The Steinhoff Saga Management review - University of Stellenbosch Business School

January – June 2019

Structural resilience: the future of organisational structure in South Africa, 2030 and beyond

By Deidre Samson

  • JUN 2019
  • Tags Reports, Management
18 minutes to read

SHARE

The future has arrived

Organisations all over the world are under increasing pressure to adapt to a rapidly changing environment – one in which technology is the new currency and innovation is a major driver of business success. Some would like to believe that the promised upheavals associated with massive technological change are still some way off. However, the future is already here. Encroaching automation, Artificial Intelligence (AI), the Internet of Things (IoT) and other innovations are changing the business landscape, both in South Africa and in the markets with which it does business. There is no time to wait to become technologically savvy, using innovation to craft new competitive advantages. Waiting will simply increase an organisation’s chances of becoming irrelevant in the foreseeable future.

In the face of changing market expectations and surging competition, many organisations are rethinking their fundamental purpose, strategic intent and operational design, since failing to do so will threaten their very viability. Too many organisations go through painful rounds of restructuring in response to external ‘shocks’, deeply impacting employee motivation and commitment.

‘There is no time to wait to become technologically savvy, using innovation to craft new competitive advantages. Waiting will simply increase an organisation’s chances of becoming irrelevant in the foreseeable future.’

Traditional business models with hierarchical structures are giving way to flatter, more organic working arrangements which rely less on authority figures allocating work to subordinates and more on collaborative networks, with team members sharing their varied expertise in the completion of the tasks at hand. More and more people are working remotely according to flexible schedules, connected via mobile platforms. All these things are challenging conventional management theory and practice. Even employment contracts are becoming more informal and more project-based (in line with the ‘gig’ economy). However, this changing dynamic should not be at the expense of productivity and the quality of outputs at the end of the day.

The changing business environment is not only the product of exogenous factors, such as shifting power relations in the world, a country’s economic ups and downs and political orientation, the technologies the country imports or is exposed to, the spread of the mobile culture, and so on. It is also the result of endogenous factors, including the demographics of the workforce and how workers relate to an organisation’s mission and goals, to the concepts of authority and responsibility, and to their peers. In today’s climate of free expression via social media and rising populism, people at all levels of society are finding their voice. But in an organisational context, these voices need to be effectively harnessed and channelled in ways that produce rich debate and bold solutions to problems and challenges, not dissent.

The primary purpose of this study was to determine what organisations could and should look like in South Africa by 2030. It also set out a thesis that structure should be pro-actively morphed over time with ongoing learning processes mitigating the new skills challenges faced by organisations. The study – which was qualitative in nature, with much gleaned from an extensive literature review – also explored the practical steps that organisations could take in making an effective transition into the future. The year 2030 is significant because it is the time horizon given in South Africa’s National Development Plan as well as the target date featuring in a number of economic blueprints produced by international bodies such as the World Economic Forum.

‘In today’s climate of free expression via social media and rising populism, people at all levels of society are finding their voice. But in an organisational context, these voices need to be effectively harnessed and channelled in ways that produce rich debate and bold solutions to problems and challenges, not dissent.’

Disruptive technologies driving change

Clearly, the future of work and the future of organisations are intertwined with the technological revolution that the world is caught up in. While the word ‘revolution’ has a dramatic ring to it, it can be argued that the speed with which technological changes are occurring is indeed dramatic – certainly when compared with the more measured, evolutionary changes that characterised the 20th century. Building on its predecessor, the Third Industrial Revolution (which saw the emergence of information technology and mass automation, and the rise of truly global companies), the Fourth Industrial Revolution is pushing the boundaries into exciting, but nevertheless daunting, new territory.

The Fourth Industrial Revolution can be described as a melting pot of technologies which are softening the contours of the physical, digital and biological worlds. Things are happening increasingly in a networked, rather than a linear, fashion, which helps to explain today’s global connectedness and the speed with which transactions and other forms of engagement are taking place.

