By S. Sundarajan

One-third of Fortune's Global 500 listing for the year 1970 had dropped out of sight by 1983. By 1990, a full 300 had vanished. While there is not enough data to zero in on the exact reasons for the failure of these companies, one could have been their inability to adapt to a changing environment. If firms are to thrive in this millennium, they must focus on the challenges posed by the changing business environment. I believe these are some of the issues firms will have to address:

• Customers, empowered with information and flexibility, will become more discerning.
• Companies must ensure that they inspire superior performance from employees. This will involve setting goals for employees, creating performance specifications, giving rapid feedback, and then leaving employees alone.
• Knowledge will be the only sustainable competitive advantage. The better firms will acquire, develop, and distribute knowledge rapidly so that everyone has access to the best ideas, practices, and products.
• Technology gives customers and competitors instant access to each other. It also allows companies to learn their customers' likes and dislikes.
• Everything will need to be done faster-new products and services must be first to market or they'll fail to win their potential marketshare.
• Innovation will not be confined to products and services, but will apply to the company itself- its management, its organisation, and its processes.

To thrive in the new millennium, organisations will need to be designed to meet these challenges. Historically, organisational design meant organisational structure. Today it means the alignment of structure, management processes, information systems, reward systems, and people.

Bharat Petroleum began redesigning its organisation in 1997, in partnership with Arthur D. Little. During the dialogues that we had on the variables that we had to take into account, we realised that we needed to resolve several tensions between the choices available to us. While working on these tensions between these choices we were closely guided by a few principles of organisation design. The organisation design that emerged is futuristic and represents the organisation of this millennium. The design is flexible enough to keep pace with whatever changes the rest of this millennium will surely bring.

The principal strategic challenge that an organisation faces is the reconciliation of seemingly conflicting goals like thinking long-term whilst delivering short-term results, and investing in innovation while increasing operational efficiency. In each aspect of this challenge, there is a tension between two necessary, and, apparently opposing goals, which needs resolution. There is also another kind of tension-between separation and connection.

Whether it is a question of divisions in companies, teams in divisions, or even individuals in teams, there is a potential competition among components and varying degrees of collaboration between them. Creating effective collaboration, within and between groups, is a challenge. The challenge is to design companies that are sufficiently decentralised to encourage innovation in all their parts, and sufficiently centralised or co-ordinated to adopt best practices quickly.

For companies to be innovative and efficient at the same time, it is necessary to adopt a new and different approach to organising work and people. The hard aspects of organising people must be combined with the soft aspects: values, visioning, new ways of thinking, and new means of influencing behaviour. The general outlines of such an organisation can be thought of in terms of five organisation design variables:

• The glue (vision and values) that provides alignment and binds the organisation.
• The approach to defining boundaries.
• The choice of measures of performance.
• The means of influencing the behaviours of employees to ensure that they act in a desired way.
• The new competencies leaders require to think holistically and act collaboratively.

An important aspect of organising is the vision and values that are passionately held by all employees in the organisation. Shared vision provides the motivation to act. Shared values guide the action. Even with a shared vision, people need to understand what their decision-rights will be, as they participate in the process of implementing the vision. Two important aspects of these decision-rights are: who has control over the deployment of which resources, and how and by whom will the rules that affect people and work in the organisation be established. Determining good measures is not an easy task. Innovation, by nature, is a non-linear process where cause and effect linkages are not obvious. The measures should not be limited only to financial performance. Instead, they should form a balanced set to measure the satisfaction levels of all the key stakeholders. Furthermore, they should not only measure current performance, but also measure the rate and the quality of change and learning.

There are four aspects to the means of influencing behaviour: communication; role modelling and expectancy; rewards; and alignment of the various means. Whilst financial incentives are a means of influencing behavior in organisations, the other means is persuasive communication. Another powerful means of influencing behaviour is role modeling and expectancy. Expectancy is a subtle approach often used by great leaders and coaches. By simply expecting successful performance from people, they get people to pull themselves to succeed.

A key challenge is the change in style and behaviour of leaders. They need to change their mindset from owners of pieces of the business to an acknowledged leadership role. The new team leader plays several roles: coach, team-member, delegator, mentor, champion, and growth-diviner.

While redesigning the organisation, we at Bharat Petroleum worked on all the five design variables mentioned above. From the indications available so far, the new organisation is working well. Our focus on the customer has increased, and the speed of decisions has improved. This could well be the shape of the Organisation Of The Millennium.

S. Sundarajan is the Chairman and Managing Director of Bharat Petroleum Corporation

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