Knowledge Workers Need New Structures

by Michael Maccoby

Research Technology Management, Vol. 30, No. 3 January-February 1996 pp. 56-58.

The information age demands new thinking about organizational structure.

Structure describes roles and relationships, responsibilities, authority and accountability. Structure inevitably raises sensitive human issues of status and power.

We humans and chimpanzees share 98.5 percent of genetic material, and one has merely to watch our primate cousins to recognize that certain structural issues are hard wired in our psyches, particularly those of the males. Dominant males are territorial and control by force. Those at the top tend to be cool and calculating while chimps lower down on the totem pole have trouble controlling themselves. Sometimes lower level chimps form alliances to challenge authority. Females tend to take a maternal role but some gain considerable authority and are respected by males as well as other females.

It is the 1.5 percent difference in genetics that allows us humans to design or reengineer structures to fit changing strategy and express our cultural values. In the U.S. and Scandinavia, managers pursue the elusive democratic ideal of a flat organization. In Asia, the structural ideal is the hierarchical Confucian family, welded together by mutual obligation. Although we have a tendency when threatened to act like chimps, we also have the capability of treating each other with respect and supporting each other as we work for common goals. Good leadership can make the difference.

In all cultures, complex information age companies must design three aspects of structure: macrostructure, strategic structure and work process structure. I shall describe each, how they fit together, and how in both West and East, they have been changing because of the increase in knowledge required from workers.

Macrostructure describes the overall way a company is formed by the architecture of business units, divisions and corporate governance. There are five ways to structure these units: by place or region, product or service, customer or market, function or type of knowledge, and processes.

Companies in the past were generally organized as functional bureaucracies of manufacturing, sales, and R&D, coordinated and controlled at the top. Today, organizations like AT&T and Asea Brown Boveri (ABB) use a complex mix of these structures. Despite its split into three companies on the basis of product, AT&T has and probably will continue to reorganize units in all three companies according to markets, products, regions, and functions and processes. [The Network Services Division is structured according to processes such as provisioning, maintenance, leadership and human resource management.] ABB's matrix implements the strategy of thinking global through product based business areas and acting locally through regional companies. As I described in Human Engineering Leads to Operating Principles for Global Management interactivity, trust open communication, and shared logics are required to gain the full benefit of the matrix. Functional divisions within these business units develop knowledge and competence in areas such as sales, manufacturing, R&D, and finance. How this knowledge is aggregated, directed and employed depends on the strategic structure of the organization.

Three Levels of Strategic Structure

The strategic structure includes three levels: strategic, operational and doing. To give an example, in the army, the strategic level determines goals and placement of resources. The operational level (e.g. tank commanders), implements these goals by tactical planning and deployment. The doing level pulls triggers, and programs or fixes machines.

In traditional organization, the strategic structure was a hierarchy which was equivalent to the knowledge hierarchy. Strategists were the master craftsmen, operators were journeymen, and doers were apprentices. Strategists knew operators' jobs better than they did and operators could perform doers' jobs. Communication flowed one way with the strategists giving commands to operators and through speeches, trying to inspire the whole organization. Operators gave direct orders to doers. While this concurrence of strategy and knowledge structure still describes to some extent small businesses such as masonry contractors, in large information age companies each level owns different kinds of knowledge. Strategists must learn from the operators, and both the operators and strategists need feedback from the doers who are in direct contact with customers and maintain complex systems.

AT&T's Workplace of the Future has created a planning structure that brings the doers, represented by their unions - CWA and IBEW - together with operational leaders. In the AT&T services company which includes Network Services, planning councils design an ideal future aligned with the strategic goals and expressing shared values, and they develop the processes and knowledge essential to move toward this goal. Operators and doers together attend courses where they learn about stakeholder needs and values. They discuss the gaps between the ideal future and their local work organizations and agree on steps to close the gaps. The strategic level uses the planning council to interpret strategy and in some cases modify it.

