Pin Me

Why the Org Chart Is Preventing Innovation

written by: •edited by: Carly Stockwell•updated: 12/11/2013

Are your organizational charts holding you back? While they can be helpful for logistical coordination, org charts can also cause hierarchical decision making, reduce collaboration and produce inefficiencies. Learn how to break through in order to experience more innovation.

  • slide 1 of 5

    The Pharaohs Used Them, But Should Your Company Ignore Them?

    How Your Org Chart is Preventing Innovation Organizational charts have been around since the time of the pharaohs, when the ancient kings of Egypt were commissioning the Great Pyramids. They made sense then, considering the logistical coordination required to build such mammoth structures. It even made sense in 1855, when Daniel C. McCallum, general superintendent of the New York and Erie Railroad, brought the organizational chart as we know it into being. McCallum was in charge of managing some of the largest rail lines in the country. He, too, needed a way to effectively coordinate a large organization and give his managers clear direction on their responsibilities.

    Org charts have their place, but they aren’t a one-size-fits-all solution. Devout allegiance may actually hinder operational flexibility and cross-functional communication. While most companies have one, few deliver meaningful value directly.

  • slide 2 of 5

    What’s Wrong with Org Charts?

    There are three ways your org charts may be hampering innovation:

    1. Hierarchies Force Decision Making to the Top: Org charts are useful for mapping out reporting relationships and management oversight structures. But they also reinforce the idea that big decisions are made by higher-ups. This not only discourages lower-level employees from offering solutions or sharing fresh ideas, but it also leaves little room for problems that could be solved at lower levels to be sorted out there. The expectation that problems get solved and decisions get made at the top results in miscommunication of intent and an inefficient back-and-forth, as decisions are essentially passed up and down the organization’s hierarchy.

    2. Cross-Functional Collaboration is Lowered: One benefit of the org chart is that it clearly defines roles and functional assignments, allowing your company to create robust systems that produce high-quality, repeatable results. It’s great to have managers and employees who know their responsibilities and execute them well, but innovation requires collaboration and adaptation. And those can be difficult to foster when people are working under a model that offers strict definitions of what each person’s role within a company is.

    3. Resource Competition is Enforced: Put plainly, the organizational chart reinforces resource hoarding and monopolization when it comes to budgeting. Budgets are allocated strictly via stipulated functional lines, which means funding is less likely to be distributed where it’s most effective.

  • slide 3 of 5

    Creating an Alternative Culture

    Cross-functional communication and collaboration are essential for innovating and pushing the organization forward, so establish a culture in which that must happen.

    For instance, build processes that demand cross-functional integration. Look at ways in which the departments within your company can support one another and complement each other in decision making. To use an example of one B2B client, its diversification efforts required that cross-functional teams come together to assess potential targets for merger and acquisition efforts. This brought together team members from different parts of the company, fostering a more collaborative environment and sparking fresh ideas and perspectives.

    Don’t let decision-making responsibilities float to the top of the organization when they could actually be handled earlier. Drive that decision-making process down to the lowest level possible, and create opportunities for employees in those positions to increase cooperative analysis, share ideas about alternatives, and participate in the conclusions.

    Another way to encourage integration at different levels is to create pools of shared resources. When different departments are taking from the same resource pool (such as meeting and prototyping facilities), they must cooperate in order to be effective. This will boost communication among departments and break down preconceived barriers.

  • slide 4 of 5

    Experiencing Life Beyond the Org Chart

    Life Beyond the Org Chart All of this is not to say you should go tearing up your organizational charts just yet. It can be a valuable model for defining roles within a company, as long as you are willing to stray from it when needed. Having said that, don’t be afraid to let it go if you find your company operates better without it. Fostering a culture of innovation and collaboration is more important than sticking to an oft-used, but somewhat dated, business practice.

    Plenty of companies have flourished without the traditional chart. W.L. Gore has operated without one since its founding in 1958; its culture is based on personal communication, with individuals and self-managed teams going directly to the source for what they need to do their jobs well.

    Morning Star established its own in-house social network through which employees reach out to one another when they need something. When they engage in a task together, they write a Colleague Letter of Understanding (CLOU) that clearly outlines responsibilities and expectations.

    Once you’ve broken out of the mindset of the traditional org chart, there are myriad ways to organize your company and establish a cross-functional, collaborative system that allows your team to work smarter, more efficiently, and more innovatively.

  • slide 5 of 5

    About the Author: Andrew (Drew) C. Marshall is the Principal of Primed Associates, an innovation consultancy. He is a co-host of a weekly innovation-focused Twitter chat, #innochat; the founder, host, and producer of Ignite Princeton; and a contributor to the Innovation Excellence blog. Keep up with him on Google Plus.

References

  • Management Innovation Exchange http://www.managementexchange.com/story/colleague-letter-understanding-replacing-jobs-commitments
  • Laying Down the Principles: Management http://www.library.hbs.edu/hc/railroads/management.html
  • Gore http://www.gore.com/resources/corporate/en_xx/aboutus/culture/index.html