Thursday, December 29, 2011

Engineering and Administrative Phases of Organizational Adaptation

In the last blog we looked at the Entrepreneurial problem phase of the organizational adaptation process. In today's blog we look at the next 2 phases- Engineering Problem and Administrative Problem.

Engineering Problem
The entrepreneurial problem when addressed would involve operationalization of the management's solution - the creation of such a system is what the Engineering Problem summarizes. 

The management would have to select an appropriate technology (in the management sense of the word, i.e. input-transformation-output process) for producing and distributing chosen products and services and to form new information, communication, and control linkages to ensure proper operation of the chosen technology  - These are what the system would encompass.

One should also note that, the three problems don’t wait for a solution of the other to reach and then move it, Even as the Entrepreneurship Problem is in motion, the management would try to adapt a system giving rise to the Engineering Problem which when achieves some progress would attract the implementation of the Administrative system.  It is during the administrative phase that the actual form of the organization's structure will be determined as the relation between the management - environment is formalized through formal processes for coordinating and controlling internal operations.

In the TV case again, we find that the company's redefinition of its domain required a change in its technology from mass-production technology to unit/small-batch technology!

Administrative Problem
The primary goal of most organizational administration is to reduce the uncertainty within the organizational system. It could also aim at rationalizing and stabilizing those activities which successfully solve problems faced by the organization during the other two phases. 

The challenge at this phase doesn’t stop at rationalizing a model, to really succeed in the long run, the company would have to formulate and implement processes which would enable organizations to continuously innovate. 

In the next blog, we shall look at this rationalization and Articulation process in a greater detail.

Wednesday, December 28, 2011

Entrepreneurship Problem in the organization's adaptation process

In the last blog, we looked at the types of challenges an organization could face when it attempts to adapt to the environment around. In today's blog, we look at the first of these problems - "Entrepreneurial Problem".

The adapting cycle is most visible in the start-up organizations. These organizations are in a state of continuous flux, fighting for their survival with the environment in which they operate. They constantly grapple with the challenges at hand, with a lack of structure, processes etc. In a new organization, an idea (could also be called in the current context - "an entrepreneurial insight"), perhaps only vaguely defined at firs must be developed into an organizational domain: a specific good or service and a target market or market segment. 

When looked into from the context of an ongoing organization, the entrepreneurial problem has another dimension - this is since the organization would have already found a set of solutions to its "engineering" and "administrative" problems. The entrepreneurial energy doesn’t easily get transferred primarily as a result of the stability that the organization would have achieved. If we relate the context with reference to TV case the initial struggle when the company attempted to modify its products and market was constrained by the existing production process and the expertise of the general manager and his staff.

The entrepreneurial problem of adaptation cycle receives a logical end when the management accepts a particular product-market domain, and it become more evident when the organization commits resources to achieve the objectives relative to the domain. The commitment to entrepreneurial solution in the large ongoing businesses generally is sought through the development and projection of an organizational "image" that would define its market and the approach towards the market. GE's commitment to only compete in markets where it would be number one or two and leave the others is one such creation of an "image".

Tuesday, December 27, 2011

Problems of an Organization Adapting to change

In the last blog, we had a case of TV which we would begin using for the next few blogs to understand the concepts of management. We begin today's blog with the very famous question - Does strategy drive the organization structure or does the Organization structure drive the organization's strategy. The school that believes Organization behavior is only partially preordained by the environmental conditions and that the choices which top management makes is critical determinants of organization process and strategy is called the strategic-choice school. 

To link the context to the TV case, it would be easy to understand that TV had to experience a change in its products and markets, to handle these it had to change the technological processes, the administrative structure that used to plan, coordinate and control the company.

The general focus over the next few blogs is again the process of organization adaptation which we call as the "adaptive cycle". Specifically the adaptive cycle could be thought of as comprising of 3 problems listed next.

The choices that the organization's top management is many, but for the sake of simplicity to understand how the organization adapts to its changing environment, we could clarify the problem of Organization Adaptation into 

  1. Entrepreneurial Problem
  2. Engineering Problem
  3. Administrative Problem

It would be hard to state where one problem ends and the other begins, and many a times the management of the organization would have to simultaneously handle multiple problems. Just for the sake of understanding these better it would be a good starting point to analyze these 3 separately.

Monday, December 26, 2011

Changing Environment - changing response

In the last blog, we concluded the implications of history to a practicing manager. Now, before we continue with the next set of blogs on organization development, and their process of growth. Let us look at a small case, though a bit old it would be give us a good starting point for the discussion over the next few blogs.

TV is a semi-autonomous division of a medium sized equipment manufacturing firm which is part of a large, highly diversified conglomerate. TV manufactures a line of heavy duty pumps and some components for fluid movement systems. The company does most of its own castings, makes many of its own parts and maintains a complete stock of replacement parts. TV also does special-order foundry work for other firms as its production schedule allows. 

