What's New in the Industry
"Vantage Resources, Inc., helps clients to rethink their organizational design choices to more closely match and align with the requirements of their business model. New competitive factors have appeared over the last decade that make the ‘one size fits all’ organization design inadequate in today’s competitive environment. Simply putting all like functions together for efficiency and economies of scale make for a poor organizational design trade-off when neglecting the demands of a highly differentiated marketplace and complex customer portfolios."
Three new developments in the commerce ecosystem, with dramatic implications for organizational design and execution, have taken center stage as competitive levers.
Knowledge-Based Service Organizations
According to some economists, the United States’ economy is 85 percent services driven. Organizations designed to meet the demands of the agricultural and industrial enterprises of the nineteenth and twentieth century are fast becoming irrelevant concepts. In the past era, the wealthiest individuals and most valuable corporations owned tangibles like oil, railroads, steel, timber, coal, and land. Today’s wealthiest individuals and most valuable corporations own nothing tangible like Google, Facebook, Twitter, Microsoft, and Apple. These twenty-first companies own knowledge, intellectual capital, and knowledge work is vastly different than production work. The new organizations must now be organized to produce a different product – ideas, decisions, and solutions. This is non-linear work and does not fit nicely into a sequential process. The new organizational designs must now enhance the quality of non-linear work systems from a technical and cultural perspective.
Speed as Competitive Advantage
With the advent of information technology, information has increased exponentially over the last few decades. In addition, information is shared instantaneously globally. The speed at which information flows has compressed time in every market. Service industries driven on information can offer services anywhere, anytime. Every industry now competes on the speed of delivery in addition to cost and quality. From movie streaming, online sales, home mortgages, and electronic tax filing, time-based competition has risen the bar for every organization. Traditional, vertically integrated organization designs with layers of bureaucracy and intended for command and control are incapable of executing a strategy relevant to today’s markets. Organizations are moving from these vertical hierarchies to horizontal, highly integrated systems capable of responding accurately and effectively. It is been said that it used to be “the big would eat the small, but today the fast will eat the slow.”
Vertical organizations where “all like things” sat together in a tall hierarchy were designed to reduce organization costs through specialization, develop technological innovation, and maintain a disciplined command and control structure. The structure was highly effective under the American business model through the 70s of “profit is king.” What these organizations cannot do well is respond effectively to the changing demands and needs of markets – customers. If there is one important lesson learned from the Japanese business model of the 80s and 90s is the customer is king and profit is a measure of how well those demands are being satisfied. The new organizations, the “customer-centric” organization is a new model of design, a highly effective in today’s business environment and a distinct competitive advantage over functionally focused enterprises.