Thought Leader: Rethinking your organisation's purpose, form and function

It's time to select the appropriate model to future-proof your organisation, writes Jonathan Trevor, associate professor of management practice at Saïd Business School, University of Oxford.

It’s tempting to think of the global COVID-19 pandemic as having posed an unprecedented challenge to the form and function of enterprises – which required an equally unprecedented solution. 

However, while it is true that business leaders, across sectors, had to make a number of critical choices around form and function, many of these were already high on the agenda. The pandemic simply served to accelerate an existing need for change. 

What's your purpose? 

To thrive today, the first step is to identify your enterprise’s purpose – its raison d’être as a business. This is not ‘making a profit’. Profit is a measure of commercial enterprises performing their purpose well. Consider what you do as an enterprise (and what you are asking your people to do) and why anyone should care.

Purpose is an enterprise’s enduring north star, and it is essential to communicate its value and hold fast to it in good times and bad. Consider further how aligned your people are to your enterprise purpose in terms of their effort, loyalty and behaviour. What can you do to strengthen their alignment, especially in this time of remote working? 

How can you fulfil your purpose?

Next, ask yourself how the enterprise should go about fulfilling its purpose. This takes the form of the enterprise’s business strategy. Business strategy is dynamic – it should change in line with the evolving operating environment. 

Which of your offerings best meet customer demand, or even create it, while remaining aligned to your enterprise’s purpose? In which markets? How can you differentiate your business from your competitors to ensure you establish and maintain a market advantage? The answers to these questions form your enterprise’s strategic priorities and what you are asking your people to win at. Clarity is paramount. 

Organising your business effectively

The third element is to decide on the ideal form of your enterprise – how to organise it. Unhelpfully, academics provide leaders with a binary choice: the well-established hierarchy or the newer and exciting-sounding network. 

Hierarchies and networks are polar opposites and good at different things, by design: where the hierarchy is formal, the network is informal; where the hierarchy is vertically aligned and seniority-based, the network is horizontally aligned and flat; where the hierarchy is impersonal (in terms of the treatment of staff and customers), the network is highly personal; where the hierarchy relies upon rules, the network relies upon values to align staff behind its purpose, and where the hierarchy centralises authority at the top, the network disperses it evenly. 

The hierarchy provides us with a robust means of establishing control, and all things being equal, enables predictable implementation of rationally determined plans. The network enables us to tap into the wisdom and creativity of the crowd and provides the flexibility to adapt to changing circumstances. The network is de rigueur for sure, but the hierarchy has been experiencing a second lease of life during lockdown, as business leaders batten down the hatches. 

How you organise your enterprise to enable it to deliver its business strategy defines what you will need from your people. The focus should be on attracting, retaining and developing only those talented individuals who best fit the distinctive people requirements of your organisation. 

Bespoke ‘architecture’ 

In truth, both hierarchies and networks will always be required. The challenge for leaders is to segment their enterprises into their various parts and choose the appropriate organisational model (and the thousands of possible iterations of either the hierarchy or the network) that fits best. 

Nuance, and not one-size-fits-all, is the order of the day for enterprise architecture.