Podobas Paradox Explained
An increase in a vertical functional specialization without a corresponding increase in cross-functional integration will result in a diminished overall organizational performance.
Profound Implications:
1. The misalignment between the vertical, silos, based patterns of decision making and the horizontal cross-functional ones create the "Zones of Disconnect".
2. These zones will expand according to a geometric progression resulting is a total destruction of operational effectiveness.
3. The vertical pattern of decision making is an artifact of two forces:
a) industrial age focus on specialization
b) a working theory of academic institutions that a vertical pattern of learning (leading to a specialized terminal degree) is beneficial because it expands the frontiers of knowledge.
4. This theory ignores the fact that organizational gains are made by the synthesis of cross-functional processes, not by their separation. It also totally ignores the process by which the "Zones of Disconnect" are created and their destructive impact on productivity and performance.
Traditional Specialization Driven Vertical Functional Silos
Strategy
Marketing
Finance
Operations
Deep Specialization
Horizontal Cross-functional Flows
Strategy
Marketing
Finance
Operations
Cross-functional Integration
Zones of Disconnect
Strategy
Marketing
Finance
Operations
Zones of Disconnect
Flow of Information
Flow of Skillset
Flow of Material
Flow of Funds
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The Remedy: The MBA students, managers, and executives should embrace, learn, practice, and perfect the art and science of lateral systems thinking. As the scope of their responsibilities increases (vertical progress), the need for and the value of cross-functional integrative (horizontal) thinking increases.
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