Emerging Flexible Organization Perspectives from Silicon Valley
In the 1990s, developing flexible organizations is critical for business enterprises. ... High-technology firms in Californias Silicon Valley are experimenting with flexible organizational building blocks, designed to address novel tasks, "kaleidoscopic" change, and continuous innovation. ... Many high-tech companies attempt to become "diverse" by blending various management styles and cultural perspectives. ... These developments are collectively precipitating a move away from monolithic and rigid organizational designs which were geared for repetitive transactions and routine activities. The resulting impetus is toward flexible and agile organizational forms which can accommodate novelty, innovation, and change.(1) This article describes some of the organizational features of the emerging flexible enterprise and is based on field studies of 37 high-technology firms in Californias Silicon Valley. ... One of the expected benefits of flatter hierarchies is the organizations ability to become flexible and responsive by reducing the time lag between decision and action--enabling faster response to market and competitive dynamics. ... These include "changing environmental conditions, the limits of large-scale organization, and the importance of speed and information."(7) As Evans suggests, collaborative partnerships are a flexible mode of blending capabilities, sharing risks, and generating options. ... Additionally, this trend points to a fundamental shift in the foundation of employer-employee relationship, away from the traditional patriarchal orientation toward what may be characterized as a peer-to-peer relationship. ... (11) As current trends indicate, contemporary firms need flexible and agile organizations that can effectively function in environments of continuous and kaleidoscopic, rather than periodic and paradigmatic, change. FLEXIBILITY: THE EMERGING IMPERATIVE Historically, the term "flexibility" has been used rather loosely--referring to a blend of capabilities and attributes that facilitate adjustments to change. ... The latter refers to the ability to come back from the brink of disaster without bearing permanent scars or disabilities. ... The point is that all these different attributes--spanning both offensive and defensive qualities--are needed in a truly flexible enterprise. ... In view of these challenges, a number of innovative organizational experiments have been under way in many high-technology firms in Silicon Valley and elsewhere. ... (16) BUILDING BLOCKS OF FLEXIBLE ORGANIZATIONAL DESIGNS High-technology firms face significant organizational tensions in spite of their relative youth. ... As depicted in Table 1, they need flexible organizational systems which can balance dialectical forces--facilitating creativity, innovation, and speed, while instilling co-ordination, focus and control, and the staying power to withstand periods of adversity. ... we want people to stretch to reach tough goals, so our real emphasis is on easily-measured short-term growth and profits--but we should also have time to develop our employees for the longer haul, to promote from within, to monitor the atmosphere for creativity. ... (20) A MULTI-POLAR ORGANIZATION--The traditional model of the industrial enterprise has been one of an all-powerful center with various subsidiaries. ... Separating the brain (the center--which plans a response) from the muscles (the line units--which enact the response) can lead to slow response and result in information distortion through hierarchical filtering processes. ... (22) The emerging organizational system of high-technology firms is more akin to a "federation" or a "constellation" of business units that are typically interdependent, relying on one another for critical expertise and know-how. ... Many firms compensate for the relative inflexibility of the bedrock structure by using overlays of temporary project teams and multi-functional groups whose members are drawn from various operating units. ... The third re-organization (which was largely confined to the telecommunications business) was initiated in 1981 when a hybrid structure was created to consolidate its end-user sales and service organization and to focus on the new initiative in office systems. A further re-organization was completed in February 1984, prior to the IBM acquisition. ... Team members were drawn from various product divisions, they made their recommendations within 6 months, and the teams were subsequently disbanded. ... Temporary teams are the flexible, rapid deployment overlay. They enable the organization to pool together different individuals at short notice, put them to work on diverse projects, and disband them once their task has been accomplished. ... Critics have long argued that as a result, staff functions have been cushioned from the harsh realities of the "market. ... (26) The impetus for change has largely come from competitive pressures to reduce costs. ... Despite the inherent challenges, however, a pluralistic culture can provide considerable versatility by drawing on diverse perspectives, approaches, and solutions. ... "(31) Apple strives to create a cosmopolitan organization--not with one heart rooted in U. ... (32) It has attempted to create a pluralistic organization and a cosmopolitan culture in a number of ways: * Its top management team is composed of different nationalities. ... The organization can thus be characterized as a montage of individual capabilities and informal