THE HIERARCHICAL ORGANIZATION IS FAILING US
The hierarchy is a natural consequence of solving problems by divide and conquer. The original problem is successively broken into smaller problems until the smallest problems can be solved. Then these solutions to the smaller problems are put together to form the solution of the original problem. Thus, the problem is broken down in the form of a tree that branches out as you get lower in the organization. Managers are stationed at the branching points in the tree. Thus, the hierarchy allows us to organize so that each manager in the hierarchy has less to contend with.
But the weaknesses of the hierarchical organization in today’s world are becoming quite evident. They don’t react fast enough to new situations that arise from a rapidly changing environment. It takes too long to communicate problems and their solutions up and down the hierarchy. Furthermore, the various ingredients for solving complex problems are no longer concentrated at the branching points of the organization. For the past few decades we have been seeing information, knowledge, and problem solving abilities become distributed widely throughout the organization. The hierarchy is breaking down.
This raises the question: When the problem is complex, how do you bring together all the various ingredients of the problem and its possible solutions so the problems can be solved quickly and effectively? Then, how do you command the resources and steer the implementation of the solution? In the past it has been practical to buck the information up to the top of the hierarchy where all the appropriate knowledge and problem solving ability existed so unthinking minions could implement the solution by simply carrying out orders. But not now. So we’ve tried flatter organizations. Flat organizations tend to work fine when they are small, but as they grew they have to fight their decay into chaos. With the demise of the hierarchy, there needs to be a new guiding light.
So we have reached another juncture. As products and services and the ways we produce them have required more elaborate technologies and knowledge, and as businesses have become more global and collaborative and have required shorter response times, the hierarchy as an institution is breaking down. We have begun to realize that the hierarchy cannot react fast enough to new problems as they arise, and that the hierarchy does not make best use of the knowledge already distributed throughout the organization. But the limits of the hierarchy are now being stretched to the breaking point.
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