Keeping control within an agile organization

"You can never solve management paradoxes, you can only manage them", argues Prof. Dr. Ron Meyer, professor of Corporate Strategy at TIAS, in this interview.

Ron acknowledges that important management challenges are really paradoxes and tackles these challenges together with managers. "It is important to be able to make use of the advantages of both extremes. How to do this, depends entirely on the context".

What are the most important paradoxes that managers have to encounter?

If one looks at the challenges at an organizational level, then four important management paradoxes can be mentioned:

1. The horizontal design paradox: integration versus differentiation between departments/divisions. With properly integrated units, more synergies and efficiency benefits can be achieved, while more differentiation leads to a more responsive department. Both have their advantages and disadvantages.
2. The vertical design paradox: does one choose control or empowerment? Does one choose to manage the organization from the top or self-management by the employees?
3. The development paradox: the controlled planning of initiatives versus unfolding ideas en route in the organization.
4. The change paradox: does one want to make a revolutionary change in direction or implement evolutionary changes?

There is of course plenty of room for play between these four paradoxes. It is important that the manager finds the right balance within a given context. In practice this proves to be anything but easy.

Which paradox do managers wrestle with most?

The central theme at this moment is how organizational structures can become flatter and how organizations can become more agile. Organizations that are making this transition, tend to radically implement changes. Consequently, there is insufficient overview and too little control. It is still important to keep enough control, particularly in this situation.

And how do you achieve that?

Becoming more agile as an organization does not mean that you have to let go of control. In making it flatter and more agile, we pay too much attention to the hard side of the organization. It is important to look more at the soft controls. By this I mean: creating the right conditions in the organization so that the chance of success is increased. Consider for instance positioning the right people in the right places within the organization, the joint development of strategy and setting the right behavioral example. The key to success within an agile organization is that it is just those extra additions of soft controlsthat lead to a better balance.

Can you give an example of an organization that has successfully made the transition from a hierarchical to a flatter organization?

Thermaflex is a good example. This is an international company that trades in piping for among other things district heating. Five years ago – partly inspired by the Brazilian entrepreneur Ricardo Semler – they implemented the transition from a hierarchical company to a flat organization. This was a pretty radical change. They have globally dispensed with management layers and aim for self-management. All this with the goal of broadening ownership and becoming more agile. Of course it cost Thermaflex a learning curve. They have wrestled with all management paradoxes, but today you can see that they have profited substantially from this transition. The core of success is to build in subtle soft controls besides strong empowerment.

 

Ron Meyer is professor of Business Strategy at TIAS, where he conducts research in the field of concern strategy and leadership.