I'm intrigued by a concept that John F. Welch developed with great success at General Electric: the concept of the company without boundaries. By this, Welch means the removal of all barriers to the flow of information and ideas into and through your company.

In some companies, information flows through the corporate structure, but only through narrow, carefully restricted channels.

In a typical old-style corporation, ideas and information flow up and down "chimneys of power" running from the executive offices down through several layers of management. Often, information becomes bottled up in little bureaucratic compartments where it can never get out and reach the people who could really benefit from it. There are several reasons for companies to dismantle these barriers to free-flowing communication.

The Four F’s

Rosabeth Moss Kanter tells us that modern companies must observe the Four F's, by being focused, flexible, fast, and friendly. You can't be any of those unless information can flow fast and freely from all corners of the organizations.

You can't focus the efforts of your entire work force if your organization is criss-crossed with walls that impede the flow of communication.

You can't be flexible if you have a rigid corporate structure in which every division and department is a closed information loop with no lines of communication to other parts of the organization. You can't respond to the market if you erect barriers to information flowing in from the outside.

You can't be fast if information has to seep slowly through layer after layer of management.

And you can't be friendly if your people don't talk to other people inside and outside your organization.

In the old days, everyone had to "go through channels." In the new business environment, the channels have to be removed. The organization must become saturated with information and ideas.

Here's how Jack Welch described the kind of organization he had in mind:

In a boundaryless company, internal functions begin to blur. Engineering doesn't design a product and then "hand it off" to manufacturing. They form a team, along with marketing and sales, finance and the rest. Customer service? It's not somebody's job. It's everybody's job. Environmental protection in the plants? It's not the concern of some manager or department. Everyone's an environmentalist.

If you look around, you'll probably find plenty of boundaries in your own company that need to be removed. One of them may be the door to your office that remains closed to input from your employees. Another might be a rigid boundary between hourly and salaried employees that keeps people in one category from talking freely with people in another. Or it could be a boundary labeled "NIH" for "Not Invented Here." Some companies are hostile to ideas that didn't originate in-house.

The Right Way, The Wrong Way, and The Company’s Way

To paraphrase Vince Lombardi, in many organizations, the company's way isn't the best way; it's the only way. When you take that attitude, you're literally shutting out a world of innovative ideas.

Because GE was receptive to ideas from beyond its corporate walls, it was able to reduce its average inventory levels by $200 million a year.

Here's what happened:

GE found an appliance company in New Zealand using an innovative method of compressing product cycle times. It put the method through a trial run in a Canadian affiliate, then transferred it to its largest appliance complex in Louisville, Kentucky. The method, which GE dubbed "Quick Response" has enabled GE to respond more quickly to customer needs.

But GE didn't just introduce it in Louisville and forget it. It brought people in from all 13 of its major businesses to study the method and adapt it to their own operations.

A company without boundaries doesn't just shop for ideas among other companies in the same business. GE dispatched people to Wal-Mart to learn about the management practices that have propelled this business to the forefront in retailing.

Smaller companies can use the boundaryless concept to acquire products and expertise that they can't afford on their own. If you're wrestling with a tough problem, look for some other company that has had the same type of problem and has solved it. If you can't afford the R&D required to develop the technology you need, look for somebody who has already developed the technology and buy it.

This approach can benefit both sides of the transaction. I've watched it in action with a long-time client of mine in Tulsa. The Bama Companies is a sweet goods and snack manufacturer. It does a prosperous business under its own label, but has broadened its market. A number of other companies in the sweet goods and snack business have contracted with Bama to manufacture their products under private labels.

Some of these companies are too small to invest in the manufacturing facilities Bama can offer. Others are large companies that find it more profitable to contract with Bama than to invest in their own plants. Bama has made it into a win/win situation for all parties.

Divisions Within A Corporation

Another boundary might be the lines that run between divisions of a corporation. GE brought down the interior walls by practicing a principle Welch calls "integrated diversity."

Under this concept, GE remains a diversified company. It consists of many different businesses, each at the top or near the top in its market. But the people from these businesses look for ways of sharing their knowledge and technology. If one division develops a piece of technology, the company looks for multiple applications.

For instance, in GE's Medical Systems, experts from Aerospace helped with the development of ultrasound technology. Engineers from Aircraft Engines helped Power Systems to cope with expanded worldwide demand for gas turbines.

Moving personnel across divisional lines provides fresh perspectives, not to mention hybrid vigor. In 1991, GE transferred leadership in four of its 13 major businesses, with new leaders coming from other GE businesses. These internal transfers give executives throughout the company broad-based experience. They no longer think narrowly of divisional interests; they think first of GE.

Among the toughest boundaries to dismantle are the ones individual managers erect around the borders of their turf. In the old days, you provided people with upward mobility by giving them a raise and a title. Soon the corporate work place was overrun by people with "manager" in their titles. They carved out little fiefdoms and fiercely defended them.

Look at your own work place. How many of your "managers" really need to manage? In a boundaryless corporation, there's a greater need for people who coach, advise and facilitate through teamwork than for people who control and direct through authoritarian management.

If you review the job titles and job descriptions in your company, you may see opportunities to reduce the number of management positions by replacing functionaries with leaders. If you do this, you'll be amazed at the way boundaries of authority can be turned into avenues of cooperation.

Many of the bureaucratic boundaries erected by corporate functionaries are there because the individuals feel insecure. Because they feel insecure, they resist change. GE sought to remove these boundaries through a program it calls "Work-Out."

Work-out sessions are similar to New England town meetings. The people who attend are drawn from the ranks of hourly and salaried employees; of management and union leaders. These are people who don't often have an opportunity to speak to each other during the work day. In keeping with its boundaryless nature, Work-Out also frequently includes representatives of customers and suppliers.

During these sessions, people are free to speak out on any topic that turns them on. Often, the complaints they raise are addressed on the spot.

One union leader, given a chance to lecture at Work-Out, told the group that he used to have three clearly defined enemies: the IRS, the Russians and GE management. Now, he said, there's only one: the IRS.

I'm convinced that the Company Without Boundaries is the company of the future. If you remove the barriers between your company and its stakeholders, you create a community of mutual interests in which everyone works toward the good of all. That's what you call a win/win situation.

Published in FPG's March 2002 Issue