|The first step to building a culture of collaboration, innovation and engagement is rethinking organizational design. By challenging traditional ideas about work, and removing hierarchical, functional and geographic boundaries, leaders can leverage untapped potential for competitive advantage. With greater flexibility and integration, boundaryless organizations can move quickly and nimbly through the changing business terrain and capitalize on new markets, new opportunities and new technologies.|
In an era of globalization and rapid technological innovation, leaders are being forced to embrace a new business model. Vertical hierarchies and silo thinking are fast giving way to a more flexible approach to organizational design. Speed, flexibility, integration and innovation are the new organizational success factors – but these can only be attained if leaders have the courage to move beyond the tried and tested.
It was former General Electric CEO, Jack Welch, who first coined the term “boundaryless organization” in the early 1990s. Welch recognized that the combined knowledge, skills, ideas and talents of GE’s workforce represented a major source of competitive advantage for the business. He believed that the removal of internal and external barriers would uncover a reservoir of ideas and innovation, and increase the organization’s responsiveness to changing market needs.
Welch identified five criteria that a winning organization would need to satisfy to become, and remain, competitive in a fast-changing global economy:
- Eradicate bureaucracy to free the organization from constraints, such as too many organizational levels and overregulation.
- Eliminate boundaries to release potential, innovation and creativity.
- Focus on softer values, such as team building and the sharing of ideas,rather than purely on financial performance.
- Cultivate leaders to deliver on the vision and values, and meet commitments.
- Create a learning culture to encourage the free flow of information.
To unleash the innate potential of their people, an effective organization should remove any barriers that get in the way of innovative, creative performance. In particular, functional boundaries should be removed. An organization free of unnecessary boundaries is one that is free of bureaucracy, and any other constraint that prevents the free flow of ideas, solutions, talent, etc. Typically, the boundaryless organization is characterized by informality, fun, and speedy reactions to problems and concerns.— Jack Welch
These criteria are the precursors to a boundaryless organization where unnecessary barriers are removed, creating opportunities for seamless functioning across an extended supply chain. In this scenario, competitive advantage is sustained by establishing fluid alliances and networks with strategic partners.
Boundaryless organizations operate across a fully integrated value network, sharing strategic thinking and involving key partners in key decisions. The effectiveness of such an organization is dependent on a number of relational issues, including:
- A high level of mutual trust
- A culture of knowledge sharing, within and outside the organization
- Continual innovation and experimentation, often in collaboration with customers
- A values-led leadership style that focuses on coaching and energizing, rather than on directing and control
To achieve these success factors, organizations need to reshape four types of boundaries:
- Vertical boundaries, which separate people by hierarchical levels, titles, status, and rank. Boundaryless organizations reject these kinds of barriers in favor of open-door policies, open-plan offices, and accessible C-suite leaders.
- Horizontal boundaries, which separate people by function, business unit, product group or division. In a boundaryless organization, there is a blurring of responsibilities as teams are organized by process rather than by function or department.
- External boundaries which separate organizations from their suppliers, customers, communities and other external constituencies. In a boundaryless organization, product design ideas, innovation and strategic thinking are shared with consulting suppliers and customers.
- Geographic boundaries and cultural differences are transcended in boundaryless organizations where new technologies are employed to connect employees across the globe.
Each of these boundaries needs appropriate permeability and flexibility, so that ideas, information and resources can flow freely up and down, in and out, and across the organization. The idea is not to have totally permeable or nonexistent boundaries — that would be “disorganization”. Rather, there should be sufficient permeability to allow the organization or value chains to adjust to changes in the environment quickly and creatively.
Each of these boundaries needs appropriate permeability and flexibility, so that ideas, information and resources can flow freely up and down, in and out, and across the organization.
A boundaryless organization requires a leader who can manage complexity, embrace cultural diversity, is comfortable in times of uncertainty and views change as an opportunity. Here are four levers you can use to foster permeability within your organization:
Ensure that information is shared across all boundaries throughout the extended value chain.
Give your people the power to make independent decisions about action and resources.
Help your people develop the skills and capabilities needed to leverage information and authority wisely.
Provide incentives that promote organizational objectives and are based on accomplishment rather than position.
To successfully lead a boundaryless organization, you need to shift from command and control to methods that rely more on creating a shared mindset, stretching targets and empowering colleagues. At the same time, you need to keep the focus on results, maintain clear accountability for performance and make tough decisions.
Once boundaries are removed, or reduced, creativity, innovation and adaptability are unlocked. The benefits of a boundaryless organization include:
- Greater flexibility and responsiveness to change
- The free exchange of information and ideas
- Better integration between departments and functions
- Closer partnerships with suppliers and customers
Getting buy-in from your leadership team will likely involve convincing them to eradicate bureaucracy and reframe their concept of organizational design.
The first step to becoming boundaryless is challenging assumptions about organizational architecture. Getting buy-in from your leadership team will likely involve convincing them to eradicate bureaucracy and reframe their concept of organizational design. Following are some common concerns your team might express about becoming boundaryless, and how you can alleviate their concerns:
- Relaxed working environments, including work-from-home options, could lead to some employees taking advantage and becoming less productive.
Fulfilled employees who have the ear of their peers and superiors, and can see an exciting career path ahead of them, are more likely to remain engaged and committed to the organization’s vision.
- Not everybody is comfortable with using technology to communicate. Some employees prefer face-to-face communication only.
All employees need to take part in onboarding programs and should be encouraged to embrace the technological environment. Case studies that demonstrate the success of collaborative technologies can also help to secure buy-in.
- Somebody has to lead – “boundaryless” is a more of a philosophy, and cannot be practically applied in every facet of the business.
“Boundaryless” does not mean that every boundary has been eradicated. The organization will still need leadership, and some decisions can only be made by the executive leadership teams.
- There will be detractors who will resist the idea of becoming boundaryless.
Change management and onboarding programs will have to be implemented, particularly if the hierarchical structure is well entrenched.
- Where organizations are made up of a strong outsource model, i.e., the boundaries between a cluster of companies, suppliers and customers have been blurred, there can be a lack of organizational identity which is potentially confusing for employees.
There needs to be a strong brand identity within the organization and in the marketplace. Constant feedback from employees and customers will offer insight into how the marketplace views your brand.
By becoming boundaryless, you’ll be able to tap into hidden reserves of talent and possibility, and create a dynamic, flexible and adaptable organization.
By becoming boundaryless, you’ll be able to tap into hidden reserves of talent and possibility, and create a dynamic, flexible and adaptable organization. These are the characteristics that will move your organization quickly and nimbly through the changing business terrain and help you capitalize on new opportunities, new markets and new technologies.
This resource has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained herein without obtaining specific professional advice. Competitive Capabilities International (CCi) does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this resource or for any decision based on it.