The evidence is clear and overwhelming. Centralized, hierarchial organizations work about as well as the old Soviet Union. Despite all the evidence, I am still appalled by the number of variations on the centralization themes I still keep smacking into. What makes things even worse is how senior managers in these dysfunctional organizations proclaim empowerment, participation, teams, leadership, trust, and the like. Then they take partial measures while expecting total success. They liberate parts of their organizations while limiting other parts. They push hard with one foot on the accelerator while also pushing hard with their other one on the brake. Their words say “you’re empowered”. Their actions say “you’re empowered as long as you get approval first”. These dysfunctional organizations end up trying to go in two opposing directions at once. I once halted an executive retreat and everybody went home after the group of seven division presidents and corporate staff vice presidents couldn’t agree on whether their values were centralization or decentralization. Trying to do both at once was ripping the organization apart. The CEO never could decide which direction he wanted to commit to. He was eventually fired as frustrations and infighting rose while organization performance fell.

Most centralists don’t set out to deceive anybody. In their heads they know that high degrees of involvement, participation, and autonomy are key elements in high organization performance. But in their hearts, they still crave orderliness, predictability, and control. That’s why they cling to such anachronisms as strategic planning. It’s part of their futile search for a master plan that can regulate and bring a sense of order to our haphazard, unpredictable, and rapidly changing world. Our equally outdated accounting systems give centralists plenty of reinforcement. For example, hard financial measures can clearly show that consolidating and centralizing support services and functions saves money and increases efficiency — at least on paper. What don’t show up are the alienation, helplessness, and lack of connections to customers or organizational purpose that mind-numbing bureaucracy brings. The energy-sapping and passion-destroying effects of efficiencies may save hundreds of thousands of dollars. But traditional accounting systems can’t show the hundreds of millions of dollars lost because of lackluster innovation, mediocre customer service, uninspired internal partners, and unformed external partnerships.

I am an extreme (some might argue dangerous) decentralist. Since I began my management career, I’ve given people high degrees of autonomy. I’ve run even small organizations to the point of such inefficient decentralization that people are running their own show. It works. Here are some of the reasons:

• Everyone can see and manage their work as part of a whole, interconnected system, not as one in a bunch of parts and pieces.
• People are trusted and treated as responsible, caring, and committed adults — which is how they then behave.
• A collection of small, self-contained teams or business units are many times more flexible and responsive at meeting threats and capitalizing on opportunities.
• Ownership, commitment, energy, and passion levels are much higher.
• Everyone focuses on meeting customer/partner — not the internal bureaucracy’s — needs.
• People have more control over their work. The vicious cycle of learned helplessness is replaced with a virtuous cycle of hopefulness and leadership.
• Bureaucratic committees become entrepreneurial teams.
• Feedback loops are much clearer, shorter, and closer to the customer and markets.

High-performing organizations that are thriving in today’s chaotic world are adapting and pioneering a wide variety of highly decentralized structures. They are giving up control of people so that people can control their own and the organization’s destiny. This is creating an explosion of organization structures and models with such names as network, shamrock, pulsating, jazz combos, adhocracy, horizontal, hollow spider’s web, flat, meritocracy, modular, cellular, cluster, inverted, starburst, federal, pancake, and virtual … to name a few.

The Shape of High Performance

The search for an ideal or perfect structure is about as futile as trying to find the ideal canned improvement process to drop on the organization (or yourself). It depends on the organization’s vision and values, goals and priorities, skill and experience levels, culture, team effectiveness and so on. Each is unique to any organization. We are also in the midst of a major transition from organization and management practices that began around the turn of the twentieth century. My cloudy crystal ball won’t allow me to see which organization structure or model will dominate the twenty-first century. Because we’re no longer in an age of mass production and standardization, I sure there won’t be just one type. Rather, we’ll see our top organizations grow and shed a variety of structures and models to suit the their changing circumstances.

