I have spent much of my career believing that organisations need to build stronger capabilities. I still do. But I have recently been thinking about a question that perhaps comes before that. Why does an organisation have its present shape?

Most organisational structures were created for a reason. Information was difficult to collect. Expertise was scarce. Distance mattered. Human beings could only process so much complexity.

So we divided organisations into functions. We created layers of management. Information travelled upwards, being aggregated and interpreted along the way.
It was a rational response to the constraints of the time.

Banks, for example, built large branch networks because customers needed a physical place to transact and local knowledge mattered. Branches were not a sign of old-fashioned thinking. They were the right organisational response to the world at the time. The same applies to many large organisations in other sectors.

But technology has changed that constraint. We no longer need a physical location to do banking transactions. And that makes me wonder why organisations do not always change at the same pace as the constraint that shaped them.

If technology changes how information is collected, interpreted and shared, do we still need the same functional boundaries? The same layers of management? The same reporting structures?

Perhaps we are too focused on using new technology inside old organisations. The more important question may be whether the organisation itself needs to be redesigned.

Before asking what new capabilities we need to build, we should first ask what constraints gave our organisation its present shape and do those constraints still exist?

If the constraints have changed, why should the organisation remain the same?