problems of the hierarchic company

Problems ofthe hierarchic

company

Characteristic # 1

Stable andlow complexenvironment

Dynamicenviron-

ment

MachineBureaucracy

Stable environ-

ment

Complexenvironment

Low complexenvironment

Problem

The environment of manycompanies is often bothcomplex and dynamic.

Hierarchical structureto keep control over

operational work

Characteristic # 2

Power for decision making is centralized at the top

The individual employee /manager communicates vertically.

Problem # 1

Much time is wasted ontraditional meetings. Decision making is slow.

Problem # 2

The potential of interactiveand collaborative technologiessuch as blogs is not sufficientlytaken advantage of to commu-nicate across functions and hierarchies.

Command and controlmanagement to

establish regularityand predictability in

operational work

Characteristic # 3

1-way flow of commands from top to bottom

People are toldwhat to do and

how to do it

Problem # 1

More and more people arewell educated and canmanage themselves.

Problem # 2

Command-and-control managementmakes many people act reactively,i.e. more or less like machines - andstop thinking / acting proactively.

People take initiatives only in theirspare time, i.e. after having finishedwork.

Characteristic # 4

Standardizationto effectively and

at low costs produce, pack, and transport

products

Problem

Customers want more andmore differentiated products, variability, individualization.

Characteristic # 5

Specialized work toreduce complexity andincrease effectiveness

Analysts standardize

work

Each worker doesspecialized

operational assignments

Examples:� Developers develop.� Distributors distribute.� Sellers sell.

Employees and managers become specialists by doing the identical standardized assignments day in and day out – usually at a fixed number of hours each day and ata certain place.

People stop thinking acrossborders - for example acrossfunctions, industries, geograhies. Thereby, the company onlyslowly renews itself.

Problem # 1

”The old organizations are breaking down, because if everybody is doing a well-definedtask and job requirements change, peopledo not know what to do anymore – nor dotheir bosses.

And today’s fast-moving, competitive marketswill not let you hide this kind of ignorance inside your organization.”

Source: Abell, Derek F.: Managing With Dual Strategies, p. 129.

Problem # 2

Internet tools, that give peoplethe opportunity to work inde-pendent of time and place,are not sufficiently takenadvantage of.

Plans, budgets, templates, rules, guidelines etc.

to uphold standardization and specialization

Characteristic # 6

Structures and processesare VERY important.

TaskProcess

Structure

Problem # 1

In an uncertain world, wheremany things constantly change,It is better to continuously trythings out than to constantlyrefine plans.

Work becomes routine.

People lose the competence to think and act creatively, trythings out spontaneously etc.

Problem # 1

Problem # 2

Lack of freedom preventspeople from following theirinterests, i.e. doing thingswhich may bring significantvalue.

Politicaldecision making

Characteristic # 7

Problem # 1

Owners/managers keep puttingmoney into old, slow growthstrategies that were oncesuccessful.

Resources are slowly reallocatedfrom old to new strategies.

Market share

Cash cows

Look out for new “question marks” to invest in.

Poor dogs

Fix, sell, or close down.

Stars

Develop great concept further.

Question marks

Try out ideas with growth potential.

Market growth

Problem # 2

Many managers hire and keepthe wrong people, i.e. peoplewho want to maintain status quo– not people who want to change/renew.

Characteristic # 8

Contractualrelationship

between managerand employee

Problem # 1

Many people do only whatis written in their individualcontract. Consequently, collaboration suffers.

Problem # 2

In the business environment,we increasingly live in, thereis more focus on relations,for example customer relationsand relations betweenbusiness partners.

Characteristic # 9

Education isa cost that must

be minimized

Many and frequent changesmake education an integratedand necessary part of work.

Problem

Characteristic # 10

Jobs arecareer jobs

Problem # 1

People with high competencies inoperational areas are promotedto become managers. In otherwords: People stop doing whatthey are really good at.

Problem # 2

The company becomes anumber of ”department siloes”.There is limited communicationacross the company.

Problem # 3

More and more work istemporary / freelance / part time / nonstandard / non-career / more flexible.

Problem # 4

More and more people solveassignments for morecompanies / more people- not only for one company.