Our group’s sample consisted of FlexCell Group (a virtual manufacturing network), ABB (a diversified, multinational conglomerate), Oticon (a manufacturer of hearing aid devices), and Chiat/Day (an advertising agency). This paper will explore the areas of commmonality between each company and discuss some of the issues pertaining to the emerging forms of corporate organization embodied in each of our examples. In each case, we noted that these were traditionally hierarchical firms offering traditional services and products that were initiating organizational changes as a result of forces in the competitive marketplace which required each firm to become more focused on the needs of their customers. Taking this as a starting point, we noted the following generalizations from our examples.

Changes in the Organization

As noted above, these companies were making changes in their organizational structures. Each at one point was a traditional “hierarchical” organization that was moving to a structure of smaller units within the company that were given increased decision-making power in order to be more responsive to their customers. These units were generally comprised of cross-functional teams, aiming to either offer more services (FlexCell’s bundling), better time to market (Oticon), or to get closer to their customers (Chiat/Day). In every case, the smaller units demanded that individual members better utilize their skills and knowledge, and that they become more customer focused.

Business Processes

Within the context of these smaller organizational units, the way business was being conducted changed dramatically from each company’s historical model. As noted above, these were generally cross-functional teams that had the effect of bringing different elements of the value chain together, thereby reducing the distance between each end of the value chain and enhancing communication and coordination.

Interestingly, we observed that information technology (IT) was used to support this transformed structure, but never did IT initiate the change. In the case of FlexCell, a virtual manufacturing network was created with almost no investment in IT; the investment was in the people and training them to think in new ways about their businesses.

Leadership

The changes outlined in the previous two sections were the result of strong and competent leadership from the CEOs of the companies. In each case, the CEOs were visionaries who were able to implement these changes with very positive results. Furthermore, we observed that the nature of leadership by the CEO changed as a result of a more distributed organization with smaller units. CEOs became less decision-makers and more commuicators whose primary job were to transfer knowledge among the different groups and work to unify the interests of the disparate groups within the new organization. We concluded that these changes can only occur under a strong leader, who a) uses this strength to force the change and make the new organization operate effectively, and b) communicates the vision effectively to ensure employee buy-in.

The net effect of these three areas of change is that each company increased their value proposition to their customers. This was manifested differently for each company through the following mechanisms: offering more services (FlexCell), decreasing time to market (Oticon), getting closer to the customer (Chiat/Day), and offering a locally-adapted product (ABB).

Pending Issues

Each of our examples also brought to light several operational issues that these new organizations must address, namely resource allocation/coordination of activities, unifying interests of distributed, independent groups, and transferring knowledge among the smaller units. We concluded that once businesses organize in these new ways, they can use IT to more effectively address these issues.