Organizing for the future

Organizing forPlatform-based talent markets help put the emphasis in human-capital management back where it belongs—on humans. Here is a brief excerpt from an article written by Aaron De Smet, Susan Lund, and William Schaninger for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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The best way to organize corporations — it’s a perennial debate. But the discussion is becoming more urgent as digital technology begins to penetrate the labor force.

Although consumers have largely gone digital, the digitization of jobs, and of the tasks and activities within them, is still in the early stages, according to a recent study by McKinsey Global Institute (MGI). Even companies and industries at the forefront of digital spending and usage have yet to digitize the workforce fully (Exhibit 1).

The stage is set for sweeping change as artificial intelligence, after years of hype and debate, brings workplace automation not just to physically intensive roles and repetitive routines but also to a wide range of other tasks. MGI estimates that roughly up to 45 percent of the activities employees perform can be automated by adapting currently demonstrated technologies. (For more, see “Four fundamentals of workplace automation.”)

This coming digitization of the workforce — and the powerful economics of automation — will require a sweeping rethink of organizational structures, influence, and control. The current premium on speed will continue, to be sure, even as a new organizational challenge arises: the destabilization of the way people work.

The threat to organizational health is plain. As we argue in “Agility: It rhymes with stability,” the hallmark of an agile age is the ability to be stable and dynamic, allowing incumbents to make the most of their big-company advantages, while simultaneously keeping pace with quicker-moving disruptors. Like old masonry buildings—such as the Musée d’Orsay in Paris or the Asian Art Museum of San Francisco—that have new glass and steel added to their existing structures, today’s leading companies must integrate the contrasting elements of stability and speed to create a more functional, modern whole.

McKinsey research shows that bedrock aspects of stability — workers’ roles and the processes that support them — are the first and fourth most important factors, respectively, differentiating agile companies from the rest. What happens when these roles and processes suddenly turn to quicksand? Most of the organizational ideas of the last half-century or more have taken for granted the underlying building blocks of jobs and the way people work, both individually and together.

Automation can devastate these assumptions by disaggregating jobs into their component tasks and subtasks and then hiving off those that can be automated. It will force companies to figure out how to reassemble the remaining tasks into something that makes a new kind of sense, even as it reconceptualizes the very idea of what a job is. The early stages of these efforts may already be visible as organizations free highly specialized knowledge workers from mundane tasks. The most talented surgeons at one cardiac hospital, for example, perform only the heart surgery itself, while more junior staffers handle pre- and post-op procedures; a similar redesign has helped lawyers on the partner track and school administrators make the most of their scarcest skills.

Once roles and tasks are sorted out, the newly constructed jobs that result must be reaggregated into some greater whole, or “box,” on the org chart. Those boxes then need a new relation to each other. Will the destabilization of jobs prove powerfully liberating to organizations, making them far more agile, healthy, and high performing? Or will it initiate a collapse into internal dysfunction as people try to figure out what their jobs are, who is doing what, and where and why?

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Here is a direct link to the complete article.

Aaron De Smet is a principal in McKinsey’s Houston office; Susan Lund is a principal with the McKinsey Global Institute, based in the Washington, DC, office; and Bill Schaninger is a director in the Philadelphia office.

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