Transitioning from hierarchical to a network-based organisational structure: 4 key points for leaders

Networks are powerful systems. While the networked-based structure seems to be the way forward to many teams, leaders need to be aware of issues related to the flow of decision making, talent retention and purpose.


 Jun 23, 2021

The covid-19 pandemic and subsequent acceleration of digital transformation have forced organisations to innovate rapidly, change their products and services, and remain flexible to adapt to an ever-changing landscape. These significant changes have prompted a resurgence of the debate about the optimal organisational structure.

Over the past few years, there has been a welcome shift toward client-centricity with organisations adopting more agile structures – centred on products, teams, and projects – and forming both internal and external networks of teams that are generally empowered to communicate, coordinate, and make decisions.

Yet, given the volatility of our times and challenges related to digital communications and employee wellbeing, there are certain limitations to the model. A recent study, for example, found that “network centric organisation does not necessarily lead to higher perceived situation awareness or better understanding of the situation”.

We asked three experts from our global educator network to share their advice on the key points to be aware of when adopting a new organisational structure. Their answers reveal that while the networked-based structure seems to be the way forward to many teams, leaders need to be aware of issues related to the flow of decision making, talent retention and purpose.

1. The rise of ‘extreme teaming’

The move towards network-based structures is a recent evolution, according to author and thought leader Peter Fisk.  “A decade ago, around 80 percent of employees had functional roles, the rest seconded to ad-hoc projects. Today, that ratio is reversed. Few employees now have fixed roles. Formal job titles in outdated organisational charts have given way to a more fluid deployment of talent, by project, to manage constant change”, says Fisk.

In a recent article, Fisk states: “Networks, whether organisational or social, are powerful systems. “Every additional participant creates new connections, capable of driving the exponential growth of today’s network-based start-ups.”

At the heart of these network structures is the concept of “extreme teaming”, Fisk continues. “They assemble the best people for the job, energised by customers not managers, building psychological safety, and a collective commitment to deliver excellent, innovative results.”

In his recent book Next Generation Leadership, business educator and adviser Adam Kingl explores how organisations can enable younger talent to thrive. He sees the shift toward networked structures as a competitive advantage:

“Companies that reimagine how work is organised around projects and freelance experts will be sailing on a rising tide”, said Kingl.  “The volume and strategic importance of projects is growing.  About one-fifth of the world’s economic activity per year – $12 trillion – is now organised around projects.”

Over the next decade, Kingl says, “companies are expected to experience over two-thirds’ increase in project work”.  “As the operating environment becomes more volatile and complex, businesses need a new playbook to seize opportunities faster, an adaptive approach to talent and the skillsets that one might need at any point in time.  Organising company structure around project work may make more sense.”

2. Leaders become decision aggregators

Joe DiVanna is a Cambridge-based management consultant and author. As well as working regularly with Headspring clients on custom programmes, he runs his own innovation think-tank providing research and advisory services to the financial services industry. He says that the transition from a hierarchical to a network-based structure is essentially a change in how decisions are made. More traditional structures were based on the assumption that upper levels had “more collective knowledge and experience than the level beneath it” and therefore decision-making flowed up and down the pyramid. In network-based structures, this changes completely.

“This evolution strives to push decision making close to the action where the decision is needed”, says DiVanna. “As each node on the network becomes more and more empowered the entire role of senior leadership changes from a control point to approve or disapprove issues to a consultative resource to be consumed by the organisation”.

Yet, he argues, this change in organisational structure does not relinquish decision making of the senior leadership to the business unit: “What has changed is the parameters of what decisions can be used to empower people at all levels of the organisation”, he said.

As organisations go through this transition, DiVanna continues, “decision making often becomes fragmented. Not all decisions can be handled by the business unit. As a result, exceptions which need decisions become the underlying challenge (which is also an opportunity) for senior management to act as a decision aggregator.”

3. Mind the generational gap

While the network-based structure can help organisations move faster, Kingl warns that there is a significant generational gap when it comes to the acceptance of change and the adoption of networked structures.

“When I ask audiences to consider a world where companies comprise just a dozen or so executives and hundreds of freelance project directors and contractors under them – the gig economy writ large – Baby Boomers and older Gen Xs in the room appear ashen-faced and horrified, while the Gen Ys beam with optimism”, Kingl said.

