Transcript Organization Theory: Strategy Implementation Process Steven E. Phelan

Organization Theory:
Strategy Implementation
Process
Steven E. Phelan
October, 2008
Overview of Today
Simulation Results
Organizations as machines
Strengths and limitations, implications for strategy
Organizations as organisms
Open systems
Contingency theory
Organizational ecology
Brains and Cultures
Paths of Glory
Organization Theory
Developed out of sociology
Sociologists tend to believe in institutions
and forces greater than the individual (that
may even constrain the individual)
Management theory has tended to see
managers as free agents
See Democrats on an Elevator video
 Give
some left and right wing interpretations
Fundamental Tension
Individual vs. Society
Choice vs Constraint
Free agency vs. Determinism
Freedom vs. Inevitability
Pre-ordained, Destiny
We will explore these boundaries in the
next two classes
Why, what is the relevance to future
CEOs?
Morgan on Metaphor
Morgan justifies his book as
teaching metaphors
“Is there value in teaching
people to see their
organizations in different
ways?
What, then, is truth if different
people learn to see the same
thing in different ways?”
Do you see an old or young
woman to the right?
Organizations
as
Machines
Organization as machine
Pre-determined goals and objectives
A rational structure of jobs and activities
Its blueprint becomes an organizational
chart
People are hired to operate the machine
and behave in a predetermined way
When an organization is seen as a
machine it is expected to operate in a
routinized, efficient, reliable, and
predictable way
My life as a machine
“Whoever uses a machine does all his work like a
machine. He who does his work like a machine
grows a heart like a machine” He loses his soul!
The industrial age left its mark on the
imagination, thoughts, and feelings of humans
Organizational life is often routinized with the
precision demanded of clockwork
People arrive at work at a given time, perform a
predetermined set of activities, rest at appointed
hours, and then resume their tasks until work is
over.
Employees are expected to behave as if they
were parts of a machine
Do you agree?
Max Weber
The bureaucratic form routinizes the process of
administration exactly as the machine routinizes
production.
Bureaucracies provide:
Precision, speed, clarity, regularity, reliability, and
efficiency
Through:
A fixed division of tasks, hierarchical supervision,
and detailed rules and regulations
Purging Particularism
According to Perrow, one of the major benefits of
bureaucracy is purging particularism (incl.
nepotism and favoritism)
Loyalty to the king was once everything,
incompetence counted for little
Tenure was a early invention that provided
freedom from unjust authority, separating the
office from the person further controlled it.
Nepotism
Nepotism is still a big problem in a lot of
countries – e.g. Italy, Mexico, China
Why is it so bad?
Because there is often little relationship between
the social criteria for hiring or promoting people
and the characteristics that affect performance in
the organization
It may even hurt performance (lower morale,
motivation etc.)
Perrow on corruption
Corruption (or enlightened self-interest) is also a
likely to accompany favoritism
Perrow argues corruption is good for the individual
and sometimes even good for the organization


“one of the best ways to seize or retain control [of an
organization] is to surround oneself with loyal people”
It doesn’t hurt to have a sympathetic friend in
government
Bureaucracy and Corruption
Bureaucracy limits corruption:
“since official goals are proclaimed,
unofficial, unpublicized, and unlegitimated
uses can be held up to scrutiny when they
are found, and action can be taken.”
“The hidden uses of organizations, always
present, can be exposed and addressed”
Hierarchy
Downside to hierarchy:
Lack of motivation - ‘not my problem’
Fear of passing bad news or suggesting
changes
Buck passing
Delays and sluggishness
Dictatorial/ignorant decisions by superiors
Stifling of independence and creativity
The Upside
Perrow argues that:
A lack of coordination between departments
The failure to exercise authority or be
decisive, and
A lack of accountability
are, in fact, much worse problems than the
problems identified on the previous slide
Do you agree?
Strengths of the machine
metaphor
For Morgan, mechanistic approaches work well
when:
There is a straightforward task to perform
The environment is stable and predictable (to
enable efficient division of labor)
When one produces the same product time and
again
When efficiency and precision are at a premium
When the human parts are compliant and behave
as they have been designed
For Perrow:
Bureaucracies limit particularism and self-interest,
and promote coordination
Limitations of the machine
metaphor
Bureaucracies have difficulty adapting to change
They are designed to achieve predetermined
goals not innovation
It takes time to get an efficient division of labor
through detailed job analysis
Moreover…
Mechanistic approaches result in mindless and
unquestioning bureaucracy
Problems can be ignored
Communication can be ineffective
Paralysis and inaction can lead to backlogs
Senior managers can become remote
Specialization creates myopia and NIH syndrome
Employees know what is expected of them but
also what is not expected of them
Initiative is discouraged
Using the machine metaphor
What is the alternative to bureaucracy when
coordinating a large group of people?
To what degree is organizing as a bureaucracy a
choice?
To what degree are people in a bureaucracy
forced or constrained to act in certain ways?
Do bureaucracies alter what it means to be
human?

