Is your organization future-proof?

Topic: Organizing for Speed

Josefin Bona
08.04.2019

Hierarchical organizational structures are becoming outdated
Early management theories and leadership frameworks were developed during the industrial revolution when organizations continuously grew larger and larger, which required structure. At the time this structure came in the form of a hierarchy with multiple layers of managers to control different organizational units and employees. Today, this type of hierarchy and structure is still in place in many organizations, where managers control its subordinates by telling them what to do and where decision-making is concentrated to managerial positions.

However, it is increasingly recognized that the old type of hierarchical management structure creates several obstacles for businesses operating on today’s ever-changing market. One of the most evident problems is its rigidity and inflexibility resulting in slow decision-making processes. Moreover, leaders are expected to be the ones having all information and knowledge needed to make decisions and steer units and employees. However, in practice such information and knowledge are rarely solely concentrated to the management.

New generations of employees
Younger generations are, in large part thanks to rapid development of new technologies, adapted to a changing environment. Therefore, they are more used to change in their everyday life. This means they are more tolerant to a working environment where frequent directional shifts are needed. It also means that the younger generation have different expectations than older generations on their working environment requiring rapid movements and high-paced development opportunities to greater extent. One example is the increased desire of having a flexible work schedule and work place with the possibility to telecommute. Another is the shift towards more flexible roles and positions where a permanent position in an organization is no longer as desirable as before. In addition, younger generations tend to be less patient than older generations in working towards long-term goals and await the opportunity to reap the rewards of their efforts in a hierarchical system. Moreover, they expect a more equal balance of power between management and staff where immediate feedback, transparency and fairness are highly valued. This puts pressure on today’s leaders and organizational structures to respond to such expectations to attract and retain a younger workforce.

In the uncertain and ambiguous business environment of today, with rapid and frequent changes, and with a workforce demanding more flexible working conditions, it is evident that new organizational structures and new types of management and leadership are needed.

A new system
As a response, we can see new movements shaping to share knowledge in the field of management and leadership. An example of this is Management 3.0 which can be described as an initiative wanting to introduce a new mindset rather than a new framework replacing outdated hierarchical structures and leadership styles. The Management 3.0 mindset urges leadership and decision-making to be seen as a group responsibility, requiring both managers and employees to contribute rather than a responsibility solely of management. The initiative gives actionable hands on advice on how a system can be created where both managers and employees can be engaged in leadership activities.

In the new system the leader is no longer expected to steer and control the organization and the employees, but rather to manage the system by facilitating a network and a culture that inspire the employees to lead themselves. This type of manager-less organization is an alternative to the traditional hierarchical organization where the employees are seen as a network of specialists and the beholders of knowledge rather than the managers. The role of the manager thus becomes to connect employees and ideas within the organization to facilitate creativity and value creation, rather than telling the employees precisely what to do. In addition, authority is delegated throughout the network to enable faster decision-making in close connection to where ideas emerge. Decisions can thereby be made by employees with expertise knowledge and access to the most relevant information, rather than by organizationally remote managers with limited insights in details. By delegating authority, an organization can empower employees to take own initiatives allowing them to focus more on how to deliver increased value. As a result, management becomes more flexible and knowledge from the entire organization is utilized. This leads to the facilitation of faster and more well-grounded decision-making processes enabling the organization to better respond to market fluctuations.

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At Knowit Insight we believe that leadership is formed together, by both managers and employees, and that delegation of authority through network organizations will open new spaces for management roles. We have structured our own internal operations according to this and frequently support our clients in transforming their organizations to the same. Therefore, we have been able to see the power such organizational structure actually can bring. We see that it allows for managers to focus on creating a setting and culture where employees are inspired to self-leadership and collaboration within the network. Through this type of setting, the organization tend to navigate faster in a complex world where solutions can be created in a more rapid manner, thus enabling innovation to thrive. In other words, concepts such as Management 3.0, network organizational structures, delegation of authority and shared leadership are here to stay.

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