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Agile Org Structure

The traditional organizational chart dates back to the 1850’s in the railroad industry.  The 21st Century calls for a more open and flexible approach.  Consider this:

The traditional organizational chart is known for creating internally competitive silos where resources are horded and fiefdoms are protected at all costs.  It adds layers of bureaucracy and cost but most importantly, the customer is nowhere to be found…  Does this look familiar?

Organizational Silos

Instead, what about a framework that is more flexible, transparent, and effective?  Create a framework that includes both the Organizational Structure and is overlaid, in a logical manner, by the Business Model.  Design a structure that everyone can understand and, more importantly, that actively interfaces with the customers on a daily bases through a clearly designed feedback loop.  It might look something like this:

Agile & Transparent Organizational Structure

Key Aspects of an Agile & Transparent Org Structure:

The value centers would be grouped in a way that made sense based on the organization’s business model.

The value center teams would ideally be groups of up to 150 people for effectiveness.

The value centers would be cross functional teams designed by the members and would not be limited to operations personnel.

The value center would have autonomy in managing their profit and loss statements, including:

  • Who serves as Team Leaders (leaders must have people willing to follow them)
  • Subject Matter Experts can be made available to the team or be full-time members of the team, as deemed appropriate.
  • Hiring (includes all phases)
  • Salaries/Wages (including fairness internally, as well as, in the field/industry)
  • Rewards/Recognition (includes intrinsic and extrinsic)
  • Promotions (holistic view of skills to be successful in the new position, not limited to technical skills)
  • Terminations (with compassion)

Transparency makes information available to everyone and supports knowledge sharing across the organization.

Every team interfaces with customers daily.

The Value Zone is the benefit the organization would reap in immediate customer feedback in product and service improvements, innovation, product/service bundling, etc.

Value Centers would be free to place small bets through experiments with willing customers on new product and service ideas.

The C-Suite executives would be responsible for keeping the organization on track with the long-term vision, obtaining and allocating resources using venture capitalist like parameters (knowing when to hold them, when to fold them, and when to reconfigure them), and keeping watchful oversight.

The administrative functions would provide support as needed at a mutually agreed upon cost.  Value centers would be free to outsource, if necessary, to maintain their profitability.  An overhead burden would not automatically be added to their profit and loss statement, because the value centers would have full control over their units’ profitability.  Administrative functions could include:

  • Accounting/Finance
  • Human Resources
  • Marketing
  • IT
  • Logistics, etc.

The key points are that it is flexible, holds everyone accountable for results, and demands trust and transparency to really work.