The Boundaryless Organization: Structure and Advantages

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  • 0:06 Boundaryless Organization
  • 2:29 Vertical Boundaries
  • 3:46 Horizontal Boundaries
  • 5:06 External Boundaries
  • 5:52 Geographic Boundaries
  • 6:33 Lesson Summary
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Lesson Transcript
Instructor: John McLaughlin
In this lesson, you will learn how the structure of an organization can create barriers that have a negative impact on its operations. Find out why managers want to reduce or eliminate these barriers and create a boundaryless organization.

The Boundaryless Organization

Skeeter Scruggs owns a small family grocery store in Bug Tussle, Alabama, that employs four people: Skeeter's wife, Winnie Mae; his son, Junior; his daughter, Fannie Mae; and Skeeter himself. Last year, Skeeter's grocery store averaged about $5,000 a week in sales.

Jack Welch is the former CEO of General Electric, a multinational conglomerate American corporation that employs hundreds of thousands of people all over the world. When Jack took charge of GE in the early 1980s, he announced that his mission was to change the structure of his enormous corporation to a structure similar to that of companies like Skeeter's grocery store.

Why would the CEO of a gigantic company, like General Electric, want to re-structure his multi-billion dollar corporation to function like Skeeter's tiny grocery store? Jack wanted to banish the barriers that were bogging down his billion dollar bureaucracy and restructure his organization to operate as a boundaryless organization.

What exactly is a boundaryless organization, and what changes must management make to the structure of an organization to make it boundaryless? Let's find out!

In order to operate effectually, an organization must have structure. The structure of an organization plays two important roles in every organization: structure clarifies the roles for each member of an organization and dictates the amount of control each member possesses.

So, although structure plays an important and necessary role in an organization, the structure of an organization can also create barriers between people in different parts of the organization and between the organization and stakeholders outside the organization. These barriers or boundaries can inhibit people from working together and make the organization less efficient and less responsive to the needs of their customers.

Is there a way to structure an organization so that these boundaries are eliminated? Although there will always be some hierarchy and geographic boundaries in organizations, a boundaryless organization is an organization that seeks to remove vertical, horizontal and external barriers so that employees, managers, customers and suppliers can work together, share ideas and identify the best course for the organization.

Vertical Boundaries

One type of barrier that the structure of an organization can create is a vertical boundary. Vertical boundaries create barriers between the different levels of management that are part of the structure of an organization. These boundaries are called vertical boundaries since they impede communication and interaction between organizational members who operate at different levels within the organization.

In order to reduce or eliminate these boundaries, management must flatten the hierarchy, minimize the importance of status and rank in the organization and use participative decision-making practices, so that organizational members do not feel constrained by these vertical boundaries that are imposed by the organizational structure.

There are no vertical boundaries among the employees of Skeeter's Grocery Store. Winnie Mae is the head cashier, Junior stocks the shelves, Fannie Mae works as the assistant cashier and bagger, and Skeeter manages the store and helps out wherever he is needed. Every member of this organization communicates with each other and works together to provide the best possible shopping experience for their customers. If Junior notices they are low on grits, he tells Skeeter, who places an order for more grits. If Skeeter sees that there are too many carts in the parking lot, he sends Winnie Mae to collect them.

Horizontal Boundaries

The structure of an organization can also create boundaries between the different functional departments that are part of the organizational structure. These boundaries are called horizontal boundaries since they impede communication and interaction between organizational members who work at different functional departments within the organization. Horizontal boundaries can cause organizational members to focus on achieving the goals of their department while losing sight of the overall goals of the organization.

In order to reduce or eliminate these boundaries, departments should be replaced with cross-functional teams, and organizational members should be structured around the processes that the organization performs. Organizational members can be rotated in and out of different functional areas so that they become generalists instead of remaining specialists in their department.

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