Artificial Intelligence (AI), robotics and the Internet of Things (IoT) are three innovation fields associated with the Fourth Industrial Revolution that need to be on companies’ radar screens. Not only are they changing the competitive environment, including what consumers expect in the way of product and service offerings, but they are creating new job opportunities while eroding more traditional ones. The fact that tasks powered by AI, robotics and other advanced applications are often more efficient and cost-effective than those performed by humans is a key factor contributing to job displacement.

Whereas robots are typically seen as replacements for humans performing routine, repetitive work, they are now moving into more sophisticated job categories which require intelligent reasoning and discretionary decision-making.’

Artificial Intelligence (AI) has been defined as ‘the broad collection of technologies such as computer vision, language processing, robotics, robotic process automation and virtual agents that are able to mimic cognitive human functions’. Drones, autonomous vehicles, facial and voice recognition and virtual reality all depend on AI. AI has the ability to process and make sense of huge quantities of data in real time, which has enormous implications for the speed and quality of organisational decision-making. Equally intriguing is its capacity for self-learning.

Whereas robots are typically seen as replacements for humans performing routine, repetitive work, they are now moving into more sophisticated job categories which require intelligent reasoning and discretionary decision-making. Using Artificial Intelligence, robots are developing an increasing capacity for self-learning, which means that more job categories could be at risk than previously thought. Stories abound of machines teaching themselves (without human intervention) how to perform certain tasks after a short period of self-tuition. Robotic chess players, for example, have been known to beat their highly experienced human opponents after simply studying the rules of the game.

The Internet of Things (IoT) is another innovation which will play an increasingly valuable role in business, notably in the areas of production, supply chains and logistics. IoT works on the basis that general items (from clothing to pharmaceuticals to palletised cargo) have on-board sensors which allow them to be monitored in real time (stock levels, position in the logistics chain, etc.) with the help of high-speed broadband networks. Decision-making in the areas of production and logistics may also be automated through predictive analytics, which could enhance accuracy and free people up to focus on other priorities.

‘In a country like South Africa, which faces record-high unemployment figures and unacceptably high levels of inequality, some (particularly in government) view the disruptive forces of the Fourth Industrial Revolution as posing a threat to social stability as it will widen the digital divide.’

Clearly, the rules of the game are changing for producers, marketers and consumers. The thought that billions of people are connected via mobile devices and have practically limitless access to information sounds like a dream come true for many companies, particularly those with limited resources. Technology can streamline business operations by automating processes, while digitalisation can filter and lend order to large quantities of otherwise unmanageable data. But many potential obstacles stand in the way of companies’ technological goals – high levels of competition from more nimble players in the marketplace, financial constraints, a lack of suitable knowledge and skills, an inflexible business model which makes adaptation difficult and costly, a poor policy environment, and other factors. Even for strong proponents of a more technology-rich and digitalised world, the impact on jobs remains a concern. A key challenge is to build a culture of adaptation with employees pro-actively open to learning new skills required by the organisation, as an alternative to displacement and retrenchment.

In a country like South Africa, which faces record-high unemployment figures and unacceptably high levels of inequality, some (particularly in government) view the disruptive forces of the Fourth Industrial Revolution as posing a threat to social stability as it will widen the digital divide and drive a deeper wedge between the ‘haves’ and the ‘have-nots’. Many traditional job categories in the manufacturing and service sectors (from machine operators to call centre staff, and even those in the financial services and legal fields) will fall away in the face of rising automation. How governments use their policy space to encourage innovation and competitiveness without sacrificing too many jobs along the way, will be of critical importance in the years ahead. Similarly, the way in which companies adapt their business models and configure work streams to attract the best talent and be more technology savvy and market responsive, will determine whether they will be able to sustainably leverage the forces of swift and unpredictable change.

