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Monday, July 04, 2005

The 21st-century organization : Executives, Collaboration & Productivity

(Via MQuarterly)Big corporations must make sweeping organizational changes to get the best from their professionals. Today knowledge workers in most cases are the innovators of new business ideas. They make it possible for companies to deal with today's rapidly changing and uncertain business environment, and they produce and manage the intangible assets that are the primary way companies in a wide array of industries create value. The authors claim that while productive professionals make big enterprises competitive, yet these employees now increasingly find their work obstructed. Excerpts with edits & comments:

In the act of collaboration, each upsurge in the number of professionals who work in a company leads to an almost exponential - not linear - increase in the number of potential collaborators and unproductive interactions. Many leading companies now employ 10,000 or more professionals, who have some 50 million potential bilateral relationships. The same holds true for knowledge: searching for it means trying to find the person in whose head it resides, because most companies lack working "knowledge markets." One measure of the difficulty of this quest is the volume of global corporate e-mails, which rose from about 1.8 billion a day in 1998 to more than 17 billion a day in 2004. As finding people and knowledge becomes more difficult, social cohesion and trust among professional colleagues decline, further reducing productivity.
The vertically oriented organizational structures of big enterprises, retrofitted with ad hoc and matrix overlays, nearly always make professional work more complex and inefficient. These vertical structures—relics of the industrial age—are singularly ill suited to the professional work process. Professionals cooperate horizontally with one another throughout a company, yet vertical structures force such men and women to search across poorly connected organizational silos to find knowledge and collaborators and to gain their cooperation once they have been found. Worse yet, matrix structures, designed to accommodate the "secondary" management axes that cut across vertical silos, frequently burden professionals with two bosses—one responsible for the sales force, say, and another for a product line. Professionals seeking to collaborate thus need to go up the organization before they can go across it. Effective collaboration often takes place only when the would-be collaborators enlist hierarchical line managers to resolve conflicts between competing organizational silos. Much time is lost reconciling divergent agendas and finding common solutions.
Retaining the best of the traditional hierarchy while acknowledging the heightened value of the people who hatch ideas, innovate, and collaborate with peers to generate revenues and create value through intangible assets such as brands and networks would be the key to success. Organizations need to reduce the complexity of their interactions and improve the quality of internal collaboration by implementing four interrelated organizational-design principles:
1.Streamlining and simplifying vertical and line-management structures by discarding failed matrix and ad hoc approaches
2.Deploying off-line teams to discover new wealth-creating opportunities while using a dynamic-management process to resolve short- and long-term trade-offs.(Am not too sure about this - offline and on the field teams typically work at different pace - most of the times besides speed incompatibility the difference is between being idealistic and being real)
3.Developing knowledge marketplaces, talent marketplaces, and formal networks to stimulate the creation and exchange of intangibles
4.Relying on measurements of performance rather than supervision to get the most from self-directed professionals
A new organizational model for today's big corporations will not emerge spontaneously from the obsolete legacy structures of the industrial age. A new holistic model, using new principles that take into account the way professionals create value is the crying need for enterprises. Big companies that follow these principles will get more value, at less cost, from the managers and professionals they employ. In the process, they can become fundamentally better at overcoming the challenges—and capturing the opportunities—of today's economy.

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