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Organization Theory: Strategy Implementation Process. Steven E. Phelan October, 2008. Overview. Simulation Results Organizations as machines Strengths and limitations, implications for strategy Organizations as organisms Open systems Contingency theory Organizational ecology - PowerPoint PPT Presentation

Text of Organization Theory: Strategy Implementation Process

Corporate Strategy

Organization Theory: Strategy Implementation ProcessSteven E. Phelan

October, 20081OverviewSimulation ResultsOrganizations as machinesStrengths and limitations, implications for strategyOrganizations as organismsOpen systemsContingency theoryOrganizational ecologyBrains and CulturesPaths of Glory

2Organization TheoryDeveloped out of sociologySociologists 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 agentsSee Democrats on an Elevator videoGive some left and right wing interpretations3Fundamental TensionsIndividual vs. SocietyChoice vs ConstraintFree agency vs. DeterminismFreedom vs. InevitabilityPre-ordained, DestinyWe will explore these boundaries in the next two classesWhy, what is the relevance to future CEOs?4Morgan on MetaphorMorgan justifies his book as teaching metaphorsIs 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?

5Organizations as Machines6Organization as machinePre-determined goals and objectivesA rational structure of jobs and activitiesIts blueprint becomes an organizational chartPeople are hired to operate the machine and behave in a predetermined wayWhen an organization is seen as a machine it is expected to operate in a routinized, efficient, reliable, and predictable way7My life as a machineWhoever 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 humansOrganizational life is often routinized with the precision demanded of clockworkPeople 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 machineDo you agree?8Max WeberThe bureaucratic form routinizes the process of administration exactly as the machine routinizes production. Bureaucracies provide:Precision, speed, clarity, regularity, reliability, and efficiencyThrough:A fixed division of tasks, hierarchical supervision, and detailed rules and regulations9Purging ParticularismAccording 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 littleTenure was an early invention that provided freedom from unjust authorityseparating the office from the person further controlled it.10NepotismNepotism is still a big problem in a lot of countries e.g. Italy, Mexico, ChinaWhy 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 an organizationIt may even hurt performance (lower morale, motivation etc.)11Perrow on corruptionCorruption (or enlightened self-interest) is also likely to accompany favoritismPerrow argues corruption is good for the individual and sometimes even good for the organizationone of the best ways to seize or retain control [of an organization] is to surround oneself with loyal peopleIt doesnt hurt to have a sympathetic friend in governmentSee http://www.youtube.com/user/fiercefreeleancer

12Bureaucracy and CorruptionBureaucracy 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 13HierarchyDownside to hierarchy:Lack of motivation - not my problemFear of passing bad news or suggesting changesBuck passingDelays and sluggishnessDictatorial/ignorant decisions by superiorsStifling of independence and creativity

14The UpsidePerrow argues that:A lack of coordination between departmentsThe failure to exercise authority or be decisive, and A lack of accountability or even corruptionare, in fact, much worse problems than the problems identified on the previous slideDo you agree?15Strengths of the machine metaphorFor Morgan, mechanistic approaches work well when:There is a straightforward task to performThe environment is stable and predictable (to enable efficient division of labor)When one produces the same product time and againWhen efficiency and precision are at a premiumWhen the human parts are compliant and behave as they have been designedFor Perrow:Bureaucracies limit particularism and self-interest, and promote coordination16Limitations of the machine metaphorBureaucracies have difficulty adapting to changeThey are designed to achieve predetermined goals not innovationIt takes time to get an efficient division of labor through detailed job analysis

17MoreoverMechanistic approaches result in mindless and unquestioning bureaucracyProblems can be ignoredCommunication can be ineffectiveParalysis and inaction can lead to backlogsSenior managers can become remoteSpecialization creates myopia and NIH syndromeEmployees know what is expected of them but also what is not expected of themInitiative is discouraged18Using the machine metaphorWhat 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 isnt?19Organizations as Organisms20Organizations as organismsThis metaphor has its roots in biology and natural selectionPerhaps certain organizations are more adapted to specific environmental conditions than othersLed to the development of concepts such as:Open systemsOrganizational life cyclesFit and the process of adaptation to environmentOrganizational ecology and different species of organizations21Organizational NeedsThe Hawthorne studies of the 1920s and 1930s shifted the focus from organization as a technical problem to the human side of organization, especially motivationProductivity wasnt just a function of workflow design but also of motivationMaslows hierarchy of needsPhysiological, security, social, ego, self-actualizing needs22ImplicationsThe idea of integrating the needs of individuals and organizations became a powerful forceJob enrichment, autonomy, responsibility, recognition, democracy, focus on turnover and absenteeism, HRMSocio-technical systems (STS)The design of a technical system always has human consequences and vice versaOptimization involves reconciling human needs and technical efficiencyIsnt this obvious? Why was it so controversial at theat the time (1950s)?23Open systemsVariants of the open systems philosophy became popular with managers in the 1960s with Forresters system dynamics and in the 1990s with Senges Fifth disciplineDefined 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 sunlightComputers and people are open to informationOrganizations and societies are open to structureWhether or not a system has outputs does not enter the distinction between open and closed systems.Systems with inputs are controllable. Why?

