Tuesday, 8 July 2008

Organisation structure design is dead!

This blog has recently been focusing on web / enterprise / HR 2.0 but the reason that I've called it 'The New Social Business' is that I want to focus much more widely on all the other non-technological factors and activities which are supporting and enabling major social changes in the workplace.

So I was interested in an article in this month's Harvard Business Review on Managing Corporate Social Networks (Adam Kleinbaum and Michael Tushman).

The article looks at the need to combine creative energies across a whole organisation and concludes that the problem is structural:

"Business-unit boundaries exist precisely because they create efficient structures for executing strategy. But silo focus and ruthless efficiency come at the cost of cross-divisional collaboration, so some innovation opportunities are either poorly executed or not seen at all."

However, echoing Einstein's famous point that we can't use the same tools to solve problems that we used to create them, the authors believe that the solution is not structural but social:

"The solution, we think, lies not in reorganization but in informal communication through the social networks that exist throughout the company. These networks must be shaped and cultivated to efficiently find and exploit innovations.

Company executives shouldn’t expect informal, interdivisional networks to spontaneously produce innovations; they must consciously manage the structure of these networks to promote innovation at all its various stages."

The management of social networks need to include

1) the identification of 'idea brokers': people who maintain broad networks throughout the organization and are thus uniquely able to draw connections between—and recognize collaborative opportunities for—technologies, markets, or people that might otherwise never come into contact. This will help ensure that the organisation is able to discover new opportunities.

2) the development of strong cross-functional ties through the formation of dense webs of strong interpersonal relations.  This will help ensure the organisation is able to mobilise the organisational support and resources necessary for execution.

"You can encourage the former by systematically promoting serendipitous meetings between people from different parts of the organization at conferences, off-sites, and training programs. You can encourage the latter with executive rotation, broadening the experience of young executives as they forge new ties and bring their old ones to bear in new contexts."

The analysis leads the authors towards an interesting conclusion: we should select people for important positions on the basis of not only their skills and prior experience but also the nature of their social networks.

This is the way that we will become adept at deploying and overseeing informal networks that are required to proactively manage the transition between discovery of a collaborative opportunity and execution of a cross-divisional project.

I'd like to add a tentative personal conclusion too.  I've delivered lots of workshops and undertaken quite a bit of consultancy around organisation design.  I usually take people through the various main design options in order to emphasise that they do have choice in different designs.

And I still believe that they do - but I've yet to come across a situation where we've introduced for example a process based organisation.  I suspect it's going to remain very rare for the benefits of this type of structure to outweigh the considerable costs.

I think the choice is probably now much more on a micro rather than a macro scale.  It will focus on relatively subtle options around different, mainly hierarchical organisation designs, rather than some of the more innovative alternatives.

And instead, we'll provide some of our organisational requirements not through structure, process or job design but through the design and management of social networks.

Organisation design is dead!  Long live social network analysis!