The Horizontal Organization

Citation

van Hoek, R.I. (1999), "The Horizontal Organization", Supply Chain Management, Vol. 4 No. 5, pp. 254-256. https://doi.org/10.1108/scm.1999.4.5.254.1

At the heart of the horizontal organization (much like the supply chain) is the delivery of value to customers. Embedded in most organizations are core processes that are meant to deliver value. But in today’s vertically organized firms, the people who make the core process work are almost always grouped according to fragmented functions. This text is designed to give organizations the structural form andintegrated organizational approach that will allow them to deliver value to customers (citations p. ix and x). This is achieved using the following organizing principles (which are at various impact levels and are sometimes overlapping):

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  organize around core processes, not tasks or functions;

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  install process owners;

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  make teams, not individuals the cornerstone of the organization;

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  decrease hierarchy by eliminating non value added work and assigning responsibility to teams;

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  integrate with customers and suppliers;

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  empower people by giving them tools and authority;

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  use IT to help people reach performance and deliver value to customers;

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  emphasize multiple core competencies and train people to work cross‐functionally;

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  promote multiskilling;

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  redesign functional departments to work as partners in process performance;

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  measure end‐of‐process performance, customer satisfaction, employee satisfaction and financial contribution;

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  build a culture of openness, cooperation and collaboration.

It is implemented in three phases: setting direction, formulation design and institutionalizing the approach.

The book references the fundamental work of Mintzberg in “The structure of organizations” and claims that the horizontal organization does not represent a complete move away from hierarchical organizations. In most horizontal organizations certain elements of the organization (such as CEO hierarchical responsibility and reporting lines, R and D or certain staff functions) remain vertical. A question which therefore emerges is whether the horizontal, supply chain based, process organization represents a new organizational structure, in addition to the Mintzberg typology.

In that respect Ostroff states that horizontal organizations can be formed at various levels of the organizations, from the entire corporation, down to the division, business unit and even the operating level. This suggests a different level of analyses than the referenced work of Mintzberg (which covers the organization as a whole), leaving out the cross company dimension of the supply chain (included as one of the fourteen principles but hardly covered) and one can question how much integration (recall the first paragraph) can be leveraged at that level.

When a top consultant (Ostroff is a principle with AT Kearney) writes a book, one might expect that he will make sure to bring a concept that works well with (top) management and back that up with great case examples from consulting practice. Often however, they do not reveal the true technicalities of the trick in their concept. Horizontal organization is no distinction from that practice: a lot of great promises (short cycle times, highest quality, full customization, lowest possible costs), with case chapters on GE, Ford, Motorola and Xerox, but hardly any detailed empirical evidence to prove or reveal how it is put into practice or what the contingencies of the concept are (i.e. if it works well with these companies, does it work for me?). Case chapters provide the reader some great war stories and can create buy‐in from business readers, but how to go about this in our own organization? Ostroff claims that a horizontal organization will be different in each case but does not explain how.

The book does not reference relevant literature in this area. The book falls short of explaining how it is to contribute to existing techniques such as BPR (“horizontal organization is not a one‐off transformation because it institutionalizes responsiveness”; the process and customer focus, however, are similar) or flattening the organization (“certain levels in the organization will remain”). Reference to the literature might have helped, going a long way to providing clues and guidance. Cooper et al. (1997) for example, defined generic supply chain processes that can provide guidance in defining horizontal organizations.

Despite its lack of detail, apart from the suggested structure of 14 principles, this book may help in selling supply chain management to top management. Make sure however, to have your supply chain management practices on hand, to be able to deliver on the promises, in case they buy it!