Hello friends,
This is an article written by me, about the utility or otherwise of conventional organisational structures. It was published in "The Hindu" more than a decade ago.
Send your comments. I am planning to update/ re-write it.
thanks and regards
Raj
PYRAMIDS ARE FOR MUMMIES
An old joke about business managers goes something like this – “a specialist knows more and more about less and less till he knows everything about nothing, whereas a generalist knows less and less about more and more things till he knows nothing about everything!” Jokes apart, for quite sometime, there have been super-specialists – for example in the medical profession, and now we have a new breed of business managers who ‘specialise in generalising’ and are predictably called ‘specialist-generalists!’ But more of this later.
The conventional organization structure in the form of a pyramid, with the CEO at the pinnacle and the lowly executive-trainee at the bottom has been widely perceived as the ideal method of balancing the needs of the business as far as specialists and generalists are concerned. Thus at the bottom were the specialist managers, freshly recruited from management institutes and full of theoretical knowledge but little experience. They are designated to take care of a small segment of the business, a microcosm of activity which they are to understand, assimilate and specialize in. With the passage of time this manager gains experience, acquires additional knowledge and is ready to expand his sphere of functioning, at which point he is considered fit to be promoted up the hierarchy. With each upward movement the individual is expected to understand and specialize in an ever widening sphere of the organization’s activities and simultaneously s also formed to take a broader view of the business perspectives. The process is repeated time and again till the manager has reached the pinnacle, or to quote Murphy’s famous law, “attained his level of incompetence”!
The pyramidal structure presupposes the breaking down of the business into a series of manageable microcosms, generally based on functional requirements. When integrated, these functional units are to from the core of the business. This then is the typical assembly-line approach to management when each functional unit contributed its mite to the general business process and a viable value entity is expected to be produced, for the benefit of the ultimate customer of the business.
Decisions are but interpretations of available information and the conventional organizational structure assumes that as one moves upwards in the organizational hierarchy, the decision makers automatically have access to more channels of information and hence are in a position to take better decisions. Thus delegation of authority is invariably designed to ensure that the more important a decision (is perceived to be) the higher the authority who takes it. Thus the CEO is expected to take the most important decisions, and down the line, decisions of lesser and lesser importance are taken till we reach the very bottom where the most mundane things are decided upon.
The information shock.
The onset of the “Information Age” has changed, nay, deformed beyond recognition, the structure of business organizations. The information explosion has effectively shattered many a myth of the conventional business structure. More and more organizations are discovering, to their horror that the pyramidal structure which sharpened their competitive edge in times of yore continues to be as sharp as ever, only they are holding it by the blade!
The first and perhaps biggest myth was the wisdom of segregating the business into a series of functional entities like operations, finance, marketing and personnel, which when integrated were designed to contribute to business synergy and add value. Alas, nothing could have been farther away from reality. Everywhere, one accosts functional units which not only do not contribute to the business of the organization but are found to actually negate the efforts of other units.
The second major lacuna was a major mis-handling of human attitudes. Thus it was expected of a specialist joining at the bottom of the ladder to gradually transform himself into an all-knowing generalist by the time he reached the top of the hierarchy. Easier said than done. What actually happened was that the specialist tended to become more and more involved in his functional discipline, effectively erecting barriers all around and converting his work sphere into a personal fiefdom of which he was lord and master, and “to hell with the organization”! Customer needs came to be perceived as but an intrusion into one’s routines.
And finally, there was no place for creativity and innovation in the conventional pyramid. Every idea got filtered through myriad layers of hierarchy and the ideas of the lowly manager were invariably and automatically assumed to be not as good as those of his superiors, positioned above. Boss was always right and CEO was the right-est! (if not the brightest!)
In any economy free of extraneous controls, two aspects of an organization effectively determine its success, or failure: how quickly and efficiently can the organization react to changes in the environment and more importantly how creative and innovative it can get in order to provide value to its customers. Alas, the pyramid of hierarchy is woefully lacking on both these counts. It is intrinsically slow in responding to changes – the more drastic the change, the slower are its reactions; and it has no place for creativity.
