'Wake up to the new economy.
Embrace it, for it will transform our lives
and the way we work
more profoundly than we can imagine.
And nothing is going to stop it.'
in Fortune (June 27, 1994).
If you're comfortably ensconced in a box
somewhere on your company's organisation chart,
you could soon find yourself downsized, re-engineered,
and out of business.
you've structured your company vertically or like a pyramid, with the
chiefs at the top and the serfs at the bottom, you're heading for trouble.
The sort of trouble that could drive you out of business.
Let's examine the traditional pyramidal corporate structure. The
broad base interfaces with your customers. It's topped by several intermediate
tiers. And at the pointed top, far from the madding crowd, sits the chairman
or chief executive officer.
Decisions flow downwards to a layer of middle managers. They translate
orders from above into instructions, directives, rules and policies. These
then continue their downward plunge until they hit the base of the pyramid
where workers meet customers face-to-face.
It's a slow, cumbersome process. In an age of instant everything,
its adherents will wither and die.
So what do you do to survive?
Rip your pyramidal corporate structure apart. And when you get down
to the foundations, reconstruct it so that it's flat and efficient. Then
hone it to keep pace with the fluid, mobile business environment.
Take a hard, cold look at the way your company's organisational
architecture. If it's like most South African businesses, it probably takes
the shape of a pyramid.
And pyramids were never renowned for their aerodynamic properties.
This type of company architecture gives it such a high profile that
it suffers from what aeronautical engineers call 'drag'. The shape makes
forward movement difficult because it offers resistance to the winds of change
now howling through international businessland.
Aerodynamically 'clean' corporate structures, on the other hand,
are low and streamlined, slicing through the atmosphere, causing little speed-inhibiting
SO STREAMLINE YOUR CORPORATE STRUCTURE
However, before we go into what you need to do to construct a 'new
look' corporate structure from the ruins of the old one, let's check out
an old-time structure that slid into oblivion and a couple that structured
themselves for survival and bigger profits.
During the Second World War, industrialists, faced by the need to
produce military hardware quickly at the lowest
possible cost, developed mass-production techniques into an art form. Organisational
charts, littered with directional arrows and function boxes, flourished.
Accountants and efficiency experts had a field day advising manufacturers
to demarcate job functions down to the nth degree. Executives, suitably indoctrinated,
assigned each man and woman on company payrolls to a specific, unvarying
task on long production lines.
More top-down controls
The change to peace-time production and more competition as world
markets normalised led to even more top-down controls. As the bean counters
calculated their way into executive suites to usurp entrepreneurs and justify
their existence, distances between boardrooms and factory floors increased.
A new army of middle managers moved
in to act as
buffers between those
who made the decisions and those who did the work.
An early an prominent casualty of the boardroom take-over by accountants
and efficiency experts was the J Arthur Rank Organisation.
The biggest film producer in Britain rose to exalted heights with
entrepreneur movie-maker Rank in the driving seat navigating 'by guess and
by God'. Then accountants waving balance sheets, profit and loss accounts
and trailed by hordes of neatly pigeon-holed corporate 'yes men', trooped
into the boardroom. Displaying an abysmal ignorance of the entertainment
industry and the way it worked, they quickly converted cinemas into bowling
alleys and bingo clubs.
Down the tubes
Predictably, J Arthur Rank, as a film producer, became history.
And the British film industry went down the tubes with it.
However, not all companies in post-war Britain followed the corporate
lemming route to disaster. One of those that didn't was a small London-based
operation called Dualit. Max Gort-Borten launched it in 1946 to manufacture
cocktail shakers, electric heaters and domestic toasters.
Bucking established management trends, he side-stepped the obsession
for organisational charts as well as pyramidal corporate structures. He also
ditched the then in-vogue mass-production concept.
Gort-Borten made each employee responsible for
the assembly of an entire product.
They didn't just work for Dualit. They owned their jobs and the
way they did them. Any faulty products found their way back to the person
who made them.
Despite intense competition from vertically structured multinationals,
Dualit stuck to its policy of the less
management the better.
Managing director Leslie Gort-Borten, son of the founder, firmly
believes in workplace democracy. He describes his method of leadership as
'management by wandering around' ... of getting his hands dirty on the factory
|Gort-Borten Junior must be one of the few managing directors anywhere
who begins his day by readying the power presses for the manufacturing process.
And while he powers up the plant, his 80-year-old father, now Dualit's chairman,
works on product development in the toolroom.
Management gurus are impressed. But what impresses them more are
the bottom line results.
In 1994, growing demand by Europe's moneyed elite for Dualit toasters,
which sell for up to R1 200,00 each, forced the company to double its floor
space and increase its staff complement. At the same time, turnover climbed to around R30-million a year.
There's another smallish British company that has made it big internationally
by shunning conventional management wisdom.
If you appreciate the seductive lines of classic sports cars and
follow the volatile fortunes of the automotive industry, you've surely heard
of Morgan cars. They're manufactured by a typically English operation, Morgan
Motor Company. It's located deep in the heart of Worcestershire.
Reputedly the world's oldest car manufacturer still in business,
it was established in 1909 to produce rakish, open-topped sports cars for
The car really came into its own during the 1930s and was the preferred
mode of transport for Simon Templar, the roguish, Robin Hood hero of Leslie
Charteris' series of Saint books.