The more the doers gain knowledge and responsibility, the more there is value in bringing the levels together for planning. While doers in low knowledge jobs can productively participate with operators in planning work schedules and solving problems, doers who are running complex systems and interacting with other high knowledge doers need to participate further in the planning of the new systems and processes they must use and understand.

In the electromechanical age, uniform tasks were fragmented, and mechanized. Most workers did not have customers. Everyone had a boss whose power rested on position and control of information. In the information age, work varies according to the nature of product and process. Everyone has a customer, internal or external. Information is widely shared and teams may manage many of the leadership functions which in the past were done by bosses. In some organizations, the doing and operational levels have begun to merge.

The Work Process Structure

The Work Process Structure or what might be called the micro-structure describes the different ways work processes are designed, depending on the nature of the product or service and the process. The horizontal dimension differentiates standardized and customized products and the vertical dimension moves from processes requiring relatively low knowledge to those processes requiring high knowledge from employees.

The four boxes show prototypic work process structures. In the lower left is the customer-supplier assembly process first described by W. E. Deming as a means to eliminating waste and defects. T. Ohno at Toyota perfected this "pull" system. At Toyota, leadership emphasizes continuous improvement, group harmony and personal development. In the lower right is the typical work process structure for information age financial services. Teams of frontline employees use information technology to answer inquiries, provide services, or do billing operations. Employees are trained to respond to small variations in customer needs. Examples are found at AT&T's operator, credit and billing services. Supervisors take the role of teachers and facilitators of teamwork.

In the upper left box, the customer-supplier process is typically automated: an electronic switching system, an oil refinery or paper and pulp mill, or a nuclear power plant. While the product is standardized and the production is automated, teams of workers must understand the technology and be able to respond quickly to problems before they become threatening to product quality, capital investment and safety. Teams are often self directed with help when needed from engineering specialists.

The upper right box describes the most difficult process, where experts from different functional organizations work together with an equally knowledgeable customer as a member of the team. Each circle stands for a different function such as design, development, marketing and operations. This is the most knowledge intensive type of work that I have observed at AT&T, ABB, Cultor and MITRE. It is the type of process used for concurrent engineering to speed up product realization at AT&T or to provide customized telecommunication and information services to large business customers like banks or airlines. At ABB of Canada, this type of structure describes the team that works in partnership with large energy using customers Hydro Quebec or Cominco, a metal and mining company. At Cultor, it describes a technical and marketing team customizing sweeteners for soft drink and chewing gum companies. For MITRE, it describes system engineers bring together different parts of the FAA and airline representatives to improve the capacity of the air traffic control system.

Facilitative Leadership

The customized-high knowledge work structure requires not only breaking chimneys or silos, but also facilitative leadership. At ABB of Canada and AT&T, this would normally be the account managers who develop the long term relationship with the customer organization. However, essentially this process becomes a heterarchy in which leadership functions shift according to which team member has the appropriate knowledge. This means that all team members need leadership skills or heterarchical capabilities.

These include aspects of style having to do with interactivity: openness, consensus building, listening and learning from other experts, and willingness to accept leadership responsibility. Systems thinking is also a big help and it is developed by practicing idealized design. AT&T Workplace of the Future teams continually evaluate the progress of heterarchical process design projects in terms of the ideal future which includes human considerations (skill development, empowerment) as well as strategic business goals.

The customized-high knowledge work process does not replace but makes use of functional divisions that provide the experts-developers, technicians, designers, and sales engineers.

Challenge Chimp Thinking

Furthermore, information and communication technology such as groupware frees much work from geographical constraints. As the work process structure includes people who are scattered throughout the world, leadership requires much higher levels of interactivity, to create trust and shared understanding of strategic goals. The development of knowledge and shared values combined with leadership that walks the talk can lift people from chimp thinking to understanding of organization as a tool to serve human goals rather than a jungle where one succeeds by dominating turf.