Business leaders today must deal with the fastest-changing marketplace in history. Change in organizations is a fact of life for them. Effective leadership thus requires that they stay up to date with trends in organization design, evaluate the validity of trending ideas, and determine how they might adapt them to suit their organization’s needs.
While some trends are fleeting or suitable for only a small number of companies, others promise far-reaching advantages for a broad spectrum of organizations. Let’s take a look at three organization design trends every leader should be aware of.
Trend 1: Digital transformation
When personal computers first became mainstream in the 1980s and ’90s, there was widespread fear that computers would eventually displace human beings in the marketplace. Although it’s true that many tasks which used to be performed by humans are now done digitally, 30 years later there are still plenty of jobs to go around, partially because of the growth of digital industries. As it turns out, the biggest impact digitization has had on the marketplace has not been the displacement of human tasks, but rather the exponential expansion of capabilities and, as a result, opportunity.
Today, nearly every business has digitized to some extent. Some companies—for example, Uber and Amazon—have used digital solutions to create business models that would have been unimaginable in the 1980s. While not every business needs to be digitized to the same extent as Uber, nearly every business can benefit from exploring the use of artificial intelligence, data and analytics, and other technology to improve capabilities and results not just incrementally but exponentially.
Capitalizing on these potentials, however, does require strong leadership and a willingness to change and adapt. You can’t just plug a new technology into an old framework without affecting other aspects of the organization, such as how work is done, how the structure is designed, how metrics are used to drive performance, what skills and talent are needed, and how culture will reinforce strategy.
Trend 2: Virtual connection
Related to the digital trend is an organization design concept that is changing the way companies create value and gain power and influence. Rather than attempting to own and control all means of production and resources, businesses use the power of relationships and technology to create value. We call organizations that fully leverage this principle “virtual connected organizations.”
One need only look at the hospitality industry to see this trend in action. A company like Airbnb owns no real estate and doesn’t even manage property. All it does is facilitate relationships, connecting property owners with potential users and offering a secure place for transactions to happen.
There are many ways a company can switch from the traditional own-and-control model to a more networked, virtually connected approach. Even organizations that are heavily invested in concrete capital may be able to profitably leverage this trend. However, as with digitization, leaders must be aware of the implications and how they will impact their organization.
Trend 3: Agile
Agile is another organization design trend that has its roots in the digital world. It is a way of working that enables a company to respond more quickly to changes in the marketplace, and it can result in a more nimble, resilient organization.
By breaking down complex processes into short bursts of focused activity, Agile ways of working can allow an organization to create new products and respond to customer feedback much faster than by using traditional means. It also facilitates innovation by enabling people from disparate parts of the organization to come together to solve problems.
However, to implement Agile successfully, the organization must be structured in a way that supports this way of working. Leaders interested in using an Agile approach need to familiarize themselves with the requirements of an Agile team and be willing and able to facilitate the necessary changes in the organization’s governance and leadership practices.
Staying on top of the trends
While not every trend will be appropriate for every company, keeping abreast of changes in organization design is a leadership imperative. We encourage leaders to study these trends with an open mind to explore how they may be used to drive differentiation and enhance opportunities for their organizations.
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