I recently ran a top management team session with the executive board of a trading company. One important item on the top team’s agenda was its “one firm” initiative. The organization was the subsidiary of a multinational conglomerate with extensive leeway to run the business, however, with a strict template to report results along product categories. As a result of the product line logic, which extended to the organizational set-up and determined the incentive scheme, the company fragmented its approach towards large clients and missed a lot of cross-selling potential.
The one firm initiative (“firm” of course to be replaced for the company’s name) sought to structurally address this issue by integrating the back-office across product lines. This first step was to be followed by some form of integration in the sales force, in order to identify and then collaboratively realize additional sales potential with the company’s most promising clients. For this to happen all sorts of people across the organization would have to work together in a different way to address opportunities quickly, collaboratively, and in a client-focused way. Second-guessing about chain of command, higher-level alignment and bonus implications would doom the initiative from the outset.
How go get things done as a firm
Originally analyzed for professional service firms (see David Maister’s classic 1985 article on “One-Firm Firms” in the MIT Sloan Management Review and its more recent update) this basic question is increasingly relevant for other firms as well: how can we “get things done as a firm”?
Often this question is reduced to culture and common core values. Indeed, I would argue that a strong culture, a shared and relevant expectation of how a firm’s members should behave and act, is a powerful integration device for large scale organizations. So, there is nothing wrong with that perspective as long as it is backed up with a specific account of which management practices support a specific culture.
It’s more than culture and core values
That being said, organizational structure matters a lot. The stronger a silo mentality is hard-coded into the management structure, the more difficult it will be to ensure collaboration. Cross-unit collaboration can itself be supported by according management structures.
Beyond that, one-firm approaches call for a high level of management capabilities across the organization. Calling for effective on-the-spot collaboration to satisfy a client’s request which transcends the organizational set-up, people have to be able to organize themselves, make decisions and execute in line with a one-firm understanding. Structure must not be in the way – see above. But in addition, basic skills like communications, goal setting, facilitation, problem solving, decision making, etc. need to be brought to the process, if there is no single boss calling the shots. Those skills need to be trained, and people need empowerment to get the chance to learn them in action.
Three insights for business agility
This, I argue, are three important insights for the journey to building agile organizations:
First, as paradoxical as it may seem, a powerful decentral unit requires a strong central backbone or framework. This backbone is essential as a joint reference for empowered decision making and action at the point of value creation.
Second, if there is no single manager with the remit and experience to make “one firm” decisions, more people across the organization have to have the management skills to lead and manage cross-functional, often temporary settings.
Third, and coming back to the case discussed above, the top management team has to lead the effort – as a team, in contrast to a forum of top managers sharing information and aligning along the borders of their principalities.
Check out our tools to support cross-unit collaboration as part of the Organizational Structure Kit.