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Change is hard. However, change is inevitable and embracing it is essential to a company’s ongoing development and evolution.
There are many factors that play a role in adopting and implementing change in an organization. In an earlier blog post, I outlined the key stages of change management – Unfreeze, where organizations unlearn bad behavior and old processes before new practices can be absorbed; Change, where new business practices, new technology and/or new behaviors and introduced; and finally, Freezing, to memorialize the change.
Following these steps is important, and key to their successful execution is creating a work environment that supports change – not just for changes’ sake – but where flexibility is built in to ensure that you can adapt when change is required. In this post, I’ll explore the important role organizational structure plays in the acceptance and adoption of change. Additionally, I’ll touch on how the use of technology and outsourcing supports the flexibility and adaptability of organizations and contributes an organization’s capability to respond to market changes.
What Organizational Structure Supports Change?
In general, organizations fall into two main categories – they are either centralized or decentralized. Centralized organizations are very hierarchical, with many layers of middle management. In this type of organizations, information is often siloed, decision-making is from above – often by one person or a group of very senior individuals far removed from the employees who are responsibility for executing the decisions.
Many companies have seen the benefits of moving to a flatter, decentralized structure, where middle management is significantly reduced, and those affected by the decisions actually play a role in making them. As Thomas Malone, a professor at MIT Sloan School of Management, describes it, decentralized organizations can be defined as “participation of people in making the decisions that matter to them.” In effect, decisions can be made by subject matter experts who are closer to the work and understand the impact.
Because decentralized organizations result in a reduction in the time to make decisions and improved access to senior leadership for guidance and feedback, a higher degree of flexibility and adaptability is built right in. This allows the organization to “ebb and flow” in response to a changing environment and adapt more quickly and easily.
How Technology Helps
Removing middle management and flattening an organization is often best accomplished by the adoption of technology, and this holds true in real estate and store development. Through the use of IWMS and SLM solutions, individual contributors now have easy access to the information they require to make intelligent decisions, without always requiring input and interaction with senior leadership. They can be in another city – or even another country – and still be able to accomplish what is required to move a process forward and support the organization’s real estate strategy
One of the hallmarks of a flatter organization structure is transparency. Jack Welch of General Electric famously emphasized technology as the only way an organization can effectively implement a flatter organization. With fewer levels, employees better understand and have access to the information they require, and technology supports that as well by providing a single source of all information the entire real estate and store development process.
Outsourcing Supports the Flat Organization
As discussed, organizations that are flat, nimble and flexible are the ones most likely to capitalize on market changes. One way organizations can accomplish this is by outsourcing non-essential, non-value add activities.
By focusing on core competencies, retail organizations can grow and retract to address market changes easier than if the non-value add functions remained in-house. Outsourcing, including strategic activities, might be applicable if these activities happen in either sporadic fashion or are undertaken for a short period of time. In many cases outsourcing such activities as market analytics to firms like TMC are even more applicable as such firms usually have a higher skill level and cost advantages to doing them in-house.
The topics discussed in this blog are not easily implemented and even harder to maintain over time. That being said, the market will only reward those companies who never cease to find ways to compete better and leaner than their competitors. Decentralizing your organization, even if only in a few departments or groups, can have lasting impact to the organization.
Placing the right technology in the right hands will make decentralization an easier proposition to adapt. If you would like to learn more, download Tango’s Making Store Lifecycle Management Strategic white paper.