From product-centric to channel-centric, and now with the rise of consumer sovereignty, the organizational structures, functions, and positioning of enterprises are bound to undergo significant changes.
I. Drawbacks of Traditional Organizational Structures
In the early days of reform and opening up, due to the mismatch between production capacity and demand, China's consumer goods market was in a state of supply shortage for a long time. Consumer behavior was simple, products were similar, and a relatively stable retail environment and centralized channel environment formed accordingly.
In such a stable market environment, enterprises focused all their efforts on efficient production and refined operations, which to some extent promoted the popularity of Taylor's scientific management philosophy. This philosophy emphasized specialized division of labor among organizational members, standardized actions, and mandatory execution.
Each person only needed to understand the specific work of their own position, not why it was done. Managers were responsible for optimizing systems, setting standards, breaking down processes, and assigning tasks, similar to a deep well structure. The purpose of designing this structure was clear: to pursue maximum efficiency under deterministic demand.
However, with the surplus of upstream productivity and the explosion of personalized consumer demand, the drawbacks of this management philosophy and organizational structure have further erupted:
Poor team mobility and flexibility, often slow to respond to the market. There are clear hierarchies between organizations, poor collaboration, serious departmental barriers, and difficulty in product iteration and service iteration;
Poor innovation capability, severely limiting individual creativity. Everyone only needs to be a screw, complete their KPI, and has no motivation to fully unleash their creativity and energy;
At the internal management level, such organizations often adopt a one-size-fits-all approach, easily forming a leadership one-man show and breeding corruption.
II. Changes in the Market Environment Force Organizational Reform
In the new era, with the improvement of consumption levels and the fragmentation of information brought by mobile internet, consumer demand has become increasingly diverse and fragmented, and scenarios have become more complex, evolving from complex to intricate.
A complex machine, although composed of multiple parts, connects each part in a relatively simple way, and its movement is controllable, repeatable, and predictable. But intricate things, like weather, are uncontrollable, unrepeatable, and unpredictable, just like a butterfly flapping its wings in the Pacific off southern Chile causing a hurricane thousands of kilometers away in Japan.
This complexity is unpredictable and uncontrollable, and the entire environment is full of great uncertainty, far exceeding the capability boundaries of most enterprises' existing organizational systems.
We summarize this as the VUCA era: Volatility, Uncertainty, Complexity, and Ambiguity.
For the entire retail industry, it has shifted from the past single geographical location competition to an all-around three-dimensional war online and offline. A three-dimensional war involving air, sea, and land requires both an air force, which is high above, dropping point targets, using data for precision marketing, and ground and naval forces, which cover lines and surfaces to achieve coordinated strikes. At this time, the cooperation within the enterprise is particularly important.
III. How Can Enterprises Survive in a Complex Environment?
In the future, to meet consumer needs, enterprises must simultaneously possess multiple retail models such as online and offline. At this time, the requirement for the organization can no longer be centered on maximizing efficiency, but must maintain rapid and flexible adaptability, with obtaining survival advantages as the first goal. This requires the enterprise team and organizational structure to continuously reconstruct and iterate, maximizing the subjective initiative of every member.
What kind of team can adapt to this era of uncertainty? Let's first look at a historical case:
Let's start with the famous Battle of Trafalgar in European history, which was the greatest victory in British naval history.
The battle was between the British Royal Navy and the combined French-Spanish fleet. In traditional naval warfare, the two fleets faced each other in a line, forming two parallel lines, and then fired at each other under the command of the commander-in-chief. In this battle, the British commander Nelson used a clever tactic: he ordered his fleet to split into two columns and charge at the enemy fleet from a perpendicular direction, splitting the enemy's line formation into three sections, and then the two fleets engaged in close combat in a melee.
The British ultimately won a great victory, capturing the enemy commander and 19 ships without losing a single ship of their own. This battle left the French-Spanish combined fleet in a slump, and Britain firmly secured its maritime supremacy.
What we want to explore here is: what was the key to the British victory in this battle? Some say it was because of Commander Nelson's genius battle plan, which caught the enemy off guard, but that is only the surface reason. Nelson's clever tactic created chaos, but how did he ensure that the British would win from the chaos?
