Manuel and Daniel will celebrate episode 20 of the #AskTheCEO talking about how you can create the environment for a modern company structure. Thinking about a business hierarchy is essential. But might we have to re-think if a modern company structure does support hierarchies as we know them for more than 100 years? Join the discussion and help the people in your organization to thrive.
Working on a modern company structure is very important to every organization and its success in the long term. If your current business hierarchy structure is not supporting your goals you should review and improve it urgently. Having a modern business structure is more a constant process rather than an on-off thing. As a manager or company owner, it is an ongoing challenge to adapt the company structures to the constantly changing circumstances and conditions.
💡 QUESTIONS AND VIEWS HIGHLIGHTED IN THIS EPISODE:
♨ EXCERPTS YOU MIGHT WANT TO JUMP IN
02:15 Are you still wasting time, energy, and resources "controlling things"?
05:10 Getting out of the hamster wheel
10:40 Transforming your command and control structures
18:39 Keep re-evaluating constantly
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[00:00:11.450] - Dani Guaper
Hello out there and welcome to our weekly #AskTheCEO Q & A session here at the Virtual Frontier. Today we actually have a little anniversary together with you. We celebrate episode 20 of the Ask the CEO series. Thank you for all all engagement and comments so far. Keep it coming. We'd love to hear from you. Today's topic of our Q and A session is "Five Steps to a modern Company structure". I can only imagine what it must have been like to start and run a business in the last century.
[00:00:39.290] - Dani Guaper
Many things were probably much simpler and much more constant. Controlling command and top down management still functioned here and there without major problems. Today, everything looks much more complex. As a manager or company owner, it is an ongoing challenge to adapt the company structures to the constantly changing circumstances and condition. Join the conversation today and find out how to work on a modern company structure that actually works for everyone in your organization. See you right away on the other side.
[00:01:29.170] - Dani Guaper
Yeah welcome Manuel Q and A Session. Our topic today is Five Steps to a modern company structure.
[00:01:37.270] - Dani Guaper
Why we're talking about that? There is still a vast majority of companies and organizations out there they are probably more structured, like hierarchy, typically hierarchy that we know in the top there is the top management that tells everyone how to think and when to do things and then lower floors are the people that actually are doing the work. But before we get into that, I'm wondering, and maybe we can elaborate on that. Why is it that so many organizations are still wasting so much time, energy and resources to control things which they're probably not really doing?
[00:02:24.350] - Dani Guaper
But why there's so much waste of energy and resources still there. This is also an economic factor, ? Yeah.
[00:02:34.850] - Manuel Pistner
I think the economic losses, they are huge because this hierarchical organizational structure slows things down a lot and cause a lot of inefficiency. But why they do this is, I think, because they are used to it. This is how we designed organizations since, I don't know, 100 years. But even when I started my business in 2006 and I looked around, this was the main structure. This is what all the books write, how you build an organization and how to build structures. And I think in the past that was valid when the growth factor of factories and other organizations was labor.
[00:03:14.870] - Manuel Pistner
Then you had people that are just doing the work and you have other people that think and they were separated. So those people that think and tell others what to do, they were on the higher level. But if you cut the head, the organization will die because other people, they have no command and don't know what they should do because they don't think they just do. But you can easily cut those people that do something and replace them with other people that do something. But if you replace or cut those that thing, the Nomad organization will stop working.
[00:03:44.510] - Manuel Pistner
And I think that was okay when you had, like, factories that depend on labor on the one side, but on the other side, when the environment was not so volatile and didn't change so fast and wasn't that complex and driven by technology. Nowadays, organizations rely on the ability to adopt to change in circumstances. They need flexibility. And yeah, that requires a different organizational structure. And now that is a big problem because no one knows how to exactly do that. Everyone is talking about agile, but very often agile ends in chaos because they just think everyone can do what they want, which is absolutely not the case.
[00:04:26.510] - Manuel Pistner
And then they see agile doesn't work. And then they are convinced in their belief set that the hierarchy needs to stay as it was because that worked in the past. And this experimental spirit. I think you find that in only very few organizations, but this is required to get to the new model and to become more flexible. So yeah, that's a cultural change. And that's always hard. Yeah.
