In this episode of BTG Insights on Demand, BTG’s Rachel Halversen is joined by Herman Vantrappen, managing director of strategic advisory firm Akordeon and co-author of "The Organization Design Guide: A Pragmatic Framework for Thoughtful, Efficient and Successful Redesigns," a comprehensive framework that enables executives and teams to have nuanced, in-depth and conclusive discussions about difficult organization design choices. Together, they’ll discuss best practices for effective organization design as well as best overarching org design principles, how leaders can identify the best fitting structure for their org, how to maintain and manage an organizational redesign, and more. Listen to the episode, read our lightly edited transcript, or jump right to a specific section of the chat below:
Interview Highlights:
- Strategy and organization design
- Organization design schools of thought
- When to think about organization design
- Organization design principles
- How to identify the best fitting structure for your organization
- Impacts of organization design on an organizational culture
- Centralization vs decentralization in organization design
- Ensuring effective coordination across an org
- How to operationalize a new org design
- How leaders can ensure day 1 effectiveness
- Best practices for maintaining and managing an organization design
- Organization design trend forecasting
Rachel Halversen:
Hi, Herman. Thank you so much for joining us today.
Herman Vantrappen:
Hi, Rachel. Thank you for inviting me. It's a pleasure.
Rachel Halversen:
Will you start by introducing yourself a little bit, and giving us a brief overview of your background and experience?
Herman Vantrappen:
Sure. I've been a consultant for most of my professional career. In fact, I started out working for a US consulting company called Arthur D. Little, where I worked for close to 25 years as a partner. And then a bit, like 10 years ago, I started out as a fully autonomous consultant. But still doing very much the same work, focusing on organization design work for all kinds of companies across sectors all over the world.
Rachel Halversen:
Well, thank you. So I'll get right into it. I've heard it said that an organization is nothing more than a living embodiment of a strategy. With that in mind, could you provide an overview of what organization design is, and why it's important?
Herman Vantrappen:
Sure. I'll try to do that. But let me first qualify a bit, that statement that an organization is nothing more than a living embodiment of a strategy, as you quoted it. In fact, that statement reflects Alfred Chandler's famous maxim that, and I quote, "Structure follows strategy." But other scholars have argued, and I must say quite convincingly, that the opposite is also true. In other words, that it’s strategy that follows structure. And the reasoning is that the very structure of an organization has a big influence in how the managers in that organization make strategic choices.
I can give you an example, take two different structures. One structure is a very highly centralized organization with divisions defined by product. That's one structure. The other structure, for the opposite, is a highly decentralized structure, with divisions based on countries. So depending on which of those two structures—organization structures—you do have, your managers are likely to make different strategic choices, because their views of the external world are going to be different.
So in other words, whether strategy or organization comes first is a bit of a moot point. And Henry Mintzberg kind of settled that debate by stating very smartly, and I quote that, "Structure follows strategy, as the left foot follows the right." So in other words, if you want to move forward as a company, you must work both on your strategy and your organization design, in kind of a natural never-ending cycle. So that being said, there's, of course, truth that an organization is only a means to an end. And that's because organization changes tend to be disruptive. So you would only change the organization design if you expect that the new design will better enable you to achieve your business goals. Which implies, of course, that you have made those business goals explicit, and that they are reasonably stable. Because if your business goals are vague or fluctuating, you are likely to cycle through highly disruptive organizational rearrangements without much improving your company's performance.
Then your question is, okay, what does organization design actually mean? Firstly, it's about defining all the tasks that you need to do as a company to achieve your business goals. It's about distributing roles and assigning responsibilities for executing those tasks. It's about coordination, the execution of different tasks for different people. It's about motivating everybody who's responsible for the speed of the work, but still to pursue the collective interest. It's about covering the whole thing. So all of that, what do we want to achieve? What do we need to do? Who's going to do what? How would you coordinate? All of that is within the scope of organization design. And I should add that, when we talk design, we don't talk only about the formal art structure of a company, and all the organization charts with the boxes, the layers, the reporting lines, what have you. It's also the more softer stuff, if you like, the processes, the company’s culture, people, the skills, the number of people, technology. So all of that is part of the variables to which you can play to redesign an organization.