Until recently, TV had defined its business as providing quality products and services to a limited set of reliable customers. TV's GM, a first-rate engineer who had spent most of his time in the machine shop and foundry, personified the company's image of quality and cost efficiency. In the mid-90's corporate management became concerned about both the speed and direction of TV's growth. The management and staff at corporate headquarters began considering two new product and market opportunities, both in the energy field. Fluid movement systems required for nuclear power generation provided one of these opportunities, and the development of novel techniques for petroleum exploration, well recovery and fluid delivery provided the second. TV had in the past done some large for these markets, but the opportunity now clearly indicated growth opportunities. 

TV initially moved towards exploiting these opportunities tentatively, the GM realized that the contract sales involved extensive planning, field-contact work, and careful negotiation. These didn’t suit the GM's primary strength or his area of interest. The Parent organization moved the present GM to another position at the headquarters and in his place got a new manager with extensive background both in sales and engineering and who was adept at large-scale contract negotiations.

Within a year of this changeover, TV landed several lucrative contracts, and more appeared to be in the offing. The new business created by these contracts, however, placed heavy coordination demands on company management, and while the organization's technology (production and distribution system) has not been drastically revised over the past 2 years, workflow processes and the operational responsibilities of several mangers have changed markedly. Materials control and scheduling, routine tasks in the past are now complex activities, and managers of these operations meet regularly with the executive planning committee. Moreover, a rudimentary matrix structure has emerged in which various line manages undertake specific project responsibilities in addition to their regular duties. Key personnel addition have been made to the marketing department and more are planned, with particular emphasis on individuals who are capable of performing field planning and supervising and who can quickly bring new fluid systems to full operation. Budget of some of the older departments are being cut back, and these funds are being diverted to the new areas of activity.

Thursday, December 22, 2011

Manager's usage of history to predict the future

Continuing from the last blog, where we began a discussion on the managerial implications of the understanding of history that we had developed, we today look at the next 2 implications for the manager.

2. Recognize the Limited Range of Solutions

It is common to find people who would love to use what they have already learnt! In organizations too when you are faced with a new revolutionary change - it is common to be tempted to use the technique that had succeeded the last time. This essentially would complicate problems since the current organization structure is in response to the earlier revolution and the current revolution has grown out of the processes and structure that have evolved through the adaptation learning from the last revolution - seasoned through the evolutionary phase in between. 

The management should be prepared to dismantle the current structures before the revolutionary phase become extremely turbulent. Top managers too would have to realize that their management style are no longer appropriate and may even have to move out of the leadership positions.

It is important to note that evolution stage is not an automatic stage; it is a contest for survival. The company would have to consciously introduce planned structures to solve the current crisis but also are fitted to the next phase of growth.

3. Realize the Solutions breed new problems

Historical determinants are very much the determinants of what happens to the company at a much longer date. This awareness would help managers to avoid the habit of "pinning the blame" on a current development. A well experienced practitioner would also be able to "predict" future problems - thereby effective solutions and coping strategies could be gotten running before the revolution gets out of hand. 

Wednesday, December 21, 2011

Historical Implications to the manager

In the last blog, we summarized the various management practices that are prevalent in the various phases of organizational growth. Starting from the current blog, over the next few blogs, we shall look at what this means for the manager! 

In a recent comment to the post, one of the readers of the blog had indicated that all this is pure "common sense"; this is really the proof that it is intuitive. However, it is really hard for the individual manager who is going through the phase to really realize the challenges that he is currently undergoing and act accordingly. Today's blog and the next few to follow also deal about this issue. The first of these is:

The manager should know where the organization is in the developmental sequence

Recognizing the current stage of growth of an organization is very critical for the Top Management of the organization. This enables the organization to recognize when the time for change has actually arrived, or it may result in imposing a wrong solution to the issue at hand. 

Many a times the top management tends to work against the tide, realizing the flow and move with it is a good approach to take! It is also important to note that every phase is essential, and in a way strengthens the organization through the learning that is accumulated at that phase, these learning are very essential to the success in the subsequent phases. 

It would be wise to really let the revolution move in, it is these periods of tension, pressure, which create ideas and awareness that builds the platform for change in the future and acts as a reason for the introduction of the new managerial practices.

Tuesday, December 20, 2011

Organization Processes at Evolutionary stages

In the last blog, we looked at the last of the 5 phases - Collaboration. In today's blog, we intend to provide a summary of the management processes of the organization across 1the various phases.

The diagram below provides the summary.
Org Processes at Evolutionary Stages

Monday, December 19, 2011

Interpersonal collaboration & organization

In the last blog, we discussed about the phase of coordination understanding the characteristics of the evolutionary scenario there in and the following revolution. In today's blog, we look at what the revolutionary phase leads to and what would characterize the evolutionary stage there in.

Phase 5: Collaboration

The red tape crisis of the earlier coordination phase begins to slowly open up into a more inter-personal collaboration phase. The phase generally composes of temporary teams that work on projects with spontaneity. Social control and self-discipline replace the formal control mechanisms of the earlier phase. 

