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Organization Theory: Strategy Implementation Process


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Title: Organization Theory: Strategy Implementation Process

Organization Theory Strategy Implementation
  • Steven E. Phelan
  • October, 2008

  • Simulation Results
  • Organizations as machines
  • Strengths and limitations, implications for
  • 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 Tensions
  • 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
  • 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
  • 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 an early invention that provided
    freedom from unjust authority
  • separating the office from the person further
    controlled it.

  • 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 an organization
  • It may even hurt performance (lower morale,
    motivation etc.)

Perrow on corruption
  • Corruption (or enlightened self-interest) is also
    likely to accompany favoritism
  • Perrow argues corruption is good for the
    individual and sometimes even good for the
  • one of the best ways to seize or retain control
    of an organization is to surround oneself with
    loyal people
  • It doesnt hurt to have a sympathetic friend in
  • See http//

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

  • 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,
  • A lack of accountability or even corruption
  • 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
  • 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

  • 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
  • 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?

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 the development of concepts such as
  • Open systems
  • Organizational life cycles
  • Fit and the process of adaptation to environment
  • Organizational ecology and different species of

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 wasnt just a function of workflow
    design but also of motivation
  • Maslows hierarchy of needs
  • Physiological, security, social, ego,
    self-actualizing needs

  • 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
  • Isnt 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
    Forresters system dynamics and in the 1990s with
    Senges 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 with inputs are controllable. Why?

Practical implications
  • Open systems theory emphasizes the importance of
    the environment (not seen in machine metaphor)
  • Organizations are seen as sets of interrelated
  • 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
  • Managements 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. RD departments need to be organized
    differently from production departments)
  • How is this different from an ideal bureaucracy?

  • This research also led to the development of
    typologies of organizations
  • Miles and Snow
  • Prospectors, analyzers, defenders
  • Mintzberg
  • Machine bureaucracy, divisionalized form,
    professional bureaucracy, simple structure,
  • 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
  • why are all banks, hospitals, hotels or
    universities so similar? Is this anti-contingency
  • Debate How inert are companies in the face of
    competitive or environmental threats?

  • 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 organizations
  • 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
    managements 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

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 firms
  • 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

  • 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
  • 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
  • widely disseminated case studies and post-project
    reviews of successes and failures - concept of
    learning from mistakes
  • training in best practice
  • transferring and rotating staff - learning by

Why is effective learning so hard?
  • Argyris and Schon start with 2 theories of
  • 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?

  • 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

More defensive routines
  • Unilaterally save face by withholding information
    or making certain things "undiscussable" in order
    to minimize upsetting others or making them
  • Engage in defensive actions such as blaming,
    stereotyping, intellectualizing
  • Keep premises and inferences tacit, lest we lose
  • Remain logical by suppressing emotions and

  • 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

  • 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
  • How much of this is learned behavior?

Strengths of the brain metaphor
  • Clear guidelines for creating a learning
  • We learn how information technology can support
  • We gain a new theory of management based on
  • 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,
  • How can we become more effective managers in
    global situations?

Some key questions
  • Where does culture come from? How is it
  • How do we create or change a culture?

Where does culture come from?
  • Leadership (setting mission/vision)
  • Selznick (1957) says purpose-setting is the
    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

  • 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
  • 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 powr, And
    all that beauty, all that wealth eer
    gave, Awaits alike thinevitable hour. The paths
    of glory lead but to the grave.
  • Thomas Grey Elegy Written in a Country
  • What is the title of the film meant to convey to

Paths of Glory (1957)
  • Shot in BW although color was economical
  • Cost only 900,000 to make
  • How does BW change our perceptions?
  • Trivia
  • Inspired by real events
  • The female singer at the end would become Stanley
    Kubricks wife
  • Not shown in France until 1975

  • 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

  • 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?

  • Kubrick described the theme as anti-authoritarian
    ignorance rather than anti-war. Do you agree?
    Would modern IT have changed the level of
  • 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