Rachel Halversen:
Thank you for that. So will you tell us about your approach to organization design, and how it might differ from other schools of thought that our listeners might be familiar with?
Herman Vantrappen:
Sure. In fact, if you talk to organization design scholars, they don't agree about what the main schools of thought actually are, and they even less agree about the differences and the merits and shortcomings of these schools. But if you ask practitioners, as both the scholars, there is quite a bit of strong consensus about the bits and pieces in which you can play, as an organization designer, to redesign an organization. But I'm not really advancing a novel school of thought. I'm just combining bits and pieces that have been around for a long time. And then there is a paradox effect, because there was abundant advice in the management literature about the bits and pieces I'm just talking about. And people know all of those bits and pieces. Then, there's a paradox here, many people still struggle to get effective outcomes efficiently when they redesign the organization. Those exercises often go astray, or even run into dead ends.
And if I look back on the many major organizational design exercises that I've done in the past about 20 years, I find that one reason stands out why those exercises still consume—and sometimes even waste—a lot of energy, time, and even emotional energy. And the reason is that executives don't use a comprehensive and pragmatic framework, or thinking and debating about organization design choices in a nuanced way. So what's missing, really, is an integrated and robust framework. And when I say an "integrated framework," I mean two things. First, the framework should cover all the different phases from A to Z. Meaning first, you formulate, you redesign objectives, as we discussed a few minutes ago. What do you want to achieve? Then once you have those objectives clear, you do the concept design.
Once you have this designed and selected, one concept, you do the detail design. And once that is ready, you prepare the transition to go live towards a new design, on so-called day one. And finally, once it's implemented, you start making course corrections to the new design. So the framework should cover all those phases in a comprehensive work. And if you ask me what's novel about my approach, I would say it's this comprehensive framework. Because many things you read in the literature is about “flavor of the year” topics. There's been a lot of talk about agility in recent years. Today, everybody talks about resilience. All important, but that's flavor of the year. For many, pieces of advice use anecdotes from superstar firms.
But these anecdotes are misleading, because they're not generally generalizable. Or, they offer simplistic—I would say, formula-based solutions—like if your business strategy is to focus on customer-centricity, then, by definition, you must organize by customer segments. No, I mean, I don't see why the formula would be true in most circumstances. So in short, what the framework does is to enable advanced debates among executives. It helps them ask the right questions, tells them to address the key factors that they should take into account before deciding on the best possible design choice. And that's really key, because, as you know, there is rarely a single best organization design. So it's a matter of making choices and making judgments about the least bad design, so to speak.
Rachel Halversen:
So, what are some of the common signals that indicate that it's time for leaders to start thinking about an organization redesign?
Herman Vantrappen:
Well, to answer that question, we should distinguish between what I call "emergent hops," and on the other hand, what I call "deliberate leaps."
Hops are the minor adjustments that companies make all the time continually to their organization. You know, for example, at some point in time, company may decide to take its cybersecurity activities away from IT department, and reattach it to, say, the risk department. Fine, that's a minor adjustment, happens every day, so to speak. That's what I call an emergent hop, all the time. By contrast, those leaps are really the fundamental organizational redesigns that companies make only from time to time, because they're so big. And then the question is really, what triggers such a big leap of fundamental redesign? And there are three common triggers. The first one is that it can be triggered by major strategic events, like a merger, or a company split, or big restructuring, or change of business model.
