We live in a digital world and it has changed everything. Yes, this is a bit like claiming that water is wet. But just because we all know it’s true doesn’t mean we’re all tuned in to its far reaching, ubiquitous impact. One such impact is the demise of the traditional office hierarchy.
Recent research from Deloitte proved that companies are moving away from their industrial age management structures, with only 38% reporting they are still ‘functionally organised’ in siloed departments. The old top-heavy hierarchy is increasingly being abandoned for a cell-like structure, with autonomous groupings responsible for defined business objectives from concept to delivery and senior executives becoming facilitators of networked teams rather than top-down controllers. But why abandon company structures that have endured since the industrial revolution?
Firstly, it comes from an increase in customer control. The last 20 years have seen an explosion of choice, so whether its holiday destination, an item of clothing, a taxi home, or even legal advice, the customer chooses, what, when, and how much. Successful businesses have grasped that and delivered. In fashion, for example, the high street winners are those that deliver on shifting customer requirements day to day - businesses like Mango, which has reorganised its supply chain to deliver fast fashion.
It’s now possible to move from concept to reality at breakneck speed – and because it’s possible, it is also necessary. Overly centralised management structures and their inherent long sign-off processes conflict with this critical business need, gifting the nimbler disrupters an opportunity to steal market share.
The other group now in control are your employees. The digital revolution allows them control in every element of their life: they can book a trip away, organise a loan, find a date for the evening all while waiting for a bus. They are unlikely to leave that feeling of control at the office front door, and unlikely to thrive in an environment where they feel they have no control whatsoever.
Employees want control because they want to be trusted, they want to demonstrate wide-ranging skills, and because they inherently understand that long sign off-structures inhibit the nimbleness they are now used to as consumers.
It’s easy for those of us who were shaving before 2000 to bemoan ‘millennials’, but when you couple their demands as employees with those of them as customers, you can see why more and more businesses are restructuring in a way that satisfies both.
Meanwhile, technology has made things more complicated. There are so many more disciplines, it’s not feasible to shunt specialists into narrow fields, as their skills might not always be in demand. Multi-skilled staff in autonomous groups can always be utilised. And as technology is moving so quickly, multi-skilled teams will survive as and when individual skills become obsolete.
Putting the new digital age office structure in place requires a commitment to ‘empowerment management’, or to put it more bluntly, a move away from HiPPOS (Highest Paid Person Opinion Sought). The likes of Valve and Medium have been the poster children for this new approach, but many others have explored the options. At my company, the digital agency Zone, we restructured into a decentralised cell structure two years ago, where teams of approximately 40 people are autonomous, plugged into the centre where we facilitate rather than govern.
In my experience, taking this approach is a win-win-win. For the employer, the willingness of team members to be adaptable allows for the group to efficiently reconfigure itself based on situational need. For the employee, a more open structure allows them to utilise and expand their skill sets, as well as feel genuine ownership of, and proximity to, their output. For customers, it means a more agile company able to be responsive their needs.
But, in order to get most benefit from a diversified structure, autonomy has had to really mean autonomy. Giving autonomy means giving it up as well, and that is not always easy. Success means answering some tough questions:
- Where does final decision making (i.e creative sign-off) lie – the cell or the centre?
- Who controls recruitment – not just who is hired, but what positions are available. Cell or centre?
- Who knows the team financials (i.e team P&L, targets, margins, billing rates etc). Cell or centre?
I am certain that in order to create a home for the best talent, so we can meet our customers’ demands and keep their loyalty, we need to be decentralised, and create autonomy for every member of staff. It is not easy. It means undoing things we have done for years. But the pay-off is retaining your best staff, increased profitability and happier clients and customers.
The hierarchy is dead, long live the team.
Jonathan Simmons is chief strategy officer at digital agency Zone.