Mintzberg: The three last configurations

Mintzberg: The three last configurations

Pål Sørgaard, Telenor R&D and IfIINF 5250September 26, 2005

26 September, 2005 Pål Sørgaard, R&D 2

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


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


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


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


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


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


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


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


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


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


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


Stages of divisionalisation (fig 11-3)

Integrated form(pure functional)

By-product form

Related product form

Conglomerate form(pure divisional)


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?


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)


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


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


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


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


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


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


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


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


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.


Some issues

Ambiguities– Unclear, multiple and changing lines of authority

The most politicised configuration Not very efficient Danger of inappropriate transition


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

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Mintzberg: The three last configurations

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