What the organisation of tomorrow looks like - oot.org lecture series 2

Bryan Fenech – Founder and Director

Building the Organisation of Tomorrowwww.oot.org

What the organisation of tomorrow looks like?

Contents

Introduction

Comparative Analysis

A Proposed Transitional Model

Case Studies

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INTRODUCTION

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Introduction

• This presentation explores what the organisation of the future looks like across multiple dimensions: – context– strategic imperatives– capabilities and resources– governance, leadership and other social

practices– organisational structural forms

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Introduction

• Across these dimensions the organisation of the future is compared and contrasted with today's traditional organisations as described in Topic 1

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Introduction

• This represents a synthesis of many different perspectives and theories from different fields including leadership, change management, team dynamics, organisational behaviour and psychology, economics, management theory, organisational science and organisational design, among others

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COMPARATIVE ANALYSIS

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Changing context

Traditional (Industrial) Organisation Organisation of Tomorrow

A socio-economic era built on the technological breakthroughs of the industrial revolution

A socio-economic era built on the technological breakthroughs of the information revolution (and now robotics and biotech)

Increasing globalisation – opening up of vast new markets for products and services

Unprecedented globalization – hyper competition, dynamic and volatile markets, short product lifecycles

A world of “unlimited” resources to be exploited – the New World, Africa, India, China and the East

A world of limited resources to be conserved and sustained

Positivism as the dominant worldview Constructivism as a challenge to the dominant positivist world view

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Strategic imperatives


Standardisation and repeatability – mass production

Differentiation and innovation – mass customisation

Size and stability Nimbleness, flexibility and responsiveness

A relentless managerial focus on cost containment, reducing unit costs

A relentless leadership focus on investment in new products and services

Economies of scale Economies of scope

“Sweating” value from tangible assets – property, plant and machinery

Creating value in intangible assets – knowledge and the social capital that underpins it

Beating the competition, achieving dominance within an industry or industry niche

Building strategic alliances and partnerships

Achieving personal financial wealth and power for a narrow set of shareholders, the capitalist project

Achieving social and environmental as well as financial value and meeting a broad range of objectives for a broad range of stakeholders, the social enterprise project

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Capabilities and resources


Strategy formulation Strategy implementation

Operational management disciplines Project management disciplines

Management – causal rationality, from a pre-determined goal and given set of means identify the fastest, cheapest, most efficient etc

Leadership and entrepreneurialism – effectual reasoning, from a given set of means allow goals to emerge contingently over time

Development and application of specialist technical knowledge

The commoditisation of specialist technical knowledge and the need to dynamically reconfigure and apply collaborative knowledge resources – “dynamic capabilities” and “absorptive capacity”

Developing core competencies to dominate markets and niches

Value co-creation – sharing, integrating and coordinating resources across boundaries, “radical transparency”

Application of the “factory” model to regularise all processes, products and services

Ambidexterity – simultaneously managing dynamic and well as static business contexts

Implementing versus formulating strategy

• A vast array of planning models and techniques has been paraded before managers over the years, and managers for the most part understand them and know how to use them effectively. However, there is a lack of execution know-how1

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Operational versus project management

Area Response Problem Addressed

Delivery methods Program management, change management disciplines

Coordinating and marshalling project-based activity

Governance Project portfolio management (PPM)

Investment oversight

Functions Steering Committees, PMOs Driving cross functional integration

Structure Matrix organisations, skunk works, project based organisations (PBOs)

Managing both dynamic and static contexts

Roles Project managers, change managers, business owners, sponsors, etc

Performing project activity inhouse

Standards PMBOK, Prince2, MSP, P3M3, etc

Improving predictability and performance

Maturity models OPM3, PMMM, CMMM-I, etc Making project based change business as usual

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Knowledge capabilities and Resources

• The ability of organisations to implement the new strategic imperatives and meet 21st century success criteria is highly dependent upon their ability to develop, share and mobilise knowledge resources2

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• Dynamic capability – i.e. the capability of an organization to purposefully create, extend, or modify its resource base

• Absorptive capacity – i.e. the ability to recognize new external knowledge, assimilate it and apply it to commercial ends

• Transformative capacity – i.e. the ability to continuously redefine a product portfolio based on technological opportunities created within a firm

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• Value co-creation – the ability to share, integrate and coordinate resources and sustain an honest and open dialogue (radical transparency) across organisational boundaries for mutual benefit3

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• Ambidexterity – the ability “to achieve breakthrough innovations while also making steady improvements to an existing business”4, simultaneously managing dynamic and well as static business contexts.

