FLAT AND BOUNDARYLESS STRUCTURES

Prepared By Dr. Les Pang

Problems with Traditional Organization Structures

• Lack of flexibility to changing mission needs/rapidly changing world
• Internal and external communication (ideas are not communicated)
• Slow/Poor in responding to customer requirements
• Turf battles
• Failure to get things done
• Customers/Vendors have a hard time dealing with the organization (multiple/unknown contacts)

Flat Organizations:

Definition: Reducing layers of an organization in the hope of achieving organizational efficiency and effectiveness

Boundaryless Organization:

What are the boundaries?

Vertical - Boundaries between layers within an organization
Classic Example: Military organization
Problem: Someone in a lower layer has a useful idea; "Chain of command" mentality

Horizontal - Boundaries which exist between organization functional units.
Each unit has a singular function.
Problem: Each unit maximize their own goals but not the overall goal of the organization

External - Barriers between the organization and the outside world (customers, suppliers, other government entities, special interest groups, communities).
Customers are the most capable of identifying major problems in the organization and are interested in solutions.

Problem: Lose sight of the customer needs and supplier requirements

Geographic - Barriers among organization units located in different countries

Problem: Isolation of innovative practices and ideas

What is a boundaryless organization?

• One that makes all of these barriers much more permeable than they are now; loosen boundaries
• Let information/ideas/resources/energy flow throughout the organization and into others
• Jack Welch, GE, coined the term
• Can an organization be completely boundaryless? No -- there will always have some hierarchy, functional divisions, geographic boundaries, limits between organization

Examples: Private Sector

Global enterprise - body of a classic big-company while having the soul of a small company

    Big-Company advantages - reach/strength, resources

    Small-Company advantages - thirst to learn, compulsion to share, the bias for action (speed, hunger, urgency)

Demise of "not-invented-here" attitude; learn from each other

• Productivity solutions from Lighting
• Quick response asset management from Appliances
• Transaction effectiveness from GE Capital
• "Bullet train" cost reduction from Aircraft engines
• Global account management from Plastics

Learned from ideas coming from great companies

• Quick Market Intelligence - direct customer feedback from Wal-Mart
• New Product Introduction from Toshiba, Chrysler, HP
• Advanced Manufacturing Techniques from American Standard, Toyota and Yokogawa
• Quality initiatives from Allied-Signal, Ford and Xerox
• Quality focused culture from Motorola

Benefits - meet the needs of customers today by gaining:

• Speed
• Flexibility
• Integration
• Innovation

Ikea

Works closely with suppliers by providing technical assistance, leasing them equipment, giving advice on bringing production up to world class standards

Refined the role of the customer -- minimal salespeople, cart it home and assemble it themselves, provides car carrier racks, tools/instruction including tape measures and clipboards

Result: Lower prices for customers, growth for Ikea

Saturn

Plants are run by semi-autonomous teams of 6-15 people, each of which are responsible for every aspect of their area on the line

Relationship with customer redefined - no-pressure sales/no haggling (similar to buying a small gift in a local shop)

Suppliers have access to its production schedule

Wal-Mart/Procter & Gamble

Wal-Mart approached P&G regarding diaper warehousing and distribution

P&G gained access to WM's daily sales information and delivered optimal quantity to each specific store the very next day or as needed

Examples: Government

Federal Health Care Administration, Medicaid Bureau (now called "Centers for Medicare & Medicaid Services")

• Sally Richardson, Director of Medicaid Bureau, created a team of employees of managers to de-layer the organization and become more flexible, responsive to changing policies, and provide better service
• Allowed former managers to move into policy and project roles without losing compensation or promotional opportunities
• Open dialogue about team thinking throughout the organization, encouraged innovative thinking, encourage empowerment

Federal Aviation Administration

• Boundaryless view of Customer Relationship - Providing Training to customers; reexamine the value chain
• Offers pilot training in FAA standards and guidelines

NASA

• Wanted to study global water cycle and its effect on climate variations
• Co-located scientists, educators and flight engineers in an interdisciplinary center

USDA's Field Office of the Future

• Formed an interagency team ("Listening Team") to gather customer input for improving the agencies customer services in field offices
• 400 citizens responded and employees in early 1994
• Customer expectations derived:
  1. Timely, reliable program information for decision making.
  2. Needs-guided delivery of information and services.
  3. Local controls and flexibility (delegation and empowerment).
  4. Efficient business processes redesigned to take advantage of new technologies.
  5. Usable technologies.
  6. Privacy and security.