Really big strategic things that trigger the questions. I mean, why are we making that big strategic move? And then, how do we organize ourselves so that we can realize those major strategic goals? For instance, is our major strategic goal to get access to a new market? To expand upstream in the value chain? Enter a promising new market? I mean, all those questions may come to the surface, and at that point in time, they may trigger a big organizational redesign. That’s the first kind of trigger. The second kind of trigger is more like an organizational health check. A typical situation is that's where a new CEO comes on board, and he or she wants to make sure that the organization that he or she inherits is on solid footing. Therefore, health check is conducted about the organizational design. And that may lead to, well, maybe it's time to really rethink fundamentally the organization design.
The first trigger, major strategic event, second trigger, an organizational health check. And a third trigger may be that those kind of fundamental or feeling among the executives of the company that their organization has become hopelessly complex and inefficient. And that complexity is often due to the fact that there has been an accumulation over the years of a large number of those minor organizational adjustments that were made all the time to kind of compensate for the imperfections of the design. But then after a while, the accumulation of small adjustments leads to a very complex and inefficient organization. And that then, in turn, may trigger, well maybe it's time to do a fundamental rethink.
Rachel Halversen:
Thank you. I liked those explanations. So what are some of the overarching principles that leaders should keep in mind when thinking about an organizational redesign?
Herman Vantrappen:
We've already spoken about two. First is that organization is a means to enhancement, to achieve some business goals. And second piece, we've already discussed this. Well, this pattern that I just explained, about a range of small incremental changes there, those small hops. And then after a while, a big leap. And that the pattern is very common. But then a couple of other principles. In the first principle is that when you redesign an organization, you should always consider a couple of alternative concepts. Never go straight for one single concept, because there is no single best organization design. It's never perfect. So you have to define criteria, and then develop a couple of alternative concepts, score those concepts on the criteria, and then make a judgment call about which one is the best, or best meets those design criteria. So looking at alternatives is a fundamental principle.
The second big principle is a question about who should participate in an organization redesign. And there, I think we should distinguish between participation in the concept design phase, and then participation in the subsequent detail design phase. The detail design phase, many people can participate. In fact, that's a good idea, because people in the field know best what works. They'll have to work with the new design. If they participate, then they can also be change ambassadors to the rest for the organization. But when we talk about the more upstream concept design, then it's rarely advised to have a very broadly participative approach. It's better usually to limit the exercise to a small team of senior executives.
And the reason is that you want to be able to talk freely within this smaller executive group about the company's strategic options. Also want to avoid conflict of interest that may arise when you discuss future roles. If the people in the room whose function, whose job may be at stake, they're not very neutral, of course. So you want to restrict to a small group. And also, there's a matter of speed. In the concept design phase, you want to move fairly fast. If you involve too many people, you cannot move very fast. And then the third principle that's important is, it relates to what is called "day one." Day one is the moment at which the approved detail design goes live.
And at that moment, the redesigned organization starts to have a direct impact on the daily functioning of [a large amount of] people. What they do differently, how they do it differently, which other people will they work on a day-to-day basis. At that moment, day one, when you go live, as little as possible should go wrong. Because if things go wrong, that's not good for the credibility of the managers. It's not good for the people, and impact on the business. So that's why it's crucial to start a very careful change management process ahead of day one. And make sure that no employee is left in the dark about their place in new organization.
Rachel Halversen:
Of all the many ways to approach an organizational redesign, how can leaders hone in on the best fitting structure for their organization?
Herman Vantrappen:
As we have discussed earlier, being crystal clear about the objectives and the expected benefits is important. An obviously important thing is to, at the start of the design process, to get clear about your design freedom. Sometimes there are some upfront design choices that have been made, and that are being imposed by the board of directors, or by the regulator, what have you.
And so you have to know what are the boundaries which you must respect, what are the things that you cannot touch when you redesign. Because you're rarely given, as an executive, full carte blanche when you redesign. So getting those things clearly upfront avoids having to backtrack later on, which is always very costly, and it's not very credible. Another important thing is to remember that when you redesign an organization, you never start from a blank sheet of paper. There's always an existing organization in place that has a big impact on the redesign, because even if the current organization design has become dysfunctional, there are usually good reasons why it was adopted in the first place.
