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Strategic Management

Notes involved in the design process of products with interchangeable components are loosely coupled,
operate autonomously, and can be easily reconfigured.
The concept of modularity can be applied not only to complex product system design, but also
to business system interpretation and design. A modular organisation is one in which different
functional components are separated from one another, a technique adopted from software
engineering.
A modular organisation is in contrast to a composite organisation in which there is no separation
between functions. Modular organisation is also distinct from hierarchical organisation. Modular
organisation is chiefly concerned with the horizontal design of a system.
Modularity allows components to be produced separately and used interchangeably in different
configurations without compromising system integrity. In modular organisations, coordination
tasks are delegated to individual modules (functions, teams, etc.) and coherence is achieved
easily through fully specified interfaces. In addition to the reduction of managerial complexity,
this structural, hierarchical function-based decomposition results in the localization of the impacts
of environmental disturbances within specific modules, increasing the immunity and
adaptability of the overall organisation in a turbulent environment.

11.6 Towards Boundaryless Structures

Traditional companies with boundaries, rules, and extensive plans are at a supreme disadvantage
in today' globalized world, where technology changes daily and the value chain commands
changes of its own. In a traditional company where people are categorized into neatly defined
positions with their job descriptions filed in triplicate in the Human Resources department, the
way a company plans its business can cause it to sink despite planning because the boundaries
can mean lost opportunities, being overtaken by the competition, loss of revenues, or watching
its niche slip away because of a new technology, an alteration in the global marketplace, or
simply a failure to market its product effectively. When changes occur, they happen too quickly
for its organisational processes to meet them; as a result, opportunities are quickly lost, problem
situations take over rapidly, and before the company can respond appropriately, it has lost
customers, opportunities, and market share. Although that company likely has more than enough
talent within its walls to offset all of those disasters, the talent is never put to use, because
employees are constrained to operate within the confines of their job descriptions, where only
the prescribed talents can be put to good use.
The answer to this dilemma lies in boundaryless organisations. A boundaryless organisation is
a contemporary approach to organisational design. It is an organisation that is not defined by,
or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure.
This term was coined by former GE chairman Jack Welch because he wanted to eliminate
vertical and horizontal boundaries within GE and break down external barriers between the
company and its customers and suppliers.
A big question is if all companies become boundaryless? Yes, but not all companies can do it
today, because an organisation has to be completely compatible with such a radical methodology.
Upper level management has to embrace it wholeheartedly, knowing that their status will
essentially vanish in the new organisation, and employees have to be retrained to understand
how to operate under the new paradigm. Companies should already be in the process of getting
to that point, however, and those that do it first will have the greatest advantage.

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