All is not rosy at this stage; the transition would be extremely difficult for those experts who created the old systems as well as for those line managers who relied on formal methods for answers. The characteristics of this phase include:

  • The focus is on solving problems quickly through team action
  • Teams are combined across functions for task-group activity
  • Headquarters staff experts are reduced in number, reassigned and combined in interdisciplinary teams to consult with, not to direct, field units.
  • A matrix-types structure is frequently used to assemble the right teams for the appropriate problems
  • Previous formal systems are simplified and combined into single multipurpose systems
  • Conferences for key managers are held frequently to focus on major problem issues
  • Educational programs are initiated to train managers in behavioral skills for achieving better team and conflict resolution
  • Real-time information systems are integrated into daily decision making
  • Economic rewards are geared more to team performance than to individual achievement
  • Experiments in new practices are encouraged throughout the organization

The possible revolution that follows this evolutionary phase hasn’t been well documented so, we wouldn’t really discuss about these at the moment.

Thursday, December 15, 2011

Collaboration phase of Organization Growth

In the last blog, we discussed about the organization development phase of Delegation and the associated characteristics along with the build up to the next revolution. In today's blog we look at the next phase - Coordination.

Phase 4: Coordination

The top-management which had a lot of issues in the delegation phases achieves control over the organization's functioning in this Coordination phase. The evolutionary period of this phase would be characterized by the following:

  • Decentralized units are merged into product groups
  • Formal planning and procedures are established and intensively reviewed
  • Numerous staff personal are hired and located at headquarters to initiate company-wide programs of control and review for line managers
  • Capital expenditures are carefully weighed and parceled out across the organization
  • Each product group is treated as an investment center where return on invested capital is an important criterion used in allocating funds. 
  • Certain technical functions, such as data processing are centralized at headquarters, while daily operating discussions remain decentralized
  • Stock options and company-wide profit sharing are used to encourage identity with the firm as a whole.

These coordination systems enable the organization grow efficiently allocating a company's limited resources. The field manager begins looking beyond the local unit needs. They still enjoy much of the decision making authority, but they would have to justify their actions to the headquarters. This smooth sailing begins to rock when the lack of confidence begins to creep in. 

The lack of confidence would be between the line and staff and between headquarters and the field. The proliferation of system and programs being to exceed its utility - a red tape is created. A lot of paper work is seen as highly bureaucratic. Procedures take precedence over problem solving, and innovation takes a backseat. The organization would have at the time of the next revolution become larger and complex to be managed through such rigid processes and formal programs. 

The next phase following this revolution is that of Collaboration

Wednesday, December 14, 2011

Delegation - Organization Development phase

In the last blog, we looked at the "Direction" phase of a phase in the development of an organization. In today's blog we look at the next phase of Organization Development - Delegation. We understood from the last blog, that the struggle for more responsibility at lower levels of the organization leads to the process of delegation. At this juncture, the company could grow only if a good amount of delegation is in place. 

We begin today's blog from the point of such delegation. As the phase "evolves" we find that:
  • Much greater responsibility is given to the manager of the plants and market territories.
  • Profit centers and bonuses are used to stimulate motivation
  • The top executives at headquarters restrain themselves so managing by exception, based on periodic report from the field.
  • Management often concentrates on making new acquisitions which can be lined up beside other decentralized units
  • Communication from the top is infrequent, usually by correspondence, telephone, or brief visits to the field locations.

Such delegation enables the company expands through enhanced motivation at lower levels. The decentralized managers are able to penetrate larger markets, respond faster to customers and develop new markets.


This growing delegation to the lower levels sows the seeds of the next revolution. The top management begins to sense a loss of control. The highly diversified operations are akin to the field managers running their own show with little to no concern for coordination, money, and technology and man power with the rest of the organization!

The top-management attempts to regain control over the total company. A return to centralized top-management at this stage is not an option. The companies that really move ahead are the companies which would have to find a new solution in the use of special coordination techniques.

Tuesday, December 13, 2011

Direction as an organization development Phase

In the last blog, we began our discussion on the various phases in an organizational development and discussed the phase of creativity in particular. In today's blog we look at the next phase of organization development - Direction and its accompanying evolution characteristics and the revolution that could happen.

Phase 2: Direction

At the end of Phase 1, the companies would have installed an able manager at the helm of affairs. What follows would be a period of sustained growth under able and directive leadership. The duration may vary but the characteristics are:
  • A functional organization structure is introduced to separate manufacturing from marketing activities and job assignments get more specialized
  • Accounting systems for inventory and purchasing are introduced
  • Incentives, budgets and work standards are adopted
  • Communication becomes more formal and impersonal as hierarchy of titles and positions builds
  • The new manager and his key supervisors take most of the responsibility for instituting directions, while lower level supervisors are treated more as functional specialists than as autonomous decision making managers.

These changes channel employee energy more efficiently into growth, they eventually become inappropriate for controlling a larger more diverse and complex organization. The lower-level employees find themselves restricted by a cumbersome and centralized hierarchy. They have come to possess more direct knowledge about market and machinery than do the leaders at the top. Consequently they feel torn between following procedures and taking initiatives on their own. 

At this stage, the 2nd revolution is due - It comes from the demand for autonomy from the lower-level managers. Most companies move towards greater delegation to handle such a scenario. The challenge lies in the top management who by this time is accustomed to being directive to give up responsibility. The lower-level managers are not yet accustomed to taking independent decisions. 

If Companies at this point choose to stick to old control mechanisms, they are bound to lose the race with most of the lower-level employees leaving the organization.

