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The Molecular Organization

Lately, I have been reading and re-reading "The Age of Unreason," an important book in which author Charles Handy makes the case for change, massive, life-altering, business-affecting change. Though an economist, Handy could not have foreseen the changes wrought by the Internet boom and our current recession, yet he offers a prescient perspective on corporate organizational change driven by downsizing, globalization and a shift from manufacturing- to a knowledge-based economy.

While I don't suppose to be the deft social observer that Mr. Handy clearly is, I have the advantage of 15 years' of progress in technology and communications to inform my challenge of a key idea in his book. Handy argues that corporate downsizing, the movement of labor to developing markets, and the shift to knowledge-based economics will give rise to what he calls "federated" organizations. In his model, corporate headquarters are lean organizations of high-value executives who manage a federation of business units that act more or less independently from one another, but are controlled by the corporate core. I don't deny that this model is, indeed, emerged and emerging. In fact, it is the organizational basis around which DEMO's parent company, International Data Group (IDG), has successfully grown and held study against the buffeting economy for some 35 years. But unlike Handy, I don't believe federating organizations will be the dominant structure of corporate business in the next 10 to 20 years. Rather, the "molecular organization" will emerge and dominate corporate organization.

Now, chemistry wasn't my best subject, so forgive me if my metaphor isn't perfect, but here's the concept of a molecular organization:

At the center of the organization is a strong atom - the corporate core. That core owns, broadly speaking, the brand portfolio, the vision, and the administrative function of the corporation. It is the atomic essence of the organization, if you will. Coupled to this strong atom are other atoms either strong or loosely bonded. These atoms provide all the other business functions of the corporation.

The strong-bond atoms are the wholly-owned assets of the organization. These are business units and functions that provide unique competitive and differentiated advantage to the organization, and as such will be tightly held to the core. (And like the core, these strong-bond atoms will couple with other, primarily loosely-bonded, atoms.) Loosely-bonded atoms are organizations that provide business functions that can be effectively outsourced. The bond is loose because as these functions are no longer needed due to business change or the cyclical nature of the requirement, the loose-bonded atoms decouple from the core and re-bond to another organization. In this way, the molecular organization is far more dynamic and organic than a traditional hierarchical enterprise, or even Handy's federated corporation. The organizational structure changes as business needs change.
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What drivers are bringing about the molecular organization? Technology and Economics. In many instances, technology obviates the need for vertical integration of business functions.
Broadband connectivity, as just one example, enables individuals and small businesses to be efficient service providers to larger enterprises - more efficient, in many instances, than the internal functions they may be replacing.

The recession economy gave a major schooling to businesses of all sizes about the need to become organizationally flexible and adaptable. After 36 months of cost cutting and restructuring, business will not move rapidly to re-build a corporate infrastructure that could not support change. And not to be forgotten are the thousands of individuals who were "down-sized" out of jobs. They, too, adapted and many of them became loose atoms for the emerging molecular organization. These are the same factors that I wrote about in my October 20 column, "Draining the Swamp," and in my August 25 column, "The Changing Face of Work (and Play". Ultimately, the molecular corporation will emerge because it is the only truly efficient way to organize in a global, dynamic, knowledge economy.

How is your enterprise evolving? Send your comments, examples, and challenges to me at mailto:chris@cshipley.com.

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THREE QUESTIONS: ALL I WANT THIS HOLIDAY IS ...
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DEMOletters "Three Questions" survey is back this week and we want to know what you plan to give and hope to get this holiday season. Crawl upon Santa's knee at http://www.zoomerang.com/survey.zgi?G3BNCJXQPEBC1MM4DWHG8TSH. I'll be sharing these as part of my Great Gifts coverage in the December 1 Issue of DEMOletter.

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Chris Shipley is the executive producer of NetworkWorld's DEMO Conferences, Editor of DEMOletter and a technology industry analyst for nearly 20 years. She can be reached at chris@demo.com. Shipley, has covered the personal technology business since 1984 and is regarded as one of the top analysts covering the technology industry today. Shipley has worked as a writer and editor for variety of technology consumer magazines, including PC Week, PC Magazine, PC/Computing, and InfoWorld, US Magazine and Working Woman. She has written two books on communications and Internet technology, has won numerous awards for journalistic excellence, and was named the #1 newsletter editor by Marketing Computers for two years in a row. To subscribe to DEMOletter please visit: http://www.idgexecforums.com/demoletter/index.html.

This column was reprinted with permission of Network World Inc. All registered trademarks are owned by IDG. More information can be found at http://www.idgef.com.

© IDG. All rights Reserved

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The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of the The Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.

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