Digital frontrunners across industries are adopting new organisational structures, often inspired by software companies. But how do they organise themselves?
Historically, companies have been organised into functional units, such as R&D, manufacturing, logistics, sales, after-sale services, IT etc. Each function has had substantial autonomy. Integration between units has primarily been episodic and tactical. Coordination has taken place at the business unit leader level and through formal processes for product development, supply chain management etc.
This has now changed. Co-ordination is ongoing and never ending, even after the sale of the product. Traditional functional roles have been blurred and overlap. Also, completely new functions have emerged, for instance to manage all the new data and ongoing customer relationships. Also, entrepreneurship has emerged as a new function that explores new business models and is located inside, at the edge of, or outside the existing company, depending on the situation.
The key changes to the traditional organisation are illustrated below.
Based on Michal E. Porter and James E. Heppelmann: How Smart Connected Products are Transforming Companies, Harvard Business Reviews, October 2015
We believe companies that organise this way has got it right. How is your company organised?
- “How Smart, Connected Products Are Transforming Companies”, Porter and Heppelmann, HBR October 2015.
- “The startup way: How Entrepreneurial Management Transforms Culture and Drives Growth”, E. Ries, 2017
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