Monday, December 12, 2011

Phases of organization growth - Creativity (Ph 1)

In the last blog, we concluded the initial discussion on the dimensions affecting the organizational development. From today's blog we begin a new discussion on the phases of organizational growth. The basis of this brief discussion is still the same source - Evolutions and Revolutions as organizations grow by Prof Larry E Greiner.

Building on the understanding of the various phases of organizational development, when we analyze the growth of companies over a relatively long period of time, we could categorize the phases of growth into the following phases:

  • Creativity
  • Direction
  • Delegation
  • Coordination
  • Collaboration

It is important to note that, each phase is both an effect of the previous phase and a cause for the next phase. The principal implication of each phase is that management actions are narrowly prescribed if growth is to occur. 

We shall understand each of these phases beginning with Creativity today and continue through the week. 

Phase 1: Creativity
Organizations when they begin have 2 primary areas of emphasis - creating the product, creating the market.
The characteristics of this period include

  • Company’s founders are usually technically or entrepreneurially oriented and don’t focus on the managerial activities.
  • Communication amongst employees is frequent and informal
  • Work is generally for long hours but rewards are modest salaries. There would be promise of ownership benefits
  • Control of activities comes from immediate market place feedback - "management acts as customer reacts"

While all this is the daily happening, there is something lurking in the horizon - a potential leadership crisis. As the organization scales up, the range of activities widen requiring an entirely different mindset to handle these. The founders who love their freedom and creativity find them burdened with unwanted management responsibilities. The critical question now to answer is - who is to lead the company out of confusion and solve the managerial problems confronting it.

The founders often hate to step aside even though they are probably temperamentally unsuited to be managers. The need would be to locate and install a strong business manager who is acceptable to the founders and who can pull the organization together.

Thursday, December 8, 2011

Organization growth, evolution and revolution challenges

In the last blog, we began looking at the 5 dimension that are important when considering organization development. We have covered 2 of these, and the remaining 3 are being discussed in this blog.

  • Stages of Evolution
  • Stages of Revolution
  • Growth rate of the company

As a company grows from a start up phase the first few months are with enormous confusion, the managerial processes are generally evolving and the challenges are many. There are no defined rules, procesures etc. Once the organization lives through this face, it enjoys a period of stability till another challenge of growth and scale comes in. This mandates another change in the managerial processes of the company. Once this challenge is effectively handled out by the organization there will be  a longer phase of stability - the quiter periods. This is what is indicated by the term "evolution".

A look at the forture 500 list over the last 50 years would indicate definitely that companies in the first 10 years of this search would be very distinct from the once in the last 10 years. This is due to the turbulance these organizations face. The companies might have experienced a long stable period where it wouldnt have to change much of the organization structures and processes to address external challenges. However over a period of terbulance these would have to be changed, the challenge is to find new set of organization practises to handle the new challenges and prepare for the future. These turbulent times is what is meant by the term "revolution"

The stage of the organization where the company is - revolution or evolution is also what defines what the organization structure is going to be.

If a company is in a rapidly changing market then it has to be extremely agile. In a rapidly expanding market the comapny would have to respond by expanding the employee base. This leads to a requirement of a new organizational structure. The length of the evolutionary phase is shortened and the revolutionary phases are more common. Thus the growth rate of the company plays a significant role in the oragnization structure and processes and there by its development.

Wednesday, December 7, 2011

5 dimensions affecting the organization's growth

In the last blog, we began our discussion on understanding how the organization grows, in today's blog we look at the key forces that affect the organization development. We shall discuss 2 of these forces and the remaining in the next blog. 

It has always been a hard call on whether the organization's structure would define its strategy or is it that the organization's strategy would define the organization strategy. Though each of these approaches could have a long and detailed discussion, to understand the way we look at the current blog, we would take the approach that it is structure plays a critical role in influencing corporate strategy. We can look at 5 key dimensions that are important in building a model for organization development, these are:
  1. Age of the Organization
  2. Size of the Organization
  3. Stages of Evolution
  4. Stages of Revolution
  5. Growth rate of the industry

Let us begin looking at each of these dimensions:
Age of the organization: 
This is one of the most obvious of the dimensions that one can think of. A simple observation would clarify that the same organization practices are not maintained throughout a long time span. - Management problems and principles are rooted in time. The passage of time is also the factor that enables institutionalization of managerial attitudes.

Size of the organization:
A company’s challenges and theirs solutions tend to change a lot as the company scales up - both in terms of the number of employees and the sales volumes. Organizations that grow in size need to change their structure and management practices over a longer time frame. Along with the increase in size, come problems of coordination and communication, new functions emerge, levels in the management hierarchy multiply, and jobs become more interrelated.

Let us continue the discussion in the next blog.

Tuesday, December 6, 2011

Growth of Organization - Evolution & Revolution

In the last blog, we summarized the relation between technology and task interdependence. From today's blog over the next few blogs we look at some of the theories that deal with the growth of an organization, these are mostly based on the HBR paper - “Evolution and Revolution as organizations of growth" by Larry E Greiner.

