Business Insights from Andrea Hill

I don’t think companies can afford to continue to operate in the old hierarchical ways. Those structures will be the dinosaur bones in the dirt within this century.

Take a Hammer To It?

10 November 2007

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Large corporations have overwhelmingly made the transition to team organizations in the past 15 years. All of them approach teams in somewhat different ways, but the unifying concept is that they understand the need to reduce the number of layers in their hierarchy and increase the autonomy, creativity, and financial contribution of their workforce.

The trend was not ignored by mid-sized companies, but they have been slower to convert. That may be partly because mid-sized companies are frequently private, but it may also be because they have not experienced some of the strains on capital and capacity that larger companies experienced during our last two recessions.

Now more companies want to make this transition, and I am frequently asked how difficult the transition will be. There is an impression that we should  be able to go from soup to nuts in a year or less. That is extremely optimistic, and unless a company is unbelievably well primed for such a transition, probably impossible.

The system implications of going from hierarchical to flat are huge. The areas in which I have seen the biggest impact are in communications, motivation & compensation, project management, and of course, technology requirements. The umbrella over all of this is that the culture itself changes.

Let's just talk about project management for a minute. In the old approach to project management, a management person (i.e., someone with role authority) would set up a project, assign resources, expectations and due-dates, and let everyone know what their job was. Employees would more or less successfully complete the tasks more or less on time. The projects were usually done within a functional silo, so if it was a product development effort, for instance, engineering would have one project plan for the invention or development of the object, marketing would have one project plan for the promotion, pricing and feedback on the item, and sales would have yet another project plan for the launch of the item.

That approach to project management is fraught with difficulty, largely because of the throw-it-over-the-wall effect of working in silos. Enter team-based project management.

Now a project manager is selected from any one of the disciplines identified above. They may or may not be of significant management role authority, and even if they are, they only have role authority within their divisional area - say, engineering in this instance. They need to set up a project plan, and the team will consist of people from marketing, sales, accounting, and possibly other groups (hopefully they're including customer input, but that activity is still lagging in most companies).

The project manager lacks role authority, so they have to use collaborative techniques to get the rest of the project team to contribute input regarding resources, tasks and due-dates. The team members need to accept the project manager's leadership. Does the project manager even have any leadership skills? Did they get any training or mentorship?

Assume the project has been defined well. Who has budgetary authority and responsibility? To whom do they go to make sure the project funding is adequate (or planning has been adequate)? Does the project have a project champion? And what is their role authority?

The project members all work in different areas of the organization, but they need to be in constant communication. Do they have the right communication technology for this type of work? Email isn't a great medium for project communication. Does IT have any responsibility to provide them with support? And in what time frame?

Say a team member doesn't maintain their part of the project in a responsible way. To whom does the team go? Their usual manager? The project manager? What if they're told to try to address conflict within the team? Do they have any conflict management training? And was the training any good, using a mediation or conflict management method that is known to work?

These are all different system dynamics that are indicated in the change from hierarchical to flat - and that's just in one part of the company! Such transitions are rewarding, both personally and financially, but their complexity should not be underestimated.

I don’t think companies can afford to continue to operate in the old hierarchical ways. Those structures will be the dinosaur bones in the dirt within this century. Flat, networked organizations are not the thing of the future – they are the organizational design of now. So companies thinking about making a transition are wise to do so. But the process needs to be approached with a deep respect for how much time and investment will be required to achieve the desired results. Companies who are just focused on today and tomorrow’s results won’t be able to muster the discipline and patience necessary to change. But ten to fifteen years from now (if it takes that long), they won’t be able to muster the profits they need to survive.

(c) 2007, Andrea M. Hill

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