[00:04:53.930] - Dani Guaper
And I'm going to ask you more about the change process later on. Probably first step is when you think about this is not the best structure for today, where everything is so voluntary and complex and things are moving so fast. How to get out of this hamster wheel that we know. So for so many decades and redefine it in the daily business.
[00:05:23.790] - Manuel Pistner
How to answer that for every business. I think that's impossible. I think you always need to look at the individual business, but what is for sure you cannot change the environment. You cannot change how things go. You can say I don't like that everything is digital. Still, it is digital, and it will be digital, and every business needs to be digital or will be removed from the marketplace. That is for sure you might like it or not, but it's just a fact. You see that trend all over the place, but how to avoid or escape that hamster wheel, that the environment change faster.
[00:05:59.670] - Manuel Pistner
But we try to focus on stability and fixed structures. I think this is just all it starts with the way we think about work and organizations. When we believe that we can plan everything and every step up front. And we believe that when we do the work, it must always be according to the plan, because the plan is the ultimate truth, that's the big itproblem planning is good, and planning is everything, but without execution, it's nothing . And I think we need to understand that the plan is good in order to understand things and think about how things could happen.
[00:06:42.870] - Manuel Pistner
But then they happen as they happen. And we need to be able to see that reflect on that, find the gap, fix it and adopt. And this reflecting improving process is a different thing because it includes failure so when we define a process based on doing, reflecting, and improving, there is a failure between the steps. Otherwise, we don't need to improve anything. Something didn't work as we want it to be. And that's what we give a label failure. And maybe that is an problem, because that typically triggers the emotions of, oh, my God.
[00:07:20.490] - Manuel Pistner
Something isn't working. Something is wrong. There's a big failure. Fires are burning escalations, . Which shouldn't be. It's just okay. We were wrong in our assumptions. So Congratulations. You found something to improve. Now you can learn something, and the Nomad organization can learn something, and we have an opportunities to fix that gap and then make it work. But this is a mindset shift. I think most managers and people they don't have and the organizational structures they are not made to allow failure. So they don't allow learning because most failures will be punished in most cultures.
[00:07:51.570] - Manuel Pistner
Or I mean not punished like punishing people or hitting people, but punished like telling other people like you caused that failure. So it's your fault, then other people feel blamed. And I think this is the worst thing that can happen in a culture that other people feel blamed because they made a failure. Or in other words, they learned something. I think that's what needs to change this cultural thinking. Yeah.
[00:08:15.810] - Dani Guaper
I just remember watching an interview last week. They were talking about a company where they say, okay, failure is okay. But as soon as the project fails, you probably didn't get the next promotion for another role, . So it was not like, really congregant to say, okay, there is a failure. We accept it and learn from it, and we are not going to put consequences out there that will be hindering you for the carrier, ?
[00:08:51.070] - Manuel Pistner
Yeah. I think there is. The word failing itself is just a itproblem. I would say, now, if we identify a itproblem, we will only fail. If we stop . Then you failed. If you have a itproblem and you stop and you don't improve it and you take it for granted that this itproblem exists. Then you fade. But if you have a itproblem and you discover it and you wrap your brain around a potential solution and then you find it, then you improve, and then the next itproblem appears, of course, because drawing is all about solving problems and overcoming obstacles, that's all it is about.
[00:09:29.170] - Manuel Pistner
So if you look at the things with solution mindset and you always ask yourself, oh, nice. How can I solve this? Itproblem. How can I learn from that? How can I get better if this becomes a natural way of thinking? You see every itproblem and obstacle as an opportunities, not just. Oh, we need to think in opportunities. That's sorry. Bullshit. If you don't just think, but just use these words because someone told you that every itproblem should become an opportunities that has no values. If you don't act like this, .
[00:09:59.710] - Manuel Pistner
And if you act like this continuously, then you will get used to it. And the Nomad organization change the culture change. The entire culture sees problems as opportunities for improvement. This is when the Nomad organization becomes more adaptive and flexible. Yeah.
[00:10:17.170] - Dani Guaper
What do you do about? Let's say we are starting at a classical hierarchical company.
