Large Enterprises Need Small Organizational Units to Enhance Agility

Rapid development and widespread use of digital technologies, combined with constantly changing external conditions, continuously pressure organizations, requiring agile actions, high‑frequency practice, and fast iteration to sustain value creation for customers.

01 Large Enterprises Need "Small" Organizations – Most Chinese large enterprises still operate under stable, traditional hierarchical structures that lead to rigid processes and low efficiency, making it difficult to respond quickly to market changes and customer needs. Breaking the "pyramid" model and creating smaller, networked units (often called "small cells" or "networked" structures) can give each unit flexibility and innovation, enabling rapid response to environmental and customer demands. When large enterprises adopt platformization, they empower members and unleash individual creativity.

02 Four Directions to Improve Organizational Agility

1. Activate Business – Organizational change must support business development; the business itself must be competitive and able to face external changes.

2. Architecture, Tools, and Methods – Agility relies on tools such as information‑sharing platforms that enhance decision‑making and collaboration speed; large enterprises should invest in appropriate tools and platforms.

3. Build an Agile Organization – Establish a performance culture that emphasizes not only departmental goals but also organizational collaboration and symbiosis.

4. Internal Marketization – Large enterprises should foster genuine internal competition and market mechanisms, turning internal units into truly competitive entities.

Large enterprises tend to be cautious because they emphasize risk control, societal impact, and stability, but digital transformation forces them to adapt their structures to improve agility.

03 Efficient Collaboration for Value Creation – In the digital age, effective organizational collaboration is crucial; enterprises must restructure to achieve high‑efficiency value creation.

Key principles for organizational restructuring:

Adaptability to future environments.

Alignment with corporate strategy.

Achieving efficient collaboration.

Customer‑oriented focus.

Restructuring should enable the organization to exchange resources with its environment, respond to cultural and societal demands, and maintain legitimacy within its industry.

Strategic shifts inevitably lead to structural adjustments; for example, Tencent evolved from functional to multi‑business, then to business‑system and finally to a business‑group model, each change serving strategic needs.

As management scholar Chandler said, "Structure follows strategy." Modern organizations also pursue shared, decentralized, and boundary‑less structures, adopting practices like "amoeba" units (e.g., Tianhe Solar's "platform + venture" model or Haier's autonomous business units) to revitalize agility.

The ultimate design principle is customer orientation, providing employees with resources, support, value assessment, and motivational vision, while information flow becomes networked rather than linear, fostering cross‑team and cross‑department connections based on trust.

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