The past and future of global organizations – Mc Kinsey

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Here some statements from thoughtful leaders at a well-run company, speaks to the difficulty of the global corporation’s perennial challenge: how to capture scale across borders while differentiating products and services to suit the needs of local customers—all without letting complexity get in the way of speed and agility:

“We typically lose out when a market commoditizes and we no longer differentiate, further aggravated by us being too slow or expensive.”

“The matrix is too slow—we are in a very turbulent market with great potential, and we have far too many low-cost competitors. We need very short communication lines, quick decisions, alertness—we’ve got to be able to adapt fast.”

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We’re starting to see glimmers of global organizational redesign reflecting these new realities. One international engineering company, for example, has restructured to put its commercial-project process (including decisions about whether to bid on a contract and then the preparation of the offer) at the heart of the organizational structure. This model enables more effective team-based problem solving that transcends organizational silos and geographic boundaries, in part through the use of collaborative technologies.

It’s still too early to paint a definitive picture of what the global organization of the future will look like as efforts like these become more commonplace. What we’re confident about is that “process-centric” thinking will be a more prominent feature of organization design than it has been in the past, even if the peculiarities of culture suggest that each process-based structure is likely to be a custom fit.

Leaders should bear in mind these principles as they pursue their own solutions:

-Tomorrow’s answer will be different from today’s. As markets, competitors, and strategies evolve, so will the structural, people, and process elements of a coherent design system.
The specification of globally consistent roles and processes should be kept to a minimum. The most effective companies allow business units to tailor their organizations to local conditions so as to better achieve their wider commercial goals.

-Technology has made location less important than it used to be—but it still matters. While videoconferencing and social media keep far-flung executives connected, co-location brings additional benefits. Companies should always seek ways to bring people physically together.

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