New Organizational Forms – Need or Hype?

In times where transformation is increasingly becoming the status quo in many organizations, lots of leaders and teams are looking for methods, tools and models to help cope with complexity and which match to the new agile corporate culture. Looking for answers to the question of whether new forms of organization are a must or just a new hype, I looked at the latest findings from Jana Costas.

In these turbulent times, traditional organizational forms that emphasize top-down control, centralization and up-front planning are said to be ill-suited. Currently, new agile organizational forms that shift innovation, empowerment and collaboration from the margins to the core of the firm are promoted as novel solutions to such problems. Yet, their potential remains fiercely disputed.  Proponents see the new agile forms as a panacea for all troubles associated with traditional organizing. Critics say they are simply a fad that represents “wishful thinking” ignorant of the fundamental social dynamics of organizing.  And you - which side are you on?

3 Examples for new organizational forms

In general, the term organizational form refers to the configuration of structures and practices that defines how an organization functions in terms of governance, membership and communication channels. Research has repeatedly pointed out that firms with an organizational form that fits their strategic goals and the dynamics of the business environment perform better. That fact being considered, it is no surprise academic interest in the emergence of “new” organizational forms that present alternatives to traditional industrial and post-industrial form is hardly new.  However, only more recently, several forms have gained prominence and exposure in the general public. Particularly companies of the so-called new economy have experimented with such forms. They essentially represent radicalized versions of the otherwise old principle of self-organization.

  1. HOLACRACY represents a collaborative organizational form that is characterized by a distributed governance system driven by consent-based decision making. It is a more fluid form of membership that structures jobs around dynamic roles (rather than static job descriptions) that are bundled into semi-autonomous circles.  Each circle is embedded in a higher-level circle that defines its purpose, but is at the same time empowered with the full responsibility and authority for designing and enacting the processes needed to reach its goals. Finally, holacracy is designed to promote intense cross-functional communication and collaboration by explicitly encouraging organizational members to participate in various circles and flexibly switch between different roles, or even create new roles and circles.
  2. Another prominent form is ADHOCRACY. Debates about it in fact date back to Henry Mintzberg’s seminal work in the late 20th century.  More recently, adhocracy has been promoted as an agile organizational form that is based on decentralized governance structure that promotes experimental decision making and trial-and-error learning. The goal is to shortcut internal deliberations and to try out things with customers to gain rapid feedback instead. Furthermore, membership is driven by the participation in and formation of temporary teams formed around emerging market opportunities. Importantly, such teams – other than Holacracy – do not constitute permanent structures, but rather get dissolved as soon as the opportunity is seized. Finally, adhocracy necessitates horizontal communication channels that cut across functions and divisions and enable ad-hoc collaboration and coordination. Overall, the aim is to create a highly responsive and dynamic organization.
  3. PODULARITY  is a related organizational form that has its origins in the principles of “agile” software development.  It sees to rebuild traditional hierarchies and processes as nets of pods: A pod is a small, autonomous unit that is enabled and empowered to deliver the things that customers value. To coordinate pods, podularity aims to establish a culture-driven governance system that emphasizes common cultural standards as an enabler for autonomous decision-making within pods. In a similar fashion to holacracy, membership in pods is fluid. Finally, podularity seeks to foster connections between pods by emphasizing communication based on “pattern languages”: collections of common standards that allow teams to connect and collaborate more easily.  Overall, the goal is to minimize interdependencies between pods, while simultaneously fostering new connections in order to organize for innovation rather than pure efficiency.

Basic principles for new forms of organisation

Make oraganizations more agile:

This principle´s  overall goal is to fulfill the need of today’s businesses to operate in an increasingly dynamic and complex environment.

 Being able to seize emerging opportunities by reacting flexible and fast enough to re-organize as needed on an ad hoc basis. Therefore, new organizational forms embrace modularity: Dynamic teams – be it “circle”, “pods” or “cabals” – that continuously pop out and disappear as soon as they have fulfilled their purpose are the structure..

Empowerment:

Teams are largely let to design and govern themselves as they think is best given their purpose. By radically empowering individuals and teams to self-organize and self-manage, such organizations respond to the current need for work environments that enable “whole” individuals to unfold their creative potential. 

Collaboration:

They seek to create a work environment in which people can engage in joint efforts, share a common goal, and work together towards turning this goal into reality. As collaboration requires people to dynamically switch between different roles that evolve themselves, a more contextual approach to leadership is common in the new organizational forms – it is a responsibility of certain roles far more than of the individuals that enact them.

Together these three principles attempt to build organizations that are both more innovative and more resilient. Yet,  leaders need to deal with multiple challenges in order to successfully integrate them in large, mature organizations.

Essentially all debates about new organizational forms have to do with the key tension at the heart of every organization: the need to become ambidextrous in order to balance the paradoxical demands of exploration and exploitation – the age-old tension. Rather than applying new organizational forms to the organization as a whole, big businesses are therefore better off choosing those elements that might help them improve exploration without putting exploitation at risk. 

Are there Key Take-Aways?

Proponents of new organizational forms promise to make organizations more resilient and more creative at the same time. Yet, they are not a panacea for solving the complex issues of today’s business reality. At best, if they indeed fulfill their promise, they can primarily help organizations get better at exploration and innovation. Thus, rather than applying them as a wholesale approach, leaders are advised to carefully reflect about not only which parts of the company they fit best, but which aspect of ideas are implementable in their company.

What should be considered when implementing new organisational forms?

Although all new organizational forms emphasize distributed forms of governance and the firms that try to implement them might take the admonition to “get rid of all manager”  seriously, in practice even they are neither hierarchy-less nor leadership-less.

For instance, in holacracy there are the so-called “lead link” roles. These have the authority to fill in other roles within the circle, to allocate resources across projects and roles, to establish priorities, define metrics in order to ensure the circle enacts its purpose and accountabilities.  In short, many aspects of the authority and power of formally defined managers are still maintained. Indeed, the ability to fully implement the new organizational forms crucially depends on a visionary leader who strongly supports and champions the necessary change. 

Whereas the proponents of the new organizational forms paint the picture of a brave new world of work, not everything becomes simpler, easier, quicker and better. In fact, evidence from the firms that try to implement the new agile forms indicates the opposite: there can be more rules, more meetings, more leaders and more interdependencies. At Zappos for instance, the introduction of holacracy led to the emergence of a much more complex organization: from the 150 teams and team leaders the company has moved to 300 lead links responsible for 500 circles. Such complexity can often be difficult for people to grasp. The social media company Medium decided to abandon holacracy after people felt overwhelmed by its complexity.

 

Are new forms of organisation a must?

New organizational forms can open unseen opportunities for companies that seek to become more innovative. However, leaders should not unconditionally embrace them as a whole model, but rather carefully evaluate which elements can be beneficial for which parts of their organization and which can’t. Cultural fit is another aspect that should be kept in mind because just like people, organizations and departments differ from each other and although one form has worked somewhere else – it might not work in your team or department. Allowing discourse within the team and profoundly discussing pros and cons before implementing new ideas are fundamental steps that prevent making mistakes and guarantee finding the best possible solution for your individual leadership context.

 

* Notice: This Article is based on the academic research by Prof. Dr. Jana Costas, which is collaborating with the Telekom.

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