What is the ideal Digital Organizational Structure?

Humans progress is made through three stages: dependent, independent, and interdependent.

Due to the hyper-connectivity of digital nature, the trend toward a softer and flatter organization structure is clear. And surely it is the right direction, as speed is a key imperative these days and “silo” mentality as a product of rigid hierarchy hinders flexibility. However there are certain limits from an organizational design perspective, and there is a long way ahead of building a high performing digital organization with an optimized organizational structure.  

Transformative leadership: The real challenges in any hierarchical leadership model are that people can become entrenched in a position they hold via job title without necessarily being effective leaders. The second is that there are times where the fact of their being top-down leadership gets in the way of the flow of communication as it invariably creates a bottleneck and excludes perspectives that are valuable. Hence, sophisticated environments don't function well unless someone has to realize that leadership requires being not afraid to fail and be willing to tell people things they don't always want to hear. Flattening a corporate hierarchy serves no purpose if at the same time you flatten the will and tenacity of people who are willing to lead and take chances. The purpose of adopting a new social process is "to be a leader of yourself," and explore the talent motivation cycle of autonomy, master, and purpose

Humans progress through three stages: dependent, independent, and interdependent: The higher state being is the collaborative interdependent one. Limited hierarchy works best in a creative environment where the free flow of ideas and their prompt implementation is a key element of success. Also, consider people who feel comfortable being managed in the old way because they do not want to be held accountable. They seek approval from formal authority to be on the safe side. And this does not necessarily mean they are inefficient at work. So it is about individual mental set-up too, hence inter-dependency is a premium stage. Flatter structures will help to speed up organizational response to changing markets, but this won't always work well where the value of knowledge and skill reflects experience and learning. Nevertheless, experts are needed to challenge convention and break down peoples' natural resistance to change or to new ideas; helping to deliver incremental improvements over time. This helps to improve quality, reliability, and also productivity, which helps to fuel sustainable growth and jobs too. The organizational model used is also a reflection of how much investment is needed in the capital and human training (knowledge) to make the organization commercially viable. Of course, these traditional organizations offer huge opportunities for change.

 A flatter organization is more about the collaboration: It's worthwhile to explore new models and be congruent with the words "change management"; and actually consider changing the model to meet what the future may be bringing. Just because something has worked historically, there’s no reason to assume it has value going forward. Everyone has a valuable contribution to make at whatever level in the formal hierarchy they happen to be placed, the goal for optimized organizational design is to get the mass collaboration, innovation through less hierarchy, cross-functional insight and adopt a socialization process designed for the globally connect the world.

Customer-centricity: The challenge for any business is to find a successful structure that delivers what the customer wants at a price they will pay and that provides a sufficient return to owners. In a world that has been transformed by technology, many old and powerful hierarchies became ‘commoditized.’ Currently, the emphasis of an organizational business partner will spread to all employees of an organization and its ecosystem. Traditional hierarchical lines will phase out and a collective of business partners will emerge working collaboratively to set and achieve organizational goals as well as strategy.

The digital transformation won’t happen overnight, and organizational structure optimization takes planning, experimenting, and scaling up. What is further needed is a strong visionary as a leader to drive the organization into the digital age, or successful competition from a dynamic organization created from scratch with a new culture, business model, and organizational structure.

Posted in: Change Management,Digital Maturity,Digitalization,Organizational structure tuning