For four decades, professor David Ulrich of the University of Michigan and associated researchers have been trying to understand how organizations reinvent themselves. Ulrich and his team study how firms respond quickly to changing markets and “govern for agility and innovation,” he says in a LinkedIn post.
Ulrich’s new book coauthored with Arthur Yeung, “Reinventing the Organization: How Companies Can Deliver Radically Greater Value in Fast-Changing Markets,” presents a fresh approach to remaking the company. What’s it all about?
Four Organization Forms
It should come as no surprise that businesses constantly reinvent themselves. They regularly adapt, reset their goals and strategies and change their forms. Ulrich and his team conclude that organizations have evolved, having passed through four phases:
1. Hierarchical structure, the traditional organization form, focused on a chain of command. Everyone plays specific roles and follows set decision-making rules.
2. Systems organization, phase 2, aligned people and structure with strategy, rewards and processes. This is the old McKinsey model; the organization chart looks like a star with shared values at the hub of the company.
3. Capability structure, or phase 3, presented a modified “star” structure that focused on making use of information, collaboration, talent and culture.
4. Market-oriented ecosystem is the new organization form. MOEs set up a common platform “design around ecosystem capabilities” from which a variety of teams do their work. The idea is to think of the company not in isolation, but in the context of its ecosystem or marketplace. MOEs reinvent themselves rapidly. They respond quickly to changing market conditions, and they generate greater innovation. Examples of MOEs include the U.S. firms Amazon, Facebook and Google and the Chinese firms Alibaba, Tencent, Haier and Huawei.
If you’re going to reinvent your firm, you’ll need an organization architect. This is the company leader who will work in conjunction with human resources.
“CEOs ‘get it’ when they recognize … their requirement to respond and grow or to wait and languish,” says Ulrich in a LinkedIn comments stream associated with the post, “The Emergence of the Market-Oriented Ecosystem Organization.” “When HR (or others) help CEOs recognize that there are ways to anticipate and respond to external requirements, they (CEOs) are less threatened and more proactive.”
Six Dimensions of the MOE
How does the organization architect reinvent the company? In studying successful MOEs, Ulrich and his team identified six dimensions that map out the steps to reinvention. Here’s my synopsis of the questions to ask at each step, taken from the above-mentioned LinkedIn article:
Environment. How well does our company appreciate business and social trends? How well do we anticipate them? Do we understand how they affect our business?
Strategy. How successful are we at growing our business? What paths are leading to growth? Do we know how to create market opportunities?
Capability. How well do we leverage our strengths? Are we truly customer-centric? Are we creating capabilities in the ecosystem and not just within our organization?
Morphology. Do we have the right organizational form to deliver these ecosystem capabilities? Do we have the right platforms, cells and allies to capture market opportunities?
Governance. How strong is our culture? Do decisions and subsequent action-steps, though perhaps made by separate teams, ultimately reinforce each other? Is information transparent? Are we true collaborators? Do we have an effective talent pipeline?
Leadership. Do our top leaders set the context and rules clearly for others? Do they empower, energize and properly orient others? Do they coach?
Your HR team can help you define, assess and audit the firm along these six dimensions.
Pivot to New Opportunities
There’s a lot going on in wall and ceiling construction. Economic growth is starting to slow. The spread of prefabrication and pre-assembly work is picking up. Labor brokers are moving into parts of the country where they have not yet been seen, areas where general contractors are claiming more of the framing packages on projects. You’ll need to adapt to such changing market conditions. You don’t want to become the next industry Blockbuster or Sears.
You can do it!
“Once leaders learn these principles,” Ulrich says, “they’ll let go of organizational assumptions and will instead capitalize on a design logic and language for reinvention and pivot to opportunities fluidly.”
Mark L. Johnson writes for the wall and ceiling industry. He can be reached via linkedin.com/in/markjohnsoncommunications.
