Inarticulate ramblings of a management consultant

the day to day experiences of a consultant operating in weird and wonderful client situations

The real impact of disruptive innovation – fundamentally changing the future structure of organisations

Disruption is the new buzz word in business these days. There are still some organisations and sectors which resist the concept that, somewhere, in the minds of a consumer or an employee, there is an idea which will change their industry for ever….but largely, there is a surface level of acceptance.

The real change behind disruption however is much more subtle, disturbing and has the potential to change the corporate world in a truly significant manner.

That change is the disintegration of the traditional organisational structure.

You see, the strength of the traditional model is based on a few key principles:

  • Control through hierarchy (often age based)
  • The transfer of knowledge from top to bottom through a process of interaction and ‘on-the-job learning
  • Promotion based on experience and length of service
  • Power of the network and relationships (internal initially but as one becomes more senior external)
  • Confidence and internal sponsorship based on these interactions and the practice gained through the process.

Why is this being challenged? At the heart of this change is the fundamental disconnect between the top and the bottom which, in my 25 years of work, has never been greater. Many of the key principles listed above have already become irrelevant:

  •  Control? Don’t make me laugh. Given the recent history of large public companies who have displayed the most extraordinary lack of oversight and governance despite increasingly pervasive and pernicious processes (VW, SNC Lavalin, Lehman Brothers, Enron to name but a few), any control is at best limited (exercised through the goodwill of the employee base) and at worst illusory.
    • Hierarchy is seen as blockage rather than something which enables learning. Everyone can site numerous examples of organisations which are flat and successful. The increasingly desperate attempts to find innovation by the leadership of many organisations confirms this as the initiatives identified seek to cut out the ‘middle’ of the organisation and connect the top with the bottom.
  • Knowledge and information is not only freely accessible, its value is perceived by those coming up as fleeting and temporary. What’s much more important in the eyes of those employees is agility, adaptability and an openness. The perceived value of accumulated knowledge in a market or sector which will look completely different in 10 years is diminishing rapidly.
  • Promotion based on experience doing something that is no longer relevant? It has the same value as some of those pre industrial revolution skills (black smithing, coopering, weaving). Good fun to listen to…but no longer qualifies the person for leadership.
  • Power of the network. No change here…the network is as important as ever before. The only difference is that the accumulation of contacts and meaningful contact points has been massively enabled through social media and the rapid rise of LinkedIn, Twitter and other communications platforms which give instant and highly targeted access to liked minded individuals with similar interests. I spent 10 years in executive search (interviewing candidates for a living)…a rough estimate would suggest that the last 3 years have generated more meaningful contacts than that entire period. What links all of those in the networking world of social media is a single minded and consistent objective…which is simply to connect!
  • Confidence. The embodiment of disruption is that ‘failure’ is increasingly seen as a critical part of the journey which creates enormous confidence. Ask yourself the last time anyone asked for a reference on an employee who worked for you? No one cares anymore about the past history, the number of jobs and their relative success or failure.

So, why work within the constraints of an organisational structure where:

  • The friction of decision making and implementation (down the organisational structure) is only matched by the friction that generating a new idea encounters moving upwards.
  • Those who lead are as far removed from the customer’s needs and expectations as they are from those that actively interface with the same.
  • Those with the actual skills to take advantage of the brave new world sit at the bottom, reporting to ever diminishing levels of understanding the further up the organisation they go.
  • The sense of job security which used to exist has been dramatically proven to be false.
  • The pay differential between those at the top (who know next to nothing about the world in which their business is going to have to operate) and those at the bottom is at record levels.

The traditional structure is irrevocably broken…we just haven’t recognised it yet.

Disruptive Innovation

Categories: Compliance, Corporate Culture, Disruptive Innovation, Employee Engagement, Incremental innovation, Innovation, Organisational design, Organisational Structure, Strategy, Transformation

Tags: , , , , , , , , , ,

8 replies

  1. thank you for another insightful post. I’m in the middle of a change programme in a government organisation, I’m going to flag this post to my colleagues as a good summary of why and how we need to change

    Like

  2. Hi Ben, another interesting post. Yes, the current traditional structure is broken even though it continues in almost every organisation I’ve been to. The very way business is undertaken in our digital economy requires a different approach to the way we organise ourselves. I assume you are going to offer alternatives to the traditional hierarchical approach in a future post or posts?

    Like

  3. Great. I am thinking the same since 2010 (at least) http://dbj.org/blog/2015/12/12/dbj/

    Like

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  1. Fixing the irrevocably broken – creating an organisational structure which can thrive in a world of disruptive innovation | Inarticulate ramblings of a management consultant

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