[00:10:22.690] - Manuel Pistner
[00:10:23.110] - Dani Guaper
There's a process to get things more flattened out and inclusive and syncing inside structure, whatever or in matrix organization. But how you get those? Let's say we have this huge amount of managers that were controlling before and where their control function disappears. But how you keep them included how transformed this process that they are not like in this controlling position anymore. They're maybe probably more open to failure and more autonomy in their teams. But how you create this environment, how you lead them there.
[00:11:01.690] - Manuel Pistner
Okay. So let me go first one step back to explain what I don't mean because it might sound like that when I talk about organizations that should become flexible, they should not have structures and processes. I totally disagree. They need structures and processes, but they need to understand that they might fail. And then they should ask themselves, how can we improve that? If you don't manifest learnings in processes and structures, then they will always fall back. You need to manifest learnings in your system, in tools, in workflows and processes, but you need to reflect them over and review them over again and again, because the environment change and that might lead you to the point that processes and structures and systems that were helpful in the past are not helpful anymore today.
[00:11:51.310] - Manuel Pistner
So these structures and systems, they need to be able to change, and they also need to be flexible. But once they are there, your team needs to be trained on them. And they also need to be flexible to understand that the structures that were valid yesterday will change tomorrow. . So this is a critical part of management to find the gap and fix the gap and manifest it in structures, workflows tools and processes, and then help people to get used to these new structures and to get used to that.
[00:12:22.330] - Manuel Pistner
Things change in the past and in the future as well. And I think this is when managers become leaders because they need to lead these people in an environment of change. And that means leading their thought processes. And that means leading them from problems and failures, thoughts, solutions and opportunities. .
[00:12:46.210] - Dani Guaper
There's a nice pyramid we have on our block. I'm going to share it with our audience later on. This nice pyramid from Atmosvak, where we start in the transformation from zero, where every work has to be in one place and nobody can get out of it to the level five, which finds the Nirvana where you really like mastering this asynchronberg collaborating on trust and having a great environment to work on. I was wondering, maybe you can explain a little bit to our audience. How did this transition felt for you from level two to level two and maybe how it felt from level four to five.
[00:13:33.970] - Dani Guaper
The difference is what I'm looking for because I take it over.
[00:13:39.550] - Manuel Pistner
So honestly, I didn't transition from level zero to one and one to two and two to three and three to four and then to five. But I think if you define level zero as the level where everyone is in the same place, the work is in the same place and everyone is working on the same thing, which is in the same room or so this is what you define as level zero. . And then level five is it's distributed? It's digital. It's all over the globe. .
[00:14:08.530] - Manuel Pistner
I change that from I would say zero to five. I didn't process the other steps, which I don't recommend doing, but I think other businesses experienced the same when Corona hit us into a lockdown. So I think the majority level is from. I think zero is not possible anymore today, because what is the good thing when work is in the same room and the whole team is around this work piece is that you have transparency. You see what others are doing, you see how the work is progressing, and that is the big thing.
[00:14:44.830] - Manuel Pistner
What is missing in organizations when they like to adopt the distributed model, and that was the big itproblem when everyone started working remotely. And that's why managers lost their sense of control because there was no transparency. They didn't see what happened. They just were looking at their screen and they had, like, remote meetings, I don't know, eight to 10 hours every day, but they didn't see the progress. They didn't have transparency over the work. I'm not saying they need transparency over what people are doing. This is not relevant, but over results and progress.
[00:15:16.390] - Manuel Pistner
This is relevant. And I think this is the steps to transition from zero to five is to first understand what are the results you should deliver as a team and then as an individual, what is the work that we do? What's the output of our daily work and understanding? What do we need to do as a daily routine in order to build this output? . And then how can we reflect if what we created is really effective in the digital marketing economy and businesses? For example, you create a campaign that's your output.
[00:15:50.110] - Manuel Pistner
But what you really want is sales or leads. So you need to build your campaigns and then reflect regularly. How is the performance measured by the leads you generated and the cost per lead or cost per se? And when you have teams that focus on the work, but monitor and reflect on the result, then you have self managing teams that don't rely on the manager that has all the wisdom and truth and can tell those people what they should do so that they get the outcome.
[00:16:17.650] - Manuel Pistner
Now, this mindset and this structure and this transparency. I think this is the first thing, and then you move it from step one to two. I think you move it to a digital environment. You choose the tools that support these processes, this workflow and provide this transparency. . And then the next step is that you distribute your team, still having people that you know since a long time and where you have a huge amount of trust and they know have all the implicit knowledge that you made somehow explicitly available in your structures.
