Key Concept ~ How we structure the organization is a reflection of how we perceive function, and once established, how we function is highly influenced by our organizational structure.
I read an interesting article last week about the hyper-growth of internet technology companies in the Bay Area and the challenges they are having maintaining their creative cultures as their organizations grow. Even the most highly innovative entrepreneurial endeavors can fall back into old, hierarchical patterns as the demands of the organization flourish.
Here’s an excerpt from my book, “The Transformational Entrepreneur ~ Engaging The Mind, Heart, & Spirit For Breakthrough Business Success” that may offer a solution that is as innovative as the companies themselves!
While conducting market research in 2005 I became intrigued with the concept of convergence; of how biotechnology, information technology, and nanotechnology were coming together to create a new generation of products and capabilities. As I discovered compelling opportunities to converge companies with specific core competencies to create breakthrough technologies I also saw barriers that would challenge this vision. The barriers emerged from two areas; Company hierarchical structure resulting in silos that challenge internal coordination (never mind external convergence); and the intellectual horsepower of Ph.D.’s that were remarkably expert in their area of application but were no more insightful than a college science graduate in the complementary technologies. From an investor’s perspective, how could one converge the silos and create an environment of cross-pollination of the science and technology?
The answer came to me visually and was a bit of an epiphany…lay the silos down upon their sides and introduce structural, cultural, and operational porosity to the previously isolated silos. In effect, overlap and transform them into horizontal conduits of cooperative, customer-centric, developmental process drawn together by a surrounding conduit of leadership, finance, and shared operational infrastructure.
The seeds of thought for this new structural approach germinated while consulting with Kevin Schimelfenig, Founder and Managing Partner of SalesForce4Hire®, LLC. Kevin’s company provides custom sales solutions for medical device and life science organizations. The company creates custom business engines that can be absorbed or dissolved by the client and operates with a core management and talent team that expands and contracts in accordance with the needs of the current client mix. The core management team is highly cooperative and works together to move their clients’ projects through a proprietary commercialization process. The focus is on process flow and the company’s differentiating value highly depends upon the efficiency and speed of value creation. In effect, the process is driven through a value creating pipeline. This value conduit is highly porous operationally, absorbing contract resources as they are needed and releasing them upon conclusion of a project. SalesForce4Hire maniacally focuses on their core competencies and outsources everything else. There are no hierarchies or silos that could place a drag on value creation or introduce the risk of becoming distracted by non-value creating activities.
Interestingly, as I began refining the conduit structure business model I discovered, quite by accident, the root meaning of the word “conduit”. The word conduit originates from the Medieval Latin conductus, from the Latin, past participle of condūcere, meaning “to lead together”. Many people say there are no coincidences, and I couldn’t think of a more appropriate definition reflecting the intention of this approach to organizational structure!
The fact of the matter is, hierarchical structure is two dimensional…it reflects layers of authority across silos of functionality. It does not reflect the human element so critical for success in today’s economy. Such structures emerged out of the industrial age, when process, function, and control were the key drivers of success…not creativity. Creativity flows from within; from within the great mystery that is the human spirit. By adopting a new perspective on organizational structure, innovative companies can continue to cultivate their creative culture as they grow and flourish in the New Economy.
© Terry Murray, 2011. Excerpt from Chapter Nine of The Transformational Entrepreneur ~ Engaging The Mind, Heart, & Spirit For Breakthrough Business Success.