24Practical implicationsOpen systems theory emphasizes the importance of the environment (not seen in machine metaphor)Organizations are seen as sets of interrelated subsystemsMolecules, cells, organs, lifeforms, social systems, world, solar system, galaxy, universeThe approach encourages congruencies or alignments between different sub-systems (fit)This led to the development of contingency theory25Contingency theoryThere is no best way of organizing. The appropriate form depends on the kind of task or environment many species of organizationsManagements job is achieving alignment or fitFit applies not only to the org-env but also between sub-systems in an organization26First distinctionMechanistic vs organic (Burns and Stalker)Changing technology or market conditions pose new problems and challenges that require open and flexible styles of organization and managementLawrence 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?27TypologiesThis research also led to the development of typologies of organizations:Miles and SnowProspectors, analyzers, defendersMintzbergMachine bureaucracy, divisionalized form, professional bureaucracy, simple structure, adhocracyBCGCash cows, dogs, stars, question marksPorterCost leadership, differentiation, focus28Other developmentsOrganization developmentThe belief that we can diagnose the environment and thus improve internal and external fitExpert SystemsBurton and Obel even developed an expert system to choose the right structure for an organizationConflicts are resolved using fuzzy logicWhy am I suspicious of both OD and ES?29Organizational EcologyResearchers have tracked the births and deaths of companies over timeLiability of newness, smallness, oldnessFaced with new types of competition or environmental circumstances, whole industries or types of organizations may come and goLegitimacy 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?30ThoughtsThe organismic metaphor argues that organizations must be in fit with their environment or dieContingency theory believes managers can adapt to remain in fit over timeOrg ecology believes that there are limits to how much influence managers have on an organizations fitnessIn either case, how much freedom do managers have?31Strengths of the Organismic MetaphorOrganizations must always pay close attention to their external environmentsSurvival and evolution become central concernsAchieving congruence with the environment becomes a key managerial task32Limitations of the Organismic MetaphorOrganizations are not organismsEnvironments are not concreteActual vs perceived vs enactedMetaphor overstates degree of functional unity and cohesion in most organizations and top managements ability to choose subsystem settingsCan lead to social Darwinism and other ideological trapsi.e. the best performing organizations are the fittest and thus the bestNo guarantee the best today will be the best tomorrow33Organizations as Brains34Organizations as brainsThe 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)?35Applications of this metaphor in strategyLearning organizationsKnowledge managementE-Commerce, CRM, Data mining, SCMVirtual OrganizationsSelf Directed Teams36Why is information so important?Information is needed to coordinate the firms resourcesfaster innovation of new products, reduced duplication of efforts, savings in research and development costs, learning from expensive mistakes transmission of best practiceenhanced employee satisfaction. 37Knowledge managementWhere should this information come from? From top management? Centralization versus decentralization issueFrom information systems?Explicit versus tacit knowledge issueFrom people?Coordination versus cooperation issueHow should this knowledge be collected, stored, used? Who should have access? How should people be motivated to share information? 38GarvinIn most discussions of organizational learning, 3 critical issues are left outa plausible definition of learning organizationsclear guidelines for practicetools for assessing the rate and level of learningDefinitionan organization skilled at creating, acquiring and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights (Garvin, 1994)39Garvin: Distinctive Policiessystematic problem solvingexperimentation with new approacheslearning from your own experiences and historylearning from the experiences and best practices of otherstransferring knowledge quickly and efficiently throughout the organization40Garvin: Distinctive Practicesinsisting on data rather than assumptions (PDCA)an incentive system that favors risk-takingdemonstration projects that start with a clean slatewidely disseminated case studies and post-project reviews of successes and failures - concept of learning from mistakestraining in best practicetransferring and rotating staff - learning by doing