Change stimulus
The efforts of organizations all over the world in trying to shed their hierarchical burdens in exchange for a more modern business structure have ranged from the drastic to the comic, with a lot of confounding thrown in. Business restructuring is the in thing. Flatter organizations, reduced hierarchical levels, more delegation are all buzz words of today. Like the ever popular “all-rounders” of cricket teams, every organization is after specialist-generalists i.e. people who specialize in generalizing! (Perhaps, somebody who knows nothing about nothing!) But since one does not come across “an expert engineer who is also a financial wizard and a great marketing manager every day of the week, it is obvious that the companies have to settle for something less. Companies too have perhaps realized that even if they can find such persons, they cannot probably afford them! Moreover, there is always the problem of what to do with the existing whiz-kids!
Hence the initial efforts at competitive restructuring were directed at setting right in an isolated manner, each falling of the conventional structure. Thus organizations devised a host of schemes to tap the creative potential of its constituents – in the form of “suggest something” drives. This was carried a little further when quality circles or similar groups not only suggested but actually carried out improvements, albeit in a limited manner, and mostly in their won functional sphere of work. Any number of task forces and action groups have also been tried out to literally work outside the traditional organizational structure. But the final say-so continued to vest with the hierarchy.
Circles, squares and parallelograms
Coming back to the organizational structure per-se, every conceivable geometric shape and some inconceivable ones too have been bandied about as the best alternative structure for modern business organizations. There are matrix organizations, bridged ones and those that resemble intercepting circles. Thus, in a typical restructuring exercise, one may flatten the organization, without however allowing it to spread too much while at the same time ensuring that there is no cross-functional mis-match but again striving to enhance response time without causing an internal backlash….. and so on and so forth.
The Myopic Mummies
It is all still in a very fluid state and for every organization which has successfully restructured itself there are perhaps umpteen others which have tied themselves up into all sorts of knots. The ultimate test is survival in the market, successful survival at that. What an organization has achieved would probably be far more pertinent than the how of it and whether it was achieved through teams, or a matrix or something else is perhaps of only academic interest.
In the ultimate analysis, what emerges clear is that no longer is the CEO the only person expected to understand the organization as a whole. The pyramid has, without doubt had its days of glory and has served its purpose rather well, but has certainly outlived its utility. Though its successor may not have actually stood up to be identified, the traditional pyramidal structure depicting an organizational hierarchy is definitely passé. So the next time you come across an organization with a traditional pyramidal hierarchy, look again it might be full of mummies – of long brain-dead business managers.
From India, Hyderabad
1This is an article written by me, about the utility or otherwise of conventional organisational structures. It was published in "The Hindu" more than a decade ago.
Send your comments. I am planning to update/ re-write it.
thanks and regards
Raj
PYRAMIDS ARE FOR MUMMIES
An old joke about business managers goes something like this – “a specialist knows more and more about less and less till he knows everything about nothing, whereas a generalist knows less and less about more and more things till he knows nothing about everything!” Jokes apart, for quite sometime, there have been super-specialists – for example in the medical profession, and now we have a new breed of business managers who ‘specialise in generalising’ and are predictably called ‘specialist-generalists!’ But more of this later.
The conventional organization structure in the form of a pyramid, with the CEO at the pinnacle and the lowly executive-trainee at the bottom has been widely perceived as the ideal method of balancing the needs of the business as far as specialists and generalists are concerned. Thus at the bottom were the specialist managers, freshly recruited from management institutes and full of theoretical knowledge but little experience. They are designated to take care of a small segment of the business, a microcosm of activity which they are to understand, assimilate and specialize in. With the passage of time this manager gains experience, acquires additional knowledge and is ready to expand his sphere of functioning, at which point he is considered fit to be promoted up the hierarchy. With each upward movement the individual is expected to understand and specialize in an ever widening sphere of the organization’s activities and simultaneously s also formed to take a broader view of the business perspectives. The process is repeated time and again till the manager has reached the pinnacle, or to quote Murphy’s famous law, “attained his level of incompetence”!
The pyramidal structure presupposes the breaking down of the business into a series of manageable microcosms, generally based on functional requirements. When integrated, these functional units are to from the core of the business. This then is the typical assembly-line approach to management when each functional unit contributed its mite to the general business process and a viable value entity is expected to be produced, for the benefit of the ultimate customer of the business.
Decisions are but interpretations of available information and the conventional organizational structure assumes that as one moves upwards in the organizational hierarchy, the decision makers automatically have access to more channels of information and hence are in a position to take better decisions. Thus delegation of authority is invariably designed to ensure that the more important a decision (is perceived to be) the higher the authority who takes it. Thus the CEO is expected to take the most important decisions, and down the line, decisions of lesser and lesser importance are taken till we reach the very bottom where the most mundane things are decided upon.
