Funny thing -- every year it seems like there's a new fad in the world of business and HR.
This year, in addition to the focus on work-life balance, employee engagement, wellness, and diversity, our new research shows that companies are desperate to reorganize their teams to improve speed, time to market, and efficiency. (92 percent of companies rate this a top priority)
Why this interesting new trend? It's pretty simple: digital technology has broken down the walls between teams, dramatically reducing the need for middle managers and "information brokers" to sit between people doing the work and top executives.
As one executive in Asia put it to me:
I don't really need middle managers who aren't experts in their function any more. I can monitor and measure the health of their teams through my dashboards and information systems. I want leaders who have hands-on skills and work directly with their team.
We, as individuals, like to work in small groups. We naturally work in small teams, we tend to collaborate with people close to our desk, and we get more work done when we trust and work closely with the people in our group. The result: companies are moving from top-down hierarchies to what we call a "network of teams."
Our research shows that 92 percent of global organizations see organizational restructuring as a critical priority in the year ahead, and nearly half of respondent companies are either in the middle of a restructuring or planning one. However, few know how to implement this change. Only 14 percent of executives believe their company is ready to redesign the organization, and only 21 percent feel expert at building cross-functional teams.
How can companies step into effective structural redesign? Here are 4 main tricks:
Break down the silos
Companies that bring teams together and encourage them to talk to each other are the ones that truly innovate and thrive. However, this cannot be achieved when an organization operates in silos. People have to take time to talk with each other, share information publically, and create "liaison roles" that work between functions.
It's also important to move people around. When people find themselves in a new job shifting from sales to marketing or engineering to support, they bring valuable expertise and tribal knowledge with them. Plus its great for their career. The concept of a "job description" becomes that of a "mission specialist" or "technical assistant."
Focus on Mission and Culture
When people work in small teams, they become empowered to make more decisions. You want them making decisions consistent with your goals and overall mission. Companies should look to organize these teams around a mission, product, market, or an integrated customer need rather than a specific business function. (ie. rather than be the "sales team" they can be the "Company Y sales team" or "retail industry sales team."
A great example is the healthcare industry. Hospitals and healthcare organizations around the world are moving away from traditional medical specialties and reorganizing around patient needs. For example, the Cleveland Clinic has seen dramatic improvements in patient outcomes by restructuring its entire hospital network around patient medical problems and leveraging patient-centric teams to solve these problems. The mission of "patient health" overcomes that of "delivering service," encouraging cross functional medical professionals to work together on behalf of patients.
Move away from top-down management
As teams take over, "positional leaders" (ie. those who lead because they have a title) become less important. We still need leaders, but today's leader is more of a team-leader, connector, and coach than a "boss."
According to the Deloitte's research, nearly $31 billion was invested in corporate leadership programs in 2015 with checkered results. More than half (56 percent) of business and HR executives report their companies are not ready to meet their leadership needs, and only 13 percent of respondents consider themselves "excellent" at building global leaders.
While hierarchy is less important in the networked organization, it doesn't mean the organization is leaderless. In fact, people like having someone that sets the direction and provides guidance. They celebrate leaders who collaborate, make decisions and connections, and empower their teams to set their own goals and make their own decisions within the context of an overarching strategy or business plan. This, in turn, reverses the traditional orientation of goal and performance management.
Foster a culture of sharing and feedback
If you want your organization to succeed with the new organizational structure, then it's important to establish a culture that's rich in sharing. Roles such as "liaison officers" are emerging to help facilitate cross-team communication and problem-solving.
In addition, information and operation infrastructures are helping companies break down the silos by enabling teams to communicate quickly and identify connections between activities and desired outcomes in real time. At Nestlé, for example, digital information centers aggregate information from social networks as well as broadcast and news outlets about the company's food brands around the world to help its product business lines see where the brand is succeeding or failing to gain traction.
Listen, "designing an organization" is one of the trickiest and often most emotional things that happens in business. People are trying lots of new ideas (Holacracy, getting rid of all managers, is one) to help people become more productive at work. (Holacracy, despite interest, seems not to be working.)
The biggest lesson I've learned is to "push decisions down" - closer to customers, closer to patients, and closer to your stakeholders. If you focus on connecting people, communicating the mission, and encouraging people to share, the "new organization, different by design" will appear before your eyes, and your company and people will healthier than ever.