Yesterday I met with a director in a big global pharmaceutical company. She wanted my advice on how to organize cross-functional work in the company such as sustainability, social responsibility or ethics. She was frustrated, because whatever she tried to put into the organisational chart, just didn’t work. Either too many people became involved or too few people. Never just the right people.

Here is why: We run inadequate and inefficient organisations because we try to reduce a multi-dimensional reality into just two dimensions. It just doesn’t work. A conventional hierarchical organigram has just two dimensions: Level (vertical) and function (horisontical). The problem is that the world is infinitely more complex than that. Where is the “geography” dimension? Where is long-term vs. short-term dimension? Where are the sustainability, social responsibility or ethics dimensions? And where is the operations vs. business developmen dimension?

 So what do we do?

Throw out the conventional hierarchical organisation chart. Establish a social network of all relevant employees instead. Make each employee enter all relevant information about himself or herself. List all tasks in the company. Assign each employee to whatever tasks he or she is involved in. List all important professions, appoint a guru within each profession and invite each employee to link to relevant gurus. Invite each employee to chose a mentor so that each mentor has 10-15 mentees.

Can you draw it on a piece of paper? Probably not. It is too complex. But does it matter as long as each employee knows what his tasks are, who to consult on professional issues (gurus) and where to go for a talk about the job and his or her future plans. What more is needed?

How do we ensure that cross-functional issues such as sustainability are dealt with? Easy: First add it as a profession and invite all relevant employees to link to the sustainability guru. His or her job is to have his fingers in every project that has a sustainability component. Then go through all major processes and add all relevant sustainability aspects.

The point is simple: You need a different mindset for what an organisation is. Once you put it into action, you will be surprised: The combination of project leaders (tasks), professional leads (gurus), mentors and well-designed processes is just so much more efficient, som much more flexible and so much more fun than anything you can possible draw in a two-dimensional functional hierarchy.

It works for pharmaceuticals. Make it work for your organisation as well. Comments welcome!

 

 

24 thoughts on “Why organisational charts don’t work

  1. To add inputs to your interesting blog posting, I read this in the article titled “Meeting the challenge of disruptive change” by Michael Overdorf and Clayton Christensen:

    “Suppose that an organization needs to react to or initiate an innovation. The matrix illustrated below can help managers understand what kind of team should work on the project and what organizational structure that team needs to work within. The vertical axis asks the manager to measure the extent to which the organization’s existing processes are suited to getting the new job done effectively. The horizontal axis asks managers to assess whether the organization’s values will permit the company to allocate the resources the new initiative needs.”

    To see the matrix referred to above, have a look at http://hbr.org/2000/03/meeting-the-challenge-of-disruptive-change/ar/5

    Reply
  2. In this interesting blog posting by Tim Kastelle http://blogs.hbr.org/2013/11/hierarchy-is-overrated/ I read that there
    is a growing body of evidence showing that organizations with flat structures outperform those with more traditional hierarchies in most situations, and that flat structures will become increasingly common, as digital technologies make it easier to work in a distributed manner. Tim Kastelle also puts forward some obstacles to flat structures. He mentions, for example, these:

    1. Many people don’t believe in democracy in the workplace.
    2. Even if you do believe in democracy, it can be hard to imagine work without hierarchy.
    3. Fear of the unusual.
    4. It’s hard to change organizational structures.

    Reflecting on this, I was thinking that http://slideshare.net/frankcalberg/5-reasons-why-people-resist-change would be helpful to understand reasons why people resist change.

    Reply
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