The Democratic Organization Fewer Layers and More Ambassadors

On the Eve of 2000, the structure of most industries looks very different than it did fifteen years ago.

Science Technology and Economic Policy Board

With the growing demand for new ideas, an organization needs the ideas of employees everywhere in the organization, not only in the R&D department. The increased importance of communication for the transfer of knowledge made it essential for organizations to implement an IT infrastructure that provides means and channels of communication if the motivation is there. To compete effectively, most organizations implemented an infrastructure to facilitate the collection and processing of knowledge and ideas for their incorporation in new forms.

Idea banks, intranets, networking, and brainstorming sessions became part of the modus operandi of businesses in most industries today. It is the infrastructure brought about by the knowledge economy. Those organizations that did not have such an infrastructure were pushed to change. Xerox, for example, after discovering how its technical reps solved more problems by merely sharing their stories with each other in the coffee room, provided them with radiophones to share their ideas about the problems while in the field.

But IT is only one part of the transformation that the knowledge organization needs to go through. IT can, in the right culture, facilitate knowledge transfer between various departments (i.e., sideways). However, more structural reform is necessary if knowledge is to be shared upward and downward as well. As a result, organizations found the need to delayer to reduce the number of layers that information, knowledge, and decisions have to traverse.

Dow Chemical delayered 9 layers and reduced its layers to 5 from 14, and thus created a more flattened structure. A flattened structure is more effective for the transfer and sharing of knowledge across geographical, departmental, and hierarchal boundaries. ABB, for example, has only four layers.

A very interesting structure is one that Harley Davidson Inc. adopted to reinvent itself. Harley Davidson changed its pyramid hierarchical structure to three circles called "the Create Demand Circle, the Produce Products Circle, and the Support Circle." The three circles overlap and intersect, representing the integration among the marketing, sales, manufacturing and engineering, and administrative and support functions at the various intersections. In addition, there is a fourth circle where the three circles intersect that consists of seven executives the CEO and managers elected by their peers from the three circles.

Organizations started to flatten their structures, promote boundaryless flow, and provide the tools to enable real-time communication. However, any structure, no matter how flexible, will become rigid with time. A flexible structure alone is not enough. The continuous movement of personnel and the formation and dissolution of communities of practice are necessary to keep the structure alive and act against stagnation. In addition, knowledge sharing should be tied to employees' jobs or practice to prevent employees from perceiving knowledge sharing as a senseless social activity or, worse, a waste of time.

Savvy organizations have addressed the problem of stagnating structures by developing communities of practice (CoPs) and communities of interest (Cols). CoPs are groups of people coming together to share and learn from one another in a specified area of practice (or interest for Cols) tied to a strategic objective. CoP membership spans vertical, horizontal, and geographic boundaries and sometimes includes external parties (from outside the organization). CoPs range from being formal to informal, temporary to permanent but, most importantly, fuel the organic evolution of groups regardless of the fixed structure, and irrespective of how flexible it is.

The second problem precluding knowledge sharing stems from the social and human nature of knowledge sharing and transfer. Employees need an environment of trust in order to feel comfortable in sharing their knowledge, and they need to see its value in getting the job done. Raising awareness about the value of IC for organizational success, and changing the organizational culture to make it acceptable to socialize, are only one part of the solution.

This is why many organizations included knowledge sharing in job descriptions and tied it to their compensation and reward systems. More importantly, some organizations created new positions at middle and frontline management levels to raise employee awareness and implement programs that enable effective management of intellectual capital. As a result, many organizations incorporated in their job designs intellectual capital "ambassadors" (Skandia), knowledge managers and engineers (the Navy), and intellectual asset managers (Dow).

These ambassadors may be organized in teams like Dow's Intellectual Asset Management Teams, in a separate business unit like DuPont's Intellectual Asset Management Business, an independent company like BellSouth Intellectual Property Management Co., or as individuals like Skandia's Navigator Ambassadors. Some organizations, like the U.S. Navy, went as far as developing new career paths for knowledge management.

Regardless of the way they are organized, these ambassadors are entrusted with facilitating knowledge transfer in the whole organization and finding ways to develop and leverage the organization's IC. Or, as DuPont puts it in the mission statement of its intellectual asset management business, "to get paid for what we know as well as what we make." They are ambassadors because they work beyond business and departmental boundaries and focus on the good of the whole enterprise, advocating ICM at all levels.

The intellectual capital concept has changed not only the way organizations are evolving internally and in relation to their employees but also in the way organizations grow and compete. Increasingly in the knowledge economy, IC-enabled dynamics shape business growth strategies.