Organisation structures: More networked than linear

I am at a conference and I find myself part of a high-powered panel discussing some abstruse topic called ‘The impact of digital age dynamics on traditional organisational constructs'. A topic about which I have no knowledge or interest whatsoever. The fact that the gentleman next to me is confidently mouthing stuff that seems to indicate his level of vacuity is cold comfort to me. The panel moderator turns to me and says ...

The dream pops, I wake up with a shudder and look guiltily around me and am comforted by the collective somnolence of a well fed post-lunch crowd at a typical seminar. And thank God, I am a part of the audience!

A very dear friend of mine keeps telling me again and again that structure should always follow strategy. The fact that he has to keep repeating himself shows how much I listen to his words! Lo and behold, the same lesson is brought home to me most forcefully as I watch a documentary about the Roman Empire. As the empire expanded with its conquests, the Roman army became more sophisticated and ultimately evolved into a force that became highly hierarchical and defined by purpose: depending on whether they were troops who accompanied the emperor; were meant to defend major cities; or were forward-facing elements proactively engaging the empire's enemies. I am pretty sure that earlier civilisations would have evolved similar structures, but the Romans refined them to perfection. Over time, the Romans settled down in conquered territories. Then came the matter of the army's interface with the civilian administrations in the territories, most of which had been amalgamated into the empire through conquest. Right through this evolution, control still lay with those in power in Rome. Sounds familiar? It should. This pretty much represents the traditional organisational structure in corporates and bureaucracies alike.

This format has served us well all through human history; perhaps, even until the period immediately after World War II. That is the time the big push began when companies from the Western world began expanding globally; the next wave saw the Japanese sweep everything before them in the 1970s through to the 1990s. Then the Koreans took over the mantle and now the Chinese are on the march.

In all these developments, each country brought its own variation in managerial structure but broadly mapped the age-old system. Most depended on the command and control principle, where there was clarity that the home base was invested with both the knowledge/ expertise and authority over its dominions. In essence, it was based on the thesis that control over finances/ information/ knowledge is power and most of the power was vested in the central office.

Come the digital revolution and things have changed dramatically over the last decade or so. Given the fact that there is a growing need for work to be done wherever there is a significant commercial or knowledge advantage, it has naturally meant that the iron grip of the HQ has to get diluted. While there have always been cases when country-specific adjustments have been done by many companies to address local needs, the change now is significantly different. Now, intellectual capital is being built in multiple locations and in many cases, the local siblings have become considerably more critical than the parents.

The communication revolution is another major contributor to the success of the distributed work syndrome. Simultaneously, it has ensured that power is slowly but steadily devolving away from the hub and into the satellite units.

This is a radical change that is akin to our solar system moving away from being purely centred around the sun. This has contributed immensely to the dissemination of knowledge and it is increasingly clear that this trend will only gather pace.

These developments have begun to impact organisational structures and I believe the trend will accelerate in the years to come. The new strategies for growth and, hence, the resultant structures will mean far more collaborative work and a shift away from monolithic power structures.

For quite some time now, we have had dotted lines making their appearance alongside the old fashioned solid lines. In times to come, the structure will likely evolve more as a network of knowledge centres with what may be termed core financial and administrative power being retained at the centre and knowledge-based power being much more widely distributed in the system.

This will perforce necessitate an acknowledgement of this change and more importantly, a willing internalisation of its implications. Hegemony will need to give way to democracy.

From boxes and lines, organisation structures will surely evolve into more sophisticated formats. Maybe it will look like a honeycomb structure — who knows? What is certain though is that knowledge-based power will share the high table with traditional power based on ownership and control of financial resources.

The writer is corporate advisor to 3i Infotech and Manipal Education and Medical Group. He can be reached at >mcshekaran@gmail.com

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