Is Your Company's Corporate Structure Ready for the Future?

How hierarchical should your company be? In the past, corporate structure was rarely discussed; it didn't need to be, because the answer — very — was obvious. Leaders would give directives to their subordinates, who would pass them along down the chain of command. But the rise of the Internet and globalization has upended those expectations and led some companies to experiment with "flatter," less hierarchical arrangements.

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According to Annmarie Neal, author of Leading from the Edge: Global Executives Share Strategies for Success, a flatter corporate structure is probably here to stay, thanks to changes in the economy. "In an industrial economy, when we were worried about parts and pieces and manufacturing lines, a hierarchical structure was of great importance, because there were a few people who had the knowledge the company needed to make really important decisions and information wasn't disseminated like it is today through the Internet." But now, she says, "Information is everywhere all the time...and what was a benefit [hierarchy] in an economy that required things to get done in a very scaled, efficient way has become a disadvantage in a world where people need to not just get information, but to create things from that information."

She also notes the rise of millennials in the workforce. "They're fundamentally growing up with different ways in which they do work," she says, including a tremendous comfort with online collaboration. While some industries are more likely to benefit from a flatter corporate structure than others, every business can (and should) employ these ideas to some extent, she says. Indeed, embracing a flatter structure, and the innovative approaches that come with it, may be particularly important for middle market companies, which need to be nimble to compete against both well-capitalized corporate behemoths and scrappy startups.

She suggests that companies should try piloting less hierarchical approaches in certain parts of the company. "You never want to fail at scale," she says. "You have to step back and say, 'Where in the organization do you need to create a different kind of value to support new business models, and have some innovation at the edge?'" Then, you can learn from those experiments and bring what works into the core of your business. "The leadership of the organization has to have a fundamental mindshift," she says, "to support work getting done in different ways, and to be flexible, creative, social-structured," and able to embrace a nimble kind of "both/and" thinking.

It seems clear that the world — including the business world — is going to change dramatically in the next few years, thanks to a variety of impending technological advances (from Google Glass to nanotechnology). As a result, says Neal, "When I say, 'What should an organization look like structurally?', it needs a massive amount of agility and adaptability, like a building in earthquake country that can roll with the tectonic plates shifting...It's coming up with organizational structures that are creative, adaptive, agile, and fundamentally different than the past of being bureaucratic, tight, rigid, and saying you need to be at your desk from 9-5 in a cube."

Shifting to a less hierarchical corporate structure isn't about following a Silicon Valley fad, stresses Neal. It should always be about getting the maximum results for your company. "With any scorecard you have, you want to demonstrate how your organization achieves high performance – to get the most out of the fewest people," she says. By embracing collaboration, crowdsourcing, and rapid prototyping – and tearing down some of your organization's hierarchy – you can unlock the full brainpower of your employees. Instead of having a mere handful of executives make all the decisions, says Neal, you'll now have "lots of people adding value your to your company."

Has your company given consideration to a flat structure?

Dorie Clark is a marketing strategist and professional speaker who teaches at Duke University's Fuqua School of Business. Learn more about her new book Reinventing You: Define Your Brand, Imagine Your Future (Harvard Business Review Press) and follow her on Twitter.


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