The information shock.
The onset of the “Information Age” has changed, nay, deformed beyond recognition, the structure of business organizations. The information explosion has effectively shattered many a myth of the conventional business structure. More and more organizations are discovering, to their horror that the pyramidal structure which sharpened their competitive edge in times of yore continues to be as sharp as ever, only they are holding it by the blade!
The first and perhaps biggest myth was the wisdom of segregating the business into a series of functional entities like operations, finance, marketing and personnel, which when integrated were designed to contribute to business synergy and add value. Alas, nothing could have been farther away from reality. Everywhere, one accosts functional units which not only do not contribute to the business of the organization but are found to actually negate the efforts of other units.
The second major lacuna was a major mis-handling of human attitudes. Thus it was expected of a specialist joining at the bottom of the ladder to gradually transform himself into an all-knowing generalist by the time he reached the top of the hierarchy. Easier said than done. What actually happened was that the specialist tended to become more and more involved in his functional discipline, effectively erecting barriers all around and converting his work sphere into a personal fiefdom of which he was lord and master, and “to hell with the organization”! Customer needs came to be perceived as but an intrusion into one’s routines.
And finally, there was no place for creativity and innovation in the conventional pyramid. Every idea got filtered through myriad layers of hierarchy and the ideas of the lowly manager were invariably and automatically assumed to be not as good as those of his superiors, positioned above. Boss was always right and CEO was the right-est! (if not the brightest!)
In any economy free of extraneous controls, two aspects of an organization effectively determine its success, or failure: how quickly and efficiently can the organization react to changes in the environment and more importantly how creative and innovative it can get in order to provide value to its customers. Alas, the pyramid of hierarchy is woefully lacking on both these counts. It is intrinsically slow in responding to changes – the more drastic the change, the slower are its reactions; and it has no place for creativity.
Change stimulus
The efforts of organizations all over the world in trying to shed their hierarchical burdens in exchange for a more modern business structure have ranged from the drastic to the comic, with a lot of confounding thrown in. Business restructuring is the in thing. Flatter organizations, reduced hierarchical levels, more delegation are all buzz words of today. Like the ever popular “all-rounders” of cricket teams, every organization is after specialist-generalists i.e. people who specialize in generalizing! (Perhaps, somebody who knows nothing about nothing!) But since one does not come across “an expert engineer who is also a financial wizard and a great marketing manager every day of the week, it is obvious that the companies have to settle for something less. Companies too have perhaps realized that even if they can find such persons, they cannot probably afford them! Moreover, there is always the problem of what to do with the existing whiz-kids!
Hence the initial efforts at competitive restructuring were directed at setting right in an isolated manner, each falling of the conventional structure. Thus organizations devised a host of schemes to tap the creative potential of its constituents – in the form of “suggest something” drives. This was carried a little further when quality circles or similar groups not only suggested but actually carried out improvements, albeit in a limited manner, and mostly in their won functional sphere of work. Any number of task forces and action groups have also been tried out to literally work outside the traditional organizational structure. But the final say-so continued to vest with the hierarchy.
Circles, squares and parallelograms
Coming back to the organizational structure per-se, every conceivable geometric shape and some inconceivable ones too have been bandied about as the best alternative structure for modern business organizations. There are matrix organizations, bridged ones and those that resemble intercepting circles. Thus, in a typical restructuring exercise, one may flatten the organization, without however allowing it to spread too much while at the same time ensuring that there is no cross-functional mis-match but again striving to enhance response time without causing an internal backlash….. and so on and so forth.
The Myopic Mummies
It is all still in a very fluid state and for every organization which has successfully restructured itself there are perhaps umpteen others which have tied themselves up into all sorts of knots. The ultimate test is survival in the market, successful survival at that. What an organization has achieved would probably be far more pertinent than the how of it and whether it was achieved through teams, or a matrix or something else is perhaps of only academic interest.
In the ultimate analysis, what emerges clear is that no longer is the CEO the only person expected to understand the organization as a whole. The pyramid has, without doubt had its days of glory and has served its purpose rather well, but has certainly outlived its utility. Though its successor may not have actually stood up to be identified, the traditional pyramidal structure depicting an organizational hierarchy is definitely passé. So the next time you come across an organization with a traditional pyramidal hierarchy, look again it might be full of mummies – of long brain-dead business managers.
From India, Hyderabad
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