Why every organization now wants to go virtual
Victor Molen, Co-founder and CEO at Indivd
Indivd is not just a unique company. Indivd is a company of the time and an important example of today’s organizational and disruptive shift to a more virtual business and social world. A movement that is led by the startup world and which has now been greatly accelerated by the Corona pandemic.
The startup company Indivd is now growing rapidly. With a virtual head office in Sundsvall, where three of the founders are also located, 12 employees living in Sundsvall, Stockholm, Kazan, Moscow, and Istanbul, as well as a network of committed retail specialists and privacy experts around the world, Indivd is very much a virtual company. This creates great benefits, but also a lot of challenges, which we intend to highlight in two separate articles.
– The new technology and the new business world we encounter today are completely about to change today’s companies and the way we are used to working together. The growing global competition for cutting-edge expertise, together with the pandemic, has only accelerated this development, says Indivd’s CEO Victor Molén.
The hierarchy had its time
The hierarchical organizations of the 19th century, which were formed and developed with the mass production of industrialism, are slowly being dismantled at the same time as new structures are being formed. The virtual organization is here to stay.
The hierarchical structure was designed to handle very complex processes with many people physically involved. Hierarchical organizations often controlled and managed all activities in a company’s value chain, from raw materials to end customers. Single central management controlled the entire production process, where officials established rules and procedures for managing the entire workforce.
After the Second World War until the beginning of the 1980s, the trend was to build on more and more management layers with complementary specialists. This centralized management hierarchy was considered efficient for handling a large number of workers, but over time it proved to be inflexible, slow, and sluggish.
Since the 1980s, many companies have instead chosen to flatten their organizations by decentralizing decision-making and giving employees increased autonomy and power. The benefits are fewer middle managers, increased efficiency, and faster communication. Redundant processes are cut off in combination with an increased focus on the core business. The emergence of flat network organizations, which use strategic partnerships and alliances, is becoming more common.
However, this geographical and organizational spread has created many new challenges.
– Add to this a growing shortage of qualified skills, the fact that younger people value their time in a completely different way than previous generations and increasingly want to work from home. This explains the boost that virtual workplaces and organizations have received in the wake of the global corona pandemic, says Victor Molén.
Virtual entrepreneurship has become a central part of a completely new and disruptive business revolution. The organization World Economic Forum describes virtual teams as “one of the biggest driving forces behind the future transformation of workplaces”.
Virtual alliances a new trend
In the past, virtual organizations have mostly been used to describe virtual alliances between groups and individuals from different organizations. They have gathered around a common goal and a common competence to build a specific product or service in a short time.
These alliances have often included customers, as well as competitors and suppliers, and they have mostly been temporary with short life- and value cycles.
– The trend that has now been created, not least among today’s all-new startup companies, is the virtual organization or the virtual company. It is basically built according to the same principles as the virtual alliance, but with a more long-term common goal and culture of values, says Victor Molén.
Virtual organizations have no geographical limitations. Several individuals from different geographical and cultural environments gather around a common idea, which includes unique skills and a specific challenge. The virtual organization is often in turn included as a natural building block in a virtual alliance, consisting of a network that also includes partners, suppliers, customers, and even sometimes competitors.
– Most often, this alliance gathers around a common network platform, which we at Indivd are now also about to build up, Victor Molén explains.
Great benefits of virtual business
There are great benefits to a virtual business. In a virtual organization, the participants are, for better or worse, much more dependent on each other compared to previous historical organizational structures. The virtual company, where the interface between the company, suppliers, and customers is constantly changing, is also more mobile and adaptable
One of the biggest benefits is on the skills side.
– With the whole world as a potential workplace, the opportunities to attract the very best available talent increase. Multicultural teams also have an easier time understanding the requirements of global customers. Virtual organizations also find it easier to attract female employees, which has a positive effect on leadership and corporate social responsibility, says Victor Molén.
In addition, virtual organizations have proven to be more efficient and more sustainable, as fewer resources are spent on expensive offices and costly travel while increasing well-being through less stressful work environments. This in turn strengthens employee loyalty.
– In addition, scalability and access to new markets increase. But there are also major challenges in building a virtual organization. We are well aware of these. One of the most difficult, which we ourselves have a hard time influencing, is the conflicting national and international regulations, which are not at all adapted to tomorrow’s borderless companies and the global startup world. A difficult nut to crack is how we attract the competence to stay in Sweden and in the company. Not least, the global tax situation when it comes to options and other incentives needs to be reviewed, concludes Victor Molén.