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The following is sourced from Imaginization. It has been edited to improve readability.
For a TL;DR version, go to the end of the post.
A PDF copy of this post can be downloaded here.
Six Models of Organization
Model 1 is the classic bureaucracy. It is carefully blueprinted into functional departments. The chief executive sits at the top of the bureaucracy, and runs it through various structures, rules, regulations, job descriptions and controls.
It is designed to work like a machine, and operates very efficiently – so long as nothing changes!
Bureaucracies, like machines, operate well when there are stable functions to be performed. Especially when they can be broken down into a series of separate operations coordinated from the top.
When an organization’s tasks keep changing, however, it’s a different story. The changes create a host of problems that no one is mandated to solve.
The problems work their way up the hierarchy, and eventually, fall on the chief executive’s desk.
This chief executive soon gets overloaded and initiates a shift to Model 2
Here, in Model 2, a top management team has been formed.
Collectively, they deal with problems. The bureaucratic machine below (ie. the functional departments) continue with the routine work.
It works reasonably well for dealing with moderate amounts of change.
If the pace heats up, this top team gets overloaded, with a host of operational and strategic decisions demanding attention at team meetings.
Interdepartmental committees or project teams are established within the body of the organization itself. The idea is that routine work will still be conducted through departmental hierarchies, with special problems or projects being delegated to the project teams for investigation and the development of appropriate action plans.
This initiative, often heralded as a move to a “project organization,” makes life bearable at the top again. A lot of work can now be delegated.
However, because the teams are set within the context of a bureaucratic structure, they often fail to take off. There are a lot of projects and a lot of meetings.
And this means, also, a lot of spinning wheels. The team meetings become ritualistic. Team members are usually representatives of their departments. As such, they have dual loyalties – to their departmental bosses, and to their team.
Since real power over day-to-day activities and career progress rests with the departmental heads, the teams themselves do not develop any real clout. Members usually “sit in” on team department’s point of view.
If problems arise in the meeting, decisions are usually delayed until representatives have had a chance to “report back” and test departmental reactions.
If the issue is truly controversial, it ends up getting passed to the top team, so that departmental heads can resolve it for themselves.
Gradually, Model 2 gets pushed towards Model 3.
Model 3 is an organization characterized by pseudo teams. Each team is only capable of dealing with relatively minor issues.
Effectively, Model 2 still rules…
The teams start feeling powerless and a cynical culture develops.
The structure of the organization has changed, but the culture and politics are still firmly set in the old mould.
Organizations can often make successful transitions from Models 1 or 2, to Model 3. But Model 3 is only effective when the issues delegated to the teams are:
- small in number,
- require consultation rather than action, and
- allow generous timeframes for producing results.
Model 3 is only effective when the issues delegated to the teams are small in number, require consultation rather than action
This brings us back to the contingency view of organization and management.
To be effective, organizations need to structure themselves through models that are appropriate for dealing with the external challenges being faced.
If the quest is to create an organizational structure that is driven and enlivened from the middle by flexible, aggressive, innovative teams, the results of Model 3 are almost always disappointing.
“Model 3” organizations think, or hope, that they’re unleashing the potential of a dynamic team-based approach to work, but in effect, they are usually just involving middle managers in time-consuming processes of interdepartmental consultation.
Dynamism and team-based energy in the middle is only created against the odds, by groups of managers who are so committed to their team’s overall goals that they take great personal risks to advance their cause.
To achieve the flexible, innovative, committed organization that is needed to deal with the turbulence and change found in the modern environment, organizations have to get beyond Model 3.
This is where Models 4, 5 and 6, come in. Especially Models 5 and 6.
Model 4, the matrix organization, is a hybrid bureaucratic form.
In the matrix model, equalpriority is given to functional departments such as finance, administration, marketing, sales, production, and R & D, (the columns of the matrix) and to various business or product areas (the rows).
The people working in various product or business teams, within the organization, have a dual focus.
They must work with two perspectives in mind, combining functional skills and resources with an orientation driven by the key tasks they have been assigned.
This dual orientation means that bureaucratic power typical of Models 1, 2 and 3 is diluted. The heads of major projects, or groups of projects can be as important and as powerful as heads of traditional functional departments.
In this way, members of project-teams are not necessarily pulled back into the traditional lines of responsibility.
Since project heads may have a large influence on rewards and future career paths, real team commitment can develop.
