April 27, 2014

The death of the classic org chart: How the connected world transforms your current company setup

English Content



children on playgroundWithout any doubt, the world gets a hyperconnected place – a global network, exchanging more information and data every day. Step by step, “everything” gets connected by the global network, empowering new business models and transforming customers and markets.

Observed from a very high perspective this means that customers and markets become something like a brain – a huge network with small and big hubs. A network that is able to adapt to trends very fast and absorb new ideas and behaviors quickly. A network which generates more innovation faster and faster. A network which creates more disruptive power than ever a change before was able to.

The newspapers are full of those “disruptive news”. Think of Nokia: In 2007, Apple presented the iPhone. In 2014, Nokia was sold to Microsoft. Think of the book-stores: The e-book ecosystem was launched only a few years before – now a whole business area is in trouble. And the current big thing is 3D-printing: Think of service trucks, equipped with a 3D-printer to deliver spare parts on demand. This is why logistic companies get nervous. Powered by the network scaling effects of the Internet, young and small start-ups suddenly are able to crush existing business-models in no time.

Same change appears by having a look on the customers and markets. The modern customer is equipped with a smart-phone and socially connected, using networks for spreading news and information with his peers world-wide. The connected customer lives in that brain.

And with this existing connected customer and the new business models, which are part of a global brain, the problem for your company gets visible as one big question: Are you ready for being a part of the brain?

Trying to answer this question, let´s have a look on the very core of every company: The org chart (hopefully the result of the running business model). And in 99,999% of all companies I bet the org chart looks like this:

OrgChart_ClassicThis kind of structure is a great thing, isn´t it? It looks like things are clear: clear tasks, clear setup. Built for yesterdays business models. And the org chart is run by a huge set of rules, people running functions, seen as resources and led by managers, not leaders.

Well this setup was right for yesterday – in the pre-Internet time, as market and customer behavior was clear and “slower”. But today, we have connected customers who ask for innovation faster and faster, and markets changing with the speed of light.

So, is an org chart with all the constraints as we all know still the best idea? How long does it need to restructure parts of the classic org chart trying to adapt to the upspeeding markets? One year? Two years? And where are your customers and your markets then? So here we are: The death of the classic org chart because it represents yesterdays world.

Let´s come back to the connected world. Well if the world behaves more and more like a giant brain, your company should do that, too. Act like a network. Flexible. Fast. Adaptive. Responsive. So let´s forget the “chart” thing, because a chart only shows the current state. But we already learned that we do not need another “fixed chart” that cannot be changed fast enough to match the customers` requirements.

We need something like a “dynamic org map” that does not show a current state of the business organization, but gives an overview of how to deal with a customer and where to get support and services to fulfill the customer needs.

What enables the dynamic org map to gain speed and stay flexible like a brain?

  • The teams in the dynamic map are able to decide.
  • There is an underlying strategy for the teams and a set of few guidelines.
  • Customer orientation is the prerequisite for the entire company.

For sure, this dynamic map puts most companies on the head. But if they do not do this on their own, the markets will do. And in the second case, it might not have a good end.

As the world becomes something like a brain, the only logic step for companies is to transform into a brain node, constantly fed by external information and built-in ability of adaption of their business models.

There are a few best practices I have discovered so far. One of them is the Haier company. In 2005 the CEO decided to go an entirely new way of setting up the company: Putting customer satisfaction and interaction in the core of his strategy. In my words: The CEO was looking for the closest connection to the global brain. So he threw away his classic pyramidal org chart and build a company based on dynamic teams. Here is more of this stuff.

Staying in the current company setup has of course a target, too: Your company will end up as a dinosaur – being a part of tomorrow: In the museum of organizational structures for slow-moving industrial markets of the past.

Photo © Mog DDL –