How to Loosen Barriers

• Foster an open, sharing environment
• Communication - leads to the emergence of shared values
• Experimentation - try new processes, technologies to do work better (risk taking)
• Rewards system - recognizes the adapter or implementor of an idea as much as the originator

How to Loosen Barriers - By T.K. Ram

• Involve all the people who have a stake in the boundaryless organization
• Develop and share a common mission
• Develop and share a common vision
• Create an environment for entrepreneurial spirit
• Think of interconnected processes, not of isolated functions
• Think of final goal, while working on intermediate products
• Celebrate the achievement of intermediate goals (and sometimes, just celebrate the effort)
• Cultivate a thriving attitude for working with new people
• Communicate as many times and in as many ways as is necessary i.e. stay in touch
• Think of the person you are communicating with at any time as your customer
• Think of convincing and satisfying this customer
• Generate a sense of humor (helps maintain efficiency and effectiveness)
• A commitment from the top is required for the success of such an organization.

Organizational Processes Required by Flat and Boundaryless Structures

• Decentralization of authority
• Information sharing
• Diffusion and distribution of competency
• Redefinition and reallocation of awards

Other Implementation Issues and Overcoming Them

• People issues (Turf mentality)
• Resistance to change
• Cost issues

Are You A Boundaryless Leader?

One Who Breaks Down Vertical Boundaries

• Most decisions are made close to the action.
• You share information about overall performance and business strategy with as broad a base of constituents as possible.
• Your recognition and reward system is primarily team based.

One Who Breaks Down Horizontal Boundaries

• You encourage people to develop multiple skills -- so everyone feels ready to do what it takes to get the job done.
• You ensure everyone is focused on shared goals, across functions.
• You push for integrated end-to-end processes with a single point of accountability to get the work done -- streamlined, efficient, and value-added every step of the way.

One Who Breaks Down External Boundaries

• You are focused primarily on maximizing value to the end-user.
• You actively seek partnership and relationships of trust with customers and suppliers.
• You spend most of your time with customers, suppliers, and outside constituents.
• You formulate new business in partnership with your customers -- based on their needs and changes in their markets.

One Who Breaks Down Geographic Boundaries

• You seek diversity in the people you hire and promote.
• Significant international experience is prerequisite for top positions.
• You always start from conditions at each geographical location and build your business practices around these -- taking very little for granted (versus applying the domestic model to each location).

One Who Has the Overall Leadership Skills to make it happen!

• You are focused on results -- you clarify expectations about the desired end results and let your people figure out how to there.
• You lead through articulating clear goals, then coaching, counseling, and cheerleading people to achieve them.
• You are comfortable sketching out a rough-and-ready vision of where the organization needs to go and using actions as a way to test and refine the vision and the overall direction.
• You are comfortable putting out exceptional challenges to people -- even if you have no clue how people will deliver on them.
• You create an environment in which coming up with and exploring new ideas is encouraged and rewarded.

Role of IT in Enabling Flat and Boundaryless Structures

"The 21st century leader will need to understand information technology and supply chain management" -- Dr. Albert Vicere, Director, Institute for the Study of Organizational Effectiveness

"In re-engineering, information technology acts as an essential enabler." -- Michael Hammer, Re-engineering the Corporation

IT Which are Enabling and Driving New Organizational Forms:

• Telecommunications
• E-mail
• Distributed Computing/Client/Server Technologies
• Access to database (production schedule)
• Flat organizations create a need for systems which give employees prompt, direct access to information required to do their jobs and cope with increased work loads and fewer support staff
• Collaborative Technologies
• Groupware
• Group Decisionmaking Tools
• Internet/Intranet
• CD-ROM technology
• Office Automation Software
• High Capacity Data Storage
• Object-Oriented Technologies
• Videoconferencing
• Networks
• Executive Information Systems
• Geographical Information Systems (track where employees are located and contrast with workloads, program benefits, outcomes)
• Integrated Data Management System - Fedex -- same package record, Hertz -- rental car data from a single system

Top Ten Leadership Competencies: The 21st Century Leader Must...

Selected by 1,450 managers and executives world wide

1. Be able to articulate a tangible vision and strategy.

2. Empower others to do their best.

3. Act as a catalyst and manager of strategic change.

4. Get results. Turn strategy into action.

5. Exhibit a strong customer orientation.

6. Communicate effectively on a day to day basis.

7. Be a catalyst of cultural change.

8. Think integratively about the total business.

9. Be flexible and adaptive.

10. Take risks and initiative.

"Leaders will have to be very good at influencing people whom they have no direct authority" - Dr. Vicere

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