Six ingredients of agile organizational design

In this article, I want to clarify the need for agility in modern businesses and what agility in organizational design is.

Today’s mainstream organization structures are systems we inherited from the industrial era when employees were illiterate and the leaders were educated, market-entry criteria were high and markets were predictable. We see that the future of many established businesses has become uncertain. Businesses need to exceed customer expectations in buyer-driven markets. Customization is the norm and copying a competitive advantage has never been easier. Innovations and changes supersede at an increasingly high pace. For example, in the financial sector, many disruptors enter the market. These newcomers do not carry the burden of legacy IT systems and can offer new services at the flick of a switch. They put pressure on the existing businesses.

The hierarchical organizational design

Hierarchical organization structures were created in the industrial era (approximately 1890). They were designed to optimize for:

• Accountability: Easily locate the cause of errors.
• Efficiency: Factory workers are resources that can be optimized.