[00:16:49.390] - Manuel Pistner
But people are still used to working with implicit knowledge. . This is then the next step. And then the next step is you can hire freelancers and onboard them automatically so that you have flexibility in the skills and work capacity. And the knowledge is in your business, and these people can be onboarded and the knowledge can be transitioned into their brain in a short period of time. . And then the next step is that it doesn't really matter if you ever saw these people. It doesn't really matter how long they work with you.
[00:17:19.510] - Manuel Pistner
And it doesn't really matter which kind of work they do with your business, because all the knowledge is in your structures and people improve this knowledge in your business, in your system, just by, for example, creating videos. That's the easiest thing, . And improving structures and processes. They improve that by doing their work, not just there is a central manager, which typically happens in step zero, that there is a central manager that tells, okay, now this is broken. We need to fix that. We need a new workflow here.
[00:17:48.190] - Manuel Pistner
We need a new workflow there, but people do it themselves, even if they are freelancers. There are processes that help the Nomad organization to become self managed and to improve itself over time while doing the work as team, as individuals and as the Nomad organization. I would say these are the five steps to transition from zero to five. .
[00:18:14.110] - Dani Guaper
You already mentioned the re evaluation on that, but I would like to dive there into more. Why is it important, even if you have, like this, created or transition from a traditional hierarchy into something more agile, something more flexible and modern? But why is it still so important to reevaluate the structures all the time and, well, not every day. But there should be some process when you reevaluate. And why is this so important?
[00:18:49.570] - Manuel Pistner
Because the environment change so fast that structures and tools and systems and goals and KPI's that you defined yesterday, they might not be valid anymore in, like a quarter or half a year or a year from now. I would not say you need to refine your structures every month, but every six months, I would say, makes total sense and give your team a place so they can give feedback. That is then transparent to everyone in their organization. When it comes to ideas, how to improve it. For example, we do it in a way that we have like, we have a ticket system that's nothing complex, nothing highly innovative.
[00:19:31.630] - Manuel Pistner
But what is the good thing is that everyone in the organization can report a itproblem and can provide a potential solution. How this itproblem can be solved that focuses people on identifying problems but not stop there and just complain but also provide a solution for this itproblem and then others can vote. And when there are enough people that vote for that, then a change manager comes and looks at, okay, how much does this cost and what's the potential improvement and then makes this transparent to others so they can decide if they want to have this change.
[00:20:06.730] - Manuel Pistner
And then this change is incorporated in the organization by the teams. But transparency is really the key. And with transparency, I mean transparency about problems, about potential solutions, about who votes for what about costs. That's what I mean. This is and this is the big opportunities we're working digitally, because when we work with digital tools, we leave our food stamps anyway. Now, if the work is structured well, these food stamps become real data and you can use this data and create something that you can use to make intelligent decisions.
[00:20:43.390] - Manuel Pistner
And that is what provides transparency to make informed decisions. Great.
[00:20:50.830] - Dani Guaper
You have already taken all my questions out. I don't have anymore. Do you have anything else I might have forgotten? And then would you like to add, if not, then we'll wrap it up from there.
[00:21:01.990] - Manuel Pistner
I think we can wrap it up. I talked a lot and I think there is more than enough things. You, as a listener, can reflect on that and use to improve that. And if you have questions, feel free to reach out on social media. Yeah. We are happy to help you and support you with that.
[00:21:17.230] - Dani Guaper
Let's do it. See you next week on our next session.
[00:21:19.990] - Manuel Pistner
Yeah. See you soon. Bye bye. Thank you. Bye.
[00:21:23.650] - Dani Guaper
We hope you found the session helpful. Head back to our in Depth Blog article on re-thinking your Business Hierarchy chart. What did we miss in our conversation today? How can we do better? Let us know in the comments and reviews we are eager to engage and before you leave, hit the subscribe button. Give us a thumb up and share it around with your friends and colleagues. Sign up for the Free Business Builder training on FlashHub.io and learn more about how to scale with your business at any time, work with global top talents and make work better. On behalf of the team here at the Virtual Frontier. I want to thank you for listening. So until the next episode, keep exploring your frontiers.