Mintzberg: The three last configurations
Pål Sørgaard, Telenor R&D and IfIINF 5250September 26, 2005
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Curriculum covered
The more modern configurations– professional bureaucracy– divisionalised form– adhocracy
Chapters 10-12 Material that deserves a recapitulation
– Read the book again when you have been working for a year
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The professional bureaucracy (ch 10) Characteristics
– prime coordinating mechanism: standardisation of skills– key part: operating core– main design parameters: training, horizontal job specialisation,
vertical and horizontal decentralisation– situational factors: complex, stable environment;
nonregulating, nonsophisticated technical system; fashionable Examples
– universities, general hospitals, social-work agencies, craft production firms, law firms, courts, accounting firms
Core condition: complex enough to require professionals, stable enough to use standardised skills
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A different kind of bureaucracy
Bureaucratic in the sense that coordination is achieved by standards, by design
The standards are set by the professions involved– e.g. medical faculties and Lægeforeningen– not by the technostructure
Classification, pigeonholing as a core process– clients and cases are put in neat, predetermined categories
(diagnosis)– programs of action for each category are then applied– schools build and maintain categories
Pigeonholing creates equivalence between functional and market bases for grouping
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Focus on operating core
Professional autonomy– little behaviour formalisation– little use of planning and control systems– responsible to whom?
Support staff developed– In order to serve the professionals
IT may be used heavily by the operating core (e.g. X-ray)
Little or weak use of IT in order to run the business– not highly regulating, not sophisticated, not automated
technical system
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The administrative structure
The professionals try to control the administrative structure
Sometimes two hierarchies– one bottom-up for the professionals– one top-down for the support staff– just like the University of Oslo!
The administrators have limited power
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Some issues
Relatively weak at coordination– standardisation of skills is a loose mechanism– need for more coordination may require other configurations
Pigeonholing is not perfect Hard to deal with incompetent or unconscientious
professionals– some ignore the needs of the clients
Inflexible structure– little innovation, hard to change– sometimes good at learning from its practice, but not always
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Can professional bureaucracies be better managed? Direct supervision by managers not in the profession is
hard Other kinds of standardisation do not apply well Measuring performance may result in trouble Complex work must be under the control of those who
do it More control has negative impact on innovation and
dialogue with clients Change comes mainly with new professionals, through
their schools and associations
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The divisionalised form (ch 11)
Characteristics– prime coordinating mechanism: standardisation of outputs– key part: middle line– main design parameters: market grouping, performance
control system, limited vertical decentralisation– situational factors: diversified markets (particularly products or
services); old, large; power needs of middle managers; fashionable
Examples– common among large industrial corporations: Hydro, Orkla– other kinds of examples are Helse Øst, Høgskolen i Oslo
Not a complete structure, an aggregate
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Typically
The divisions are fairly autonomous There is little interdependence between divisions Divisions address separate markets Divisional leaders are very strong Headquarters focus on performance (economic result) Divisions are driven towards machine bureaucracy Comes as a result of diversification or acquisitions Split in separate organisations is a realistic alternative
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Powers of the headquarters
Decisions on what divisions there should be Allocation of overall financial resources Definition of the performance control system Appointment of divisional managers Monitoring of the divisions on a personal basis Provision of certain common support services
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Conditions
First of all: market (esp. product) diversity– and divisionalisation encourages further diversification
Divisionalisation based only on client or regional diversification often turns out to be incomplete
– hybrid: carbon-copy bureaucracy Technical system split in segments, one per division Environment: preferably simple and stable
– other environments often lead to hybrids Large and old (except federations) Power games and aggregation of power important
factors
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Stages of divisionalisation (fig 11-3)
Integrated form(pure functional)
By-product form
Related product form
Conglomerate form(pure divisional)
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Advantages compared to machine bureaucracy, but … Allocation of capital
– better done by the capital market?– corporations priced lower than the sum of their parts
Helps training managers– better than a small, independent company?
Spreads risk across markets– conceals failures and bankruptcies too long, may cause others
to fall? Strategically responsive
– focus on short term performance and the impact on structure in the division may be negative?
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Centralisation and synergies
Tendency to centralise decision at headquarters based on MIS-data (management information system)
“A cornerstone […] is letting heads of business units determine where and when to collaborate. If corporate managers take the lead, they often do not understand the nuances of the business. They naively see synergies that aren’t there. They tend to overestimate the benefits of collaboration and underestimate its costs.” Eisenhardt and Galunic (2000)
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Problems with divisionalisation
Centralisation of power Bureaucratisation Reliance on MIS Outside private sector: artificial performance standards Pure divisionalisation may be a weaker alternative than
full split– remember: no environment of its own
Controlled diversity more profitable than conglomerate– by-product or related-product forms the more interesting
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No environment of its own
stable dynamic
Complex DecentralisedBureaucratic(standardisation of skills)
DecentralisedOrganic(mutual adjustment)
Simple CentralisedBureaucratic(standardisation of work processes)
CentralisedOrganic(direct supervision)
Professional
bureaucracy
Adhocracy
Simple
structu
reMach
ine
bureaucracy
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The adhocracy (ch 12)
Characteristics– prime coordinating mechanism: mutual adjustment– key part: support staff (together with the operating core in the
operating adhocracy)– main design parameters: liaison devices, organic structure,
selective decentralisation, horizontal job specialisation, training, functional and market grouping concurrently
– situational factors: complex, dynamic (sometimes disparate) environment; young (especially operating adhocracy); sophisticated and often automated technical system (in the administrative adhocracy); fashionable
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Design
Focus on innovation, cannot rely on standardisation Goes away from the principle of unity of command Gives power to experts, but cannot rely on their
standardised skills to achieve coordination Mutual adjustment in and between project teams
– project coordinators, meetings, etc Matrix structure common
– experts formally in functional units– project teams based on (market) needs
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The operating adhocracy
Solves problems on behalf of its clients
– think-tanks– applied R&D institutes– creative advertising companies– manufacturer of prototypes– experimenting theatre company
May easily turn into a professional bureaucracy if more focused and with standardised methods
– e.g. from NR to Accenture
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The administrative adhocracy
Solves problems, runs projects, on behalf of itself Typically a company where the operating core is
truncated– done in a separate organisation– contracted out (outsourcing)– by full automation (c.f. discussion of machine bureaucracy)
Tricky issue of combining efficient production with high degree of innovation
– machine bureaucracy with a venture team is not an adhocracy
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Administration and support
A lot of coordination needed Managers participate in project teams Ensuring proper management and anchoring of
projects often demanding Need to monitor and redirect projects Distinction between line and staff becomes unclear
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Strategy in adhocracies
Hard to split strategy formulation and strategy implementation
Strategy tends to evolve– formed implicitly by decisions made– strategy formation, emergent strategy, strategising
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Conditions
Dynamic and complex environment Interdependencies that need to be handled Frequent product changes Often young (esp. operating adhocracies) Sophisticated and sometimes automated technical
system An element of fashion
– all the right words: dynamic, expertise, projects, etc.
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Some issues
Ambiguities– Unclear, multiple and changing lines of authority
The most politicised configuration Not very efficient Danger of inappropriate transition
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Summary
Five main configurations (ch 7-12) Five parts of organisation (ch 1) Five kinds of coordinating mechanisms (ch 1) Five types of decentralisation (ch 5) Nine design parameters (ch 2-5) Four groups of situational or contingency factors (ch 6)
– environment especially important Above all. An extended configuration hypothesis:
Effective structuring requires a consistency among the design parameters and contingency factors