Organizing’s New Twilight Zone

Tom Peters

I call them “the beyonds,” eight ideas about organizing that add up to a giant step toward the unknown.

1. Beyond the empowered worker to the “informated” individual. Empowerment, the authority at the front line to do job for the customer, is essential. But there’s more. Harvard’s Shoshone Zuboff gave us “informated” (in her book, In the Age of the Smart Machine): i.e., the line worker with the knowledge of the corporation at her or his fingertips. At Union Pacific Railroad, for example, the conductor is empowered and, via a computer in his caboose, informated too. He’s become a mom and pop store on wheels, able to attend to customer needs and whims.

2. Self-managed teams to virtual enterprises. Maybe one in five firms has even installed self-managing teams. No matter, they don’t go far enough. In his book Fifth Generation Management, computer consultant Charles Savage offers up “virtual enterprises.” Consider high-tech hose maker Titeflex: A dozen-person Business Development Team is a coherent, almost self-contained “business”—it works intimately with customers and vendors to carry orders from concept to delivery.

3. Clusters to buckyborgs. Harvard’s D. Quinn Mills touts “clusters,” collections of five- to 50-person superteams. But perhaps there’s an even more audacious organizing principle. The clue lies in the recently discovered buckminster fullerene (after Buckminster Fuller) or buckyball, a 60-carbon atom supermolecule setting chemistry on its ear. It’s tough, resilient, flexible. I call the organizational equivalent—a substantial, energetic 60-person enterprise—a buckyborg.

Britisher Richard Branson’s Virgin Group (records, entertainment, an airline) generates $2.4 billion in annual revenue from 200 companies, averaging 50 people each. When a Virgin company hits the 70-person mark, Branson will likely break it in two. Indiana’s highly regarded Associated Group designs and delivers financial service products via its Acordia companies—50-person (on average), highly autonomous outfits that focus on a narrow niche market. As an Acordia company grows to 100 people or so, it splits up to renew focus and energy. A fast growing list of similar examples point to the appropriateness of this organizational form for volatile times.

4. Speed to fashion. “IBM to start announcing its fall line,” the Wall Street Journal blared on September 3rd. That’s IBM, not Calvin Klein. All goods and services are becoming “fashion” items. Many businesses are getting the message that fashion is about speed. However, the average scheme achieving quickness features rigid processes. And that’s worrisome, because fickleness is also fashion’s signature. To deal with fickleness requires near organizational anarchy. Front-line business units must be almost wholly autonomous and encouraged to develop distinct personalities that occasionally clash with core corporate values.

5. Functional barrier-bashing to total project orientation. Folks from formerly warring specialties increasingly work together. But “breaking barriers” implies that functional units themselves remain. No! The best models for a fast-paced, knowledge-based economy are professional service firms. Ad agencies, consultancies and accountancies trade in pure knowledge: Upwards of 50,000 people may be organized as a collection of loosely linked, 10-person teams; functional departments are virtually non-existent.

6. Lean and mean to headquarters-free. ABB Asea Brown Boveri Chairman Percy Barnevik cut corporate headquarters at his $25-billion, Zurich-based corporation from 4,000 to 100. Britain’s BTR runs a successful $12-billion company with a headquarters complement of 47. Richard Branson doesn’t have an HQ at Virgin, save four or five top folks (lawyers, accountants) in a room in London, on call to answer queries from Virgin’s 200 company presidents. Hence, my new “rule”: three to four headquarters people per billion dollars in sales!

7. Customer-focused internal units to world-class organizations. The internal customer idea is useful—i.e., get accounting and personnel focused on serving their front-line “customers.” But it falls short of the mark. McKinsey & Co.’s Kenichi Ohmae says a components unit should sell a third of output to internal divisions, a third to top domestic competitors, and a third to the best competitors in the world. As I see it, every “supplier” unit, be it line (components producers) or staff (finance, personnel), should be “marketized” and aim to be world class in its own right.

8. Networks to knowledge management. Products and services are increasingly produced by a one-of-a-kind network, collected bits of outfits brought together to do a designated job. But hooking up with partners is not enough. The challenge for tomorrow is the proactive accumulation and dissemination of knowledge that can be brought to bear, fast, to create unique value. One of ABB’s big power-transmission businesses is several times larger than the world’s No.2. Yet it consists of 25 plants (in 17 countries) many of which are smaller than local competitors. ABB is inventing what I call “new big.” Power doesn’t come from huge plants, but from the ability of small, flexible units to apply the knowledge that resides in a global network.