Organizational design and its effects on employee behavior has become an important focus of the modern organization and its leaders. No longer can employers rely on the traditional models of design structure, function and employee interaction. The current business climate almost instinctively requires organizations and its members to become more agile in their response to the ever changing economic conditions. Organizations must learn to develop processes to share knowledge and resources across boundaries to achieve stated goals. The purpose of this article is to introduce the emerging concept of the Open Organization structure and the behavioral attributes of the leaders and followers within its system.
The new organization
To the casual observer, driving onto Dell, Inc.'s sprawling Nashville campus with its acres of parking lots and buildings, this mirrors any other corporate office complex in metropolis. However, moving past the formality of the buildings entrance and strict security awaits something entirely different. Enter now into what some may argue is the organization of the future. An organization that is defined by the sharing of ideas, knowledge, resources, and skills across organizational, generational and cultural boundaries within and in some cases outside the organizational system for the purpose of achieving the stated goals of the organization and its stakeholders (Foster, 2011, p 7). Welcome to an Open Organization decentralized structure.
Open Organizational Systems
An Open Organization is simply a method of self-leadership in which individuals participate in the movement of an organization from their strengths regardless of their generational or cultural origins (Foster, 2011, p 2). An Open Organization is a decentralized structure which trends away from authoritarian management styles, separatist titles and privileges of multilevel hierarchies (Galbraith, 2002, p 17). Nontraditional organizations such as an Open Organization lead to faster decision making, lower overhead and leaders who are more in touch with their followers (Galbraith, 2002, p 20). Non-traditional organizations are considered more flexible which will require flexible people who are generalists and can cooperate openly with one another (Galbraith, 2002, p 13). Yet, unlike an Open Organization, a centralized system has a clear leader who is in charge and there is a specific location where are decisions are made (Brafman and Beckstom, 2006, p 19). In a decentralized system there are many times no clear leader, structure or central location (Brafman and Beckstrom, 2006, p 19). The benefit of a decentralized system is found in its agility under pressure. When a decentralized system is attacked it becomes more decentralized and more difficult to stop (Brafman and Beckstrom, 2006, p 21). The decentralized system is not necessarily a better organization or better at making decisions in-so-much as it is able to more quickly respond to changing conditions because all members of the system have access to knowledge and hold the ability to make decisions (Brafman and Beckstrom, 2006, p 39).
I am personally fascinated by the more flexible and flatter decentralized organization design but have never actually seen one in practice until my visit to Dell. The reality is that an Open Organization stands in stark contrast to the traditional organizational settings in which I spent most of my career working within. I have long believed that I did not need a formal office, suite or tie to do a good job. As a matter of fact, my best work has always been conducted in casual attire sitting in my favorite local coffee shop. Apparently I am not alone in my assertion that people work best when they are comfortable, relaxed and working in a way that best suits them. Yet, a formal dress code or lack thereof is not enough. Understanding what intrinsically motivates the workforce is essential to their effectiveness and success. Troublesome to me however is the degree to which organizations ignore the intrinsic value of their human capital. What we find is a need for more than just good intentions to empower individuals to do what we want them to do (Handy, 1995, p 110). An Open Organization requires the decision-making process to be highly inclusive and it must allow consensus to emerge where it exists (Foster, 2011).
The best scenario for success would be an organizational model that champions the motivational needs of the individual while facilitating the expressed needs of the organization. Creating a flexible environment that meets the needs of both the organization and its members is a challenge for leaders (Foster, 2011, p 3). As you enter the internal workings of Dell's Nashville campus the first thing you notice is how alive the atmosphere becomes. There is almost an excitement which drives you to want to be a part of whatever is going on. Entering you walk past a snack bar and groupings of couches and comfortable chairs. You may even think you were on a college campus as individuals walk around in shorts, t-shirts, flip-flops, tennis shoes, blue jeans, ball caps and the like. More striking was the rows of short cubicles and a hierarchy of ten subordinates to every one manager. While there may appear a formal structure; there is a great deal of wandering and cross departmental communication.