In Kingl’s opinion, employers will have three possible responses to the inconstant tides of their younger workforce:

  1. Fight it and do everything in one’s power, spending whatever money is necessary, to keep talent,
  2. Embrace it and create the twenty-first century community of (mostly) freelancers,
  3. Select a hybrid path, distinguishing between talent that the company must keep at all costs and employees who one is prepared to let go, because their knowledge or expertise is replicable, or their functions may be completed more efficiently by contractors or business partners.

4. Your structure defines your culture

“Organisation structures define companies – culturally and innovatively, revealing both opportunities and limitations”, concludes Peter Fisk. “Henry Ford’s hierarchical business model that produced low-cost cars a century ago no longer reflects today’s organisational needs: to be fast and agile, human and technological, collaborative and creative, personal and global.”

According to Kingl, as the operating environment becomes more volatile and complex, “enterprises may choose to organise themselves differently, to be able to deliver more and more complex projects and initiatives in this dynamic operating environment.”

Thiago Kiwi

Head of Marketing & Communications at Headspring

Thiago is an award-winning marketing and communications leader with over 10 years of experience in the global higher and executive education sector. He holds a Bachelors in Communications and a Masters in Political Communications & Marketing from the University of London, as well as multiple executive and leadership development certifications. When he’s not busy studying for a new course, he’s growing vegetables in his allotment or training for his next marathon.
Virtual Team Cloud

Considering the End of Lockdown

What should companies be thinking about regarding their talent as we (possibly?) near the end of lockdown?

First, think about the physical space of your company office.  A lot of organisations are shedding commercial real estate.  The implication is that employees returning to the office are going to be smooshed together in ever more constricted open plans.  Well, that may work for some people but not for others, so do consider also providing flexible, private space.  You have introverts; you have neurodiverse colleagues.  They will, at some points in the workday, need time to themselves.

Second, think about how you may extend flexible work, giving people the opportunity to continue to work from home at least part of the time.  For many industries and functions, an option to work from home is never going to go away now and in fact will be expected from many if not most employees.  For example, over half of the U.S. workforce was already working from home at least part of the time before lockdown happened.  Most companies have already demonstrated that it can and does work.

Third, when your colleagues are back in the workplace, you now have the opportunity to socialise again.  You probably have many employees (hundreds or thousands in some cases) who joined your company during lockdown and have never yet had the opportunity really to get to know their colleagues in social situations.  To do so build trust, and that helps to reinforce culture.

This brings me to my fourth point.  If you want to build a stronger culture post-lockdown, create opportunities for your people to observe important meetings with important clients and customers.  And in that way, they start to understand how you work when it really matters, which is the true test of organisational authenticity.  This initiative can be easier when you are physically co-located, so seize the opportunity to demonstrate that being the office does have its advantages.  Get people together to observe the behaviours you desire and need for a culture that wins and has fun together, where people would not wish to be anywhere else.             

Adam Kingl is Adjunct Faculty at the UCL School of Management, Ashridge-Hult International Business School, an Associate of the Moller Institute at Cambridge University, and the author of Next Generation Leadership (HarperCollins 2020).


How our brains hinder creativity

How our brains hinder creativity
Written by
Adam Kingl, author, keynote speaker and advisor

22 Mar 2021

Our brains have learnt to sabotage our creative thinking efforts. Adam Kingl explains why taking the time for creativity can help address this issue.
Too many schools minimise or ignore creativity, too many parents discourage it, and too many companies devalue it. Our firms sometimes abrogate responsibility for innovation to a select fraction of the employee population, often someone with a lofty title like Chief Creative Officer, which of course communicates to the rest of the company that they should ‘leave creativity to the experts’.

If we observe how our leaders spend their time, and by extension how we should spend ours, too many are tacitly telling us that creativity is relegated to possibly a few minutes a week and ideally in one’s free time, not when we’re on the clock. In my advisory work to global corporations, I usually find this last condition, lack of time, to be the most common and pernicious.

Why we should make creative thinking a priority
The problem is that if we budget very little time in our lives to innovating or adapting to try new ideas, we typically incur a double deficit in our creative capacity.

First, we never make the time because creativity is always at the bottom of our priority list. Inevitably, we can never plan on all the firefighting and pop-up meetings that will occur in the week, so our real week is much more full of dealing with the day to day than our diaries suggested on Monday morning.

Allowing time for creativity is the only way to yield results
Second, if we do keep and honour a tiny fraction of our week or month to creative thinking, brainstorming and the like, we find our attention span is constantly distracted. We never seem to produce anything worthwhile as a result, and so we face each new window of opportunity for innovation with an ever growing, soul-sucking impression of dread or, at the least, resignation.

