No organization is an island. Organizational boundaries are permeable and yet boundaries tend to suppress and resist the flow of products, services and information (PSI); the resistance to flow at the boundary manifests itself as transaction cost which is a measure of resources “lost” at the boundary. Furthermore, in addition to organizational boundaries, the boundaries of intra-organizational units such as departments, and distinct departmental processing units or work centers can act as process boundaries. When process boundaries are impermeable, the flow to and from an organization cease—then, the value of the organization may cease.
Why do boundaries consume resources and incur costs? How could these costs be trimmed? If organizational boundary is akin to a membrane, could it be peeled away? Answers to these questions are a function of our understanding of boundaries, which is limited.
Consider the fact that Transportation Security Agency (TSA) at airports slows down the flow of passengers and luggage in airports; the flow will greatly improve if TSA is peeled away from airports but it would make passengers, airports and planes vulnerable to terrorism. This is an extreme example of the conflicting demands on a boundary entity, the TSA.
Boundaries play the dual role of a valuable, discriminating gatekeeper that blocks the inflow of some but allows the flow of others. An organization needs protection from external influences and may use the boundary to form a “firewall” to prevent external influences from flowing into the firm. Computers today have firewalls that prevent selected items from entering the computer from the Internet, while allowing the bulk of the information to flow to and fro from the same computer. The discriminating “firewall” is a form of boundary. An ideal computer firewall is transparent to the computer user, and all relevant information is permitted to flow freely to and from the computer.
Product development is one of the most challenging of tasks undertaken by businesses. It is impeded by the number of organizational boundaries in its path. Over the last two or more decades, product development teams have evolved to overcome the challenges posed by organizational boundaries. Teams have evolved over the last few decades as a powerful tool to subdue the negative effects of boundaries. However, product development across boundaries still remains a complex and daunting task.
Marketing literature acknowledges the challenge of being a Product Manager who plays an important boundary-spanning role. The product manger, in the role of a boundary-spanner, fields information from competition, consumers, other organizations, consultants, and retailers outside the organizational boundary, and five other entities from inside the organizational boundary. Boundaries extract a heavy price, not always measured in dollars.
Managing the flow through boundaries occupies a good part of a manager’s time and effort, particularly the time and effort of boundary-spanners. Organizations that master the art and science of minimizing the restriction to PSI flow at process boundaries perform more efficiently and effectively than organizations that do not. The resistance at the boundaries is overcome at the expense of resources without adding any value to the customer purchasing products, services or information. Thus the flow through boundaries adds to the costs of a product or service without adding value to the customer; clearly undesirable. Thus, making the boundaries more porous to PSI flow is a function of management.
*Part of work-in-progress with Professor Paul Swamidass