Boundaryless Organization – Definition and Types

Organizations, by definition, are entities with  boundaries. External boundaries separate a company from its suppliers and customers and define  its geographic reach. Internal boundaries separate  the departments between each other, management from employees. Such lines of  differentiation have been necessary.  Different departments in the organization work towards the common goal the overall success of the business. However, companies that thrive within the new environment  of global competition, rapidly changing technologies, and shifting markets are characterized by  not having many boundaries.  The new model of success is defined as “boundaryless organization”,  a term created by Jack Welch during his term as CEO of GE.

A boundaryless organization is a contemporary approach in organizational design.  In a boundaryless organization, the boundaries that divide employees such as hierarchy, job function, and geography as well as those that distance companies from suppliers and customers are broken down. A boundaryless organization seeks to remove vertical, horizontal, and external barriers so that employees, managers, customers, and suppliers can work together, share ideas, and identify the best ideas for the organization.  Some believe that the boundaryless organization is the perfect organizational structure for the 21st century.

In boundaryless organizations, employees are empowered to make decisions; therefore decisions are made by people closest to the root of the problem and who have to live with the consequences. Empowering and giving authority to employees allows to have the shortest time between decision and implementation.

The goal in a boundaryless organization is to develop greater flexibility and responsiveness to change and to enable the free exchange of information and ideas. It is made up of selfmanaging and crossfunctional teams that are organized around core business processes.  The teams include employees from different functional areas as well as customers and suppliers.

Boundaryless organizations are able to achieve greater integration and coordination. It shows in integration of resources and human capital. They are able to adapt to environmental and technological changes faster.

Types of Boundaryless Organizations

1. Network Organizations

In a network organization, various functions are coordinated as much by market mechanisms as by managers and formal lines of authority. Emphasis is placed on who can do what most effectively and economically rather than on fixed ties dictated by an organizational chart. All of the assets necessary to produce a finished product or service are present in the network as a whole, not held in-house by one firm.

2. Virtual Organizations

The most interesting networks are dynamic or virtual organizations. In a virtual organization an alliance of independent companies share skills, costs, and access to one another’s markets. It consists of a network of continually evolving independent companies. Each partner in a virtual organization contributes only in its area of core competencies. The key advantage of network and virtual organizations is their flexibility and adaptability.

3. Modular Organizations

A modular organization is an organization that performs a few core functions and outsources noncore activities to specialists and suppliers. Services that are often outsourced include the manufacture of parts, trucking, catering, data processing, and accounting. Thus, modular organizations are like hubs that are surrounded by networks of suppliers that can be added or removed as needed. By outsourcing noncore activities, modular organizations are able to keep unit costs low and develop new products more rapidly. They work best when they focus on the right specialty and have good suppliers.

4. Learning Organizations

The concept of a Learning Organizations doesn’t involve a specific organizational design. Learning Organizations is an organization that has a developed the capacity to continuously adopt and change because all members take an active role in identifying and resolving work related issues. In a Learning Organizations, employees are practicing knowledge management continually acquiring and sharing new knowledge and are willing to apply that knowledge in making decisions or performing works. Some organizational designs theorists even go so far as to say that an organization’s ability to do this-that is, to learn and to apply that learning as they perform the organization’s work may be the only sustainable source of competitive advantage.

In a Learning Organization, it is a critical for members to share information and collaborate on work activities throughout the entire organization, across different functional specialties and even at different organizational levels. This can be done by minimizing or eliminating the existing structural and physical boundaries. In this type of boundaryless environment, employees are free to work together and collaborate in doing the organizations work the best way they can and to learn from each other. Because of this need to collaborate, teams also tend to be an important feature of a learning organization’s structural design. Employees work in teams on whatever activities need to be done, and these employee teams are empowered to make decisions about doing their work or resolving issues.

With these empowered employees and teams, there’s little need for “bosses” to direct and control. Leadership plays an important role as an organization moves to become a learning organization. Leaders should facilitate the creation of a shred vision for the organization’s future and then keeping organizational members working towards that vision.

Also organizational culture is an important aspect of being a learning organization. A learning organization’s culture is one in which everyone agrees on a shared vision and everyone recognizes the inherent interrelationship among the organization’s process, activities, functions and external environment. In learning organizations, employees feel free to openly communicate, share, experiment, and learn without fear of criticism or punishment.

Learning can’t take place without information. For a learning organization to “learn”, information must be shared among members, that is organizational members must engage in knowledge management.

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