What seems natural and normal and taken for granted in
our work life that really isn’t?
Organizations
as
Organisms
Organizations as organisms
This metaphor has its roots in biology and natural
selection
Perhaps certain organizations are more
“adapted” to specific environmental conditions
than others
Led to concepts such as:
Open systems
Organizational life cycles
Fit and the process of adaptation to environment
Organizational ecology and different species of
organizations
Organizational Needs
The Hawthorne studies of the 1920s and
1930s shifted the focus from organization
as a technical problem to the human side
of organization, especially motivation
Productivity wasn’t just a function of
workflow design but also of motivation
Maslow’s hierarchy of needs
 Physiological,
security, social, ego, selfactualizing needs
Implications
The idea of integrating the needs of individuals
and organizations became a powerful force
Job enrichment, autonomy, responsibility,
recognition, democracy, focus on turnover and
absenteeism, HRM
Socio-technical systems (STS)



“The design of a technical system always has human
consequences and vice versa”
Optimization involves reconciling human needs and
technical efficiency
Isn’t this obvious? Why was it so controversial at the
at the time (1950s)?
Open systems
Variants of the open systems philosophy became popular
with managers in the 1960s with Forrester’s system
dynamics and in the 1990s with Senge’s “Fifth discipline”
Defined as a system with input OR an entity that changes
its behavior in response to conditions outside its
boundaries.
Systems are rarely ever either open or closed but open to
some and closed to other influences
Animals are open to food, plants to sunlight
Computers and people are open to information
Organizations and societies are open to structure
Whether or not a system has outputs does not enter the
distinction between open and closed systems.
Systems without inputs are not controllable
Practical implications
Open systems theory emphasizes the importance
of the environment (not seen in machine
metaphor)
Organizations are seen as sets of interrelated
subsystems
Molecules, cells, organs, lifeforms, social systems,
world, solar system, galaxy, universe
The approach encourages congruencies or
alignments between different sub-systems (‘fit’)
This led to the development of contingency
theory
Contingency theory
There is no best way of organizing. The
appropriate form depends on the kind of
task or environment – many species of
organizations
Management’s job is achieving alignment
or fit
Fit applies not only to the org-env but also
between sub-systems in an organization
First distinction
Mechanistic vs organic (Burns and Stalker)
Changing technology or market conditions pose
new problems and challenges that require open
and flexible styles of organization and
management
Lawrence and Lorsch showed that styles of
organization might need to vary between
organizational subunits
e.g. R&D departments need to be organized
differently from production departments)
How is this different from an ideal bureaucracy?
Typologies
This research led to the development of
typologies of organizations:
Miles and Snow

Prospectors, analyzers, defenders
Mintzberg

Machine bureaucracy, divisionalized form, professional
bureaucracy, simple structure, adhocracy
BCG

