The Future Business Formula is my new book that provides insights into the changing landscape of business and how organisations can adapt to succeed.
In my latest blog in the countdown to the book’s release in May, I provide an overview of Chapter 10 – Organisation Design – and how you can change it to become an effective future business.
Principle Ten – Organisation Design
Toyota, the world’s largest car manufacturer, owes its success to the Toyota Production System and The Toyota Way. Influenced by W. Edwards Deming, they prioritise quality, productivity, and market share. Their five key principles are: Challenge, Kaizen (Improvement), Genchi genbutsu (go and see for yourself), Respect, and Teamwork.
However, when Toyota entered Formula 1, their rigid management structure hindered success. Their lack of empowered leadership and agility resulted in no race wins or championship titles. The operating model designed for volume car production couldn’t adapt to the fast-paced racing environment.
Innovation in management principles is crucial for effective future businesses. Despite the changing nature of work, organisations have been resistant to change. In the tenth principle in my book, I explore the importance of Organisation Design and how it can drive success in the modern era.
Frederick Winslow Taylor’s principles of scientific management, developed over a century ago, still shape our organisations today. However, the world has changed dramatically, and traditional management practices are no longer effective.
In the knowledge and information age, value is created through human capabilities to innovate and differentiate. To succeed, organisations must break down hierarchies and silos, forming networks of teams with diverse expertise. Instead of assigning tasks, businesses should empower individuals and recognise their expertise at all levels.
Flatter, fluid structures are crucial for adaptability in our unpredictable world. By creating adhocracies and eliminating rigid bureaucracy, organisations can foster innovation and reinvention. Small, highly capable teams with autonomy can respond swiftly and effectively to market changes.
It’s important to note that flatter structures work best up to a certain organisation size, beyond which they become limiting. Hierarchy should shift from position power to relationship power, valuing expertise over the number of employees. By focusing on outcomes rather than outputs and embracing a culture of autonomy and respect, organisations can achieve more with fewer people.
Dominance hierarchies are very common and useful in nature, but can quickly become sub-optimal when building organisations. Businesses need to rethink and redesign structures to unleash the potential of our teams and drive success in the modern era.
Are your management structures and principles slowing you down?
- Organisational structure can be good for stabilising and embedding a new operating model. Changing structure on its own, you are simply in the business of rearranging the deck chairs on the Titanic.
- Keep your organisation in Beta mode.
- Wherever possible flatten the structure to increase the speed of communication.
- Create networks of experts in your organisation.
- Implement an adaptive operating model.
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Read Principle One: Strategy
Read Principle Two: Customer
Read Principle Three: Alignment
Read Principle Four: Leadership
Read Principle Five: Culture
Read Principle Six: Talent
Read Principle Seven: Innovation
Read Principle Eight: Change & Delivery
Read Principle Nine: Simplification
Read Principle Eleven: Learning
Read Principle Twelve: Measurement
More information on The Future Business Formula