Why teams and the ‘two pizza rule’ matter when creating new organizational structures

In new organizational structures, traditional hierarchies have been replaced with networks of teams. These teams are designed to be decentralized in order to foster innovation and empower the modern workforce. Read more below.

By Ann Niemeyer, Principal HCM Consultant at Terillium

There’s truth to the quote above, a statement made by Ray Kurzweil in 2001. With progress comes change, and over the past 15 years almost every aspect of our personal and work lives has been be impacted.

On a personal level the way we shop, the way we entertain ourselves, the way we communicate with our friends and family, have all been affected by progress through technology.

On a professional level we’ve experienced change in many ways including the way we search for jobs, the way we work with colleagues, the way we get our jobs done.

The fast-paced nature of progress is also impacting how companies adapt their product and service offerings to their clients, in increasingly expedited timelines. As a result, forward-thinking CEOs, CHROs, and other business leaders, are creating new organizational structures that make sense today.

In these new organizational structures, traditional hierarchies have been replaced with networks of teams. (Source) These teams are designed to be decentralized in order to foster innovation and empower the modern workforce. Companies like Amazon for example build small, focused teams with authority over specific initiatives. This approach is one of Amazon’s organizational strategies to avoid “group think” by enabling innovation through independent, team-based solution design. Jeff Bezos calls it the “two pizza rule” – never have a meeting where two pizzas couldn’t feed the entire group.

A recent report, The new organization: Different by Design, explains the network of teams concept. As noted in the report, networked teams have the following traits:

  • A high-degree of empowerment
  • Strong communication skills
  • Rapid information exchange

These teams are smaller in size and comprised of cross-functional team members who are all focused on addressing specific business needs. These small teams tap into one of the most valuable assets of the organization: the skills, talent, and strengths of employees.

 

creating new organizational structures

Organizations of the future – a network of teams

 

The mission-focused teams network concept creates challenges for Human Resources, since often the duration of an employee assignment is attached to the timeline of their group’s project. HR organizations tackling these challenges need to be flexible in order to adapt to the types of managers needed to lead the teams.

creating new organizational structures

It’s worth noting that in small and medium-sized organizations it’s not unusual for one manager to wear both these hats. This makes the role of HR that much more important in order to support and retain talented managers and employees.

The world is progressing, faster every day. Companies with traditional, hierarchical organizational structures are dwindling. CEOs, CHROs, and other business leaders need to evaluate their organizational design and embrace necessary changes in order to meet the needs of customers and employees today (and tomorrow).

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creating new organizational structures