The New Workforce Challenge

How Today's Leading Companies Are Adapting For the Future

A. Hatum

• Publisher: Palgrave Macmillan
• Year: 2013
• Print ISBN: 9781137302984
• eBook ISBN: 9781137302991
• Topic: Business
• Subtopic: Business Communication
• Index: Business

Few books go into enough depth to really understand the differences between the future generations of professionals to come and the ones that have gone before. This innovative book examines how new generations of the workplace and workforce will be shaped in the future and shows organizations the ways in which they will have to adapt to succeed.

1

Organizing and the New Agile and Virtual Firm

NEW WAYS OF ORGANIZING: THE RISE OF COMPLEXITY

Malone (2004), trying to understand changes in organizational patterns over time, concludes that businesses have been structured according to the way in which societies have been organized. He notes that until 1800 most businesses worldwide were family firms that enjoyed a lot of freedom but rarely interacted with members of other groups. Corporate hierarchies emerged in 1870 with the railroad industry, which was one of the first to embrace centralization. The benefits of scale were important to the realization of the centralization process. Malone highlights the case of Ford, where the amount of time to make a Model T had dropped from 12 hours and 8 minutes to only 1 hour and 33 minutes in 1913. Many companies that could not achieve such scale benefits did not survive. Adaptation was clearly necessary to survival.

While early corporations were single-product firms, the same companies started to expand into new product areas at the beginning of the twentieth century (Chandler, 1990). The resulting increase in complexity required new organizational forms. Business units and the multidivisional corporation emerged as a way to support the multiproduct, multi-business strategy.

The foregoing organizational model faced a crisis in the 1980s when ing processes – outsourcing, delayering and rightsizing, among other ways of adjusting and reshaping the organization – were implemented in an effort to survive the turmoil of the 1980s. During this period, historically large and successful corporations suffered from cutbacks and inertia. At the same time, however, start-up firms and the new venture capital sector that emerged in Silicon Valley developed new ways of organizing in which leanness and agility were favored over the traditional hierarchical approaches (Malone et al., 2003). As these new ways of organizing became more widely adopted, the resulting tendency toward decentralization had a large impact on the way firms are organized today: Today’s firms are flatter and leaner, with less reliance on hierarchies designed to manage a highly centralized organization. Adaptation was thus again necessary to be able to face a hypercompetitive environment characterized by huge transformations within corporations and the need to anticipate changes and develop new innovations to bring to market.

So what makes it possible for organizations to adapt rapidly to external changes? How can organizations learn to adapt to volatile conditions? Concepts such as the flexible firm (Hatum, 2007; Volberda, 1999), the innovative firm (Blau and McKinley, 1979; Drucker, 1999; Pettigrew and Fenton, 2000), the adaptive firm (Haeckel, 1999) or the agile firm (Goldman et al., 1995) have been proposed in an effort to explain the organizational capabilities needed to allow firms to adjust to an ever-changing environment.

Grantham (2000) emphasizes the importance of the “Hollywood” model of organization for the future. To produce a feature-length film, hundreds of small firms and individuals coalesce around a project that is led by a team of producers and directors. Talent from one film may work together on future films. But when a particular project is complete, the virtual organization that was created comes to an end. This model allows for maximum flexibility, but it also leads to minimum loyalty and endless jockeying for advantage.²

Hedlund (1994) introduces the concept of the N-form, which is based on different elements of an ideal organization, for instance, lateral rather than vertical communication, temporary constellations of people and units rather than permanent structures, and heterarchy rather than hierarchy. Hedlund’s N-form might have been seen as futuristic at the time he predicted this type of organization to be on the horizon. However, as we will see later, the new forms of organizing observed in practice today are not far from this idea. Similarly, based on an analysis of the complexities of the four-pillar organization structure at Procter & Gamble (P&G) and the six-dimensional organizational structure of IBM, Galbraith (2009) predicts a fragmentation of the business environment and the adoption of a dimensional matrix structure consisting of functions, business units and geographies.

One of the most recent empirical attempts to understand the ways firms organize in an effort to adapt to changing competitive contexts comes from Pettigrew et al. (2003). Instead of focusing on ideal ways of organizing, Pettigrew and his colleagues focus on how firms organize in reality and examine the indicators of firms’ organizational choices. The conclusion of their international survey is that the most adaptable and innovative firms have combined changes in structure (i.e., more decentralization, delayering and project forms of organizing) with changes in processes (i.e., horizontal communication, investments in information technology and new human resource (HR) practices) and changes in firm boundaries (i.e., downscoping, outsourcing and more strategic alliances).

