Yesterday I wrote a post concerning the fact that what had been - and still are - important business functions have become stovepipes. That is, groups like Finance, Marketing, Sales have more sway in most business than necessary and hinder the work of adding value. Add to that our adherence to the traditional top-down command and control hierarchical structures and you've got a firm that is rigid, bureaucratic and very slow to move.
When did finance become so important anyway? It seems like in most businesses financial engineering, reporting and financial management have become more important than making a product or delivering a service. I think this has moved the emphasis away from creating great products or providing excellent customer service. It's easier for the finance guys to engineer a synthetic lease - whatever that means. Here's my question - if finance is so important - do your customers know who your CFO is? Do they care?
This isn't just to beat up on finance (although secretly I think we'd all like to do it occasionally). Most customers and business partners don't know who runs manufacturing, or customer service, or marketing either. They'd better know who runs sales or your firm is really in trouble.
My point is that our businesses are finally reaching the juncture in technology, information and cultural evolution where we can begin to morph our business models to fit the needs of the business as it exists today. The top-down model is creaky, and the fascination or power held by specific business functions is unnecessary and unwieldy. I think there are several business models we can pursue which will make businesses more efficient, serve the customer more effectively and provide greater opportunities for employees.
Organize around a business process.
I'm no expert, but I think that Dell has done this fairly well. Their whole goal is to get the order, make the product and ship the product as quickly and efficiently as possible. Who's the leading technologist at Dell? I don't have a clue. They haven't attempted to differentiate around their technology, so that's not really important. They chose to optimize their organization around a business process - taking the order, making the product, filling the order. So in a "high tech" company, there's no clear R&D head or chief technologist. Contrast this to Sun, for example, where the focus seems to be on the technology (still). There are five or six significant, high profile technologists at Sun, yet for the most part they are very removed from their customer. Sun until recently designed their own semiconductor. Did that really add tremendous value? Does the customer care about that? Did it make Sun more efficient?
In some businesses, especially as the products become commoditized, it makes sense to provide timely fulfillment, good service and great pricing. That's what Dell has done in its niche. Can this model be applied elsewhere? Absolutely.
Organize around a customer or an industry
This makes sense for firms selling to a large, monolithic customer (USPS or a Federal agency, for example) or in cases where there is a large, homogeneous market (selling to the Big Three auto manufacturers, for instance). In this case you'll structure your organization to the requirements and needs of the customer, and put the systems and hooks in place to satisfy that customer. In the automotive world, for example, that lead to tight systems integration with downstream customers.
The nice thing about this model is the ability to FOCUS. Everyone should have a clear line of sight to the customer or something that's important to the customer. In a firm dedicated to a customer or to excellent customer service, can you imagine someone saying "Well, finance won't let me do that" or "IT said no to that request".
Organize on the fly
That's what consulting firms seem to do best. Many consulting firms are organizational chameleons, able to morph into the required structure and components based on the problem presented. Of course, consulting firms have to do this to survive, and there are secondary organizational structures within most consulting firms, but these firms are a great example of plucking people from different roles and regions to present a team to solve a problem. That team will be disbanded once the project is complete and may or may not work together again. In this model, the focus is on solving the problem presented. Everyone on the team should have a very clear focus and goal.
In any of these organizational models, we are trying to use the firm's resources, especially the people, as effectively as possible. In these models we've moved from a top down command and control model to a model which provides much more decision making at the interaction with the customer or the challenge. Business functions, which were once stovepipes, now return to their rightful role as SERVICE organizations to the groups that are building product, solving a customer problem or generating great customer service. The organizational structure, rather than getting in the way of getting things done, becomes an enabler to getting more stuff done more effectively and more efficiently.