Simplify the line structure

Date: 2015-10-07; view: 611.

Deploying off-line teams to discover new wealth-creating opportunities while using a dynamic management process to resolve short- and long-term trade-offs

3. Developing knowledge marketplaces, talent marketplaces, and formal networks to stimulate the creation and exchange of intangibles

4. Relying on measurements of performance rather than supervision to get the most from self-directed professionals

The ideas underlying each of these policies may not be entirely new, but we don't know of any company that applies all of them holistically — and this failure limits the ability to perform up to potential. A company that tries to simplify its vertical organizational structure without helping large numbers of self-directed professionals to collaborate more easily might increase its efficiency, for example. But that would be more than offset by a decrease in its effectiveness.

The first design principle is to clarify the reporting relationships, accountability, and responsibilities of the line managers, who make good on a company's earnings targets, for all other considerations will get short shrift until short-term expectations are met. To achieve this goal, a company must establish a clearly dominant axis of management — product, functional, geographic, or customer — and eliminate the matrix and ad hoc organizational structures that often muddle decision-making authority and accountability. Dynamic management and improved collaboration, as we show later, are better ways of accomplishing the purposes of these ad hoc structures.

A company that aims to streamline its line-management structures should create an effective enterprise-wide governance mechanism for decisions that cross them, such as the choices involved in managing shared IT costs. These mechanisms are typically created by defining and clarifying the decision-making authority of each member of the senior leadership team and establishing enterprise-wide governance committees as required.It may also be necessary to take important support functions, which demand focused management, out of the line structure, so that specialized professionals (rather than line managers, who are often, at best, gifted amateurs) can run these functions as shared utilities.

Finally, to promote the creation of enterprise-wide formal networks, parallel structures and parallel roles should be established across the whole extent of the company. Defining the role of the comptroller or the country manager consistently throughout it, for example, helps the people in those roles to interact and collaborate.