In fact, this was a competition between two combat modes. The French-Spanish combined fleet used the traditional combat mode: the captains did not know the overall strategy of the commander, and strictly obeyed every command; Nelson, on the other hand, clearly told the captains the overall battle plan and emphasized that once the melee began, the captains must make autonomous decisions and adapt to the situation, no longer relying on signal flags. In other words, Nelson first created chaos, and then dealt with the chaos by empowering the captains. That was the key to victory.
From this, we can see that empowerment is to better respond to uncertainty in the environment. Conversely, if the environment is basically stable and uncertainty is small, then there is no need for empowerment, and a top-down command and control system is the most efficient, such as the scientific management theory that dominated the 20th century industry.
But empowerment is not about being a hands-off boss, which would lead the enterprise into a state of fragmentation and disunity. The purpose of empowerment is to fully leverage each person's subjective initiative while also coordinating as a whole.
For modern enterprises, to achieve this, they need to abandon the hierarchical, vertically divided tree-like organizational structure left over from the scientific management era and create a new network-like organizational structure. Turn every small team into a decentralized network, and at the same time connect these small networks into a larger network.
If the traditional organization is a tightly meshed machine, then the network organizational structure is a self-evolving ecosystem that combines efficiency, flexibility, and resilience. It can quickly respond to changing situations, self-repair when damaged, and any single point of attack will not pose a fatal threat to the entire network.
At present, many enterprises have already operated this management philosophy and model through different theoretical systems such as network organization, boundaryless organization, inverted triangle, and amoeba organization. Han Du Yi She, Alibaba, Huawei, etc. are all talking about platform empowerment of small teams. Through empowerment, each small team can be as strong as special forces, with clear division of labor and high efficiency.
To build such a management system, traditional enterprises must have the following characteristics:
Clear mission, high authorization, small and lean teams, and the core is to achieve business and organizational closure;
Special forces personnel possess all different key capabilities, including attack, explosion, communication, defense, etc. For the enterprise, this requires that everyone can specialize in their field, but also be able to help and collaborate in business;
High tacit understanding among members;
Strong backend support behind them.
At the same time, behind such small teams, the traditional vertical tree-like structure is still used. This structure is like parallel deep wells, each department has its own "special forces," but such organizations either operate independently without interaction, or compete and guard against each other, or even compete with each other. The author once saw an international brand in China, because of its parallel organizational structure, when a new B2B business emerged, multiple internal departments signed contracts with different departments of a B2B platform simultaneously. This is a very typical example of resource waste caused by departmental barriers.
At this time, organizers must use certain means to increase information sharing, so that every member can obtain overall information about the organization, enhance horizontal interaction between various departments and teams, and thus maximize internal efficiency.
Research has shown that the collective intelligence of a group largely depends on the strength of connections between members.
Teams with higher levels of internal and external interaction can generate more creativity. This is like in a ball game, you must ensure that every player on the team clearly understands the overall situation of the field. If each player only sees the grass under their feet, it is impossible for the team to win.
Behind an empowering organization is a platform that can highly empower. If our team is like special forces, then the backend support must also have platform capabilities. Platform capabilities can be compared to an aircraft carrier. The platform can be divided into three layers:
First layer, business support: This can be understood as the ground crew on the carrier deck, who directly serve the takeoff, landing, maintenance, and communication of aircraft. In an enterprise, this is the department that directly supports business teams, such as supply chain, customer service, logistics, and marketing, supporting all business teams.
Second layer, decision support: This can be understood as the intelligence department on the carrier, which collects, analyzes, and organizes intelligence through satellites and radar, and provides effective intelligence collection and analysis capabilities for the battle through data mining. This department is currently rare in traditional enterprises. You can understand it as CDF. This department is responsible for the collection and classification of massive data, research and proposal of new algorithms, and also needs to structure consumer behavior data to achieve consumer insights through data.
In essence, future business is algorithm and data-driven. We must learn to use data inference to help operators analyze the business logic behind data, and use data thinking to assist business decisions.
Third layer, functional support: This can be understood as the driving of the carrier and ground firepower. In an enterprise, this corresponds to production, HR, finance, and other departments.
The role of the platform is to help business teams win battles. Ning Xiangdong once said: If past managers must have financial awareness, then future managers must also understand information technology and data processing.
How to achieve a seamless online and offline user experience through effective middle and back office support requires enterprises to have, on the one hand, very comprehensive operators, and on the other hand, to re-engineer the organization. Only in this way can enterprises maintain sensitivity and respond promptly to the ever-changing brands and products, so as not to be forgotten and abandoned by the market and consumers.
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