Why the traditional corporate organisational structure is broken

The traditional corporate organisational structure is subject to some profound revision. One of the

most striking evidence of this evolution is the emergence of holacracy as an organisational model, where not only every management layer is taken out of the structure, but the whole structure itself is torn down.

Okay, this can take many forms, and the companies currently experimenting with these models might not immediately ring a bell with my reader: Zappos, Medium, Buffer, Basecamp, Blinkist and alike. Oh, you might have heard of Gore-Tex though.

One might quickly conclude that this is only applicable to smaller, leaner organisations. However, one can see signs of things shacking at big companies as well.  Microsoft, and more recently Deloitte and Accenture, have thrown their yearly performance reviews (and subsequent rankings) in the garbage can. It’s only a first step of bigger changes, I’m sure.

But why do companies experiment with new organisational models, or why do they get rid of traditional practices that, for decades, have proven so successful?

There might be plenty, but the main reasons in my eyes, each of them beautifully overlapping, would be:

• The traditional structures are not the most efficient ways of organising work.
  
  There’s something troubling with the case study of Blinkist (see list of sources below). Instead of starting from people whom they assigned tasks and functions to, Blinkist starts with a list of things to accomplish. It then lets employees decide which ones they wish to work on. A person with, say, deep knowledge of accounting might hence find himself performing logistic tasks parts of the day, if he wishes. Ultimately, fewer people do more tasks. Efficiency increases.
  
  I don’t see why this reverse principle would not work with bigger companies.
• The networked ecosystem needs to be mirrored by the internal structure.
  
  The way companies work with their ecosystem is profoundly changing. In an open, networked company, suppliers, clients, contributors of any kind, are increasingly becoming part of the organisation. Very often this requires an organic, constantly evolving model to work with the ecosystem, and this cannot work if on the inside are tied to a rigid, hierarchical structure. Both external and internal worlds need to align on the same principles for it to work.
• Many traditional functions have lost their relevance anyhow.
  
  With the emergence of trends like open sourcing, crowdsourcing, 3D printing, Cloud,  ‘as a service’ models, Artificial Intelligence, many traditional functions like marketing, sales, IT, logistics and so on have somehow lost their meaning. The skills required in industries and companies where these trends become a major competitive advantage, are not limited to the ones assigned to these job roles anymore. To perform their ‘marketing’ job, marketers need a completely different set of skills compared to what a marketer previously was supposed to have (and probably are still supposed to have). In the new normal you would not be able to match all these skills with a ‘marketing’ function. And this will account for many other functions as well.

Oh, obviously, I omitted the argument that the new generation entering the labor market demands to work in a less rigid organisation. At least according to many surveys that go around about them. Problem is, there are as many surveys that contradict these points. In some of them Generation Y almost seem as conservative than any previous generation. The problem with generalisations… 

But it’s true that the most brilliant young people around will find the prospect of working for a startup with a meaningful project more appealing compared to working in cubicles with multiple reporting lines and endless fruitful meetings. Just guessing. 

Thing is, organisational models are clearly changing, and I’m certainly going to follow that development closely. If you have ideas on this I’d be happy to discuss.

Sources on Holacracy abound. Some of the most relevant ones I referred to in this article are:

Fortune article: Holacracy and 3 of the most unusual management practices around

Culture Zine: Why most companies are looking at alternative management structures, and why you should too

Quartz article: Our startup launched our own version of holacracy and tripled its revenue (about the Blinkist case)

Washinton Post: In a big move, Accenture will get rid of its performance reviews and rankings.