Plus Eight, the company's current top-of-the-range model, retains
the distinctive 1930s look - big headlights and a
low-slung chassis. And master craftsmen still handcraft its frames from century-old
ash wood. Yet sports car enthusiasts claim that the car can still accelerate
as quickly as the more pricey, more aerodynamic, Italian-built Ferrari.
Production manager Charles Morgan, the founder's grandson, says
each worker assumes full responsibility for assembling and installing key
components in each vehicle. For example, one man assembles the chassis. Another
takes charge of body panelling and yet another is responsible for the upholstery.
And the corporate structure?
Like executives at Dualit, those at Morgan work side by side with
That bottom line again
The proof of
is in the bottom line.
|During 1994, Morgan's 130 workers built 480 cars. Half of them were
exported. Demand for the vehicles, each of which takes seven weeks to build,
continues to outstrip supply. A six-year waiting list ensures that the company
remains consistently profitable and almost recession-proof. The long waiting
list serves to iron out the yo-yoing consumer demand experienced by manufacturers
who mass-produce cars.
In 1992, Morgan Motor Company made a gross profit of almost R6-million
on a turnover of about R48-million. That's a gross per-vehicle profit of
about R12 000,00 - nothing to be sneezed at when compared
to Toyota's per-vehicle profit of R1 000,00 in the UK in the same year.
SO EMULATE DUALIT'S AND MORGAN'S PERFORMANCE
Tear down your existing company
structure and ...
CREATE A 'NEW LOOK' CORPORATE PROFILE
Go horizontal. Flatten your corporate structure. Use aerodynamic
principles to streamline operations.
The multinational Du Pont Corporation has embraced the 'new look'
concept. Says spokesperson Terry Ennis: 'Our goal is to get everyone focused
on the business as a system in which the functions are seamless'.
It sounds easy. But it isn't.
Downsizing alone isn't the answer.
Experience overseas and widespread head chopping in South Africa
shows that it doesn't enhance productivity. In many cases, it has the opposite
effect. And restructuring and re-engineering simply because everyone else
is doing it doesn't work either - unless you adopt
a new organisational model designed to improve performance.
So, if you're going to re-engineer ...
RE-ENGINEER WITH A PURPOSE
Here's my 10-point plan to rebuild your company from scratch.
- Eliminate artificial, inter-departmental barriers that
isolate people and functions. Organise teams to work on a limited number
of core projects or processes.
- Encourage team members to develop multiple skills rather
than concentrating solely on specialised know-how.
- Fully train and fully inform
all team members. Don't sanitise
information and let it trickle downwards on a need-to-know basis. Give team
members all the data and train them how to use it. Allow them to analyse
it and make their own decisions.
- Empower each team to complete the project or process.
Give them everything they need and let them get on with the job.
- Set specific, measurable
performance goals for each project.
- Make each team
accountable for achieving its performance
- Reward team performance. If necessary, change your method
of remuneration to acknowledge team results as well as outstanding individual
- Encourage partnerships
between team players - your employees,
your suppliers and your customers. Invite suppliers and customers to become
full working members of your in-house team.
- Make 'customer delight' drive performance.
Focus on what your customers
want and need rather than on profits and the build-up of stock
- Reduce top-down supervision. Eliminate tasks that don't
add value to your product or service.
red tape, which hold vertical structures together, inhibits creativity
and innovation ...
BECOME A CORPORATE BUREAUCRACY BUSTER
Does it work?
The film industry, led by Hollywood, has been doing it for years.
Massive, vertically structured studios that characterised Tinseltown during
the golden era of movie-making, which drew to a close during the 1960s, no
longer produce films. The names you may remember and still see on the screen
- MGM, Paramount, 20th Century Fox, Universal -
now only distribute films produced by small, independent companies.
|The producer handles the business and financial side of production.
He or she then hires a director to take responsibility for the creative side.
The director, working in conjunction with the producer, hires scriptwriters,
the camera crew, film editors and other technical specialists. He also supervises
casting, costumes, location research and set design.
and unwieldy pyramid
structures in the interests
of greater efficiency
and more creative
Each film is considered a separate project. When the project is
completed, the team disbands. It maybe constituted later to work on another
Other corporate giants - IBM, Xerox and General Electric, to name
a few - are following suit to meet the challenges of the new century head-on.
SO IMPLODE YOUR CORPORATE PYRAMID
And after the dust settles, re-engineer a flat, streamlined 'new
look' from the rubble by:
- identifying and setting your company's strategic objectives;
- analysing your company's key competitive advantages - a 'must'
if you're going to achieve your objectives;
- defining your company's core processes by focusing only on the
essentials needed to help you realise your goals;
- organising your teams around processes, each of which should
link related tasks that provide customers with a product or a service.
- ignoring activities that don't add value to the process or contribute
to the realisation of team objectives, and
- paring departments and functions
to the barest minimum without losing essential expertise or talent.
to work on
Going horizontal and staying afloat can be tricky, particularly
if you've cut your executive teeth in a traditional corporate environment.
It means ...
embracing an alien entrepreneurial spirit.