The fundamental structure as per how organizations have been so far operating is failing under the dynamic conditions of modern marketplace. What was once considered moat by conglomerates is increasingly becoming the very Achilles heal of their collapse. Before a company can reach the pinnacle of its market position, it faces onslaught from 100s of nimbler smaller missionary players who redefine the problem statement and together they siege the once unassailable fort of market leader.
The operational structure of an Organization hasn’t changed much since ancient days of trade. They are still rigid, with certain fixed expertise and assets and they operate in more or less top-down kind of managerial structure. The d/dt (Market Landscape ) is far greater than their ability to build new products, mould their legacy products or upgrade their human capital.
Current organizational structure is highly vertically stacked. The issue with any vertically stacked system is that they tend to be slow to react to external conditions and bureaucratic in their operational mechanics. The original thesis of these type of systems was that their sum would be greater than the parts and overall efficiency of tightly coupled moving parts would be greater. They worked well when the cost of exchange and flow of information was greater than cost of sluggishness of the system. That is not the case anymore. We are a more connected society now.
Professionals are more discoverable than ever with their specialised skill sets ( linkedin, upwork ) . There is far greater trust and transparency in the market ( reviews , recommendations ). Cost of flow of capital has become almost negligible (paypal, bitcoins etc). Capital has become like electricity – ubiquitous. You use as much as you require for optimum return (alipay, angel list ). Self governing Marketplaces are the new democracies which have millions of global citizens.
This kind of modern day markets need new kind of modern organizations. They might not look like organizations at all with all offices and top management, board of directors or employees in conventional sense. They would look more like zero asset initiatives or communities where people join to create value in return of compensation and other benefits of employment. Think of them like little nodes where capital flows and employees join for short term projects or gigs. All the complex management and collaboration and disbursement of salaries is handled automatically by software. All organizations will be multinational from day 0 and all employees work remotely across countries and continents.
Functions of org or sub functions will disintegrate more and more as the specialization required to win in the market increases and employees won’t work for org for their lives, but engagement would function more like short projects or tour of duties. Disintegration is inevitable across systems of all time, it happened with mainframe computers, craigslist, education system, tech stacks and now conventional structure of organizations are ripe for it.