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Transforming Hierarchical Organizations into Agile, Networked Enterprises

In today's business landscape, companies are shifting from rigid hierarchical structures to more flexible, network-like relationships. This transition poses significant challenges for startups aiming to become organized enterprises without traditional roles. As highlighted by Percy Barnevik of ABB, achieving a balance between decentralization and centralized control can create a competitive advantage. To succeed, organizations must understand interdependencies, build effective teams, and redefine accountability. This learning approach fosters collaborative, accountable environments while promoting clarity in roles and responsibilities.

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Transforming Hierarchical Organizations into Agile, Networked Enterprises

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  1. Week 2: IT and organization • Main idea: Companies used to be hierarchical, whereas today the relationships are more like a network

  2. Challenges • How does a small (startup) company become an organized enterprise? • Is it really possible to operate without a hierarchy of roles? • “We want to be global and local, big and small, and radically decentralized with centralized reporting and control. If we resolve thoe contradictions, we create real competitive advantage” (Percy Barnevik, ABB, page 59)

  3. Fig 2.1 Organizational Design Challenge

  4. Fig 2.2 Building Lean, yet agile enterprises

  5. Fig 2.3 Streamlining operating and management processes

  6. Fig 2.4 redefining control systems © Lynda M. Applegate, 2005

  7. Hierarchical Enterprises vs. networked enterprises

  8. Building a management team • Understand multiple functions • Relate interdependencies between processes • … learning and integrative approach (page 68) • ‘information literate’

  9. Accountability and Collaboration • Teams • Defining structures, responsibilities and incentives • See figure 2.5

  10. Fig 2.5 Building Authority Systems

  11. Does redefining roles create or remove clarity? • Boards and teams become responsible for end-to-end process performance • However, individuals still need to be evaluated for their roles • Is this really much different?

  12. Case: Learning from Leapfrog

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