Pettigrew et al.’s research sheds light on the new ways of organizing and on trends companies should consider when restructuring themselves to be able to successfully compete during times of high complexity. In short, it appears that successful and adaptable organizations will need to support high levels of decentralized participation, rely less on undifferentiated formal organization and compete more through their informal uniqueness. In line with this view, the open business model is emerging as one way to thrive in the context of a hypercompetitive business environment. In contrast to a traditional closed office, the open business model involves sharing resources with competitors (in ways that do not put the firm at a competitive disadvantage) and being open to new ideas from almost any source. Sandulli and Chesbrough (2009) and Chesbrough (2006) point to the importance of both the seller’s and buyer’s perspectives within this model. The buyer’s perspective allows firms to incorporate resources from other firms in their own business model. The seller’s perspective, however, allows the resources of one firm to be used in another company.

The open business model is starting to supersede traditional ways of structuring firms, including functional, matrix, divisional or business unit designs, which are increasingly insufficient to confront the jolts and turmoil characterizing today’s dynamic environment. One of the largest open business model initiatives currently in existence is Google’s Android platform, the first open source mobile phone platform brought to market.³ As an open source project, anyone can contribute to Android and influence its direction. Google understands that in exchange for giving up a certain amount of control, it can gain tremendous benefits from receiving participation and ideas from around the world.

Crowdsourcing is another new way firms can increase their access to great ideas and talent. Jeff Howe, author of the book Crowdsourcing (2008), defines it as “the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.”⁴ Howe acknowledges that while “crowdsourcing” encourages comparison with “outsourcing” and its negative impact on employment, the practice allows firms to obtain access to top talent from around the world and thereby deliver a high-quality, reliable product at a competitive price.

Not all models of crowdsourcing, however, bear the same degree of complexity (see Figures 1.1 and 1.2). Consider first the case of Wikipedia (http://www.wikipedia.org/). Since its creation in 2001, Wikipedia has rapidly grown into one of the world’s largest reference websites, attracting nearly 78 million visitors monthly as of January 2010. This growth has been based on content provided largely by anonymous internet volunteers who collaborate to write and update content without pay. As of October 2012, Wikipedia counts more than 77,000 active contributors working on more than 22,000,000 articles in 285 languages.⁵

Figure 1.1 Business model at Wikipedia

Figure 1.2 Business model at Threadless.com

Figure 1.1 summarizes the relatively simple business model of Wikipedia, where the contributions of volunteer collaborators are key to the organization’s success.

A more complex model of crowdsourcing can be found in the case of Threadless (http://www.threadless.com), launched in 2000 by Jake Nickell and Jacob DeHart. The idea is simple: Artists submit a T-shirt design, potential consumers vote for the best design, the winner receives free T-shirts bearing his or her design and the most popular designs are selected for printing and sale by the Threadless online retail store.⁶ At Threadless, decisions that have traditionally been core strategic decisions of firms – the design of potential products offered as well as the choice of which products will be sold – are now outsourced.

Today, Threadless receives design submissions from a worldwide community of more than 80,000 artists and participation from a community of over 1.3 million members who vote regularly on their favorite design submissions. Threadless further boasts over 1.5 million followers on Twitter and 100,000 fans on Facebook.⁷ Thus, by engaging customers, understanding what interests them and building on this information, this 50-person company harnessed the power of social networks and consumer support to grow its revenues to over US$30 million a year. Indeed, as cofounder Jack Nickell observes, “the best brands are built from a community of people who make each other realize they share a love for something. They’re built from something genuine.”⁸

Figure 1.2 summarizes the more complex business model of Threadless, where virtuality, networks and social media play key roles.

If Threadless has created a new kind of marketplace for products, InnoCentive (http://www.innocentive.com) has done so for ideas. InnoCentive is a website that allows people and companies to collaborate in solving scientific and business challenges, something previously hard to imagine as firms have traditionally kept research and development innovations to themselves. The company distinguishes seekers and solvers. Seekers receive help from the company in defining their problem, writing their challenge statement and evaluating possible solutions. Solvers may be professionals, retired scientists, students or anyone who can answer a problem that has stumped a company’s own researchers. Cash rewards are sometimes offered to those who solve a challenge, with award amo...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Figures and Tables
• Acknowledgements
• Introduction
• 1 Organizing and the New Agile and Virtual Firm
• 2 Demographic Changes in the Workplace
• 3 Attracting Millennials to the Workplace
• 4 New Learning Paradigms and the Challenge of Developing the Future Leaders
• 5 The New Realignment Contract
• Interviews
• Notes
• Bibliography
• Index of Companies and Organizations
• Subject Index