Determining the best of several popular organization models is imperative to any business for its long term success.
G.E. has, after several decades, finally been trashed for their inflexible, outdated, authoritarian practices which have resulted in reduced earnings and stock price.
In contrast, the Golden State Warriors recently won their second NBA championship in three years. Their organization is based on innovation, collaboration, and excellence. For example, their coach Steve Kerr, allows, and I think, even encourages some emotion and mistakes that allow for risk and innovation which make them successful.
Some other examples where traditional organizations have a difficult time adapting to different cultures include:
- Walmart bought Jet.com and eliminated Thursday night drinking parties in the office, thus alienating employees and effecting work place culture.
- Because banks have such rigid cultures, they have a hard time recruiting technology staff.
- Organizations that automate and eliminate staff don’t adapt to the need for flexibility when the automation fails (weather delays with airlines make automated reservations almost useless).
I have argued for years that this should be no surprise because, society, and business fail to recognize old paradigms and structures are deteriorating. What is even more distressing is realizing the very structure of these organizations which produces much of the results. Long-held propositions that business advantages, like economies of scale and utilizing expertise and marketing synergies, are simply false in many cases. In particular, there, is a dramatic shift from hierarchical to distributed organizations.
Distributed organizations provide the flexibility and speed needed to respond to the needs of the market and encourage innovation. They allow the vision, entrepreneurship, and risk necessary to succeed. They also enhance commitment, diversity, collaboration, and even friction, among diverse participants during a project. Most important, distributed organizations replace innovation and expertise for the hierarchy and traditions that burden significant progress. Below are three illustrations of popular models:
- Centralized Organization, also known as, hierarchy-decision making is the most common. This model is most effective for executing repeat efforts with rules, controls and certainty. They are ineffective to deal with change and using expertise, rather than authority
- Decentralized Organization involves decision-making from mid-level or lower-level. This model can be effective to develop diversity and collaboration on projects in large organizations. It frequently lacks the strategy and overall organization necessary in a changing environment.
- Distributed Organization Model involves openness and collaboration on all levels. It relies on expertise and analytics for decision making. This model is also focused on reacting to change and developing the best solutions rather than falling back on “we have always done it that way.”
An example of the effectiveness and potential of distributive organizations is illustrated by a recent New York Times article on temporary flash organizations. Games and other apps are being developed by flash groups of diverse freelancers who unite to complete a project and then are disbanded.
These new paradigms: speed, expertise, flexibility, innovation, and collaboration, which are the hallmarks of distributive organizations can produce dramatic change for organizations. While they involve new approaches to problems, the solutions are readily available and can readily utilize new tools like the cloud and improved analytics.
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