The average lifespan of S&P 500 companies is dropping, now less than 20 years compared to an average lifespan of 60 years in the 1950s.1 No wonder that recent Accenture Strategy research found only 25 percent of companies are very confident that they will meet their 2020 growth projections.2 Understandably, many companies are responding to competitive pressures by applying new technologies and analytical techniques to improve market and customer strategies. Fewer are taking the additional step of applying those same capabilities internally to improve organizational agility. By creating an adaptive, flexible organizational structure, businesses can be more responsive to customer and market needs, and demonstrate the competitive agility to thrive both now and in the future.
The end is clear, but where to begin?
To compete more effectively, organizations will need to rewire how their organizations are structured, from senior leadership levels to the most junior ranks. The challenge for executives is knowing where to begin.
Much has been written about the attributes of an agile organization—for example role mobility, rapid iteration and continuous learning. Accenture research suggests that executives recognize this evolution toward a more responsive organization. For example, 72 percent of executives surveyed by Accenture believe that the proportion of multi-skilled generalists in their workforce will increase over three years.3 Forty-six percent of executives acknowledge that job descriptions have become obsolete as workers shift towards more project-based working.4 Yet advice on where to start the journey is harder to find.
Our recommendation is to launch the organizational rewiring across the business with an analytics-powered assessment of spans and layers to identify quick wins and opportunities to break down organizational complexity and bureaucracy. Two agility killers.
Spans and layers – Misunderstood and misused
Organizational structures become increasingly complex as companies grow and expand—adding more reporting layers between executives and employees on the front-lines. As the number of managers increases, the overall managerial span—the number of subordinates reporting to each manager—shrinks. This structural ‘bloat’ causes companies to become unwieldy and slow to react to changing market conditions—the opposite of what they need in today’s fast-changing environment.
An analytics-powered spans and layers assessment peeks under the hood of organizations to understand where there are too many reporting layers, and where there are opportunities to optimize the types of work leaders manage, who they manage, and how teams are composed. For example, a spans and layers assessment can identify opportunities to organize sales and marketing teams as ‘flatter’ self-organized product pods that are motivated by a common objective (e.g., launch a new product). The self-organized pods enhance agility by reducing organizational hierarchy and management approval layers to allow teams to bring products to market faster. In turn, these pods are part of a larger ecosystem of ‘neighborhoods’ and ‘towns’—larger groupings of pods that work together to deliver a product or service to customers.
Taking an analytics-based approach is a vast improvement over traditional assessments that often rely on spans and layers “benchmarks”. These benchmarks are often misused when taken at face value without consideration of factors that might influence managerial spans. Factors such as geographic dispersion, automation, work activities, type of work—for example, high-value strategic and analytic work typically requires narrower spans—and more. This is why a spans and layers assessment pairs best with insights from an organizational activity analysis to truly understand what type of work is happening, who is performing the work, and the nature of the automation potential.