BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Stretch And Flex: What Leaders Should Know About the Future of Organizations

This article is more than 5 years old.

We hear a lot nowadays about minimalism and the blessings of decluttering. If you’ve been uncertain whether to get rid of that old textbook on organizational behavior, a recent report by Forrester is likely to prod you toward your giveaway box. A bit of nostalgia and the comfort of the familiar are fine around the house, but if we’re to believe Forrester, those qualities will prove lethal to organizations—and a great many businesses are much farther from the cutting edge than they think.

“For companies to thrive in these dynamic times, we believe leaders will need to fundamentally rethink what an organization is and how it works,” Forrester says, and this entails going far beyond modifying structures that are already in place.

It’s also not a matter of looking to the future, either, because that’s just a way to fall behind trends that are reshaping business right now. Here are some key points for leaders to consider:

Revolution, not evolution.

Organizations have the potential to help people be their best, but most organizations today are falling short. In customer-facing activities and in the realm of employee experience, most organizations are adding new technology onto old models, as leaders are loath to deviate from the norms that got them where they are. It’s like giving a skin graft to someone who needs multiple organ transplants.

Companies might be hiring chief data officers and setting up “innovation centers” and cross-disciplinary teams, with the supposed aim of promoting flexibility, but the new people and units are not being integrated organically. They continue to be add-ons, without really changing the character of the organizations, even as today’s connected consumer becomes more demanding and more likely to expect the sort of customer experience provided by new competitors who were “different” to start with.

Most organizations have been designed with stability in mind, and in a business climate in which stability has practically ceased to exist, the attempt to make it the number-one priority will mean stagnation and extinction.

Shape-shifting is more than skin deep.

If leaders who are truly in touch with the changing organizational climate could start with a blank sheet of paper, they would comprehensively redefine what it means to be an organization. In what Forrester calls “a talent-scarce, customer-led, digital-first, robot-enabled, ecosystem-oriented, and privacy-sensitive market,” cutting-edge leaders will use that market as their polestar instead of trying to evolve their organizations on the basis of pre-existing internal dynamics and structures.

It reasonable to expect that instead of fixed work forces within companies, teams of specialist experts will move from firm to firm in response to very particular needs. The emphasis will be on tasks, which are fluid, as opposed to jobs, which are static. Robotics will assume more and more fundamental tasks, with AI being used to make decisions about how to apply the teams and robots.

With these changes eroding company cultures and altering the manner and extent of human interactions, leaders will bear a heavy burden as motivators and communicators. Coherence and cohesion depend on the organization’s purpose and values to drive it, not just to steer it.

Leaders will also have to be more agile regarding budgetary matters, as the task-oriented and team-oriented workplace, with less emphasis on static jobs and permanent structures, is likely to lead to shorter budgetary cycles.

Talent will be acquired and maintained in new ways.

The arrival of these shape-shifting organizations will be heralded by a surge in continuing education, with university courses increasingly including industry tie-ins and vocational content; growth in freelancer marketplaces to serve the matchmaking needs of expertise-driven teams and their potential members; and enhanced means of information exchange between people and intelligent machines.

Management theoreticians have touted the value of liberal arts education for decades, claiming that times of rapid change require an education that develops critical thinking, subtlety, and adaptability, as opposed to specialized course-work that soon becomes outdated. Hiring practices have generally not adhered to the theory, but this could very well change as innovation outstrips management doctrines at an ever-more-rapid pace.

No one will escape—not even boards and shareholders.

These changes will “shock the core of almost every stakeholder in commercial markets,” as Forrester puts it, but this is preferable to the less sudden, less dramatic but ultimately decisive shock induced by inertia that places an organization’s survival at risk. You can pull the bandage off quickly or slowly, and with everything happening so fast, it’s best to get it over with.

Forward-thinking boards will try to dismantle and reassemble businesses along the lines we’re describing, but the effort to manage the inevitable risks of restructuring could create some inhibitions. Boards themselves are likely to be reconstituted as the less flexible members are forced out and replaced by digitally adroit leaders who are comfortable with ambiguity.

More firms will choose to remain private, or will de-list during restructuring, in order to avoid being held back by the risk-averse outlook of shareholders made nervous by frequent and not-readily-comprehensible change. Management consulting firms will thrive.

Conclusion:

None of this is to say that long-term planning no longer matters and that leaders should just sort of wing it, but it does mean that the opportunity to impose a familiar template on future activity is rapidly disappearing. The winners will be leaders and companies that take things apart and put them back together in new ways while rapidly integrating new parts as necessary, re-thinking all of it constantly in terms of short cycles instead of long-term structures. Above all, in the absence of the structures that once channeled activity, leaders will have to communicate purpose at all times.

 

Follow me on Twitter or LinkedInCheck out my website or some of my other work here