41Why is effective learning so hard?Argyris and Schon start with 2 theories of actionTheory in use (Model I) what we actually do in practiceEspoused Theory (Model II) what we would like others to think we doLearning occurs when we explore the fit between model 1 and model 2 and correct errorsBut we hate doing this! Why?42BecauseExposing inconsistency is threatening and psychologically painfulPeople want to avoid embarrassment and blameThey want to be seen as winners not losersHowever, this also prevents them from discovering the causes of their errorsRedirecting blame causes defensiveness, misunderstanding, and mistrust in organizationsExecutives are so skilled at this behavior that they see no other way of behaving - it is a tacit and automatic way of behaving43Organizational defensive routinesDesign and manage situations unilaterallyAdvocate 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; 44More defensive routinesUnilaterally 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, intellectualizingKeep premises and inferences tacit, lest we lose control. Remain logical by suppressing emotions and conflict

45LoopsSingle Loop Learninglearning within existing premises of the organization (e.g. how do I make a better widget)Double Loop LearningDouble 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 learningRequires double loop learning in a sensitive way TLL requires trust, listening skills, sharing of power, tolerance of diverse views, and ability to resist saving face46ThoughtsIf 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?

47Strengths of the brain metaphorClear guidelines for creating a learning organizationWe learn how information technology can support organizationsWe gain a new theory of management based on knowledgeDecentralized decision making is powerful48Limitations of the brain metaphorThere may be conflict between the requirements of learning and the realities of power and controlInformation is not knowledgeAssumes defenses can be overcome (easily)49Organizations as Cultures50Organizations as CulturesCulture: the way we do things around hereNational culturesRegional culturesOrganizational culturesDepartmental cultures51National culturesConcept that management style should change to remain effective in different countriesEthnocentric vs polycentric stylesCultural dimensions:Hofstede: masculinity, power-distance, uncertainty avoidance, individualityTrompenaars: universalism/particularism, neutral/affective, time orientation, achievement/ascriptionHow can we become more effective managers in global situations?52Some key questionsWhere does culture come from? How is it sustained?How do we create or change a culture?53Where does culture come from?Leadership (setting mission/vision)Selznick (1957) says purpose-setting is the essence of leadershipShared valuesReligious groups, etc.Stories, legends, myths, symbolsReward systemsProfessional values e.g. engineers, doctors, accountantsHistorical accidentsMorgan makes a big deal about enactment what is it and why is it important?HegemonyIndoctrination of masses, coalition with powerful54Changing a culturetrigger shifts in the established mindsetbreakdown habitual behavior patterns including routines, structures and rewardsmove outside established information channelsuse data and analysis to shock peopleintroduce new people and outsidersco-opt or break adversarial political alliancesrevamp employee communication mechanismstraining and developmentuse symbolism , ritual, and enactmentreward new behavior, celebrate successprovide leadership55ThoughtsIf 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-boundEmployees are culture-boundStakeholders are culture-bound56Strengths of the cultural metaphorEmphasizes the symbolic significance of what we doWe learn that organization and shared meaning may be one and the sameWe see how success hinges on the creation of shared meaningLeaders and managers gain a new understanding of their impacts and rolesWe see that organizations and their environments may be enacted domains57Limitations of the cultural metaphorThe metaphor can be used to support ideological manipulation and controlCulture is holistic and cannot readily be managed by a simple checklistImportant dimensions are invisible and what is easily seen may be relatively unimportantCulture usually has a deep political dimension58Paths of Glory (1957)The boast of heraldry, the pomp of powr,And all that beauty, all that wealth eer gave,Awaits alike thinevitable hour.Thepaths of glory lead but to the grave. Thomas Grey Elegy Written in a Country ChurchyardWhat is the title of the film meant to convey to us?59Paths of Glory (1957)Shot in B&W although color was economicalCost only $900,000 to makeHow does B&W change our perceptions?TriviaInspired by real eventsThe female singer at the end would become Stanley Kubricks wifeNot shown in France until 197560QuestionsTo what degree were the characters cogs in a bureaucratic machine (and to what degree did they have free will)?The CondemnedOther SoldiersFiring SquadJudges/ProsecutorColonel DaxGeneral MireauGeneral Broulard61QuestionsWas 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?62QuestionsKubrick described the theme as anti-authoritarian ignorance rather than anti-war. 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?63