The basic principle on which the growth of an organization could be predicted is that it is less determined by the environmental forces and more defined by the history of the organization! To understand the paper further, we would need to understand the 2 terms
  1. Evolution
  2. Revolution

Evolution stands for a phase in the growth of the organization where no major upheaval has occurred. It is relatively a stable period.
Revolution stands for a phase where substantial turmoil is felt in the organization. 

The famous adage - what goes up comes down it something that could be related to in this scenario. Every Evolutionary phase would be creating its own revolution. The nature of the management solution is what would determine whether a company would move forward into the next stage of evolutionary growth.

Let’s take an example to get this clearer - Generally start ups begin with a phase where entrepreneur is the central decision making authority. He/She works out most of the decisions to be taken regarding the company or the firm single handedly. As the company scales up, we begin seeing that the complexity of the decisions to be made would not be best decided by the entrepreneur. There needs to be a decentralization of these decisions to ensure that the company moves ahead smoothly.

Monday, December 5, 2011

Task interdependence and Technology summary

In the last blog, we looked at intensive technology and reciprocal interdependence. In today’s blog we take a look back at all the various interdependence and technologies to get a comprehensive view of the topics discussed over the last 10 blogs.

We could summarize the complete discussion on task interrelation and technology in the following diagram. 
(based on Thompson)

It is to be noted that task interdependence increases from pooled to sequential to reciprocal, mechanisms of coordination get added to the organization. Pooled interdependence only requires rules and procedures, sequential interdependence uses rules, procedures and scheduling. Reciprocal independence uses all these coordination mechanism and "mutual adjustment".

To provide an alternate view of what define the organizational structure we would like to take the focus on to what Galbraith has suggested. He claims that it is communication that shapes the organization structure. He also argues that technical complexity leads to structural complexity, uncertainty promotes organic forms, and interdependence increases demands for coordination, because these factors increase the communication load carried by organization. This in turn affects its structural form. Thus - technology is related to social structure through the mediating effects it has on communication. 

Thursday, December 1, 2011

Intensive technology - Reciprocal task interdependence

In the last blog, we looked at long-linked technology and the task interdependence associated there with. In today's blog we look at intensive technology and the nature of task interdependence. 

Intensive technology generally comes with a lot higher complexity compared to the long-linked technology. The scope of the task is much task is much higher that an individual's capacity to transform things; it mandates exchange of information between the people working on the task while performing it. 

Let us take an example of restaurant to understand the scenario at hand better. The kitchen staff waits for the wait staff to provide orders, and the wait staff is dependent on the kitchen staff to provide meals prepared to the customer's satisfaction. The situation becomes even more complex when we take the situation of a surgeon at work.  The surgeon needs to continuously exchange information with the anesthesiologist, assisting doctors and nurses while performing the operation. 

We see that in addition to the existence of pooled and sequential task interdependence, we find a new type of task interdependence called - reciprocal task interference. We could diagrammatically understand this through the image shown below.

The primary difference between the sequential and reciprocal task interdependence is that while long-linked technology involves work flow in a single direction, but the intensive technology has complementary work flows. "Mutual adjustment" becomes extremely essential to the operation of intensive technology on the parts of the individuals and units involved due to the reciprocal nature of their task interdependence. 

Extreme mutual adjustment mandates the requirement of team work. In teamwork, work inputs to the transformation process are simultaneously acted upon by members of the work team, rather than passing inputs back and forth as in the case for less intensive forms of reciprocal task interdependence. The second example of surgical process is an example for this.

Wednesday, November 30, 2011

Long-linked Technology - sequential interdependence

In the last blog, we looked at the realign between mediating technology and the related task interdependence - pooled task interdependence. In today's blog we look at the long-linked technology and the related task interdependencies. 

To begin with, let’s take an example of assembly line. We sometimes see that there are lots of functions operators can perform independent of one another. So the different lines are pooled in the sense that their outputs are aggregated into the total output of the organization - this is an example of pooled task interdependence. 

In another situation, we see that within a production line, we see that each worker is dependent on the work of the others located at positions prior to theirs in line; this means that there is a sequential dependence of the tasks - this is called sequential task interdependence. This can be visualized as shown in the diagram below. 

Such sequential task interdependence requires more planning and scheduling than pooled interdependence. Getting back to the context defined earlier, we would   need to design tasks and assign workers and schedule to work together in order for the assembly line to work properly. Any break in the line can interrupt production, careful planning of tasks and scheduling of workers is imperative. Rules and procedures are also necessary and these don't need any explanation.

Tuesday, November 29, 2011

Mediating Technology - task interdependence and coordination

In the last blog, we looked at the relation between Technical complexity, Uncertainty and Routineness. In today's blog, we begin the discussion on relation between task interdependence and mechanism of Coordination.

Thompson recognized that the objects being processed or the work processes of a technology may be interrelated so that changes or problems in one part of the technical system affect other parts. This is defined situation as task interdependence.

In this blog, we look at specifically at mediating technology. To understand this, let’s take the example of a bank.

Bank employees mediate between borrowers and savers or investors. The mediation cab is accomplished simultaneously by several bank branches that operate independently of one another.  Little direct contact is needed between the various units. In such cases, the output of the organization is simply the sum of the efforts of each unit. - This is called "pooled task interdependence". 

