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Organizations Need New Architectures to Remain Competitive

Increasingly dynamic and complex business environments necessitate a retooling of hierarchical organizational schemes according to research co-authored by Penn State Smeal College of Business Professor Charles Snow. In place of these traditional structures, organizations must provide individuals and groups with greater freedom to act in collaborative ventures and respond more efficiently to business challenges.
February 20, 2013
Organizations Need New Architectures to Remain Competitive

Charles Snow

Increasingly dynamic and complex business environments necessitate a retooling of hierarchical organizational schemes according to research co-authored by Penn State Smeal College of Business Professor Charles Snow. In place of these traditional structures, organizations must provide individuals and groups with greater freedom to act in collaborative ventures and respond more efficiently to business challenges.

In their paper “The Architecture of Collaboration,” Snow and his colleagues explain, “Collaboration has been shown to reduce risk, speed products to market, decrease the cost of product development and process improvement, and provide access to new markets and technologies.”

According to the authors, hierarchical organizational systems often get in the way of open, effective collaboration by creating delay through built-in approval processes. Hierarchies also lead to distortion of information as it is transferred through the chain of command. Alternative actor-based systems give individuals and units the ability to self-coordinate, eliminating the extra time lost to approvals. Ultimately, such systems are also less costly to operate and more rewarding for employees.

Restructuring from hierarchical organizational schemes to actor-oriented schemes that facilitate open and collaborative engagement necessitates managerial shifts in attitudes and abilities that can take time and require giving employees the tools they need to self-organize into effective collaborative relationships. The authors propose that three main elements are needed for the actor-oriented scheme to take off: people who have the capabilities and values to self-organize; a “commons” or set of shared resources; and infrastructures, processes, and protocols that enable collaboration.

Having the right people, as always, starts with hiring competent, knowledgeable employees who share the company’s values, then providing them with the information and tools they need to “set goals and assess the consequences of potential actions.” The information and tools they need come from both the shared resources to which all employees should be able to add to and access, and the protocols and processes set out to guide collaborative exchanges.

“This scheme represents a change from expressing organizational architecture as specific organization structures to expressing it as principles by which actors engage in organizational relationships,” the authors write. “Such a change provides a truly dynamic perspective of organizational adaptation to continuously changing environments.”

Charles C. Snow is a professor emeritus of business administration in the Smeal College of Business. His co-authors are Øystein D. Fjeldstad of the BI-Norwegian Business School in Oslo, Norway; Raymond E. Miles of the Haas School of Business at the University of California, Berkeley; and Christopher Lettl of the Institute for Entrepreneurship and Innovation at the Vienna University of Economics and Business in Vienna, Austria. The paper, “The Architecture of Collaboration,” appeared in the Strategic Management Journal last year.

At a Glance

Charles Snow, Øystein Fjeldstad, Raymond Miles, and Christopher Lettl suggest that companies may benefit from moving away from a hierarchical structure toward an actor-oriented scheme, which provides more agency to individuals and groups within an organization and is therefore more conducive to both efficiency and collaboration.

  • Collaboration is critical to solving today’s complex business problems, and actor-oriented schemes will better facilitate this collaboration than will a hierarchical reporting structure.
  • Hierarchical systems can delay response to problems due to built-in reporting mechanisms, and information can be distorted as it travels through the chain of command.
  • To facilitate an actor-oriented scheme, people must be empowered to self-organize, have access to a widely accessible set of shared resources, and be aware of guidelines that enable collaboration.
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