Many organizations aim to shorten time to value through customer centricity and value-stream orientation. But there are different approaches to setting up your organization. Organizations need to consider which org models are best suited for certain business objectives. Org models provide clarity by determining the hierarchy between leaders, managers, and individual contributors. They define what employees do, whom they report to, and how decisions are made. Organizational models matter as part of your digital transformation effort because:
- An ill-suited organizational model causes a lot of pain for employees. An ill-suited org structure blocks employees from getting their jobs done effectively.
- An understanding of the organizational model is essential for employee productivity. Unless employees understand how their organization operates and which business objectives it pursues, they cannot build effective org structures.
- Your org model should help accelerate digital initiatives. Business leaders are forced to rethink the structure of their teams as a result of changes in the wider business landscape. They need to take advantage of the digital capabilities and tools that are becoming available.
The Rise Of Agile Is Giving Rise To Cross-Functional Teams
Agile methodologies can help organizations deliver value faster. Importantly, agile allows for the vision and the design of the product to shift and evolve during the development process. However, agile is more of a philosophy and mindset than a strict methodology. Therefore, there is no simple set of steps that you can implement to become agile.
All organizational models fall somewhere on a spectrum between strictly defined, bureaucratic, and centralized and, on the other end of the spectrum, organically grown, loose structures. The more that a model takes on a “centralized” approach, the greater the rigidity and the lack of control of individual stakeholders, and vice versa. Agile pushes org models toward greater autonomy. These self-organizing teams tend to focus on the speed of creative innovation. To enable autonomy and remove potential bottlenecks, they are also cross-functional in nature. The most common formats are journey-, channel-, and product-based teams. In this model:
- A fluid organizational structure replaces corporate hierarchy. Members of a cross-functional team form distinct and symbiotic groups that are tasked with accomplishing certain predetermined tasks and outcomes. Team structures are much flatter and not subject to a traditional hierarchy of command. Problems that arise within the team or between teams are raised in periodic governance meetings.
- The number of team members is small and interdisciplinary. Cross-functional teams are small enough that every team member can communicate easily and stay on the same page about product needs and business goals. The teams are autonomous, without a strict reporting hierarchy. The key team members comprise a product manager, a data scientist, a UX designer, and developers. Such teams often have a greater sense of ownership and empowerment, as well as a startup spirit.
- Team members assume multiple roles. Team members in cross-functional teams occupy several roles rather than fixed job responsibilities. Rather than sticking to classic job descriptions, roles have a purpose, domain, responsibility, and accountability. As employees in an organization can have multiple roles, senior executives will at times assume subordinate roles.
- Team members have autonomy to make key decisions. In principle, cross-functional teams should encounter only weak dependencies on other teams. The cross-functional teams are more flexible and often replace the rigidity of a traditional command structure with self-management. Team members have more authority to take decisions.
- The autonomy paradox can undermine the effectiveness of teams. As individual organizational units become more and more autonomous, it becomes more important, and more complex, to align and integrate these units in the overall organization. The trend toward greater autonomy of teams therefore paradoxically also drives the need to align and integrate these teams in the wider organization.
Choose The Digital Org Model That Fits Your Needs
Most organizations struggle to work effectively across functions due to the coordination complexity of external partnerships, global operational spread, and contract workers. Other reasons such as protectionism, resistance to change, budgeting processes that are aligned with old org structures, ambiguity around accountability, and historic reporting lines also stymie adoption. The report Choose The Digital Org Model That Fits Your Needs focuses on which leading cross-functional org models are best suited to achieve your business objectives given your organization’s current state.
If you’re a Forrester client, you can download the report here: Choose The Digital Org Model That Fits Your Needs. And if you’d like to discuss this topic further, please reach out through an inquiry or guidance session.
