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New Organizational Forms

In the 1960′s, the historian, Alfred Chandler, crystalized his vision of corporate organizational theory with the phrase, “structure follows strategy.” Times have changed, markets have changed, the inherent usefulness of the corporation has changed, and strategies have evolved – thus it’s time again to address the structure of organizations around the globe – ours and especially our client’s.

Chandler, the first true business historian, studied how the chemical company Du Pont, the automobile manufacturer General Motors, the energy company Standard Oil of New Jersey and the retailer Sears Roebuck all garnered explosive growth through the use of a multi-division organizational form. The M-form, as its known, is a federation of semi-independent product or geographic divisions governed by a central hub making strategic decisions and setting financial targets (I’m sure you’ve worked for a few M-form organizations).

As the need for internal communication sped up and markets demanded greater responsiveness (which is the founding need for organizations to begin with), some M-form organizations have mutated into what we call N-form: networked models where communication is central among business units. Dell, for example, was only able to achieve its just-in-time production because of greater communication abilities across its supply chain.

And as complexity studies grew popular, an understanding of the organization as an even more adaptive entity developed.

But even with the march of time and technological innovation, the same basic assumptions noted in Chandler’s work still seem to have been carried along all these years in organizational theory:

Above all, I suggest that we begin to share ideas for organizational structures between ourselves more often. Advertisers and marketers have an especially large responsibility as we’re feeder fish to organizations facing these challenges. We’re eager to reinvent ourselves, but perhaps we should first reinvent our clients. The successful organizations won’t be the first to recognize what I’ve laid out here, these problems are known well; the most successful organizations will be the first to implement a truly radical and effective solution.

Our strategies for our clients have certainly evolved and as Chandler dictated, its time to evolve their structures.

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