What we’re learning now is that we’re unfortunately training our brains to deliver this depressing result. Recent neuroscientific research has revealed how we repress and invigorate creativity. These hurried, captured moments of precious time for innovation yield paltry results. Our brains can’t turn on the magic for such short, unsustainable periods of time.

The five brain states explained
There are several brain states from deep sleep to deep focus and peak performance. The higher the performing brain, the greater the frequency of brain waves, hence Hertz is the degree of measurement:

Delta – deep sleep: 1-3 Hz
Theta – deep meditation, light sleep: 4-8 Hz
Alpha – relaxed, calm consciousness: 9-12 Hz
Beta – normal, alert consciousness: 13-30 Hz
Gamma – super-focused mind, increased brain power, peak state of consciousness and performance: 31-70 Hz.
Which of these do you think is our typical brain state during a normal work day?

I imagine many of you are thinking Theta! Sad but true – light sleep can be our normal work state. That’s rather depressing if that’s your normal. But Beta is probably our usual state, right? This is what we require of our brains to accomplish our normal tasks of answering emails, solving our workaday problems…and possibly Theta state when we’re in committee meetings.

Typical business routines encourage us to work in a state where the Beta waves (business as usual) in our brains are dominant, though we now know that maximum innovation and insight occurs when we are in Gamma state.

How to remain in Gamma state for longer
Neuroscientific research has also revealed that our brains can stay in Beta for a long time, and in fact are conditioned to stay there. As a result, if we crank the mental engine to get up to Gamma, the brain through habit easily and proactively often drags us back to Beta.

Therefore, if we need our brains to be in Gamma in order to be truly creative, genuinely adding previously unheard-of insight and exponentially big ideas, our brains would struggle to do that in, say, a one-hour meeting once a week. Beta state is like a constant and familiar noise, the ever-present static of our work lives that can block Gamma state. I liken this to how I find it hard to think when I’m eating an apple because I have this magnified, crunching noise in the echo chamber of my skull.

Mundane and creative – why getting the balance right is important
We can’t easily shut off this Beta activity, the laundry list of actions and decisions we have to make, even if we’re completely confident in our ability to make them. Beta is our habit, our rhythm, our tyranny.

Because we don’t have balance between the mundane and the creative, we can’t achieve creativity even if we give ourselves those fleeting thirty minutes a week to do so. We must change our routines so that we give our brains more time to marinate in Gamma and increase the frequency of those marinades. Like any muscle, the creative function in our brains requires exercise in order to improve, but as importantly, to be receptive to create in the first place.

The point is not that we denude all traditional routine from our organisations. We need some of that. But most of companies that I’ve experienced usually operate at a ratio of about 99% business as usual to 1% creative time…on a good week! So if you’re feeling uncomfortable that I’m suggesting something like a fifty-fifty balance, I’m not saying that. But the better ratio surely has to be closer to eighty-twenty at least? I’m merely entreating us to ask ourselves honestly, ‘Is the balance right?’

Adam Kingl is the author of Next Generation Leadership (HarperCollins) and is a keynote speaker, educator and advisor.

Management Innovation Image

What Should Senior Executives Focus On When Pursuing Innovation?

A lot of executives say they want to enhance innovation in their organisations. I tell senior executives not to focus on products, services or processes because they have many colleagues who can focus on those. Senior executives should be focusing on strategic innovation, answering three fundamental questions: ‘Who, what, how?’ : Who is my customer? What am I offering that customer? How am I offering it?

This is also known as business model innovation, challenging the assumptions implicit in the answers to those three questions. If you can innovate around your strategy, you can develop an inimitable competitive advantage. To improve the quality of internal conversations in an organisation, leaders have to encourage that their assumptions be questioned. They should be asking their colleagues, including those more junior, ‘Based on what you’ve just heard me say, what assumptions do you think I’m making?’

Once those assumptions are surfaced, then ask, ‘OK, which of those assumptions may not be true or may no longer be true? Maybe some of the ways I look at the world were fit for purpose five or ten years ago, but they aren’t so today.’ That’s a really simple hack to make yourself automatically a more innovative executive. Of course, in a COVID and post-COVID world, the relevance of one’s perspective may be limited to months rather than years!

