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  August 31st, 2020 | Written by

Create a Flexible Corporate Structure to Develop High Performance Leadership in Global Companies

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This article portrays a more detailed picture of the effects of flexible structures on knowledge management. This article also indicates that executives can implement structural changes for better leading their companies. This article summarizes my experience as a senior management consultant and is about getting the information needed to be successful in the right hands of executives worldwide.

How Can Flexible Structures Improve Leadership Effectiveness?

A flexible structure is necessary to lead a global organization. This type of corporate structure is at the forefront of the knowledge base and has relative value in organizations throughout North American and the rest of the developed countries. When executives generate flexible corporate structures inspiring innovation and creativity within organizations, they will secure a foothold in an ever-changing hypercompetitive marketplace.

Corporate structure has been defined as a pattern by which organizations can divide their activities and tasks as well as control them to achieve higher degrees of coordination. Corporate structure, therefore, refers to the bureaucratic division of labor accompanied by control and coordination between different tasks in order to develop communication within organizations. 

Corporate structure can be reshaped by executives when they develop knowledge sharing and inspire employees to create new ideas for a better environment among business-units and departments. Sirkka Jarvenpaa and Sandy Staples, prominent authors and scholars in the area of management at The University of Texas at Austin maintain that the informal structure could facilitate new idea generation to build a more innovative climate within organizations. Executives can, therefore, implement structural changes that develop better collaboration among subordinates and managers. 

Centralized versus decentralized decision making is also a topic that management executives must deal with. More emphasis on formalized and mechanistic structures can negatively impact the executive’s ability to exert such changes. On the contrary, a more decentralized and flexible structure may improve departmental and managerial interactions. The mechanical or centralization at the commanding level of leadership impairs the opportunity to develop relationships among managers, business units, and departments. 

Executives can reshape corporate structure to be more effective when the command center of organizations can disseminate information in a decentralized and organic way as opposed to the mechanical and centralized command center. Decentralized structures shift the power of decision-making to the lower levels and subsequently inspire organizational members to create new ideas and even implement them while centralized structures may negatively impact interdepartmental communications and inhibit knowledge exchange.

An empirical study by Wei Zheng, Baiyin Yang and Gary McLean in Texas A&M University affirms that there is a negative impact of centralization on various knowledge management processes such as knowledge acquiring, creating, and sharing among both managers and departmental units. On the contrary, a more decentralized and flexible structure may enable executives in improving departmental and managerial interactions that can lead to identify the best opportunities for investment that potentially leads to improve knowledge utilization processes for companies. Both scholars and executives have acknowledged some form of relationship between corporate structure and the knowledge utilization process. Ergo, executives can positively contribute to knowledge management by building more decentralized structures within organizations.

The key take-away for executives is to facilitate knowledge management by developing a more flexible structure that is considered an essential source for developing relationships. Therefore, if the corporate structure is not completely in favor of supporting knowledge management, executives cannot effectively manage organizational knowledge to improve overall performance and companies cannot be effective. Hence, the key kernel for executives is that corporate structure is a resource that enables organizations to solve problems and create value through improved performance and it is this point that will narrow the gaps of success and failure leading to more successful decision-making.

How Can Knowledge Management Improve Leadership Effectiveness?

The process of knowledge exchange enhances an executive’s capabilities to play the role of an inspirational motivator in their company as it allows them to set desired expectations by recognizing possible opportunities in the business environment. The knowledge exchange also positively contributes to executives developing a more effective vision for their employees, with access to a comprehensive array of information and insights about the external environments. By creating a vision of what is achievable, executives can then integrate knowledge internally to enhance efficiencies in their business systems and processes that align with this vision, as well as to be more responsive to any current market changes. 

To be effective, knowledge integration also requires a continuous process of monitoring and evaluating your internal knowledge management practices, coordinating experts, sharing knowledge and scanning the changes of knowledge requirements to keep the quality of work and produce in-line with market demand. By undertaking knowledge integration activities that incorporate all levels of the company, executives can assess any required changes that will keep the quality of their services at maximum efficiency. Instilling this systematic approach of coordinating company-wide experts also enables executives to propel the role of intellectual stimulation, which creates a more innovative environment within companies. 

Executives are also responsible for curtailing knowledge within companies, as and when it needs to be reconfigured to meet environmental changes and new challenges. Essentially, what worked yesterday or a few years ago has already changed rapidly, and will continue to do so as technology increases in prolific ways.

Knowledge is commonly shared at a global level amongst companies through domestic and global rewards such as the Malcolm Baldridge Award in the United States and the Deming Award in Japan. However, past industry research posits that companies might lack the required capabilities to access and develop this knowledge or decide to decline from interacting with other organizations due to distrust to share or take knowledge. Therefore, expert groups may not have sufficient diversity to comprehend the knowledge acquired from external sources.

However, despite these limitations whether natural or caused, networking with business partners is a key activity for companies to enhance knowledge exchange and should not take an award to be the impetus to initiate interaction. Ergo, networking with external business partners will enhance the effectiveness of leadership, empowering executives to better develop strategic insights for a more effective vision that incorporates the various concerns and values of external business partners.

Ultimately, knowledge transfer amongst organizations improves the effectiveness of learning, which in turn enables executives to empower human resources through creating new knowledge and solutions. Thus, I suggest that networking takes place between organizations in both domestic and international markets to enhance the effective use of management. As executives in senior positions effectively use knowledge management this is likely to improve their leadership effectiveness through increased learning opportunities.  Figure 1 illustrates how flexible structures lead to the improvement of knowledge management and leadership.  

In Conclusion

This article can portray a more detailed picture of the effects of a flexible structure on knowledge management performance. When executives ensure the effectiveness of knowledge management projects they increase control and lesson operational risk. Furthermore, knowledge management constitutes the foundation of a supportive workplace to disseminate knowledge and subsequently enhance the effectiveness of leadership. In fact, a firm’s ability to develop leadership can be highly affected when executives implement knowledge management projects as the primary form of managing people, resources, and profitability.

Executives can now see how they can implement structural changes, which can enable superior knowledge management performance to achieve business objectives and satisfy careers. In addition, this article is set in place to inspire executives to create effective structural changes in order to meet and exceed the challenges of not only today but also what we see as the onset of new advances in the future. The practices mentioned in this article can also represent a complete answer to the need for structural changes in today’s global market environment.

I suggest that scholars take these ideas and continue to conduct research using executives as the focal point so that academic scholarship can meet the needs of managerial implications at the higher echelons of companies worldwide. 


Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to business publications and his work has been featured in top-flight business publications.