We could visualize this as shown in the diagram below.

Another interesting point to note is that, if the organization wishes to achieve a coherent organizational identity or ensure services are consistent across units, this can be achieved by setting up and following rules and standard procedures.

Monday, November 28, 2011

Technology Complexity, Uncertainty and Routineness

In the last blog, we discussed about the technology imperative and how it affects the structure of an organization. In todays blog, we look at how technical complexity, uncertainty and routiness are related.

Woodward's study indicated that both unit and continuous processing technologies are associated with low routineness while mass production technologies have high routineness. Thus the relationship between routines of work and technical complexity takes the form of an inverted U. The following diagram indicates the same. 

We could represent Perrow's two dimensional topology of technology into once single dimension of routiness as shown in the following diagram. 

The above 2 diagram shows how both the topologies link technology and social structure in terms of routines and non-routinesss of work.

Thursday, November 24, 2011

Technology and Implications on Organization Structure

In the last blog, we looked at Perrow's topology of technology. Beginning with today's blog we begin understanding the relation of the technology on the social structure of an organization. We could classify the affects of this social structure into one of the following 3 classes. 
  1. Technology Imperative
  2. Relationship between Technology complexity, Uncertainty and Routine-ness 
  3. Task interdependence ant Mechanism of Coordination

In today's blog, we begin the first of these - The Technology Imperative.

The early works of Woodward's indicated that technology used by the organization would determine what sort of organization structure was best. This belief was called "Technology Imperative". However, when this was studied extensively by the researchers at "Aston Group", they found the result which Woodward's had indicated was contingent on the organization size.

The study by Aston Group summarized is as follows - technology has a greater significance for the structure-performance relationship when organizations are small than when they are large. 

This becomes clear when we have a closer look a these small organizations. [Relating back to this blog on the structure we had defined something called operational core, which we could here call as technical core]. In these smaller organization, most employees work directly on the core technology, but in larger organizations many employees are involved in technologies which are not directly related to the core. The structure in large organizations reflects greater differentiation and integration of a wider array of technologies than do social structures in smaller organizations.

Wednesday, November 23, 2011

Organization Theory - 42 (Perrow's typology of technology with examples)

In the last blog, we looked at Thompson's Topology of Technology. In today's blog, we look at Perrow's Topology of Technology.

In the topologies described by Thompson and Woodward, a common problem was that there was only one dominating technology in the organization and it would be challenging if an organization would have more than one technology. For this he used 2 dimensions:
  1. Task variability
  2. Task analyzability
Task Variability could be defined by the number of exceptions to standard procedures encouraged in the application of a given technology.

Task Analyzability could be defined as the extent to which, when an exception is encountered, there are known analytical methods for dealing with it.

Put on a 2x2 matrix, we could look at it as shown in the diagram below.

The classification of the technology could be as:
  1. Routine
  2. Craft
  3. Engineering
  4. Non-routine

An example for each of these is:
  1. Routine - The job of a clerk generally has low variation on the kind of activity that (s)he performs and almost always has a known method of solving the problem at hand
  2. Craft - The job could be that of a construction worker. The number of exceptions to the standard procedures could be minimal, but when such exceptions occur there is almost always a new case at hand to handle which a new method needs to be involved
  3. Engineering - Consider the case of aerospace engineering, every challenge at hand would different exceptions to face and handle every time each requiring a special method to solve. There is a high task variability and high task analyzability in such a scenario
  4. Non-routine - A case could be in an RnD lab, when high task variability could be found but there are standard ways to handle the exceptions that come in the means of achieving the objective

Tuesday, November 22, 2011

Organization Theory - 41 (Thompson's topology of technology)

In the last blog, we looked at Woodward's Topology of Technology. In today's blog, we looked at Thompson's topology of technology. 

Thompson classified the technology as one of the following 3 varieties:
  1. Long-linked
  2. Mediating
  3. Intensive

Long-linked technology covers’ Woodward's mass production or continuous processing categories. Essentially, this technology indicate linear transformation process that can be thought of as having inputs entering at one end of a long line of steps from which products emerge at the far end.

Mediating technologies bring clients and customers together in an exchange or transaction. Mediating technologies are called so because firms using these technologies act as go-between (i.e. mediators) in bringing together the interest of two or more different parties to a transaction.

An example of Intensive technologies is hospital emergency rooms, research laboratories etc. This technology requires coordinating the specialized abilities of two or more experts in the transformation of a usually unique input into a customized output.

Thompson's theory could be visualized in a 2x2 matrix as below, on 2 dimensions.
  • standardization of inputs and outputs
  • standardization of transformation process

The interesting part is the 4th quadrant - where we have standardized inputs/outputs with un-standardized transformation processes. It could be interpreted as a nonexistence due to enormous inefficiencies associated with such a system, hence not a very serious impact

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Monday, November 21, 2011

Organization Theory - 40 (Woodward's Topology of Technology)

In the last blog, we began our discussion about technology. In today's blog we discuss one of the initial classifications of technology done by - Woodward.