This approach to encourage questioning is rather antithetical to the old paradigms of the leader as the font of wisdom. Experience is sometimes an ally and sometimes a professional hazard. So do consider encouraging others to identify and then question your assumptions in order to progress on the road to enjoying an innovative environment in your team or company.

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The three things millennials want if they are going to work for you

The three things millennials want if they are going to work for you

Leadership expert Adam Kingl believes a new way of thinking is needed to retain and attract Generation Y talent.

Next Generation Leadership Image

How to Develop Your Young People in Lockdown

How to Develop Your Young People in Lockdown

One of the main conclusions I came to in researching my book, Next Generation Leadership, is that Generation Ys (Millennials) crave development more than almost anything else from their organisations.  But the question I hear now that we are in lockdown under Covid is: How can we recreate the development that would have happened organically by our youngest colleagues’ observing how senior people go about doing business?

There are still at least a couple of things that we can do.  First, even under lockdown, we can invite our young team members to senior stakeholder meetings, senior customers or strategic conversations, even if they are just observing.  If we want to enhance a culture of development, one way to do that is to help our people observe desired behaviours.  The best definition I’ve ever heard of ‘culture’ is so good because it is so simple.  It’s just two words: ‘shared behaviours’.  That’s it!  But that definition implies that you have to give your people the opportunity to observe behaviours in action, and you can certainly still do that under lockdown.

The second piece of advice I would give is to consider mentoring your youngest employees.  These don’t have to be your direct reports, but also make that a reverse mentoring opportunity.  You can teach them about how to navigate your organization, advance their careers, serve more sophisticated customers, and they help you with issues such as leveraging social media, identifying new customer segments, and using skills and tools they have acquired which many of their older colleagues have not.  It’s also an opportunity to find out for yourself what younger generations want from life, their career and their leaders.  I think you’ll find it illuminating!

So how do you still organically develop your Millennial colleagues under lockdown, in ways that don’t cost you anything?  First, invite them to senior virtual meetings, and ask them to observe and note behaviours.  And second, consider mentoring and asking for reverse mentoring.

Virtual Team Cloud

Virtual Management in a Virtual Age

In these times, virtual teamwork will be a critical function in the workforce.  I have little doubt that mastering virtual teamwork in practical application will be a hallmark of the successful, next generation leader.

Putting “Virtual” to the Test

Even ten years ago, I thought that managing virtual teams would be a critical skill of the twenty-first century leader.  I had hypotheses about how to do this well, but I needed data to test these.  So while directing the Emerging Leaders Programme at London Business School, I added a simulation to the curriculum both to invite participants to reflect on their effectiveness at virtual teamwork and, for myself, to identify the critical success factors.

I invited participants to complete a competitive challenge, using both face-to-face and virtual methods. Before arriving to the program, I asked students to submit pressing dilemmas that their companies faced. I then identified two of these questions for the students to tackle in the competition; questions were easily comprehended, did not rely on technical or deep, industry-specific knowledge, and would have great impact on the business if these thorny issues were cracked.  For example, in one cohort, the dilemmas were related to the news industry:

How can an international news division bring to life its new brand tagline, “Never Stop Asking?”
How can newspapers make money selling to a Google generation used to reading content for free?

Students were split into two teams that incorporated a diverse set of expertise, nationalities and industries.  They had one week to brainstorm and refine solutions to each question. They were allowed—and encouraged—to take advantage of the “wisdom of crowds” by soliciting input from people outside the program too.

There was one catch: Team A had to answer question one using only face-to-face communications only and question two using solely virtual methods.  For Team B, these requirements were reversed.  When working virtually, students could use any tools or forums they wished, including video or teleconference, e-mail or social networking sites.  We also constructed a simple website that allowed teams to post, categorize, rank, and discuss proposed solutions. The website was also accessible to people outside the course, if they were invited, who could then review and contribute to the online discussion.

At the end of the week, the teams presented their conclusions to a panel who scored the merits of each solution without knowing whether students used face-to-face or virtual methods.[i] After the panel gave its feedback, we discussed what the students found to be the advantages and pitfalls of virtual teamwork, as well as the key differences between working virtually and working face-to-face.  This exercise brought to light many dynamics about the nature and requirements of leading and working in a virtual team.

What Works, What Doesn’t

Virtual teams that set too many rules or were too rigid about how and when participants contributed were not as successful as those that were more flexible. Different time zones, for instance, required that teams set slightly longer deadlines.  Allowing for asynchronous discussion versus requiring real-time “chat” generated higher quality ideas and responses to colleagues’ suggestions.