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• Such organisational knowledge capabilities are highly dependent upon the availability of intangible social capital resources that are generated and leveraged 'in community' – in particular, social and morale capital including trust, voluntary cooperation, and passionate identification with, and commitment to, the purpose of the organization5

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Leadership and governance practices


Application of principles of command and control economics to internal organisation – central control of resources and planning

Application of principles of market economics to internal organisation – devolving of power and decision making and free flow of resources, “internal markets”

Management practices embedded with the strategic intent of command and control

Leadership practices embedded with the strategic intent of empowerment and facilitation – “democratisation”, “participative management”, “distributed leadership”

Rules based on rational legalistic principles – bureaucracy, sine ira ac studio

A negotiated order based on principles of community, and renewal practices required to manage sustainability and success

Democratisation and markets

• The literature on governance and leadership practices reflects the emergence of 2 highly interrelated developments– democratisation – including ‘distributed leadership’,

‘shared leadership’ and ‘participative management’ theories6, 7, 8 as alternatives to traditional managerialism – and

– the application of market principles – including internal cap and trade systems, internal labour markets and ideas futures exchanges9, 10, 11, 12 as alternative approaches to centralised command and control

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Benefits

• The benefits of these approaches appear to align very closely with the need for increasing levels of social capital resources which has been identified as a prerequisite for building knowledge capabilities:– Participative management has been correlated with an increase of

morale, commitment, adaptability, trust, communication and teamwork13, 14

– Shared leadership leads to less conflict and greater consensus, trust, and cohesion15

– Distributed leadership can be “a moderator that can deter corruptive tendencies by providing checks and balances capable of reducing the potential for corrupt behaviour”16

– Application of market principles correlates to improved efficiency and flexibility of resource allocation and exchange of information17, and motivation through reward systems that recognise the investment of intellectual capital on a similar footing to financial capital18

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Structure


Hierarchy – multiple management layers Networked, cellular

Segregation of labour by discipline into functional silos

Integration of labour into autonomous multi-disciplinary teams

New organisational structures

• The recent literature on organisational structure demonstrates a broad consensus that more fluid process, product or customer driven structures, and networked cellular structures, in which labour is integrated into multidisciplinary teams, are better adapted to the challenges of the 21st century than bureaucratic structures19,

20

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• This is reflected in the emergence of many alternative organizational shapes most of which have been pioneered by different innovative organisations including ‘brains’, ‘machines’, ‘garbage cans’, ‘jazz’, ‘theatres’, ‘landscapes’, ‘morphings’, ‘sponges’, ‘hypermodern’ and ‘platforms’21

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• Dynamic and fluid federations of enterprises, which use multiple configurations of intellectual, emotional, digital and physical assets to provide unique aggregations of products and services, will ultimately supplant large single corporations22

• Distributed governance and leadership practices require distributed spans of control and ownership structures

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A PROPOSED TRANSITIONAL MODEL

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A transitional organisational model

CEOChief

Projects Officer

Chief Operations

Officer

Process-based organisation

Operations and execution

Lean six sigma

Project-based organisationChange and renewalProject portfolio management

New Ideas

New Capabilities, Products and

Services

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CASE STUDIES

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Case studies

Organisation Characteristics References

Morningstar Participative management

Hamel (2011)

W L Gore Participative management

Kaplan (1997), Malone (2004) p 57, http://www.managementexchange.com/story/innovation-democracy-wl-gores-original-management-model

Mondragon Cooperative

Participative management

Malone (2004) p 61

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Case studies


Semco Participative management

http://www.strategy-business.com/article/05408

Hewlett Packard Internal markets – supply chain

Malone (2004) p 93

British Petroleum Internal markets – environmental targets

Malone (2004) p 91

Valve Participative management

http://www.gamesindustry.biz/articles/2013-07-08-valves-flat-structure-leads-to-cliques-say-ex-employee

