Hierarchical organizational models aren’t just being turned upside down—they’re being deconstructed from the inside out.
Businesses are reinventing themselves to operate as networks of teams to keep pace with the challenges of a fluid, unpredictable world.
Fast-moving global markets and digital disruption have forced companies to innovate rapidly, adapt their products and services, and stay closer than ever to local customers.
This has prompted a resurgence of interest in business organization.
Our findings in this area are startling: 92 percent of companies believe that redesigning the organization is very important or important, making it No. 1 in ranked importance among this year’s respondents.
Companies are decentralizing authority, moving toward product- and customer-centric organizations, and forming dynamic networks of highly empowered teams that communicate and coordinate activities in unique and powerful ways.
Many companies have already moved away from functional structures: Only 38 percent of all companies and 24 percent of large companies (>50,000 employees) are functionally organized today.
The growth of the Millennial demographic, the diversity of global teams, and the need to innovate and work more closely with customers are driving a new organizational flexibility among high-performing companies. They are operating as a network of teams alongside traditional structures, with people moving from team to team rather than remaining in static formal configurations.