Three forces are making your current organization structure unfit for the future. And, what you can do about it.
Technology is killing value chains as data eats process.
It is all around us. Not Love: Data. And, it is eating process. Amazon Go eats cash and card handling process and all people working on it. Airbnb eats a lot: starting with the whistle-blowing doormen and the friendly staff at the reception. The relentless march of data-driven technology destroying current value chains and organizations built around these value chains is soon coming to a theater near you.
Capital is abundant and patient.
The old Marxian notion of “Those who own and those who work for those who own’ is dying. There is enough patient capital in the world chasing technology and data driven reformation of the world. Any individual can create a company that changes the world, even if that company is not heard of after a few years. (Remember Netscape?) The relentless march of technology has abundant capital behind it.
Employee life cycles are outlasting Technology life cycles.
Every human being seeks a productive, income and wealth generating life of 20 to 40 years. But, every company is a very different company every few years. How do you last in a company that sold people-based services and now sells an artificial intelligence based platform? How do you organize when algorithm based trading is due to replace many traders?
Here is what you can do to approach the future organization.
Discard the traditional hierarchy built on levels powered by job evaluation, tenure of service, span of control or size of revenue. All work needs to get organized on two axes. Technology and Value. You are either creating technology or applying technology. You are either creating value or delivering it.
Identify Networks and Platforms.
The traditional notion was that all value was created within an organization. Yes, there were suppliers. Yes, there was efficiency based outsourcing. But, most of the value chain was powered by employees. Going forward, with shorter technology cycles and the need for multiple capabilities and technologies to come together to produce a value-creating outcome, it will not be possible to do it all ‘inside.’
An organization will have to build networks and platforms that connect it with other organizations as value-creating partners, not suppliers or vendors.
Move from an ‘Organization Structure’ to a value-creating eco-system.
The traditional structure with people inside a pyramidical tent will constrain the value-creation process. Every company will have to build value-creating networks that are built around a core business idea or a domain. A robotics automation company will partner an insurance company. The insurance company will then partner with an analytics company that works with its robotics partner. The value-creating outcome now produced will be greater than if any one of these firms decided to employ people to do all three in a traditional, hierarchical and matrixed structure.
A value-creating network will always outperform the traditional, hierarchy based organization design.