networks and relationships, rather than a series of pre-determined roles and positions and formal hierarchical relationships. ... For example, the chief financial officer of one company took over the responsibility for building and managing its direct sales and service organization, despite the fact that he had no prior sales experience. ... What is different in the emerging high-tech sector is that employees need to possess a flexible mindset and the ability to adjust unexpectedly and quickly to the demands of a new assignment, without going through extensive training or being assigned the responsibility as part of a systematically planned career management program. ... Irrespective of their purpose, scope, or form, their continuous formation has broken down the solid walls which have historically separated the firm from its external stakeholders. ... (Table 3 omitted) THE EMERGENCE OF A BI-MODAL ORGANIZATION Many firms appear to have walked a tightrope between these tensions without having allowed any one imperative to dominate the strategic and organizational context. ... (47) However, strong leadership and directed moves do not imply that leaders are the sole source of the corporate vision, or that strategies and decisions are imposed from the top. ... The resulting organization can be best characterized as both centralized and decentralized. ... STABILITY AND DYNAMISM--Bi-modality is also manifest in the tradeoffs made between stability and change as reflected in the following remark: "we want to be flexible and respond to market changes without creating chaos and confusion amongst our people. ... However, constant change can also be threatening and de-motivating for individuals, and disruptive and unproductive for the organization. ... Many high-technology companies attempt to become "diverse" by blending various management styles and cultural perspectives. ... They also recruit people from different cultures and ethnic backgrounds to blend together different cognitive orientations. A young company in the network server business, for example, consciously sought to recruit a woman chief financial officer from a different cultural background in order to provide a role model for its women professionals and develop the capability base to deal with clients and partners from other cultures. ... SUMMARY AND CONCLUSION Developing flexible organizations is critical for business enterprises in the 1990s. ... A critical challenge facing many business entities is how to transform their traditional organizational systems and management practices in order to become more flexible. This task requires identifying and implementing those approaches, processes, and tools that can be used to manage a bimodal-rather than a monolithic organization. ... This challenge requires focused attention, a readiness to experiment, and the willingness to share ideas and learn from different corporate experiences. ... These findings are derived, in part, from a study of 37 firms in the electronics sector, conducted during 1982-91. The firms varied in size, ranging from start-ups to multibillion dollar corporations. ... The textile sector has historically evolved around an intricate web of relationships between different specialists; and the automobile industry has traditionally benefited from the diverse capabilities of its sub contractors--each possessing a unique skill in a distinctive area. ... By way of contrast from their hierarchical predecessors, these firms are characterized by "diffusion of strategic roles, a wide range of governance modes, and holographic attributes. ... Internal memorandum from the Executive Vice President of a $700 million high-technology firm on its business philosophy, May 26, 1981. ... Child, "New Technology and Developments in Management Organization," Omega, 12/3 (1984). ... Evans "Emerging Organizational Regimes in High Technology Firms," Human Resource Management Journal (Spring 1989) for an account of the evolution of the formal structure in high technology firms. ... In this case, the line units can either buy their required services from the support groups or from outside vendors; the only constraint is that they can not develop their own support functions. ... Bahrami "Strategic Planning in Emerging and Established Firms: A Comparison," paper presented at the fifth Strategic Management Society Conference, Barcelona, Spain, 1985. ... In a recent article, Lorenz discusses the confusion surrounding the concept of the "networked" organization, especially concerning "official" and "unofficial" networking: "Official networks are certainly a praiseworthy advance over the bureaucracies they replace. ... it is they, much more than the official variety, which will really help create the open and flexible learning organizations which most forward looking companies aspire to become. ... Doz, "Technology Partnerships between Larger and Smaller Firms," International Studies of Management and Organization, 17/4 (1987). ... By contrast, their senior colleagues would have typically advanced in the organization by playing according to the prevalent rules, without disturbing the status quo. In the absence of a major crisis, many are thus likely to support a major change either under crisis conditions, or when it has proved to be feasible and entails minimal risk to the organization. ... Child, "New Technology and Developments in Management Organization," Omega, 12/3 (1984); and J. ... Huber, "The Nature and Design of Post Industrial Organization," Management Science, 30 (1984); M.