Woodward began attempting to find a relation between structure and performance; however no significant relation was found. That is when she began classifying the companies based on the level of technical complexity; she began seeing patterns and relation between structure and performance. 

She classified the technologies into 3 basic technologies:

  1. Unit or Small Batch
  2. Large Batch or Mass production
  3. Continuous Processing

The following diagram summarizes the various topologies.

Woodward’s study showed that organizations using unit and small technologies are more successful when they have smaller spans of control, fewer levels of management and when they practice decentralized decision making.

The study also showed that organizations that use larger batch and mass production technologies are more successful when their managers have larger spans of control and when they practice centralized decision making. 

The successful continuous processing organizations are similar to those for unit and small batch processing technologies, they have smaller spans of control and decentralized decision making. However they have more levels of management than either of the earlier discussed technologies. 

Though this was breakthrough in classifying companies based on the type of technology, the study was not without limitations. The 2 major drawbacks are:
  1. The study mainly focused on small and medium sized organizations - the relation discovered between structure and performance is less significant when the organizations are larger and more complex
  2. Non-manufacturing firms were not part of the study

Thursday, November 17, 2011

Organization Theory-39 (Technology)

In the last blog, we discussed buffering and boundary spanning roles. In todays blog, we being understanding another important concept - "technology" and continue the discussion over the next few blogs. 

A general understanding of "technology" is more closely aligned with the concept of science that we know. However, this is pretty different when economists try to define "technology".

The economists and there by the organization theorists look at technology as  a means by which society provides its members with the things that they need and desire. So one can consider organization is a technology for producing a set or subset of the objects and services that society demands. This could be the environment level of analyzing the term technology.

A dive deep into the organization and we could have a completely different perspective - the view of how things are actually done! The organization has number of departments which coordinate amongst each other to provide the material another department needs etc. A complete new technology perspective within the firm. This level of analyze would be at the organization-level

One could go further and discuss these at the tasks in each of these organizational departments. However for clarity sake, we could limit the level of analysis at Organizational and Environmental level. The variations across the organizations is reduced by focusing more on the core technology to produce the organization's primary output.

This simplified view, enables us to compare organizations with different core technologies by which core technologies, by noting key similarities and differences between them. What gets lost in this approach is the details of technology diversity within the organization.

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Wednesday, November 16, 2011

Organization Theory - 38 (Buffering and Boundary Spanning)

In the last blog, we looked at a framework for understanding the relation between complexity, change and uncertainty. In today's blog we look at how organizations handle the need for information through buffering and boundary spanning roles. We begin with understanding and then better it with 2 examples.

Buffering involves protecting the internal operations of the organization from interruption by the environmental shocks such as material, labor, capital shortage etc. Organizations generally create a role to handle this sort of shocks. Through their efforts, uncertainty associated with a complex or changing environment is absorbed, freeing those in the production centers from concerns that might distract them from their work.

Boundary spanning is the name given to environmental activities including passing needed information for decision makers. It also covers the activities representing the organization o its interests to the environment.

The difference between the 2 is that while Buffering deals with the material requirements of the organization, while boundary spanning is more of information need. Many a times the 2 roles are seen to overlap - we take 2 examples in here.

A sales person, for example is responsible for transferring the organization's output to its customers, but they also bring important information about changing customer demands into the organization and represent the organization’s capabilities and reputation to the customer.

Purchasing agents in organizations too combine buffering and boundary spanning roles. As they transfer required raw materials etc into the organization, they also gather information on new supplies and techniques and techniques of production from their suppliers.

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Tuesday, November 15, 2011

Organization Theory - 37 (Uncertainty and Information need)

In the last blog, we looked at the relation between the various ecology theories we learnt. In today's blog we begin our discussion on Complexity and its implications.

Early definitions of Complexity looked at it from 2 angles
- Number of Elements in the Environment
- Rate of Change in these environmental elements

Put on a 2 x 2 matrix, it would look similar to the following.

However, this definition would be relative to the person reading it and getting one standard definition for the same wouldn't be easy. It would be easier to look at this from the information perspective.

The information perspective argues that managers feel uncertain when they perceive the environment to be unpredictable, and this occurs when they lack the information that they feel need to make sound decisions. The new 2 x 2 would now look like the following:

On an interesting note, Isomorphism refers to requisite variety - the belief that organizations match the complexity of the environment with internal structures and systems. i.e. when the environment is simple the organization is simple.

Organizations which confront different conditions and elements in their environment handle this pressure nu internal differentiation. The different departments specialize to handle the change in that component of the environment!

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Monday, November 14, 2011

Organization Theory - 36 (Relation between theories)

Over the last few blogs ending with this one, we have discussed the various organization theories. In today's blog, we look at the inter-relation between the 3 theories we studied:

The Resource Dependency Theory is formulated at the organizational level of analysis and provides a top-management perspective looking outwards from the organization to its surrounding environment.

The later 2 theories are formulated at the level of environment. The Population ecology model attempts to explain why there are so many different kinds of organizations. institutional theory tries to explain why many organizations look alike in essence, both these theories answer their fundamental questions with the reference to the influence to the environment no the organizations.

