Organize by Business Model

The first thing any new CEO or COO does is restructure the business. It shows he is in command, shows he has new ideas, he is bringing in wisdom from outside the company, and impresses the board that something is happening. Given that this is inevitable and has its merits, anyway, we could usefully think about a central question: how should organizations be structured? Based on my 28 years of experience, mostly with engineering and IT services companies, I think the best answer is: organize by business model – not by geography, not by product, not by vertical.. There are certainly many good arguments to suggest organization by vertical (business domain) is a good thing, especially for IT companies, to do. If nothing else, it forces the company to learn the language of its customers – if you are the head of the Financial services vertical of an IT company, certainly you will begin to understand the business concerns of the financial services industry. The trouble is, even within a vertical, there are many ways or modes of providing services: product, solution, services, bodies.. each of them has a different business rhythm, a different set of things we have to manage well, in order to be successful. Even within services, T&M contracts have to be managed differently than Fixed Price contracts. If we club them all within a vertical and get the same person to manage them all, he/she will manage none of them well. It is like trying to drive three or four cars at the same time – juggling is easy compared with this. The company’s delivery engine needs to be fine-tuned machine – and every business model requires a different kind of tuning.

Technology and education

What is one to make of this new wave of education on the net (MOOCs), ipad apps for mathematics, and what not? Does it spell the end of schools and universities as we know them? I seriously doubt the first - schools are really extended day-care centers, and will always be needed as such, whether any learning happens in schools or not. The consequences for Universities is probably more real and imminent. Christensen's model of disruptive innovation gives us some helpful pointers on how to think about it..MOOC and apps certainly represent 'disruptive innovations' - the path is likely to be something like this: they will work in some corner of the market for which there is no alternative, or for which the requirements are different from what University education provides, will gradually prove themselves there, and will probably take over the mainstream market in about 20 years time. What are some applications/segments where technology-enabled education will work? Think rural Indian communities (no alternative), or corporate training (where degrees, diplomas, research and brand dont matter, only the quality of the material counts,and cost is also not a primary driver)..