And therefore, you must understand those reasons, and then see which of those reasons still carry weight today, so that you don't throw away the baby with the bathwater, so to speak. So understanding why the current organization is as it is, is important. And more generally, I would say that the company's optimal design is strongly influenced by its origin, its history, and even by the founder's predispositions. Two companies may compete directly with each other, they may be similar in age, size, they may even have similar business strategies. But even then, despite all those similarities, they may have totally different organization designs. Both are effective, but they're simply different because they have different history.
Rachel Halversen:
So how does the existing organizational culture factor in?
Herman Vantrappen:
Oh, that's a very fascinating subject, Rachel. Because culture and organization do influence each other, in both directions. Culture influences the design of the organization you will end up with, and vice versa, the organization design will influence your culture. So let's look at those both directions. So culture of a company influences its organization design choices. Imagine, for example, that for strategic reasons, you want to reduce the role of the corporate headquarters, and you want to decentralize more decisions towards the managers in your company's country organizations. Now, if you have a company culture that traditionally leans towards risk management, compliance, and control, then you would do that decentralization in a quite different way from a company that has a much more entrepreneurial culture. So the culture you have has a clear impact on the design choices that you make for your organization. It also works the other way around.
So if you decide, for instance, to switch from an organization with function as vertical: R&D, procurement, manufacturing, sales, after sales, a functional organization... Suppose you have that one, but you want to switch towards an organization organized by region: America, Europe, Asia, for instance. If you do that, that very switch sends a very strong signal to the people in your organization about what it will take to be successful in the company in the future. They will reason, well maybe today, or in the past, to advance in the company, you had to show function excellence, because we were organized by function. But in the future, we'll have to be more capable of building local customer communities, because we're regionally organized. So this organization change sends strong signals about what is important in the company. The attitude that you should assume, the behavior you should display, in other words, the culture.
Rachel Halversen:
That makes sense. So a big question in organizational design is which services should be centralized or decentralized—how should an organization go about making those decisions?
Herman Vantrappen:
Well, centralization versus decentralization is one of those very emotionally charged topics in organization design, indeed. And we all know the stereotypes. On the one hand, you have people in the field. If you talk about centralization, they associate that with out of touch staff at the company's distant corporate headquarters. And all those people at headquarters keep the people who, in fact, create value in the field, from doing their jobs. That's one caricature. The other caricature by people at headquarters is that they say, “Decentralization? That's all good for local bounds who only care about their own short-term interest without giving a dime about the big picture.” And of course, these are caricatures, but it reflects a very binary look at the issue of centralization. Basically, there are only two choices. Either we concentrate everything in headquarters, or we do everything in the field.
We need to make some more nuances this debate. First of all, there are more than, of course, more than just two layers. It's not just only corporate, either corporate or the field. No, there are many layers in an organization. Say you have corporate, and there's a division, there might be a region below the division, a country below the region, a department, and so on. So you easily get to five, six levels. And the question is not, do we do it either at corporate, or in the field? But, at which of those intermediate levels, or a bit of several layers or levels in between.
The second nuance is that the level at which you decentralize or centralize, doesn’t have to be the same for all services and activities. For example, you can centralize all legal staff at the corporate level, but decentralize procurement to the lowest level, to the country level, say. So the solution to centralization or decentralization depends on each specific activity. The third one has to do with the physical location of people. It's different from the reporting line. For example, a corporate recruitment manager can be physically limited in an office somewhere else than at corporate headquarters, even in a remote country. But that doesn't mean that the person can’t still report directly to a corporate person. So physical location is not the same as centralized or decentralized. It's a different factor. And then given all of that, your question is actually, how do you decide whether you centralize or decentralize an activity?