However, the shape and characteristics of a high performing organization structure is coming clearly into view:

• Intense Customer and Market Focus – systems, structures, processes, and innovations are all aimed at and flow from the voices of the market and customers. The organization is driven by field people and hands-on senior managers in daily contact with customers and partners.
• Team-based – operational and improvement teams are used up, down, and across the organization. A multitude of operational teams manage whole systems or self-contained subsystems such as regions, branches, processes, and complete business units.
• Highly autonomous and decentralized – dozens, hundreds, or thousands of mini-business units or businesses are created throughout a single company (I’ve split business units of twenty five people into smaller business units). Local teams adjust their company’s product and service mix to suit their market and conditions. They also reconfigure the existing products and services or develop new experimental prototypes to meet customer/partner needs.
• Servant-Leadership –Senior managers provide strong vision, values, purpose, and strategic direction to guide and shape the organization. But very lean and keen head office management and staff also serve the needs of those people doing the work that the customers actually care about and are willing to pay for. Support systems are designed to serve the servers and producers, not management and the bureaucracy.
• Networks, Partnerships, and Alliances – organizational and departmental boundaries blur as teams reach out, in, or across to get the expertise, materials, capital, or other support they need to meet customer needs and develop new markets. Learning how to partner with other teams or organizations is fast becoming a critical performance skill.
• Fewer and More Focused Staff Professionals — accountants, human resource professionals, improvement specialists, purchasing managers, engineers and designers, and the like are either in the midst of operational action as a member of an operational team, or they sell their services to a number of teams. Many teams are also purchasing some of this expertise from outside as needed.
• Few Management Levels – spans of control stretch into dozens and even hundreds of people (organized in self-managing teams) to one manager. Effective managers are highly skilled in leading, (creating energy and focus), directing (establishing goals and priorities), and developing (training and coaching).
• One Customer Contact Point – although teams and team members will come and go as needed, continuity with the customer is maintained by an unchanging small group or individual. Internal service and support systems serve the needs of the person or team coordinating and managing the customer relationship.

Structure Shapes Behavior

If you’re not happy with the behavior of people on your team or in your organization, take a closer look at the system and structure they’re working in. If they behave like bureaucrats, they’re working in a bureaucracy. If they’re not customer focused, they’re using systems and working in structure that wasn’t designed to serve customers. If they’re not innovative, they’re working in a controlled and inflexible organization. If they resist change, they’re not working in a learning organization that values growth and development. If they’re not good team players, they’re working in an organization designed for individual performance. Good performers in a poorly designed structure will take on the shape of the structure.

Many organizations induce learned helplessness. People in them become victims of “the system”. This often comes from a sense of having little or no control over their work processes, policies and procedures, technology, support systems, and the like. “You can’t fight the system” they’ll say with a shrug as they give the clock another stare hoping to intimidate it into jumping ahead to quitting time. These feelings are amplified by a performance management system that arbitrarily punishes people for behaving like the system, structure, or process they’ve been forced into. “Empowering” helpless people without changing the processes, structure, or systems they work in is worse than useless. It increases helplessness and cynicism.

Structure is a very powerful shaper of behavior. It’s like the strange pumpkin I once saw at a county fair. It had been grown in a four-cornered Mason jar. The jar had since been broken and removed. The remaining pumpkin was shaped exactly like a small Mason jar. Beside it was a pumpkin from the same batch of seeds that was allowed to grow without constraints. It was about five times bigger. Organization structures and systems have the same effect on the people in them. They either limit or liberate their performance potential.

Reprinted with the permission of Jim Clemmer. For over three decades Jim Clemmer’s keynote presentations, workshops, and management team retreats, and seven best-selling books translated into many languages, articles, blog, and newsletters have helped hundreds of thousands of people worldwide. The CLEMMER Group is Zenger Folkman’s Canadian Strategic Partner, an award-winning firm best known for its unique evidence-driven, strengths-based system for developing extraordinary leaders and demonstrating the performance impact they have on organizations.

http://www.clemmergroup.com