New, innovative models underlie fancy names


March 14, 1994|By TOM PETERS

Virtual corporations, modular corporations and intellectual holding companies. Shamrock organizations, horizontal organizations and federal organizations. Intelligent enterprises, spider's web organizations and jazz combos.

Each of these new models of organization has turned into big bucks for consultants. Each has been shamelessly hyped. Each has been poorly implemented time and again. And yet each IS important.

The economic recovery grows stronger by the day. Nonetheless, the layoffs continue apace as firms grapple with total reconstruction. Outrageous hype and rotten implementation do not detract from the desperate need for brand-new ways of thinking about organization.

What does the menu offer?

* 1. Flat models. British researcher Charles Handy won a 1993 Harvard Business Review prize for an article about "federal organizations." The idea stems from the U.S. Constitution: In 1789 the 13 fractious states ceded limited rights to the center. That, says Handy, will be the way of tomorrow's best organizations. They won't be "decentralized"; that suggests headquarters dole out bits of authority to the periphery. Instead, units will set their own pace, yielding but a smidgen of control to a much-diminished corporate center.

* 2. Horizontal models. In the "horizontal corporation," propounded by McKinsey & Co. and others, previously separate functional activities are seamlessly linked. A few key processes (product development, service delivery) subsume virtually all the previously independent baronies (operations, engineering, marketing, finance) and define the firm. New horizontal logic supersedes old vertical logic.

* 3. Network models. The next step beyond the horizontal models addresses entirely new ways of linking everyone from everywhere. Dartmouth professor Brian Quinn calls them "spider's web organizations." Silicon Valley's Mike Malone and Bill Davidow label them "virtual corporations." Fortune dubbed them "modular corporations." The basic idea: The group performing a commercial task is not necessarily dominated by employees from one company. The new "organization" consists of bits and pieces of various firms, plus an array of independent contractors; the partners gather for a limited time to perform a discrete task. Corporations reconceive themselves, says Quinn, as "packages of services" (e.g., engineering, logistics).

* 4. Self-designing models. The organization cobbled together to do today's work is not the organization the leader will use to exploit tomorrow's opportunity. (The leader? Who? CEO? Virtual CEO? Temporary CEO? Network systems operator? Movie director? Symphony conductor? Talk-show host? -- new models of "command" are popping up, too.) The new, dynamic approach to product development at Steelcase has been dubbed a rugby scrum (all tangled, all at once); University of Michigan researcher Karl Weick likes the improvisational theater metaphor. The point is perpetual redesign, not necessarily (or even likely) initiated from above.

* 5. Brainware models. Behind all these machinations is the new economic reality: The basis for creating value is connected, concerted brain power. Thus Quinn offers us the "intelligent enterprise" and "the intellectual holding company," where ideas are the coin of the realm. Handy gives us the shamrock organization, where part-timers and outside contractors (two leaves of the shamrock) do the drudge work, and a small, permanent core (the third leaf) nurtures the intellectual competence that creates economic value.

This tour hardly exhausts the new management glossary. I've left out clusters and seesaws, kaleidoscopes and collapsibles, and many others.

Sure, it's easy to laugh at all this. But our new love affair with metaphors and model building is a by-product of a legitimate, frantic quest to deal with the cockamamie economic times. Real change demands more than a good metaphor, but action without compelling imagery is inadequate to the monumental task of corporate revolution.

(Tom Peters' column is distributed by the Tribune Media Services Inc., 720 N. Orange Ave., Orlando, Fla. 32801; [407] 420-6200.)

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