Wednesday, June 6, 2018

Tuning Organizational Structure from Hierarchy to Circular for Achieving Fluidity, Flexibility, and Fit

There is more than one road to lead the digital way of achieving fluidity, flexibility, and fit, enjoy the journey and make a seamless digital paradigm shift.

With the increasing pace of changes, hyper-connectivity, and interdependence, organizations across vertical sectors are at the turning point, take the multidimensional approach to make the digital paradigm shift. From the organizational structure perspective, the overly rigid pyramidical organizational structure forms communication gaps, encourages silo mentality, creates the performance bottleneck, also decelerate business speed. Therefore, fine-tuning underlying business structure and processes is a critical step for improving digital business fluidity, flexibility, and overall digital fit.

Fluidity: Most organizations need to have a certain level of the hierarchy to improve business efficiency. However, to be a highly functional system, the hierarchy must balance the freedoms, welfare, and responsibilities of the subsystems and total system. This is particularly important for running today’s digital business with high velocity and unprecedented complexity and uncertainty. The reality is that organizations that do not respond to external environmental changes will quickly outcompete as more nimble and adaptable companies catch up and take their customers. The bottom line is how well the organizational structure is being influenced by varying business factors. The management needs to check up: Does the chain of communication flow easily or does it stop at one level? Digital means flow, mind flow, idea flow, and information flow. Organizations, like individuals, need to be in flow to communicate fluently and operate smoothly. Thus, to break down silos or overly rigid hierarchy, organizations need to be in flow to keep up with the speed. Forward-looking organizations experiment with different types of organizational structures to enforce business alignment, enablement, communication, collaboration, and harmony. For example, the circular or onion-like organizational layer is different from the command-control type of hierarchy: Every system is a subsystem of a larger system and simultaneously it is always build up by subsystems. these systems of systems can forge or alter a myriad of relationships/alliances for further enforcing communication and accountability. Ideally, the digital organizational structure needs to be solid enough to “keep things in order,” but also fluid enough to interact with the expanded digital ecosystem seamlessly. The ultimate business goal is to unlock latent expertise, scale innovation, amplify digital impact, and streamline business flow across the business ecosystem.

Flexibility: Digital is the age of option. Flexibility is about figuring out alternative ways to do things. Today’s organization is the mixed bag of old and new, order and chaos. The flexible organizational structure is implemented through the virtual team setting well mixing with the physical structure. Digital favors hybrid solutions. Ideally, the physical organizational structure, relationships, virtual platforms, and social connections wrap around each other to ensure responsibility, smoothly information flow and employee empowerment. Limited hierarchy works best in a creative environment where the free flow of ideas and their prompt implementation is a key element of success to improve business responsiveness and changeability. Logically, breaking down silos and being intentional about developing processes that encourage cross-functional collaboration and enforcing business flexibility. From the management perspective, flexible organizations tend to have managers with the right mix of personal attributes, that is, people who demonstrate a variety of skills, be comfortable with ambiguity, and respectful of the process. They practice leadership discipline via influence, not via command-control. The centralized, decentralized, and hybrid models can all work given the proper planning and management focus to keep them fine-tuned for improving business effectiveness and flexibility.

Fit: There are both hard fit and soft fit. There are many business factors that influence and have an impact on digital fitness such as organizational structure, process, people, culture, technology, competition, market segmentation, rules, responsibility, performance measurement, etc, and these elements are interrelated. The right mixed structure allows the right mentality and innovative culture to bloom. Dedicate to do more with innovation rather than logistic management. Organizational behavior is the example of the shift in thinking about talent management to adapt as well. An increasing focus is on soft skills, intangible capital, knowledge management, leadership rather than management. Organizational behaviors are examples of the shift in thinking about talent management to adapt. Flattening a corporate hierarchy serves no purpose if at the same time you flatten the tenacity of people who are willing to lead and take chances. With the fitting structure and people, information exchanged are free flow, accessible to all group members and you are able to appreciate each other’s thoughts, that is the difference between flat structure and silo-based structure. Here you want to look for fit is in relation to the collective capability you want to build or maintain, the flatter the organization the better for information flow, engagement, accountability, and the freedom to act, and ultimately organizations reach the healthy business cycle with the right balance of growth and stability, innovation and standardization, inside-out and outside-in.

Compared to the mechanical nature of the industrial organization, digital organizations are like the living systems that can self-adapt and self-renew in thriving as high-performance businesses. There is more than one road to lead the digital way of achieving fluidity, flexibility, and fit. The goal is to enjoy the journey and make a seamless digital paradigm shift.


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