Dell undoubtedly understands that to be competitive they must change the way they think. They must understand that those who moderate a traditional structure persist in trying to adapt the world to their organization rather than adapting their organization to the world (Handy, 1989, p 4). A traditional organization creates a comfort and predictability that ensures that control is maintained (Handy, 1989, p 10). Traditionally, leaders tend to think of organizations in terms of their structure, such as an organization chart which creates a narrowing focus that may overlook alignment issues amongst other things (Stanford, 2009, p 20). Non-traditional organizations, like Dell, break free of the former rigidity and they form different shapes, working habits, age profiles and differing traditions of authority (Handy, 1989, p 15). Non-traditional organizations are typically those that espouse people as assets, requiring maintenance, love and investment rather than costs to be reduced wherever and whenever possible (Handy, 1989, p 24).
While there is no one-size-fits-all organization, the challenge remains to find an organizational design that fits the culture, industry, and other environmental factors. Organizations that do not anticipate the need to adapt to changing circumstances will likely underperform and ultimately go out of business (Stanford, 2009, p 1). For example, when Dell first opened its Nashville Campus in 2000, the culture was much more formal and the structure was centralized with the corporate headquarters in Texas. The dress code was business casual and individuals were expected to stay at their desks and get work done. There was very little talking or wandering in those days. Fast forward to 2011 and the organization is alive and prospering even in a down economy. Employees are permitted to wander, spend time in the recreation room or fitness center. You might even find someone wearing a wireless headset and setting up to putt a golf ball all the while talking technical jargon with a client. Some employees are permitted to check out laptops and work remotely from home two days a week.
Dell appears to be able to maintain a high morale. Constant open communication with the employees' not only makes them feel valued but they know that what they say is important to leadership. Dell appears to go out of their way to support the intrinsic motivations of the employees. Dell understands that an Open Organization requires all members to let go of their preconceived notions of how people operate and essentially trust in faith that the people to whom you pass the power to will act responsibly (Li, 2010, p 18). We find that the biggest indicator of success of an Open Organization system comes from an open-mind and the leader's ability to give control over at the right time and place and to the extent which people need the control to get their job done (Li, 2010, p 8).
Like most organizations today, Dell is dealing with the economic uncertain times we are in. By most observations I've made of organizations in these current conditions, morale is normally low and there is a great deal of stress to meet financial and production goals. Interestingly the mood at Dell is much different. While the business climate is difficult and their growth projections have been downgraded from 10% to a modest 3% growth, the employees appear confident and motivated to get the job done. Dell has not wavered from its open business model. This is in stark contrast to the many organizations that have met the economic down turn with massive layoffs and a tightening of control over employees. It would seem reasonable to assert that Dell understands that if they are to compete and survive this economic turmoil they must stay the course and not waiver. It is the dedication of the employees that will see them through.
While the Open Organization is an emergent area of organizational design, there is great potential when organizations internally share information and leaders equip their followers with resources and empowerment to get the job done. Intrinsic motivation appears to play an important role in the effectiveness and morale of the individuals within an Open Organization. Perhaps an open system is not the best option for all organizations, but the attributes of an open system may cause one to pause and take note of the positive affect it appears to have on both the employees and the bottom line of the organization.
Foster, Philip A. (2011). "Open Source as a Leadership and Organizational Model." Presented at the Regent University School of Global Leadership & Entrepreneurship Leading Transformational Innovation Roundtable, May 14 - 15, 2011.
Galbraith, Jay R. (2002). Designing Organizations. San Francisco, CA: Jossey-Bass.
Brafman, Ori and Beckstrom, Rod A. (2006). The Starfish and the Spider. New York, NY: The Penguin Group.
Handy, Charles (1995). The Age of Paradox. Boston: The Harvard Business School Press.
Stanford, Naomi (2009). Guide to Organisation Design. London, England: Profile Books, Ltd.
Li, Charlene (2010). Open Leadership. San Francisco, CA: Jossey-Bass.