Cash cows, dogs, stars, question marks
Porter

Cost leadership, differentiation, focus
Other developments
Organization development
The belief that we can diagnose the
environment and thus improve internal and
external fit
Expert Systems
Burton and Obel even developed an expert
system to choose the right structure for an
organization
 Conflicts
are resolved using fuzzy logic
 Why am I suspicious of both OD and ES?
Organizational Ecology
Researchers have tracked the births and deaths
of companies over time
Liability of newness, smallness, oldness
Faced with new types of competition or
environmental circumstances, whole industries
or types of organizations may come and go
Legitimacy and inertia prevent one type of
organization (or species) from changing into
another
why are all banks, hospitals, hotels or universities
so similar? Is this anti-contingency theory?
Debate: How ‘inert’ are companies in the face of
competitive or environmental threats?
Thoughts
The organismic metaphor argues that
organizations must be “in fit” with their
environment or die
Contingency theory believes managers can
adapt to remain ‘in fit’ over time
Org ecology believes that there are limits
to how much influence managers have on
an organization’s fitness
In either case, how much freedom do
managers have?
Strengths of the Organismic
Metaphor
Organizations must always pay close attention to
their external environments
Survival and evolution become central concerns
Achieving congruence with the environment
becomes a key managerial task
Limitations of the Organismic
Metaphor
Organizations are not organisms
Environments are not concrete
Actual vs perceived vs enacted
Metaphor overstates degree of functional unity
and cohesion in most organizations and top
management’s ability to choose subsystem
settings
Can lead to social Darwinism and other
ideological traps
i.e. the best performing organizations are the
fittest and thus the ‘best’
No guarantee the best today will be the best
tomorrow
Organizations
as
Brains
Organizations as brains
The brain has both specialized functions (speech)
and distributed functions (memory)
Is it possible [and desirable] to design “learning
organizations” that have the capacity to be as
flexible, resilient, and inventive as the functioning
of the brain?
Is it possible [and desirable] to distribute
capacities for intelligence and control throughout
an enterprise so that the system as a whole can
self-organize and evolve along with emerging
challenges (holographic organizations)?
Applications of this
metaphor in strategy
Learning organizations
Knowledge management
E-Commerce, CRM, Data mining, SCM
Virtual Organizations
Self Directed Teams
Why is information so
important?
Information is needed to coordinate the firm’s
resources
faster innovation of new products,
reduced duplication of efforts,
savings in research and development costs,
learning from expensive mistakes
transmission of best practice
enhanced employee satisfaction.
Knowledge management
Where should this information come from?
From top management?

Centralization versus decentralization issue
From information systems?

Explicit versus tacit knowledge issue
From people?

