STRATEGY
Building a simple and flexible organisation If there’s one trend whose importance is accelerating across all sectors, it’s this: simplicity. Simplicity is more important than we used to think. Most of us are working remotely these days. What the pandemic did was reward companies that could minimise their high-cost coordination. Many companies, like Spotify, VMware, and Fujitsu, have made their workplace policies ‘remote first’ for the post-pandemic time. Salesforce has announced that it’ll give employees the option of coming into the office only a few days a week. Meanwhile, French luxury goods giant, LVMH, is telling people to report to their offices at least a couple of days a week starting in March. JPMorgan Chase is doing the same. It’s also worth noting that Apple CEO, Tim Cook, said that the company would not ‘return to the way we were,’ adding that, ‘there are some things that actually work really well virtually’. Bear in mind, though, that Apple is running some 500 retail stores worldwide and is manufacturing gadgets. It’s as traditional as an operation can get. This reveals that some companies are more capable of leveraging productivity when employees are working remotely than others. Apple and Spotify seem to like it. But LVMH and JPMorgan Chase can’t do so. Companies that can’t master remote work quickly are mostly hindered by the complexity of their operations. Complexity has nothing to do with the size and scope of a company – Apple and Google are enormous in size, but elegantly simple in their setups. Here’s the thing: all companies that have achieved simplicity have, in fact, gone through near-death experiences in the past. They were all hobbled by complexity at some stage. But they restructured to pay down their complexity debts. Google, Facebook, LinkedIn, Netflix, eBay, Twitter, and Etsy have all rebuilt from the ground up. Communications between different teams were standardised and automated. The common approach among these companies is to turn their entire IT infrastructure into tens of thousands of microservices. These microservices can then exist as independent, decentralised modules that have standard interfaces with other modules. But this is not only for IT. Haier Group – one of the world’s biggest home appliance manufacturers – is one example of a traditional company that has taken this approach. For years, the China-based Haier has organised itself as a swarm of self-managing business units. Haier has some 4,000 microenterprises (MEs). Each comprises just 10 to 15 employees. Instead of being centrally orchestrated, these MEs transact with one another independently. They are given full autonomy to deliver the final product to consumers. Certain MEs manufacture specific component parts; others provide services like HR or product design. Coordination is managed through internal platforms, making the idea comparable to an app store. Obviously, Haier didn’t benchmark other manufacturers. Instead, it sees itself as Amazon and Google do and applies the same principle of simplicity. Reinforcing Business Schools’ core mission The biggest danger of a crisis is distraction. Clarity matters. The pandemic represents as much of an opportunity as a challenge for Business Schools to reinforce our core mission – helping managers to filter out the noise. We help them lay bare what impacts organisations so that they can take actions anchored in reality and conviction.
HOWARD YU is the LEGO® Professor of Management and Innovation at IMD Business School, as well as the Director of its Advanced Management Programme (AMP). He delivers customised training programmes at IMD for major global companies in Asia and Europe, including Tencent, Nitto, Temasek, Bosch, and Novartis. He is also the author of LEAP: How to Thrive in a World Where Everything Can Be Copied. Yu holds a PhD in management from Harvard Business School. Prior to his doctorate, he worked in the Hong Kong banking industry.
JIALU SHAN is a Research Fellow at the Center for Future Readiness, IMD Business School. Before joining IMD, she worked as a lecturer at the International Hotel School of César Ritz Colleges in Brig, Switzerland. Shan holds a PhD in economics (management) from the Faculty of Business
and Economics at the University of Lausanne (HEC Lausanne).
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AMBITION | Be in Brilliant Company
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