And there, it usually makes sense to start, at least, by adopting what's called subsidiarity as a default choice. And subsidiarity means that decisions should be taken at the lowest level possible, which means at the fault line. That's usually a good default choice, because there are two reasons why subsidiarity makes sense. One is that it improves the company's responsiveness, because it's people in the field who spot business opportunities and business threats first. They’re close to customers, suppliers, staff, what have you—and they can respond on the spot, without having to wait for information and decisions travelling up and down the hierarchy. The second reason is that if you push decisions down the hierarchy, that empowers the fault line managers, and that's usually good for them, both their commitment to the company and their motivation.
So subsidiarity as a default principle is a good principle. But of course, there are situations where there are benefits from organizing activities at a higher level than just a fault line. Let me list a couple of situations. First situation is pretty obvious. Some functions are inherently corporate. We think of investor relations, or treasury, or corporate branding. By nature, they've got to be centralized. So there's not much discussion there. The second case in favor of centralization has to do with governance. By governance, I mean the company has to define company-wide policies, company-wide standards, methods, procedures, systems, and then ensure compliance with those standards. Think about financial reporting standards, HR policies, technical standards. And that, by definition, also must be done centrally.
The third case in favor of a bit of centralization has to do with economics, indeed. Certain activities, if you do centralize them, can be done at a lower cost than when you decentralize them. Maybe there are economies of scale. For instance, by setting up a shared service center for accounting, or procurement, you get scale, you can lower costs. Or, you want to avoid duplication, two divisions do exactly the same thing. Whereas they could actually, they would be better off both by having a joint common solution. For instance, these days it probably doesn't make sense for every single division to have its own artificial intelligence lab. These are scarce resources, it's probably better to do that jointly together, purely for economic reasons. And then the fourth case where centralization makes sense has to do with what I call "collective stewardship."
What I mean is that some activities that are critical for the long-term well-being of the company, if you would leave them to the divisions, decentralized, they might never be undertaken. Because they are too long-term, too risky, or they depend on the dissipation of divisions. Think about medical innovation—long-term, uncertain. Global talent mobility program only works if it's really global. Or a company-wide knowledge management system… all of that if you would leave to the divisions, would never take place. So you need a corporate central function to push those company-wide initiatives, or at least kick-start them. So in summary, subsidiarity, do it as low as possible, but there are situations where it does make sense to centralize to a higher level.
Rachel Halversen:
So how can leaders ensure effective coordination across the new organizational design?
Herman Vantrappen:
If we talk about coordination and governance, there are two reasons why that's important. One is that it's important to build bridges between the verticals of the organization, bridges to enable and stimulate collaboration between the verticals. That's for their mutual benefit. And as a consequence, for the benefit of the company as a whole. I can give you an example. Imagine that you've got an organization structure with both regional market divisions, say America, Europe, Asia, okay, on the one hand, and on the other hand, global product divisions. If that's your structure, you must find a way to meet the requirements. One is you need products that meet the special needs of each region separately. Products tailored to the Americas, products tailored to Asia, and what have you.
But at the same time, you need to also put some commonality between those products so that you can reduce the cost of the products for the benefit of all the regions. So here's a trade-off to be made, and making a trade-off requires coordination between the regional market managers and the global product managers. So that's a matter of building bridges that enable that collaboration. But coordination is not only important for making those bridges, it's also to get some checks and balances in your organization. Checks and balances are needed because you want to prevent one of those verticals optimizing its own business at the expense of the other verticals, or at the expense of the company as a whole. Let me give you an example. Suppose that you're in the business of developing, and then constructing, and then maintaining, big pieces of infrastructure, say power plants.
Now, the salespeople who work to sell projects to investors, when they make their bid, they want to bid as low as possible, to win the bid. And they might be tempted to foresee in their calculations—in the present calculations—low maintenance costs, so that they can increase the chances of winning the bid. That's fine, but then of course, if the company wins the bid, those guys in maintenance will have to maintain the plant once it's being built, will bear the brunt. They will have to live with the maintenance costs that were estimated to be too low. So you want to have a process where maintenance, in this example, can check that what sales is doing, or business development is doing, actually makes sense for the benefit of the company as a whole. So there's bridges, checks, and balances… and the way you can build those bridges and get those checks and balances, there are, I would say, what is called hard-wired ways to do it, and soft-wired ways to do it.
