The Structure of Organizations

Given today's environment, the most effective organization is a decentralized one. This paper will undertake a systematic review of the global marketplace and the differences between these two types of organization and explain why decentralization offers more benefits.

Any organization that intends to survive in today's global marketplace needs to understand that marketplace fully. Business does not operate today as it did in the past, with companies gaining an easy monopoly in their industry by simply providing the best product or the lowest price. In our newly globalized economy, companies no longer compete with the business down the street, or even the ones in major U.S. cities. The globalized marketplace includes all companies everywhere around the world, because anyone anywhere can compete now with anyone anywhere else. Companies that have spent decades building a brand identity and achieving the number 1 spot in their industry can be dropped to second place tomorrow by some newcomer in a little-known area of the world. Furthermore, technology is changing so rapidly that today's paradigms are tomorrow's obsolete technologies.

As the literature shows, decentralized organizations with self-managed teams have become one of the top trends in organizations because they are more effective and make the company more profitable, as well as because of the rapid response to changing conditions that they make possible. The demands of globalization, rapid and constant changes in technology, and the uncertainty that pervades the modern business environment demand a shift away from the old paradigm of centralized organizations that no longer provides rapid enough responses or knowledge-centered teaming and toward the boundaryless, decentralized organization that can regroup virtually on the fly to assemble the people with the necessary knowledge for each challenge to be met.

Proponents of the old centralized organization can see the advantages of decentralization after the success of Joe's organization in meeting its crisis, but they still harbor serious misgivings about the concept. They find it hard to give up the usual way of doing business planning for the future, and then working the plan, with every employee sticking to a defined job description. They see a decentralized organization as chaotic, and they find it hard to believe that such an organization especially one of any size could possibly survive by operating that way. Yet, some of today's most successful companies are already operating successfully that way. Jack Welch, who as Chairman and CEO of GE pioneered the "boundaryless organization," took GE to the pinnacle of success with decentralization.

The same scenario can be used to examine how a decentralized organization would respond to such a crisis.

 

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