid globally dispersed and decidedly mobile employees. With the changes in the external environment forcing companies to re-look at how teams can be more effective, the time is also right for them to reassess their leadership structures that enable the effectiveness of such business realignment. 

The shift within companies to relook at their leadership structures is clearly underway.  By promoting concepts like reverse-mentorship, organizations today are beginning to take an active interest in breaking down leadership silos that often hamper the effective flow of information making organizations rigid when the external environment requires them to be more fluid. Although this shift is sporadic and comes in bits and pieces, organizations have today definitely realized its importance.  This shift, though still in its infancy, is clearly underway. Organizations today need to chart a way out of its rigid, pyramidal pattern of leadership and into a more adaptive system of governance— with distributed authority, self-managing and self-organizing structures that allow for the emergence of natural hierarchies which are more intuitive and based on the understanding of the team. 

Using models and frameworks like Sociocracy 3.0 (http://sociocracy30.org/) and Holocracy (http://www.holacracy.org/) have been highly influential in the restructuring process within such organizations. They help organizations create structures that empower individuals on all levels to think and act locally while creating an agile network that can quickly respond to changes in the environment as they emerge.  Built on the principle of participatory management these systems speak about how companies can modify their top to bottom approach and create a cohesive group of teams that are work in sync to achieve business outcomes.  This helps organization also adjust its internal functioning work better with freelancers and flexible working units within it.  

The challenges are not few moving forward. Existing organizational leadership will have to be willing to analyze their existing mental models and be open to transforming them. This will not be effective as a superficial process — it will require deep questioning and a relinquishing of the desire for overarching power and control.  As time moves forward the need to rethink organizational hierarchies would only become more critical for companies.  

 

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Topics: Culture, Leadership

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