In the hypercompetitive world we do business in, companies must look more closely at organisational structures to derive competitive advantage. It’s as good a time as any to reexamine whether the way we’re structured meets modern day imperatives in respect of speed, agility, and response. Customer feedback is certainly a good way to gauge whether teams and systems are indeed working end-to-end. But as customer expectations are a moving target, our teams must be organised to respond to their evolving future needs. And this must be a critical ingredient in all customer and employee dialogue.
Most companies organise their people in teams according to skills. And a hierarchy operates within each team. It’s the handoffs and the interaction between teams that affect the agility of the organisation. Because each leader is optimising team goals and that gets precedence over entity goals which often get relegated to the background.
The best way of organising teams the traditional way is to have teams aligned with the value chain. In my book, that means alignment with the sequence of customer interaction. For instance, in an IT company there would be teams for sales, pre-sales, logistics, projects, and services, apart from the enabling teams like finance and marketing.
A more contemporary way is to organise smaller autonomous teams that are multi-disciplinary. That would be very different from traditional approaches, because skill-based silos would be dissolved and hand-offs would be fewer. If we go back to the IT company example, a typical team would now consist of pre-sales, sales, projects and services, in one team, enhancing autonomy and speed. Without micromanagement, job satisfaction would improve too.
I’m reminded about an experiment I participated in a decade and a half ago. We created multi-disciplinary Account Management Teams (AMTs) to handle a defined set of customers. Customer responsiveness indices went through the roof, and business and margins improved spectacularly. Because team agility and accountability became razor sharp, and customer engagement touched unprecedented heights.
More recently, I worked with virtual multi-disciplinary teams that came together for projects, and got dismantled after the defined project goals were accomplished. Here, all resources were optimally utilized and fallow time was minimal.
I’ve seen many leaders respond to poor results as if restructuring is the elusive elixir for high performance. Managing change isn’t easy, and frequent structure changes unsettle an organisation and invite disaster. If change is warranted, it must be done, but it needs to be well thought out and holistically evaluated for it to be effective and enduring.
Lessons from the big boys
Going back in time, many companies organized their people according to product groups, and some still do. Like Apple had GMs running the Mackintosh group, the information appliances group and the server products group, each with their own P&L. Steve Jobs, on resuming charge in 1997, in one fell sweep, changed this to teams organised by functional expertise like design, engineering, marketing, operations and retail. The underlying philosophy was that experts must lead experts. And that’s the way it operates even now, 24 years later, when it’s about 45 times as large. Of course, the functional areas have expanded, in line with how the business has changed. Steve Jobs re-organised Apple so that specialisation would ignite innovation and their spectacular success is testimony to his foresight. But what also evolved over time and made it work was a collaborative culture that allowed disagreement and debate, but weaned out intemperate and obdurate leaders.
Google has functional groups, as well as product-based groups for AI, cloud and other solutions. Theirs is a flat, matrix structure intended to encourage ideation and ensure all voices get heard. Employees are expected to follow a 70/20/10 rule in terms of how they spend their time —70% on assigned projects, 20% on related new ideas, and the balance on any topic. What differentiates Google is their emphasis on culture, driven by trying to make work interesting and create an environment like home. Endorsing subcultures based on occupations, geographies, solutions, and hierarchical echelons, has helped promote non-stop development. In August 2015, Google too announced a restructure, but that was a move to separate and secure the core from ambitious new ventures that were being spawned.
In essence, we live in an ever-changing business landscape. Organisational structures will have to evolve too, because not adapting fast enough is an impediment, not an option. While there are many examples to draw from, we must organise our people and structure our teams in a manner that is germane to achieving our desired outcomes, without disregarding the organizational ethos. But for force multiplication to find expression, the purpose of the organization, ‘the why we do what we do,’ needs to be the glue that unifies and inspires all teams under a common flag.
Views are personal. The author is former MD, Country Digital Acceleration, Cisco.