I found a post a while back on one of the blogs I monitor that I wanted to comment on here but never did for lack of time. The post was on what the author calls institutional innovation .
A blog post I came across at 37 Signals reminded me to pick back up on this topic because it could be a trend quickly approaching a tipping point. I can’t say I agree with everything 37 Signals is doing in this new way of working, but I applaud their experimentation around organizational structure.
In my own work, I have wondered why there hasn’t been a shift from functional silos to project based teams in all sorts of industries. Projects can be long term or even perpetual – indeed large scale business transformation projects often are – so everything from the ad hoc to the day-to-day can be reframed as a project. There are at least three major advantages that I see to giving your organization a project focus:
Manage as though everyone were a volunteer. On client engagements, I never have formal authority, but I still have to get people from various parts of the organization to come to a consensus, make a decision and execute effectively together. A project manager does not have to have formal authority over the project team members to be effective. I work as a pro bono consultant in my spare time both because volunteerism has been an important part of my life since 16 and because nothing teaches you to be a better manager than managing a team of volunteers. Get everyone united and working together with the common goal, not management’s mandate.
Develop competencies, not functions. Hire people for skills and knowledge critical to your business (and some maybe not so critical to keep things diverse) instead of functions. Group people together according to their competencies into learning and development “pods” of 7-12 (there’s research on the optimal group size). The most experienced in each could then act as the pod mentor, responsible for guiding the professional development of the individuals in the pod – be it through outside learning or guiding them to new project opportunities. The pod should also meet periodically to discuss the challenges they are facing on their projects, creating greater trans-organizational visibility and transparency while promoting the cross-pollination of innovative solutions.
Switch it up. Functions can be eliminated, but competencies can always be reapplied. Just as 37 Signals is advocating, with project teams it is a lot easier to switch things up. This helps your talent gain new experience, and it keeps the work fresh and interesting. It also facilitates with tacit knowledge transfer from interpersonal interactions. That said, I do not think there is a one-size-fits-all-occasions formula for this. Some projects need a stable cadre so frequent, full turnovers would be disruptive. Instead, rotating individuals out one at a time could work.
The command and control hierarchies of large enterprises evolved to scale businesses and limit variability at the cost of serendipity, but moving to a more dynamic modus operandi isn’t just for innovation evangelists. Even process optimization frameworks such as Six Sigma can benefit from a flatter, project based organizational structure. Case in point: kaizen and Lean Six Sigma.
People espouse the ideal of a flat organization, but few actually accomplish it. The Netflix Corporate Culture of Responsibility and Freedom provides an interesting exploration of why this is the status quo at so many companies. However many and varied the reasons are, the need for “institutional innovation” is very apparent.