When environment has many rules and expectations to which organizations must confirm to derive necessary social legitimacy - institutional theory best explains organization's structure and outcome.
When the environment is not highly institutionalize and is influenced more by economic and technical competitions - population ecology perspective explains better to begin with.

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Thursday, November 10, 2011

Journey So Far

Over the last nearly 35 blogs, we have looked at organization from a theoretical context.

The study of organization theory summarizes the patter of growth of organizations through their lifespan. We have covered initially the phase of looking at organization processes like - centralization etc and its implication on the organization. We then moved on to discuss about the relation between environment and organization.

Before we proceed, we would love to inform our future plans. Our steady success over the last 9 months of operations have given us the confidence to move to the next leap - A newsletter.

We would love to listen to our readers what they would love to see in the newsletter. This is the starting point for us to enhancing our ambit of offerings and making it more relevant to the readers of this blog.

Expecting your response.

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Wednesday, November 9, 2011

Organization Theory - 35 (Institutional Theory)

In the last blog, we looked at the population ecology model partially. In today's blog we look at another theory - Institutional Theory.

Environment puts demands on organization in 2 ways
1. They make a technical and economic demands that require organizations to produce and exchange their goods and services in a market or a quasi-market.
2. They may make social and cultural demands that requirer organizations to play particular roles in society and to establish and maintain certain outward appearances.

Institutions generally have a repeated actions and shared concept of reality. Sometimes actions are repeated because explicitly rules or laws exist to ensure their repetition (legal and political influences). Sometimes activity patterns are supported by norms, values, and expectations (cultural influences); sometimes by a desire to be or look like another institution (social influences).

In the institutional perspective, the environment is session as providing a more or less shared view of what organizations should look like and how they should behave.

In this approach the manager would need to analyze the particular organization you should consider how the organization is adapting to its institutional context.

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Tuesday, November 8, 2011

Organization Theory - 34 (Population Ecology theory)

In the last blog, we looked at the Resource Dependency Theory of relation between organization and environment. In today's blog we will into another theory - Population Ecology theory.

Similar to the Resource dependency theory, the Population Ecology theory too starts with assumption that organizations depend on their environment for the resources they need to operate.

The population ecology assumes that the environment of an organization is assumed to have the power to select from a group of competitors those organizations which best serve the needs. Organizations which share a resource pool are competitively interdependent and the patters of interdependence that they adopt within the group affect the survival and prosperity of individual members.

The main interest of the theory to explain the evolutionary process of the organization. There are 3 evolutionary processes - variation, selection and retention - which explain the dynamics of a population.

Variation occurs in a population through entrepreneurial innovation and through the adaptation of established organizations.

The new organizations that are formed through birth or adaptation provide the range of choice the environment has during the selection process.
Environment sélects on the basis of fitness - the survival. Retention equals survival.

This model provides a more detached view of the organizations than they are normally used to taking.

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Monday, November 7, 2011

Organization Theory - 33 (Resource Dependency Theory)

In the last blog, we began our discussion about the relation between organization and environment with the contingency theory. In today's blog we look at another theory - the Resource Dependency Theory.

The Resource Dependency Theory suggests that "an analysis of inter-organizational relations within the network of the organization can help managers to understand the power/dependence relationships that exist between their organization and other network actors.

Every organization depends on its environment for almost all the tangible requirements - raw materials, labor, capital, equipments, and outlets for its produce.  This dependency of the organization on its environment gives the environment a power over the organization. 

Managers would need to perform this resource dependency analysis by identifying the source of organization's resources. The next point of focus has to be on environmental actors which can affect these organization-environment relationships and there by the organization. These are generally competitors and regulatory agencies. This is to be followed by sorting these by criticality and scarcity. 

With this analysis done, an apt strategy would have to be developed by the manager towards addressing these challenges from the resource front. There are numerous ways that have been traditionally followed, we would look at them in different cases at a later date.

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Thursday, November 3, 2011

Organization Theory - 32 (Contingency Theory Environmental - Organization Relation)

In the earlier blog, we looked at the larger context of International environment and the relevance to the managers. Beginning today over the next few blogs we would look at some of the theories that highlight the organization-environment relations. Today we discuss the first of these theories - Contingency Theory.

The Contingency Theory talks about the relation between the environmental condition and the nature of organization that would develop in such an organization. A careful observation of the business environment around us and we begin to realize that this theory is really true.

Simply put, this theory finds that a stable environment would have the organization with strict line of authority, distinct areas of assigned responsibilities etc. Since, this resembles a machine with strict rules and predictability - this is called mechanistic organization. On the other hand if the environment is very dynamic, the organization operating within it would have to be very flexible and employees would have the freedom to respond with a fitting reply relevant to the context. Given this lively nature, this is called an organic organization.

Of these 2 types - mechanical and organic, none could be said as superior to the other. Each is appropriate to different environmental conditions. In stable environment, the mechanistic form is advantageous through the standard procedures to perform routine activities. Under rapidly changing environment, the organic model scores over the mechanistic model or organizations. Flexibility of organic organizations, support the need for innovations and adaption.

To summarize - the most effective way to organize is "contingent" upon the conditions of complexity and change in the environment - Thus the name "Contingency Theory".

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