The Boundary less Organization

General Electric’s former chairman coined the term boundary less organization to describe his idea of what he wanted GE to become. He wanted to turn his company into a family grocery store . That is, in spite of its monstrous size (2004 revenues were in excess of $15 billion) he wanted to eliminate vertical and horizontal boundaries within GE and break down eternal barriers between the company and its customers and suppliers. The boundary less organization seeks to eliminate the chain of command have limitless spans of control and replace departments with empowered teams. And because it relies so heavily on information technology some have turned to calling this structure the T-form (or technology based) organization. Although GE has not yet achieved this boundary less state and probably never will it has significant progress towards that end. So have other companies such as Hewlett-Packard, AT&T Motorola and Oticon A/S. Let us take a look at what a boundary less organization would look like and what some firms are doing to try to make it a reality.

By removing vertical boundaries management flattens the hierarchy. Status and rank are minimized. Cross hierarchical teams which include top executives, model managers, supervisors and operative employees participate in decision making practices and the use of 360 degree performance appraisals in which peers and others above and below the employee evaluate performance are examples of what GE is dong to break down vertical boundaries. At Oticon A/S, a $ 160 million a year Danish hearing aid manufacturers all traces of hierarchy have disappeared. Everyone works at uniform mobile workstations.

Functional departments create horizontal boundaries. And these boundaries stifle interaction between functions, product lines, and units. The way to reduce these barriers is to replace functional departments with cross functional teams to organize activities around processes. For instance, Xerox now develops new products through multidisciplinary teams that work in a single process instead of around narrow functional tasks. Similarly some, AT&T units are now doing annual budgets based not on functions or departmental but no processes such as the maintenance of a worldwide telecommunications net work. Another way management can cut through horizontal barriers is to use lateral transfers, rating people into and out of different functional areas. This approach turns socialists into generalists.

When fully operational the boundaries organizations also break down barriers to external constituencies (suppliers, customers, regulators, and so on) and barriers created by geography. Globalization strategic alliances customer organization links, and telecommunicating are all examples of practices that reduce external boundaries. Coca-Cola for instance sees itself as a global corporation, not as a U.S or Atlanta company. Firms such as NEC Corp, Boeing and Apple Computer each have strategic alliances or joint partnership with dozens of companies. These alliances blur the distinction between one organization and another as employees work on joint projects. And some companies are allowing customers to perform functions that previously were done by management. For instance, some AT&T units are receiving bonuses based on customer evaluations of the teams that serve them. Finally, we suggest that telecommunicating is blurring organizational boundaries. The security analysts with Merrill Lynch who does his job from his ranch in Montana or the software designer who works for a San Francisco company but does her job in Boulder Colorado, were just two examples of the millions of workers who are now doing their jobs outside the physical boundaries of their employers’ premises.

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