FLAT AND BOUNDARYLESS STRUCTURES
A Lesson in the "Leadership for the 21st Century" Course
Prepared By Dr. Les Pang
Problems with Traditional Organization Structures
- Lack of flexibility to changing mission needs/rapidly changing
- 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
Definition: Reducing layers of an organization in the hope of
achieving organizational efficiency and effectiveness
What are the boundaries?
Vertical - Boundaries between layers within an
Classic Example: Military organization
Problem: Someone in a lower layer has a useful idea; "Chain
of command" mentality
Horizontal - Boundaries which exist between organization
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
General Electric/Jack Welch, CEO
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
- 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
- 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:
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
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
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
- 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
- Wanted to study global water cycle and its effect on climate
- Co-located scientists, educators and flight engineers in an
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:
- Timely, reliable program information for decision making.
- Needs-guided delivery of information and services.
- Local controls and flexibility (delegation and empowerment).
- Efficient business processes redesigned to take advantage
of new technologies.
- Usable technologies.
- 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
- 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
- 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
- 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
- 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
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
- 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
- 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:
- 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
- Group Decisionmaking Tools
- CD-ROM technology
- Office Automation Software
- High Capacity Data Storage
- Object-Oriented Technologies
- 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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