Traditionally, the hierarchical organization has been the go-to structure for businesses, non-profits and governments across the world. But that norm may be changing.
As technology, talent shortages and globalization reshape the nature of work, organizations are looking to reshape their workforces in response. While concepts like holacracy—a management system that departs from a top-down structure in favor of a team structure—may be new and relatively rare in practice, the desire to redesign the traditional organization is nearly ubiquitous. A recent survey conducted by Deloitte found that 92 percent of executives see organizational design as a top priority this year.
What's motivating leaders to ditch the hierarchical structure for a more collaborative approach? Here, four major forces inspiring leaders to find more adaptable organizational structures to match our fast-changing world.
1) More Brainpower, More Creativity
A Harvard Business School working paper found that as competition increases, organizations must become more efficient by shedding layers and widening spans of control. With fewer layers, these organizations can involve front-line workers in strategic decisions and respond to innovations and changes in the market more quickly.
In the book Innovation Through Collaboration, Michael Martin Beyerlein, Susan T. Beyerlein and Frances A. Kennedy write, “Creative ideas blossom in a collaborative environment." In other words, it's easier for teams to work on ideas that will directly impact the customer experience and the bottom line than individuals. For example, a call center team can more readily collaborate to discuss the most pressing client issues and develop innovative solutions than an individual can.
2) New Generation, New Values
Studies have shown that millennials' interests, motivations and desired work environment are different from previous generations. They don't just want a place to work, but the opportunity to build a community. Considering millennials will make up as much as 75 percent of the workforce by 2025, organizations that provide the tools, structures and mechanisms to enable employees to collaborate will have an easier time attracting and retaining the best talent.
3) React Faster to Change Together
Change is happening at a blinding pace. As Chief Innovation Officer at Kotter International John Kotter said, "The evidence of this can be seen almost everywhere—life-cycle of products, number of patents filed in the US Patent Office, amount of cell phone activity across national boundaries—and on and on." It is no longer effective to have silos with people working in separate roles or only within their vertical career path. Organizations need to have the ability to rapidly react to market changes, competition, emerging technology and shifts in customer and employee preferences.
Collaborative structures support this type of agility through improved communication and a greater ability to change. A recent article in Information Age titled "Why Collaboration is the Key to Business Agility" states, "the key to business agility lies within an organization's ability to collaborate."
4) Collaboration Through Technology
Technology has allowed communication to improve dramatically over the past decade. Thanks to email, chat, video, Slack, social media and more, employees have an enhanced ability to collaborate across roles, functions, levels and geography. Dion Hinchcliffe, chief strategy officer at 7Summit, says in order to "enable richer, better institutional practices" you need to think strategically about how you collaborate using the technology you have. For example, ensuring communication is both consistent and participative will help increase the benefits beyond a basic level.
As the business environment, customer, technology and employee needs change, it's important to think critically about the structure of your organization and initiate changes in a deliberate and strategic way.