Virtual teams that collaborated using customized, online team rooms produced final ideas and presentations that the panel scored better than those teams who used social networking sites such as Facebook.  These sites often offer little functionality to organize activities effectively, search information, engage in complex discussions, or rank ideas.  Teams using Facebook, for instance, either did not participate in brainstorming activities or did so unproductively, perhaps because interactions on the site tend to be largely superficial. Users weren’t used to using the site for this exercise’s purpose.

Although virtual teamwork isn’t necessarily more effective than face-to-face teamwork, we concluded that virtual teamwork that is well-facilitated and well-supported by a platform that is more fit for the purpose can actually be superior to face-to-face interaction, particularly for large or geographically dispersed teams. We encouraged students returning to work to have conversations with their IT departments about creating customized team rooms rather than relying on existing sites with pre-determined features.

A Different Set of Skills

The program’s participants consistently converged on at least two realizations about virtual teamwork:

First, charisma, a traditional leadership trait, is usually disintermediated in a virtual environment.  Therefore, team members could not rely on force of personality, but on clarity and the ability to delegate. “Leading” in these interactions was less about exhibiting authority and more about emphasizing team accountability, reaching consensus, and being open to challenge.

Second, merit has more power than personality or hierarchy in virtual teams.  Introverts or those who are working in a second language may actually thrive in a virtual team. We have all experienced how factors such as introversion/extraversion, cultural norms, gender, career level, and reporting lines contribute to only a few voices, sometimes only one voice, dominating.

At its worst, an overly hierarchical dynamic can not only ruin engagement, or even careers, it can aggravate catastrophic decisions.  The story of the tragic 2009 crash of Air France flight 447, which killed 228 people, is the cautionary tale.  On that flight, the crew came up through both a national and industry culture (though the latter is changing) where the captain is always right, who brooks no “interference” from his subordinates.  In turn, the captain’s co-pilots, such as those on that fateful day, do not feel it is their place to disagree with their superior officer whether it is a command, a suggestion or an opinion.

On May 31st, 2009, en route from Rio de Janeiro to Paris, storms lay in the way of the planned flight path, and a rare but not unheard-of mechanical fault occurred when ice crystals at high altitude clogged the airplane’s air pressure probes, causing altitude measures to read less accurately.  The co-pilots chose not to alert the captain to the storms that lay ahead, deferring to him to identify the bad weather and plot a course to avoid it, which did not happen.  The flight crew made a series of poor decisions and even worse communications that ultimately drove the plane into the Atlantic Ocean.[ii]    The Air France case illustrates the all-too-common dynamic that occurs in so many offices, factories and stores around the world, where initiative, productive dialogue, challenge and imagination are preemptively suppressed.

Most of our organizations’ architectures are predicated on a pyramidal hierarchy, which for centuries has suggested a tacit dogma of the manager’s infallibility.  This canon has ruined many millions of meetings, where idea creation gives way to waiting for the leader to say something, and agreeing or remaining silent, where the extrovert jumps in with their contribution first and often, while the introvert is still processing options and responses.

In a virtual, asynchronous environment, introverts can reflect before answering, the less confident can reply thoughtfully and bravely.  Adding anonymity to contributions reduces the senior voices from owning the lion’s share of the conversation.  The best ideas rise to the top instead of those which happen to be from the most senior.  Therefore, if an important objective of any leader is to bring out the best in everyone, then he or she should utilize a virtual forum for at least some discussion and particularly on very diverse teams.  Two important points to remember when considering virtual teamwork:

First, technology does not solve every problem.  Virtual teamwork can fail if leaders do not attend to the fundamental problems of coordinating, engaging, and motivating individuals across time zones.  It’s easy for team members to disengage when they’re not face-to-face, so the leader must convey a high degree of enthusiasm and clarity, and agree on who is accountable for what from the start.

Second, assumptions are dangerous. If team members are from different cultures, countries, and time zones, leaders cannot assume that everyone shares the same understanding of how the team will work. For example, will everyone be in one virtual “place” at the same time, or will they contribute on their own time? Our students’ most important takeaway is that to lead a virtual team, they must focus on team maintenance (How are we going to work together?) before task maintenance (What is the problem we are trying to solve?).

[i] I’m grateful to Moti Shahani for his collaboration with this exercise.

[ii] William Langewiesche, “The Human Factor,” Vanity Fair, October 2014.

The above is a chapter excerpt from my book Next Generation Leadership: