The

Future Of
Organizations
Rethinking Organizational Design

© 2018 Forrester Research, Inc.

 PART ONE

Current Organizational Design

Has Aged Out

PART TWO

A Future Scenario:
Shape-Shifting Organizations

PART THREE

What It Means

PART FOUR

The Future Of Organizations

© 2018 Forrester Research, Inc.

PART ONE

Current Organizational Design

Has Aged Out
The design of an organization — the structure, leadership,
and processes that govern it — has the power to unleash
the full potential of human capital to pursue the organization’s
purpose and convert the cost of that capital to strategic
advantage. But in today’s customer-led and disruption-rich
market, most organizations are proving to be slow, rigid, and
culturally tone-deaf. Designed on the principles of stability,
accountability, and control, they protect entrenched politics
and create hard-walled, politically laden silos, long decision
cycles, and disjointed customer experiences that stymie
change — and frustrate customers.

© 2018 Forrester Research, Inc.

Instead of unleashing the value of human capital, the current design of most
organizations is creating dangerous inertia in fast-moving markets.
• Customer experience (CX) performance has stagnated. Our 2018 Customer
Experience Index (CX Index™) results show another year of flat results as CX teams
fail to champion the organizational change needed to pursue more than cosmetic
see-fix remedies.
• Digital transformations are underway at over half of firms, but few have moved
beyond bolt-on efforts to optimize individual channels or functions. Analog-first, silo-
oriented political capital continues to create powerful inertia.
• Only 32% of employees in the US — 13% worldwide — are engaged, meaning they
are involved in, enthusiastic about, and committed to their work and workplace. Yet
leadership shows little appetite to change the norms that made their careers and shaped
their teams. CX combined with employee experience (EX) can create a powerful force to
drive internal and external change. But this remains a potential, not a realization, for most.

CEOs may see these risks, but their early steps have been light and hard
decisions have been deferred:

NEW ROLES INNOVATION STRATEGIC INITIATIVES

Hiring chief digital or chief data Creating innovation centers away Standing up multidiscipline teams
officers to create cross-silo from the mothership to innovate to take on big initiatives such as
leaders to tackle hard, entrenched a new reality that is protected CX or digital with a lot of talent
issues — minimizing the roles from the existing culture and clout but little political capital.
and responsibilities of existing vice-versa . . . with no plan to
executives and complicating bring the innovative (foreign)
governance. culture back home.

These efforts are telling: They create pockets of new and sometimes powerful
capabilities while avoiding organizational disruption. They speak to the
underlying fear of making deep-rooted changes in the spirit of managing
risk. Ironically, these same instincts to minimize risk are creating new (and
sometimes profound) risk.
Markets are unforgiving, customers are intolerant, and new competitors are
ready to capitalize. We are entering the gig economy, with robotic outsourcing
and disruption-as-a-rule innovation cycles.

Organizational design needs a restructure.

© 2018 Forrester Research, Inc.

We have a growing base of research on today’s operating
models. Our Customer-Obsessed Operating Model research
asserts that any modern company needs to design operations
to be customer-led, insights-driven, fast, and connected. Those
principles are easy to write and hard to do because of the
entrenched design of most companies’ organizations. To help
firms push past the gravity of today, we looked at tomorrow’s
far-reaching realities.

We brought these dynamics together to form

a possible model worth further investigation:
the shape-shifting organization.

© 2018 Forrester Research, Inc.

PART TWO

A Future Scenario:
Shape-Shifting Organizations
If leaders had a blank sheet of paper, they would design organizations to
compete and thrive in a talent-scarce, customer-led, digital-first, robot-enabled,
ecosystem-oriented, and privacy-sensitive market. They would design to
the outside market with an eye toward the future, scoffing at internal-first
approaches optimized for the past. The design would allow for constant
change, redefining the very essence of an organization to include:

A MATRIXED CORE ROBOTS VIBRANT ECOSYSTEMS

A lean set of interconnected The most tenured employees in the Today’s customer journeys,
functions and product/ future may not ultimately be human. whether in today’s travel market
development/experience teams Today, robots execute only the most or in tomorrow’s mobility
will preserve corporate memory predictable, clear-cut routines. But environment, span multiple
and root decisions in a deep through the next decade, we will brands, placing greater emphasis
understanding of their customers see robots taking on more and more on the strength of the ecosystem.
and business model. The core of the fundamental operations of As firms work out how to lead or
will be much smaller than today’s many businesses. participate in these ecosystems,
employee base and will carry the they will embrace partners to win
passion to deliver to the brand FLUID, MULTISKILLED TEAMS the hearts, minds, and spend of
and promise. customers while protecting their
Core employees, expertise-as-
core economic and IP interests.
a-service, and robots will work
EXPERTISE-AS-A-SERVICE side by side on teams that form to
In a world where needs change address a specific initiative — and PURPOSE-LED LEADERSHIP
rapidly and talent is scarce, dissolve as those needs expire. This This influx of temporary staff,
stagnant workforces and long represents a major shift in thinking robots, and fluid teams could
outsourcing contracts will — from organizational design easily erode a firm’s culture and
disappear. An agile talent roster of focusing on jobs (that are fixed) to its employees’ human need of
independent “agents” with deep tasks (that are fluid). affiliation. This means leadership
specialty expertise will flow from will require more inspiration and
firm to firm to support specific AI-LED DECISIONING communication of the firm’s
needs in the moment. The gig mission, purpose, and values.
All that forming and dissolving of
economy is often associated Purpose will move from tag lines
teams could be a management
with Millennials and the emerging and posters to the adhesion and
nightmare. Artificial intelligence will
Generation Z. But expertise-as-a- cohesion of teams, acting not
guide casting and talent-sourcing
service will also create late-stage simply as a rudder but as an
decisions to optimize teams for the
career opportunities for Baby engine.
best mix of expertise and chemistry.
Boomers looking for a different
AI will create the constancy of
off-ramp or to defer full retirement.
philosophy and logic in a shape-
shifting reality.

© 2018 Forrester Research, Inc.

PART THREE

What It Means
This kind of change would shock the core of almost every stakeholder in
commercial markets. But a type of shock is already happening. Current
organizational inertia that creates risk to a firm’s survival is simply a less
dramatic shock to the system, slower and sometimes more insipid but
equally shocking.
We believe organizational design (OD) will not simply drive cosmetic change
or preserve the norms we are familiar with today. Instead, organizational
design will cause a major rethink about what an organization is and how
it works. Watch for these signals to know if and when shape-shifting
organizations are becoming reality:

01
MICRO-LEARNING EXPLODES
In a fluid market for expertise-as-a-service,
employees will seek depth and proof of skills,
creating more demand for continuing education 03
and certification programs. Multiyear, university-
ROBOTIC PROCESS AUTOMATION (RPA)
based programs will incorporate more industry ties
BECOMES INTELLIGENT
and vocational elements. Meanwhile, new micro-
learning offerings will be all the rage as employees Leaders will need to reimagine processes to support
race to keep their skills current in between new organizations. Expect organizations to expand
assignments — or even during coffee breaks. from the current implementations of RPA to a more
intelligent form that allows for the automation of
02 dynamic, complex processes, taking a great leap
forward in creating new operating models.
GIG HIRING GOES MAINSTREAM
Freelancer marketplaces are already popping up 04
every day — from specialty networks like Tongal
ROBOTICS QUOTIENT (RQ) BECOMES
and Zooppa in marketing to broader networks
A MEASURABLE COMPETENCY
such as Freelancer and Upstart. That market will
accelerate as employers swarm and giants like Companies will expand EQ-oriented focus to
Google jump in. Large people-dependent firms will robotics quotient — identifying and valuing skills
likely create their own matching services (such as that allow humans to work alongside robots. People,
PwC’s Talent Exchange) — or buy one — to get a leaders, and organizations high in RQ will possess
leg up in the expertise-as-a-service game. the ability to engage in sophisticated information
processing and task completion by understanding,
adapting to, collaborating with, and exchanging data
and insights with intelligent machines.

© 2018 Forrester Research, Inc.

05

BUDGET CYCLES RESEMBLE VC FUNDING

Most firms are already increasing the frequency of
their budget cycles, moving to at least quarterly
reviews and adjustments based on shifting needs. 08
But more organizations will embrace more flexible
SHAREHOLDERS LOSE POWER
funding — modeled on venture capital firms — with
fluid teams bidding for funds without rigid definitions As focus centers on customers and speed,
of functional budgets. shareholders — arguably tuned to favor consistency
and stability — will hold some firms back. Watch
more firms opt to remain private rather than be lured
06
by the prospect of an IPO. And for those already
C-LEVEL ROLES MORPH public? Expect more than a few firms to voluntarily
Future organizations will value collaboration among delist while they restructure. For some,
employees, gig workers, and robots, where who it will be a drastic but unavoidable move to survive.
is in charge and what is most important is fluid.
This will change the role of C-level executives from 09
leading functions or P&Ls to orchestrating a dynamic MANAGEMENT CONSULTANTS CREATE
business. This is particularly true for the CIO and
PRACTICES TO CATALYZE THE MARKET
CMO. As technology becomes inseparable from
what the business is, the CIO becomes the major There is nothing that sets OD in motion more than
technology orchestrator. As customers become the management houses seeing big money and
the reason for being, the CMO orchestrates brand career acceleration. Expect to see early innovation
and experience across ecosystems. Different efforts expand to broader OD efforts that codify as
than building and optimizing silos, they are the new perspectives, practices, and revenue streams.
ringleaders to ensure a dynamic and hyperresponsive
organization.

07 Progressive leaders will

BOARDS BECOME RISK BROKERS
Boards will push to decompose and reassemble big
capitalize on these changes
businesses into stables of networked capabilities
— all while constantly assessing and managing the
to meet their strategic goals
risk that comes with restructuring. Expect a shakeup
in the board makeup to get it done, with a bias
and purpose — placing one
toward digitally savvy change leaders experienced in
navigating the ambiguous and pushing beyond the
more competitive wedge
horizon to set the leadership bar at its highest point.
between those responding
to a disruptive market and
those seeking to preserve
what made them successful
in prior markets.
© 2018 Forrester Research, Inc.
PART FOUR

The Future Of Organizations

Forrester believes it is a matter of when, not if, more
far-reaching organizational design concepts become real.
It also may be a question of who: If current leadership
does not understand the need for or is adverse to the
concepts altogether, we expect boards to intervene as
competitive pressures mount and market pressures take
a toll on performance.
External forces have been pounding companies for years.
Far from relenting, these forces will pick up new energy
from AI, robotics, the gig economy, and other factors
promising to reshape markets.

For companies to thrive in these dynamic times,

we believe leaders will need to fundamentally
rethink what an organization is and how it works.

© 2018 Forrester Research, Inc.

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1Source: Annamarie Mann and Jim Harter, “The Worldwide Employee Engagement Crisis,”
Gallup, January 7, 2016 (http://news.gallup.com/businessjournal/188033/worldwide-em-
ployee-engagement-crisis.aspx).

© 2018 Forrester Research, Inc.