When a Company is relying too much on direct, vertical interaction, among functions or divisions, and the Head, conflicts multiplies.
Vertical interaction, according to Ackoff and Gharajedaghi, is typical of an uni-minded organization, where peripheral, or vertical, units, are supposed to execute the directions from the Head, with a limited amount of “local” flexibility.
In the real world, this often means that the Head loses touch with the reality of the field, as each vertical unit repprts a filtered view of the business status.
Furthermore, competionion develops among internal lines, diverting the energy devoted to competing in the market, towards internal struggles.
In the traditional management wisdom, this is often positive, as increases strength of each vertical unit, creates a self-controlling mechanism, and promotes natural selection: weaks are eliminated.
In the wide and wild market of the globalized world this is no more true.
Internal competition destroys value, through two mechanisms:
– limited deployment of competency,
Internal competitors seeks the goal of damaging other internal competitors, creating the conditions that make their competitors’ performance worse.
A good top management should be aware of the increasing level of internal competition, putting in place mechanisms that turns this energy in value for the Company.
The easiest way is to give rewards to “promoted results”: if your competitor/collegue reaches a result thanks to your support, you receive a bonus, and his bonus will be higher if he acknoweldge this.
Such an approach puahes teamworking, and lowers the collaboration barriers across certical organizational structures.
The result is an increase in competitive strength, for the Company, in the marketplace.