Yesterday I talked about becoming flatter as an organization in order to increase learning and agility. Today’s lesson (also from Sloan Management Review) is about speed. The two are related, of course. One of the reasons we loathe bureaucracy is that it slows things down, so you’d think becoming more flat would help with that. But the truth is, speed is not solely determined by amount of hierarchy. In China, as the SMR article points out, many organizations who are making great strides in innovation are “combining vertical hierarchy with horizontal flexibility,” as contradictory as that may sound. The hierarchy is vertical and very strong. Senior managers set the goals, and their word is law. But if an innovation initiative hits a snag, the project team brings together people from all over the organization (heavily based on personal relationships, rather than title) to solve the problem in a “huddle and act” kind of way. The downside is that there is not much to challenge the senior managers if they get their goals wrong, but the upside is speed. The multinational corporations the authors studied had a flatter structure, but that led to structured, systematic processes for decision making.
Although this approach might mitigate risk, it often reduces innovation to a snail’s pace. By contrast, top-down goal setting combined with horizontal flexibility can accelerate the innovation process dramatically by enabling the organization to reconfigure itself continually to serve customer demand, back new initiatives, solve problems as they arise, and speed up joint learning.
There is a shift taking place. The risk of getting things wrong still exists, but it is becoming eclipsed by the risk of not moving fast enough.