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Case studies


Buffer Radical transparency on wages

http://www.fastcompany.com/3024306/bottom-line/why-this-startup-made-their-salaries-radically-transparent

Zappos Participative management

http://www.linkedin.com/today/post/article/20140108093818-2143418-holocracy-hot-trend-or-hollow-dream-in-2014

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Visit www.oot.org

Bryan FenechFounder and Director About www.oot.org

• www.oot.org is the website of Building the Organisation of Tomorrow, a networked community and set of resources to assist leaders to meet the imperative for organisational renewal

• All institutions are under increasing pressure to adapt to 21st century technological and socio-economic forces. Successful leaders need appropriate frames of reference to manage these processes of transformation; however, such frames of reference are rare

• Find articles, presentations, book reviews, and other resources

http://www.oot.org/

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References

1. Hrebiniak, L. G. (2005) Making Strategy Work: Leading Effective Execution and Change, FT Press: New Jersey

2. Tissen, R. and Deprez, R. L. (2008) ‘Towards a Spatial Theory of Organisations: Creating New Organisational Forms to Improve Business Performance’, NRG Working Paper no. 08-04 [Online http://www.nyenrode.nl/research/publications]

3. Storbacka, K., Frow, P., Nenonen, S. and Payne, A. (2012) ‘Designing Business Models for Value Co-Creation’, Review of Marketing Researach, Vol. 9 pp 51 – 78

4. O’Reilly III, C. A. and Tushman, M. L. (2004) ‘The Ambidextrous Organization’, Harvard Business Review, April, pp 74-81

5. Dovey, K. and Fenech, B. (2007), ‘The Role of Enterpise Logic in the Failure of Organisations to Learn and Transform’, Management Learning, Vol 38, No 5, pp 573-590

http://www.nyenrode.nl/research/publications

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References

6. Bergman, J. Z., Rentsch, J. R., Small, E. E, Davenport, S. W. and Bergman, S. M. (2012) ‘The Shared Leadership Process in Decision-Making Teams’, The Journal of Social Psychology, Vol 152, No 1, pp 17–42

7. Hamel, G. (2011) ‘First Lets Fire all the Managers’, Harvard Business Review, December, pp 48-60

8. Carson, P. B., Tesluk, P. E., and Marrone, J. A. (2007) ‘Share Leadership in Teams’, Academy of Management Journal, Vol. 50, No. 5, pp 1217–1234

9. McAdams, D. and Malone, T. W. (2005) ‘Internal markets for supply chain capacity allocation’, MIT Sloan School, Working Paper No 4546-05

10. Malone, T. W., Laubacher, R. and Morton, M. S. S. (2003) Inventing the Organisations of the 21st Century, Cambridge MA: The MIT Press

11. Malone, T. W. (2004a) The Future of Work, Boston: Harvard Business Review Press

12. Malone, T. W. (2004b) ‘Bringing the Market Inside’, Harvard Business Review, Vol 82, No 4, pp 106-104

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References

13. Coffee, R, and Jones, G. (2013) ‘Creating the Best Workplaces on Earth’, Harvard Business Review, May, pp 99-106

14. Hamel, G. (2011) op cit15. Bergman et al (2012) op cit16. Pearce, G. L., Manz, C. C. and Sims, H. P. (2008) ‘The roles of

vertical and shared leadership in the enactment of executive corruption: Implications for research and practice’, The Leadership Quarterly, 19, pp 353–359

17. Malone, T. W. (2004a) op cit18. Miles, R. E., Snow, C. C., Mathews, J. A., Miles, G. and Coleman

Jnr, H. J. (1997) ‘Organising in the Knowledge Age: Anticipating the Cellular Form’, Academy of Management Executive, Vol 11, No 4, pp 7-24

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References

19. Miles et al (1997) op cit20. Tissen, R. and Deprez, R. L. (2008) op cit21. Tissen, R. and Deprez, R. L. (2008) op cit22. Zuboff, S. & Maxmin, J. (2003) The Support Economy: Why

Corporations are Failing Individuals and the Next Episode of Capitalism, London: Allen Lane

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