by Matt English, IBM Global Business Services (Melbourne)
Management guru Peter Drucker once said that "management is doing things right; leadership is doing the right things". His latter point holds true regarding the way organisations are shaped and how their business models operate when going to market. To this end, the concept of the horizontal organisation has been with us for some time, focusing on driving away from vertical or hierarchical organisations towards those that are flatter or more customer focused. Indeed, the concept of flatter organisations has been in and out of vogue to varying degrees over many years.
However, there is a more powerful shift afoot that is rapidly propelling us to the "new" horizontal organisation. This shift is bolder and more profound, and is about breaking down the "four walls" of the organisation and re-shaping the business model. It is a fundamental shift in how the organisation works as distinct from how the organisation is designed. The "new" horizontal organisation is more about linkage and connection across and beyond the traditional boundaries.
Underscoring this is the recently released IBM CEO Study 2012, ‘Leading through Connections’, exploring the views of some 1,700 CEOs globally. The study reveals how technology is driving change more than ever before, enabling greater degrees of connectedness within organisations than ever previously imagined.
This connectedness embraces all aspects of how organisations operate - across employees, customers and stakeholders. It provides new ways for organisations to interact with these groups, and it offers new opportunities for fresher business models.
But what impact does this have on organisation’s capabilities? What do organisations need to do differently, and how will this impact future strategy and performance? There are three major capabilities needed in the "new" horizontal organisation.
The first is that the "new" horizontal organisation will be highly technology enabled. Many organisations may claim this already, but in reality, many have a long way to go. It goes well beyond email, chat rooms and lots of data. The "new" horizontal organisation is about being connected across people, process, information and technology, but then using that connection to deliver real value. This pervasive connection will fundamentally shift both the profile and presence of the organisation internally and externally, igniting collaboration and innovation across the business and its stakeholders. As an example, many consumer facing organisations such as telcos, banks and retailers are rapidly expanding their footprint in social media not only to connect with stakeholders, but also to drive different service and product offerings.
The second capability is that the "new" horizontal organisation will be highly people enabled, with people being empowered with new levels of accountability and decision making. The focus will shift more towards outcomes, and through smart analytics, people will have access to new levels of relevant and timely information, and thus new decision making capabilities. Such decisions can be made in real time and can be used to address the immediate requirements of employees, customers or stakeholders, and deliver real value. For example, retail sales personnel in stores will be able to readily address the queries of a customer whether they relate to an online purchase, an in store purchase or a special promotion for particular types of customers.
The final capability for the "new" horizontal organisation is to be highly culture enabled. The culture in the "new" horizontal organisation will be one that has flexibility and responsiveness as its core element. When the four walls are broken down as described earlier, the playing field shifts and expands dramatically. Indeed, the shape of the future playing field will have a significant impact on the culture of the organisation. This will involve greater mobility of people and flexible ways of working. This in turn will have a large bearing in how the organisation culture evolves, with a re-focus around what work is done and what outcomes are delivered rather than where work is done. For example, telecommuting in government agencies provides strong opportunities regarding productivity and flexibility, but also presents significant challenges to existing organisation cultures and ways of working.
So are you ready and what does your business need to do to address its capabilities for the "new" horizontal organisation? As Peter Drucker said "....leadership is doing the right things".