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Flatten the Organization

April 20, 2012

Flat organizationsAutonomy:

Inherent in all of the work to shape leadership and corporate culture is the trend toward flattening the organizations we build. Middle management is feeling the pinch on this most as they struggle to add value. With the advent of the knowledge worker, the move to more information intensive work rather than hands on manufacturing, the American middle manager is an endangered species.

Disrupting Middle Management

Traditionally, middle managers were required to receive and summarize information from the people in the organization below her and pass it up to the executive teams above for decision and/or action. With the advent of information technology, just now starting to pay-off in a big way, we do not have to have people gather and summarize data. Instead, we depend upon the systems to do that for us. In large part, that is why the business slow-down (recession if you like) in the 2001 through 2003 time-frame is so difficult to understand. Productivity of the large investment in technology over the previous decades is now finally hitting the bottom line. We are doing far more with far fewer employees than ever before.

Some believe we have gone a bit too far in this regard, and perhaps they are right. Time will tell. Meanwhile, with revenues scarce, businesses have no choice but to work on minimizing costs in order to stay in business. To the extent that they can do that while not decreasing their customer service, they will not only be successful, but in many ways will be better off than they were. We can no longer wait for a steeply hierarchical business model to function. Customers and their customers demand quick, accurate responses.

Reorganization

The Harvard Business Review (Harvard Business School Publishing, Boston, MA, Published Monthly) is replete with case studies on the many different ways companies have found to re-organize their firms to make them more responsive to customers. Almost all projects of any size involve the application of technology to re-engineered business processes in order to improve customer service. At the same time, efficiencies are gained by the organization as the installed or modified systems take over the functions that were originally performed by legions of people. Perhaps the best analogy comes from the recent armed conflicts. As we watched in amazement, the use of technologically improved weapons allowed a relatively small army to dismantle a whole governmental infrastructure with efficiency, effectiveness, and with, presumably, the least possible casualties. Things don’t always work out that way, even with the proper application of technology. But more and more we are seeing the effects of applied technology minimizing the number of people in our organizations while improving the delivery of customer service and product innovations.

Business Models Must Change

There is no reason to believe that this trend to flatter, leaner, more technology driven companies won’t continue. Even the smallest business finds that the need for Internet connectivity, e-mail, electronic invoicing, file sharing, social media presence, and electronic fund transfers are a way of life. And along the way they find that they are made more efficient in their own operations as they respond to the demanded technology. The challenge then is to manage the changes required by our companies and our employees while at the same time maximizing the return on our efforts. We are all stakeholders in the success of our economic system and so it is in our best interest to figure out how we, as individuals, will contribute to the new world of business.

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