Management Perspectives

Research has demonstrated that competitive advantage in business, today, erodes faster than in the past. Evaluating this evolution, many studies have advised companies on how to focus on intrapreneurship and new ways of innovating to invent their next S-curve.

In these discussions, the role that organisational design plays to reinvent competitive advantage, both as a means and a source of competitive advantage itself, is overlooked. Worse, organisational design is thought to be the responsibility of HR leaders. In fact, it is the responsibility of any senior executive, not just HR, to master its principles.

In the coming decades, organisational design will be an additional source of competitive advantage if business executives reset management by making the transition from traditional and rigid management to organisational agility. Here are four principles you may want to keep in mind to thrive with agile organisational designs.

Be original. Many companies tend to copy their peers. But you can do better. In their time, both IBM and Procter & Gamble with Organisation 2005 invented new models that no one thought was possible. By making the three-leg matrix structure fly, for instance, P&G forced all its competitors to catch up and stayed ahead for several years.

Today, dealing with the constraints of digital transformation and turbulence, some companies like Haier and ING have created revolutionary organisational models for agility, defying their industries’ conventions. When designing, try to be as creative as if it were your next business proposition.

Master the principles of agility. In the coming decades, executives will be rewarded for how well they allow their business to adapt to turbulence and to grow. These two goals require new organisational principles for agility. Organisational agility is more than doing things faster. It is the flexibility a business gets when management can empower the workforce to innovate and improvise around the customer to adapt to changes, while giving them clear strategic goals, purpose, and precise output-based KPIs to continue delivering on the strategy. It is like giving them the destination but letting them define the roadmap. This is the competing demand between being nimble and stable. Large businesses will also need to simplify the hierarchy and bureaucracy without becoming simplistic, since what suits some divisions or countries might not suit others. This is the competing demand between being simple and complex.

Upgrade your capabilities for agility. Designing an organisation, even for agility, continues to be about aligning structure, processes, incentives and rewards, values and people with each other, and strategy. With agility, though, you might need to learn about the new shape that some of these elements take. Processes can consist of agile methods, so learning what they are without becoming a geek is crucial. Leadership becomes about being fluent in many, such as leading through purpose and inspiration, empowering but running tough conversations or driving for accountability, rather than defaulting to command and control. So, learning the ins and outs of multiple styles and when to apply them is advisable too.

Calibrate agility to your circumstances.
Winning with organisational design is about creating the right design for your circumstances. In the turbulent home appliances industry, Haier chose a bolder form of agility than one of the big luxury brands we studied. Yet both were following the principles of agility and none used agile methods. Winning through agility is not necessarily about defaulting to agile methods. While all companies will need to be agile, they will not necessarily have to do agile.