Coordination versus cooperation issue
How should this knowledge be collected, stored,
used? Who should have access?
How should people be motivated to share
information?
Garvin
In most discussions of organizational learning, 3
critical issues are left out
a plausible definition of learning organizations
clear guidelines for practice
tools for assessing the rate and level of learning
Definition
an organization skilled at creating, acquiring and
transferring knowledge, and at modifying its
behavior to reflect new knowledge and insights
(Garvin, 1994)
Garvin: Distinctive Policies
systematic problem solving
experimentation with new approaches
learning from your own experiences and
history
learning from the experiences and best
practices of others
transferring knowledge quickly and
efficiently throughout the organization
Garvin: Distinctive Practices
insisting on data rather than assumptions (PDCA)
an incentive system that favors risk-taking
demonstration projects that start with a clean
slate
widely disseminated case studies and postproject reviews of successes and failures concept of learning from mistakes
training in best practice
transferring and rotating staff - learning by doing
Why is effective learning so hard?
Argyris and Schon start with 2 theories of action
Theory in use (Model I)
 what we actually do in practice
Espoused Theory (Model II)
 what we would like others to think we do
Learning occurs when we explore the fit between
model 1 and model 2 and correct errors
But we hate doing this! Why?
Because…
Exposing inconsistency is threatening and
psychologically painful
People want to avoid embarrassment and blame
They want to be seen as ‘winners’ not ‘losers’
However, this also prevents them from
discovering the causes of their errors
Redirecting blame causes defensiveness,
misunderstanding, and mistrust in organizations
Executives are so skilled at this behavior that
they see no other way of behaving - it is a tacit
and automatic way of behaving
Organizational defensive routines
Design and manage situations unilaterally
Advocate our views without encouraging inquiry
Evaluate the thoughts and actions of others in ways that do
not encourage testing the validity of the evaluation;
Attribute causes for whatever we are trying to understand-without necessarily validating those attributions;
Unilaterally save face by withholding information or making
certain things "undiscussable" in order to minimize
upsetting others or making them defensive.
Engage in defensive actions such as blaming, stereotyping,
intellectualizing
Keep premises and inferences tacit, lest we lose control.
Remain ‘logical’ by suppressing emotions and conflict
Loops
Single Loop Learning
learning within existing premises of the organization (e.g.
how do I make a better widget)
Double Loop Learning
Double loop learning involves surfacing and challenging
deeply rooted assumptions and norms of an organization
that have previously been inaccessible, either because they
were unknown, or known but undiscussable. (e.g. Should
we be making widgets at all.)
Triple loop learning
Requires double loop learning in a sensitive way
TLL requires trust, listening skills, sharing of power,
tolerance of diverse views, and ability to resist saving face
Thoughts
If people are programmed to act
defensively and ‘save face’ then are they
really in control of their behavior?
Can we really overcome defensive
tendencies and engage in tolerance,
listening, and power sharing?
How much of this is learned behavior?
Strengths of the brain metaphor
Clear guidelines for creating a learning
organization
We learn how information technology can
support organizations
We gain a new theory of management
based on knowledge
Decentralized decision making is powerful
Limitations of the brain metaphor
There may be conflict between the
requirements of learning and the realities
of power and control
Information is not knowledge
Assumes defenses can be overcome
(easily)
Organizations
as
Cultures
Organizations as Cultures
Culture: “the way we do things around
here”
National cultures
Regional cultures
Organizational cultures
Departmental cultures
National cultures
Concept that management style should change to
remain effective in different countries
Ethnocentric vs polycentric styles
Cultural dimensions:
Hofstede: masculinity, power-distance, uncertainty
avoidance, individuality
Trompenaars: universalism/particularism,
neutral/affective, time orientation,
achievement/ascription
How can we become more effective managers in
global situations?
Some key questions
Where does culture come from? How is it
sustained?
How do we create or change a culture?
Where does culture come from?
Leadership (setting mission/vision)
Selznick (1957) says purpose-setting is essence of
leadership
Shared values
Religious groups, etc.
Stories, legends, myths, symbols
Reward systems
Professional values
e.g. engineers, doctors, accountants
Historical accidents
Morgan makes a big deal about enactment – what is
it and why is it important?
Hegemony
Indoctrination of masses, coalition with powerful
Changing a culture
trigger shifts in the established mindset
breakdown habitual behavior patterns including
routines, structures and rewards
move outside established information channels
use data and analysis to shock people
introduce new people and outsiders
co-opt or break adversarial political alliances
revamp employee communication mechanisms
training and development
use symbolism , ritual, and enactment
reward new behavior, celebrate success
provide leadership
Thoughts
If there are patterns of behavior
attributable to national, organizational, or
professional culture (and indoctrination)
then how free are managers to make
choices?
Manager is culture-bound
Employees are culture-bound
Stakeholders are culture-bound
Strengths of the cultural
metaphor
Emphasizes the symbolic significance of what we
do
We learn that organization and shared meaning
may be one and the same
We see how success hinges on the creation of
shared meaning
Leaders and managers gain a new understanding
of their impacts and roles
We see that organizations and their environments
may be enacted domains
Limitations of the cultural
metaphor
The metaphor can be used to support
ideological manipulation and control
Culture is holistic and cannot readily be
managed by a simple checklist
Important dimensions are invisible and
what is easily seen may be relatively
unimportant
Culture usually has a deep political
dimension
Paths of Glory (1957)
“The boast of heraldry, the pomp of pow’r,
And all that beauty, all that wealth e’er gave,
Awaits alike th’inevitable hour.
The paths of glory lead but to the grave.”
Thomas Grey “Elegy Written in a Country
Churchyard”
What is the title of the film meant to convey
to us?
Paths of Glory (1957)
Shot in B&W although color was
economical
Cost only $900,000 to make
How does B&W change our perceptions?
Trivia
Inspired by real events
The female singer at the end would
become Stanley Kubrick’s wife
Not shown in France until 1975
Questions
To what degree were the characters cogs in a
bureaucratic machine (and to what degree did
they have free will)?
The Condemned
Other Soldiers
Firing Squad
Judges/Prosecutor
Colonel Dax
General Mireau
General Broulard
Questions
Was there particularism in the movie? Did
bureaucracy help or hinder it? How would
you change the rules?
Did the generals’ “defensive routines”
inhibit learning? What was the lesson to be
learned?
Is it significant (from a cultural POV) that the
film focused on the French army in WW1?
Questions
Kubrick described the film as “antiauthoritarian ignorance” rather than “antiwar”. Do you agree? Would modern IT
have changed the level of ignorance?
What is the thematic significance of the
final sequence in which French soldiers
listen to a German girl sing about home?
How do modern organizations reflect
similar themes?
Think about Enron