How advancing technologies are impacting jobs

As the Fourth Industrial Revolution gains momentum, company strategies will need to achieve the optimal balance between efficiency and innovation, on the one hand, and job retention and/or growth, on the other. The potential for automation is of particular concern to people today because it could result in job displacement. For example, the advent of the Uber app-driven service has displaced the service provided by many conventional taxi drivers whose value offering does not measure up. In time, Uber drivers themselves could face redundancy if driverless vehicles become mainstream. Interestingly, tradespeople like electricians and plumbers are likely to keep their jobs since they involve complex analysis and problem-solving. Trying to develop the technology to replicate the diagnostics that goes into an electrician’s or plumber’s work would be excessively expensive. Structural resilience – ‘the ability of an organisation to proactively anticipate and adapt to its environment, adopt new ways of working including structural forms that would enable it to accelerate and sustain strategic execution’ –  it is posited, is a crucial capability to be developed and implemented for future success. This capability will also require support divisions such as Human Resources to rethink their role as many of the people executing an organisation’s strategy will not be found on a traditional organisation chart but will be acting from positions as independent contractors, insourced service providers or ‘gig economy’ participants.

‘Tall hierarchies (and even physical premises in some cases) are yielding to more extended relationship-driven working environments, where the ability to cope with change as well as the adoption of innovative strategies in production, marketing and talent management are the keys to long-term success and sustainability. ’

Implications of a changing world for organisational structure

Some of the questions swirling around in strategic management circles today are: How do you harness the creative power of people freed (by machines) from the enslavement created by routine, repetitive, often manual work? How do you structure an enterprise to be agile, capable and innovative, responding presciently as the world changes around it? How do you maintain and sustain competitive advantage in a world of accelerated change?

Clearly, the notion of organisational structure has become enmeshed with organisational culture and the management of human capital. Tall hierarchies (and even physical premises in some cases) are yielding to more extended relationship-driven working environments, where the ability to cope with change as well as the adoption of innovative strategies in production, marketing and talent management are the keys to long-term success and sustainability.

The gig economy, though popular among growing bands of younger professionals and freelancers who are looking for flexibility and the opportunity to be part of creative teams, is creating challenges for organisations. It can be difficult to manage people at a distance, some of whom may reside in distant locations. Forging a common sense of purpose and work culture, especially when a project has a relatively short duration, can be difficult. Yet it is the way the business environment is going. Provided workers’ needs can be catered for, the gig economy can also deliver significant cost savings (e.g. in the form of overheads) to organisations and get the best out of talented, motivated people.

‘If carefully designed, jobs in today’s technology-driven climate could give workers the wings they need to fly. This is important as competitiveness today depends as much on organisations being innovative as being efficient.’

Project management skills are becoming an essential tool in a manager’s toolkit, as is the ability to nurture talent through continual learning opportunities and steady mentorship. If carefully designed, jobs in today’s technology-driven climate could give workers the wings they need to fly. This is important as competitiveness today depends as much on organisations being innovative as being efficient.

Ultimately, an organisation needs to be resilient but also have ‘structural integrity’ which, in simple terms, means that it must be ‘fit for purpose’. Technology can be an important foundation in this regard, but achieving such integrity – being able to pull all the pieces together and put them to work in the most efficient manner – is an art, which few machines will be able to replicate. Technology and Ways of Working should be integral parts of any model of organisation design, such as the Galbraith Star. New, innovative forms of structure should be considered to address some of the challenges experienced with traditional structures such as the matrix. The role of management also needs to undergo serious change in a world of digital connection which may expand spans of control and include linkages with people who cannot be managed in a traditional ‘command and control’ sense.

  • This article is based on the research assignment of Deidre Samson – an MPhil in Futures Studies graduate from the University of Stellenbosch Business School. She was the Top Achiever in her class in 2018. Her study leader was Prof André Roux, programme head of USB’s portfolio of Futures Studies programme. Prof Roux lectures in Management Economics and Africa Country Risk Analysis at USB.

Related articles

Jun 11

18 minutes to read

Structural resilience: the fut...
Jun 11

16 minutes to read

Brand engagement: What are you...

Join the USB community

Receive updates on the latest news, events, business knowledge and blogs at USB.

SUBSCRIBE NOW