To give you examples of hard-wired ways is a formal co-functional council, for instance, innovation council, with all the functions being represented as one mechanism. or a structured process with sign-offs by the different functions, or a matrix organization. All of those are examples of hard-wired ways to coordinate between verticals. But also soft-wired mechanisms which are more informal, or voluntary, or temporary. Think of an ad-hoc task force that you create to solve a very specific issue temporarily. Or, there's a very soft but very old and effective mechanism… that's just picking up the phone and calling your colleague in another division to coordinate. So that's still very powerful, and the extent to which it happens, of course, depends on the company's culture.
Rachel Halversen:
I believe you touched on this a little bit earlier, but when it's time to really start nailing down the details of the redesign, what factors should leaders keep in mind as they think about operationalizing the model?
Herman Vantrappen:
Before you can start a detailed design of the chosen concept, you have to make sure that several things are in place. First, it's essential, and it sounds obvious, but it's not always the case... It's essential that all the members of the top management team, executive team, visibly endorse the concept that was approved.
And even more than that, when they go back to their people and their own divisions, they should stand by the concept, even when they are bombarded with all kinds of questions, reservations, or even obstructions by their people. They should defend the concept that they agreed to in the top management team. And [one way] to help them do that is to make—at the end of the concept design phase—a reference document that clearly explains, describes, the design concept that was selected. And what's also helpful is for them to kind of establish the “apply or explain” rule. That means that during the detail design, you have, of course by definition, to detail. But you cannot deviate from the approved concept design, unless it's clearly explained and approved again. So in short, the members of the top management team really have to be seen to stand by the chosen concept. That's the first prerequisite.
Another set of preparations for the detail design has to do with the appointment of the teams that will actually do the detail design. As I mentioned before, detail design's more participative. So you have to create design teams, you have to appoint the leaders of the design teams. And where possible, the leaders of those design teams would be the managers of the future organization design. So it's a lot of people aspects. And then last but not least, as you go into the detail design, you should intensify the whole change management. As soon as you get into the detail design phase, you open up to many more people, especially participants. You have to start building real acceptance and support of the redesigned organization, throughout the whole organization. So change management becomes very important, as soon as you get into detail design.
Rachel Halversen:
And you've spoken before about day one. So how can change leaders ensure that the new organizational design will be effective on day one, and what role does management play?
Herman Vantrappen:
When the detail design is finished, the switch over to the new design that has been detailed, does not happen immediately the day after. Before you can really go live with that new detail design, there's still quite a bit of practical stuff to take care of. And of course, that varies case by case, but there are quite a few common things. First, as you indicated, change management is critical. Of course, you already started change management earlier in the concept and detail design phases, but now it has to be much more intensive.
And also, the focus of the change management efforts changes. The concept design and detail design phase, change management is focused on the organization as a whole. You explain, “Why did we want to change the design of the organization? What is the overall direction?” So fairly broad topics, but in this transition phase towards day one, you kind of shift from perspective or focus on organization as a whole, to change at the individual level. You have to start explaining to people how the intent of the organization affects them personally. So change management at the individual level becomes very important before you can do the switch over on day one.
Second, there is a lot of HR-related stuff to manage. Very practical stuff like appointing people, transferring people, updating the HR systems, engaging—in some countries—with employee representative bodies, maybe even regulators. There's admin stuff that you have to take care of, like updating the budgets. You have delegation of authority rules, who's allowed to sign what commitments to supplies, for instance, that might have to change. Procedures, IT systems, what have you. All that may sound kind of boring, but it's critical to handle that very well. Because if you don't, the chances of things going seriously wrong on day one become far too big to be acceptable. So careful preparation in the transition phase is really critical.
Rachel Halversen:
What are some of the best practices for maintaining and managing an organizational redesign effectively?
