boundaryless organization

BOUNDARYLESS ORGANIZATION

A boundary less organization is a contemporary approach in organizational design. It is a organization that is not defined by or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure.

A boundary less organization seeks to remove vertical, horizontal, and external barriers.so that employees, managers, customers, and suppliers can work together, share ideas,and identify the best ideas for the organization.

E.g. Wal-Mart has approached P & G regarding warehousing & distribution, where as P&G gained access to Wal-Mart’s daily sales information

BOUNDARYLESS ORGANIZATIONThere are four types of boundaries that organizations may possess viz. Vertical : Boundary between layers of an

organization. Horizontal : Boundary between

functional units of an organization.

External: Between an organization & environment outside i.e. customers, suppliers,government agencies etc.

Geographic: among different units of an organization located in different countries.

TYPES OF BOUNDARYLESS ORGANIZATIONS

NETWORK ORGANIZATIONS.

VIRTUAL ORGANIZATIONS.

MODULAR ORGANIZATIONS.

NETWORK ORGANIZATIONS In a network organization, various

functions are coordinated as much by market mechanisms as by managers and formal lines of authority.

Emphasis is placed on who can do what most effectively and economically rather than on fixed ties dictated by an organizational chart.

All of the assets necessary to produce a finished product or service are present in the network as a whole, not held in-house by one firm.

VIRTUAL ORGANIZATIONS The most interesting networks are

dynamic or virtual organizations. In a virtual organization an alliance of

independent companies share skills, costs, and access to one another’s markets.

It consists of a network of continually evolving independent companies.

Each partner in a virtual organization contributes only in its area of core competencies.

The key advantage of network and virtual organizations is their flexibility and adaptability.

MODULAR ORGANIZATIONS A modular organization is an

organization that performs a few core functions and outsources noncore activities to specialists and suppliers.

Services that are often outsourced include the manufacture of parts, trucking, catering, data processing, and accounting.

Thus, modular organizations are like hubs that are surrounded by networks of suppliers that can be added or removed as needed

By outsourcing noncore activities, modular organizations are able to keep unit costs low and develop new products more rapidly.

The job description should be worker related and not work related, the employees should be flexible, adaptable, open minded, motivate others, etc.

SALIENT FEATURES Empowered teams Innovation Collaboration/integration Customer relation Foreign market Manage expensive technology Flat structures Cross functional team Participative decisions Trust and interdependency Mutual accountability 360-degree appraisals

DISADVANTAGES People issues: Since it is Cross hierarchical teams

which include top executives, model managers, supervisors and operative employees who 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.

Many times this creates ego hassles amongst the employees which lead to problems.

Resistance: Functional departments create

horizontal boundaries. And these boundaries stifle interaction

between functions, product lines, and units.

So there are chances that while working in this type of organization people resist to this change.

Cost: It relies heavily on information

technology which involves cost; so many small organizations find it very difficult to implement this type of organization.

Co-ordinate and control: Organization seeks to eliminate the chain

of command, have limitless spans of control, and replace departments with teams.

This creates a problem of co-ordination and control among the employees.

Team-based structures and boundary less organizations have minimal formalization and centralization.

This could also create some coordination and control problems for managers.

EXAMPLES- GENERAL ELECTRIC The concept of Boundryless

organizations began at G.E. Jack Welch ,former CEO ,coined the

term. Jack joined GE in 1960. Despite the fast and exciting work

environment, there was too much of bureaucracy .

He almost quit the organisation due to this reason.

In 1980,he became the 8th CEO of GE .

He believed that rigid organizations were poorly structured to compete in the fast-moving, competitive environment .

Hence ,in 1990 he introduced WORK-OUT,GE’s boundary breaking program.

In 1992, he described boundarylessness this way:“GE's diversity creates a huge laboratory of innovation and ideas that reside in each of the businesses, and mining them is both our challenge and an awesome opportunity. Boundaryless behavior is what integrates us and turns this opportunity into reality, creating the real value of a multi-business company -- the big competitive advantage we call Integrated Diversity”

BUILD A MARKET LEADING COMPANY Jack believed that too many business

would hamper productivity. Focused on business that are No 1 in

market. He believed that G.E would prosper if it

acquires and divest companies and remains focused.

“ Currently,GE is the 3rd largest in the world as per Forbes Global 2000”.

SHARING IDEAS ACROSS BUSINESS:

G.E.’s core competency was sharing ideas across businesses .

Revamped as a laboratory that shared ideas, financial resources and managers.

Converted GE into an open learning organization.

“An idea can be from any source. So, we will search the globe for ideas. We will share what we know from others to get what they know. ”

GET RID OF THE BUREAUCRACY:

It was necessary to make the company more competitive.

Bureaucracy led to chocking initiative and enthusiasm.

Led to lot of downsizing which was met with criticism.

He removed those layers of management that he believed, were clogging GE

Thus, he removed the entire 2nd and 3rd levels of management.

EMPLOYEE EMPOWERMENT He gave employees right and responsibility to

come up with their own idea for solving problems. Everyone has a say in the way the organization

was managed. He decided that the best way to give a sense of

stability was to let them take part in company decision making to make employees more productive

By getting more involvement on the side of the employees, Jack argued that they would be helping to strengthen G.E and healthy growing businesses were the best guarantee for job security.

VIRTUAL ENVIRONMENT Boundary less organizations

communicate mainly through email, phone and other virtual methods rather than more traditional face-to-face communication.

This freedom of telecommunication with international employees removes geographical barriers and enhances productivity.

TO CONCLUDE..“Jack Welch made General Electric leaner,

tougher, more competitive with fewer people, fewer business units and fewer management. He lead a series of revolutions at General Electric, seeking to recast a highly bureaucratic, labor- intensive corporate giant into a highly productive machine that would function with the speed and simplicity of a small entrepreneur company.

Jack Welch, America’s most successful C.E.O, had transform General Electric from a 25$billion company into a 90$ billion corporate giant.”

-HARWARD BUSINESS REVIEW

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