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The vertical/functional hierarchy has been the mainstay of business since the industrial revolution. But it has its problems. In fact, the vertical design all but guarantees fragmented tasks, overspecialization, fiefdoms, turf wars, the urge to control from the top—all the negatives that foster organizational paralysis. In The Horizontal Organization, Frank Ostroff provides executives with the first truly viable alternative to the age-old vertical alignment. Indeed, he offers nothing less than the first full view of what the organization of the future looks like and how it works. The concept of horizontal organization has been hailed in Fortune as "a model corporation for the next fifty years" and in a Business Week cover story as "the real thing." But until now, management books have offered only piecemeal accounts of what the organization of the future might look like. Ostroff, a key developer of the concept of the horizontal organization, offers the first workable road map. He describes what the horizontal organization is, what it looks like, why it is important, how it helps improve performance, where it is appropriate, and how to develop it. The book contains real case examples that show how major international corporations (and one federal agency) have used Ostroff's concepts to meet their competitive goals. For instance, we see how Ford Motor Company's Customer Service Division turned to the horizontal organization to meet a highly ambitious goal—to get the customer's car fixed right, on time, the first time, at a competitive price, in convenient locations. We see how a horizontal design radically improved the performance of OSHA (the federal agency that oversees occupational safety), transforming it from a bureaucratic enforcer of regulations to a proactive problem-solver in a concerted effort to improve working conditions and save lives. And we see how Xerox combined both vertical and horizontal designs successfully, a cas
|Pt. I||What the Horizontal Organization is|
|1||Who Needs the Horizontal Organization?||3|
|2||Each Horizontal Organization is Unique||25|
|3||Horizontal is not the Same as Flat||58|
|4||The Horizontal Organization Empowers People||73|
|Pt. II||How the Horizontal Organization Works|
|5||Organizing Around a Core Process||89|
|6||Organizing a Horizontal Operating Unit||102|
|7||Organizing a Division Around a Sales and Service Delivery Process||115|
|8||Organizing an Entire Company Horizontally||130|
|Pt. III||How to Build a Horizontal Organization|
|9||Three Phases to Master||151|
|10||Phase One - Set Direction||167|
|11||Phase Two - Formulate Design||185|
|12||Phase Three - Institutionalize the Approach||205|
|Epilogue: The Road Ahead||229|
The idea of the horizontal organization starts with a question: what will the organization of the future actually look like? Many of the characteristics have been generally agreed upon: customer-focused, team empowered, with redesigned processes, and with information technology enabling performance.
But the lack of a viable alternative to the dominant vertical hierarchy has stymied attempts to align and integrate these characteristics to help companies become faster, more productive, more customer-focused and to deliver integrated solutions. Until recently, business leaders have only been able to describe what the organization of the future will look like using metaphors such as "orchestra," "clusters," or "shamrock." However, these metaphors fall short of answering basic organizational design questions: Which employees will go where? Who will they report to? How will jobs change?
Until now, that is.
Designed around core processes
The horizontal organization--the focus of this book--presents an "actionable" organizational design that describes tomorrow's business platform. Inherent in this discussion are ways your organization can create significant competitive advantage, can deliver superior customer value and how any business can embed these capabilities into its organization design..
Most organizations do their work via cross-functional core processes-from product planning through product development, from order generation to fulfillment and customer relationship management--these processes contain the work, activities, decisions, and information flows through which value is built and delivered to customers. Yet most organizations are structurally organized around functional units departments - engineering,human resources, marketing, R&D. An essential design principle of horizontal organizations is to formally structure roles, resources and day-to-day operations around these core processes rather than functional operations. A horizontal organization requires more than just identifying, reengineering, or manage processes; it requires designing and developing formal departments--called "core process groups"--centered on these processes.
An integrated approach
It has also been recognized for years that superior organization performance requires much more than structural alignment. Other organizational elements-human capital, IT, metrics and incentives, and culture, all come into play. In fact, if the horizontal organization is to be successfulwe believe it is necessary to align 11 other design principles in addition to structure. And the alignment of all its design principles to deliver superior customer value is what makes the horizontal organization uniquely capable of executing strategy and creating significant competitive advantage. Performance enablers such as cross-functionalityl structures, empowered teams, and reengineered processes are all integral to the horizontal organization, and each contributes to improve performance and make the organization a better place to work.
Leading companies are beginning to adopt horizontal approaches, and a number of the best examples are featured in this book. The organization charts at these companies look strikingly different than those of the vertical hierarchies that have dominated the past. Using these examples as case studies, we can describe how tomorrow's competitive organization will actually look, feel and be able to deliver competitive advantage.
The Best of Both Worlds
Is the horizontal organization a universal panacea? Not at all. In most cases, it will take a combination of approaches to fully deliver a company's business design. But up until now, the dominance of the vertical hierarchy has produced a "one-size-fits-all" approach to organization design. By providing a practical alternative to the vertical hierarchy, the horizontal organization makes an important contribution to increasing the range, power and customization of solutions that is possible for these performance challenges. Most organizations in the future will likely be hybrids tailored to specific performance challenges.
One of the goals of this book is to help readers understand the horizontal approach, so that they can choose the best of both horizontal and vertical to address specific performance challenges. I believe you find the book useful as you think about how your organization can position itself to deliver improved customer value, now and in the future.