Thursday, August 27, 2020

Organizational Structure Design and Innovation

The organization design enforces self-adaptation, self-management, and self-renewal.

Digital organizations are all about information savvy, people-centricity, high-performance, and speed, with an amalgam of socio-systems, techno-systems, bio-systems, and Econo-systems, etc. Corporate structure and its impact on business efficiency, agility, and innovation could play either a positive or negative impact. 

To make a seamless digital paradigm shift, organizations today cannot be organized only using the mechanistic paradigm that resulted in bureaucracies. Fine-tuning underlying business structure and processes is a critical step and continuous effort for improving digital business fluidity, flexibility, and overall digital fit.

The goal for optimizing organizational structure design and innovation is to streamline business flow and get the mass collaboration effortlessly: In a world that has been transformed by information technology, many old and powerful hierarchies became ‘commoditized.’ With unprecedented uncertainty and interdependence, digital companies are inherently and intensely complex and unpredictable systems. It’s important to break down silos, flex the organizational structure, keep information and ideas flow frictionlessly. The emergent digital platforms and collaboration tools enable cross-functional communication and collaboration, shape the “hybrid structures” with a good mix of formal structure and informal structure in order to enforce business alignment, integration, and innovation.

In fact, overly restricted organizational hierarchy encourages the “command & control” management style, decelerates business speed. Forward-looking organizations experiment with different types of organizational structures, and harmony, so the multi-disciplinary and cross-functional teams are able to handle all value-adding steps in the whole flow of work, co-develop solutions to complex problems and build a unique set of business capabilities cost-effectively. Limited hierarchy with some “unstructured processes” as the digital normality works best to build a creative environment in which idea generation and implementation are the key elements of long term business prosperity.

The goal of digital organizational structure design is to strike the delicate balance between solid and fluidity, control, and autonomy: Consider nature as self-organized, self-adaptive, but interlaced environments. Digital organizations like organic living systems encourage autonomy and enforce trustful relationships. Building a certain level of “control” and centralization help to improve business efficiency and achieve coordination toward the strategic goals or the large-scale of change; but enough autonomy or decentralization to keep all business subsystems functioning, flourishing, and self-organizing

Both official structures and unofficial structures co-exist antagonistically or harmoniously, the business relationships and connections wrap around to ensure communication fluency, accountability, functional alignment, and integration. The organizational structure design is the vehicle through which the business strategy is executed and expected performance is achieved. Identify either communication bottleneck, performance barriers, or culture friction, etc, to improve overall business changeability, maturity, and unleash its full potential.

The goal of digital organizational structure tuning is to enforce people-centricity: Digital organizations are ever-evolving, empower their employees to discover their talent and build their professional skills; engage their customers, partners in continuous conversations to come up with innovative solutions. Their organizational design shifts from inside-out process-driven to outside in people-centric. The digital ecosystem is adaptively rational, it has to strike the balance of “keeping the order,” and sparking innovation smoothly.

The challenge for any business is to find a successful structure that delivers what the customer wants cost-effectively, improves employee productivity, innovativeness, define your circles, roles, and authority through the members of your organization. It helps to empower people and provides a sufficient return to shareholders. Technically, the design of a digital organization needs to integrate the organizational design into business process design and organizational re-engineering activities to enable employees to do their work productively and shape a people-centric organization in a structural way.

The organization design enforces self-adaptation, self-management, and self-renewal. Digital enterprises ameliorate multiple effects and shape business structures, cultures, and systems continuously. Organizational structure design and innovation are a cohesive step in catalyzing changes and building core business competency to achieve a high level of autonomy as the symbol of digital maturity.


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