Herman Vantrappen:
Well, the measures that you use to measure success, in fact, should go back to what we discussed at the very beginning, to the objectives of the redesign. At the beginning we said we don't start at the redesign without the clear description of the business objectives of the redesign, and of the benefits that we aspire to achieve. So you should measure the effect and the success of your organizational redesign by validating afterwards how much of the benefits have really been realized. Of course, it may take some time before all those benefits are visible. So there's also some shorter term measures of success. And an important one is the continuity of the day-to-day business.
By definition, when you do an organizational redesign, you intend to have some clear break with the current way of doing things. So you do want some rupture, but what you do not want is disruption. Rupture, yes. Disruption, no. What I mean, you don't want to lose critical customers, you don't want to lose critical people. You don't want to damage your reputation just by this reorganization. So that's why, again, this transition phase prior to the go live on day one is so important. So that's an important measure of success, the smooth transition towards a new organization. But let's face it, no organization design will be perfect. I would say that the day after the day you go live with this new organization, the first imperfections will become visible. And for a while, you can live with those imperfections.
But at some point, after a couple of imperfections have become visible, we will have to make some small organizational adjustments, also because the company's environment continues to change. So all of that requires some tweaks to the organization design, and therefore some course corrections. And this is what we called before, the emergent hops. They are inevitable. They're even desirable. And I think it's important for managers to explain to their people that continued organizational change is perfectly normal, even desirable. So they should make sure that people get used to the idea of purposeful change of an organization design. Even though it's sometimes tiring and frustrating, it's a fact of life that organization designs change quite continually.
Rachel Halversen:
Looking ahead, what trends do you foresee in the future of organizational design, particularly with emerging technologies or changes in work dynamics and workforce trends?
Herman Vantrappen:
I think technology is an important factor in organization design, in different ways. But to fully utilize the potential of an emerging technology, you may have to change some aspects of your organization design. Take, for instance, digital customer service technologies, like online payments, order tracking, chatbots, self-service portals. If you want to get the best possible customer experience out of these technologies, you probably will have to make some changes to the roles and responsibilities of all the functions that are involved in the customer journey, from sales to after sales, all along the journey. So only when you make those organization design changes will you be able to really benefit from that new customer service technology.
But it also works the other way around. There are some other technologies that enable new forms of organizing. The classical example is collaborative information technology that creates opportunities to rethink the way you organize the innovation process. Or something that's more hot these days is these novel identification technologies that companies analyze their employees email to optimize the way they organize risk management and compliance. But of course, that's quite invasive technology, which raises lots of issues about ethics, privacy, and so on. Technology, yes, definitely has an impact on organization design, and the other way around. Regarding the second part of your question regarding workforce strength, I could mention the growing significance of the so-called—and we are getting into BTG’s area—the so-called contingent workforce.
But there again, if you want, as a company, to make effective use of on-demand talent, you may have to rethink a certain aspect of your organization design. For instance, the interface between the HR function, which typically takes care of the fully-employed people, but procurement also intervenes for on-demand talent. So the interface between HR and procurement may have to be resolved, or the KPIs that you use may have to be adapted. Or, if you use lots of contingent people, that has an impact on the company's culture. So yes, there is this growing trend of on-demand talent. There, of course, I would say, as BTG, that you're one of the leading on-demand talent providers, you probably know much more about it than I do.
Rachel Halversen:
Well, thank you. This has been really wonderful.
Herman Vantrappen:
Thank you for inviting me. It was a pleasure to talk with you, Rachel.
Rachel Halversen
As a reminder, our guest today has been Herman Vantrappen, an independent advisor on business strategy and organization design. And I'm Rachel Halverson for Business Talent Group. To start a project with Herman, or thousands of our other highly skilled independent consultants, visit businesstalentgroup.com, or subscribe for more of our conversations with on-demand experts and future of work thought leaders wherever you find your podcasts. Thanks for listening.
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