In successful examples of Model 4, the project-teams become the driving force behind innovation, providing an ability for the organization to change and adapt along with challenges emerging from the environment.
This model, typical of small and medium-sized organizations that are highly innovative, is built around teams. The influence of functional departments is minimized, and pople are appointed to work on specific projects.
One or two projects might demand most of a person’s energy at a particular time, but he or she may also be contributing to others.
As the work on one project team winds down, commitments on other teams increase. Career progress in this type of organization rests in moving from one project to another.
This kind of organization is ideally suited for dealing with the challenges of rapid change.
Unlike the matrix of Model 4, it does not have a heavy functional structure to carry along.
The focus is teamwork, innovation, and successful initiatives, completed in a profitable, timely fashion.
Functional departments, insofar as they exist, are support departments, committed to enhancing the work of the teams, who are their clients.
The whole operation is controlled by the management team at the centre. It focuses on strategic thrust, defining operational parameters, marshalling and channelling resources, monitoring results, and facilitating the general management of the system as a whole. The teams may be managed through “umbilical cords” characteristic of the spider plant model.
Rather than than a bureaucratic structure, the organization is much more like a fluid network of interaction. The teams are powerful, exciting and dynamic entities. There is frequent cross-fertilization of ideas, and a regular exchange of information, especially between team leaders and the senior management group.
Much effort is devoted to creating shared appreciations and understandings of the nature of the organization and its mission, but always within a context that encourages an open, evolving, learning-oriented approach to business.
The organization is constantly trying to find and create the new initiatives, ideas, systems and processes that will contribute to its success. It is a kind of adhocracy, finding and developing its form as it goes along.
Model 6 provides another example of an organizational style ideal for conditions requiring flexibility, innovation and change.
In a way, it’s a non-organization in the sense that it does not exist as a physical entity.
It’s a subcontracting network where the team at the centre steers the whole enterprise.
Take the fashion industry,for example, where Model 6 networks flourish as ideal means of dealing with the rapid pace of change. The team at the centre of the network has come together to exploit a market niche.
Rather than build “an organization,” it decides to subcontract almost everything: detailed design, manufacturing, marketing, distribution, communications.
The “satellites” are the subcontracting firms. They are linked to the centre through specific contracts which come and go.
Membership of the network is in constant flux. The team at the centre is the only point of continuity. It directs strategy, tactics, and resource flows, keeping lean, minimizing overhead, operating with maximum flexibility. No planning department. No MIS. No HRD department. Everything contracted out, even routine finance! It often operates on “spider plant principles”.
These six templates often exist in mixed forms.
They provide a way of helping members of an organization see which model or models they are currently employing, and can help them judge what’s possible or ideal in terms of organizing for flexibility and innovation.
To illustrate, consider a company called “Stereotype”.
The models provide a powerful way of helping Stereotype’s Management Team understand why the project teams in its Model 3 organization are not “cutting loose” and being truly innovative.
They can also help them to understand “The Gulf” that often arises between the top and middle levels of an organization from a new perspective.
And they see that if they truly want to create a more flexible, innovative organization perhaps they should be thinking about Models 4, 5, and 6 rather than just pushing for more team training within a Model 3 structure.
For example, they could find a way of shifting closer to Model 4 by elevating the priority of key projects, and changing the composition and orientation of the Management Team to reflect this.
Or they could choose to launch Model 5 or Model 6 initiatives in special areas of the organization, or for special projects, as illustrated above.
In doing so, they may be able to introduce a new potential for entrepreneurship and innovation in specific pockets of the organization, while still meeting the constraints set by HQ. An awareness of the six models, and an ability to see and name precisely what is wrong with the current
An awareness of the six models and an ability to see and name precisely what is wrong with the current situation could provide a powerful lever for change.
Used and interpreted flexibly these rough and ready templates can have a powerful effect.
They can provide the all-important “mirror” that allows people to see where their organization is, and where it could be.
A PDF copy of this post can be downloaded here.
Works well if nothing changes
All problems work end up with the CEO
True power still rests with the top management team
Lower levels still perform in a bureaucratic way
Is only effective when the issues delegated to the teams are small in number, require consultation rather than action.
Bureaucratic power is diluted
Middle managers often involved in time-consuming processes of interdepartmental consultation.
Built around teams.
The influence of functional departments is minimized.
People appointed to work on specific projects.
A subcontracting network where the team at the centre steers the whole enterprise.