Organizations: A Very Short Introduction

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GALILEO St illman DrakeGAME THEORY Ken BinmoreGANDHI Bhikhu ParekhGENIUS Andrew RobinsonGEOGRAPHY John Matthews and David HerbertGEOPOLITICS Klaus DoddsGERMAN LITERATURE Nicholas BoyleGERMAN PHILOSOPHY Andrew BowieGLOBAL CATASTROPHES Bill McGuireGLOBAL WARMING Mark MaslinGLOBALIZATION Manfred StegerTHE GREAT DEPRESSION AND THE NEW DEAL Eric RauchwayHABERMAS James Gordon FinlaysonHEGEL Peter SingerHEIDEGGER Michael InwoodHIEROGLYPHS Penelope WilsonHINDUISM Kim KnottHISTORY John H. ArnoldTHE HISTORY OF ASTRONOMY Michael HoskinTHE HISTORY OF LIFE Michael BentonTHE HISTORY OF MEDICINE William BynumTHE HISTORY OF TIME Leofranc Holford-StrevensHIV/AIDS Alan WhitesideHOBBES Richard TuckHUMAN EVOLUTION Bernard WoodHUMAN RIGHTS Andrew ClaphamHUMANISM Stephen LawHUME A. J. AyerIDEOLOGY Michael FreedenINDIAN PHILOSOPHY Sue HamiltonINFORMATION Luciano FloridiINNOVATION Mark Dodgson and David GannINTELLIGENCE Ian J. DearyINTERNATIONAL MIGRATION Khalid KoserINTERNATIONAL RELATIONS Paul WilkinsonISLAM Malise RuthvenISLAMIC HISTORY Adam SilversteinJOURNALISM Ian HargreavesJUDAISM Norman SolomonJUNG Anthony StevensKABBALAH Joseph DanKAFKA Ritchie RobertsonKANT Roger ScrutonKEYNES Robert SkidelskyKIERKEGAARD Patrick GardinerTHE KORAN Michael CookLANDSCAPES AND GEOMORPHOLOGY Andrew Goudie and Heather VilesLATE ANTIQUITY Gillian ClarkLAW Raymond WacksTHE LAWS OF THERMODYNAMICS Peter AtkinsLEADERSHIP Keith GrintLINCOLN Allen C. GuelzoLINGUISTICS Peter MatthewsLITERARY THEORY Jonathan CullerLOCKE John DunnLOGIC Graham Priest

MACHIAVELLI Quent in SkinnerTHE MARQUIS DE SADE John PhillipsMARX Peter SingerMARTIN LUTHER Scott H. HendrixMATHEMATICS Timothy GowersTHE MEANING OF LIFE Terry EagletonMEDICAL ETHICS Tony HopeMEDIEVAL BRITAIN John Gillingham and Ralph A. GriffithsMEMORY Jonathan K. FosterMICHAEL FARADAY Frank A. J. L. JamesMODERN ART David Cott ingtonMODERN CHINA Rana Mit terMODERN IRELAND Senia PasetaMODERN JAPAN Christopher Goto-JonesMODERNISM Christopher But lerMOLECULES Philip BallMORMONISM Richard Lyman BushmanMUHAMMAD Jonathan A. C. BrownMUSIC Nicholas CookMYTH Robert A. SegalNATIONALISM Steven GrosbyNELSON MANDELA Elleke BoehmerNEOLIBERALISM Manfred Steger and Ravi RoyTHE NEW TESTAMENT Luke Timothy JohnsonTHE NEW TESTAMENT AS LITERATURE Kyle KeeferNEWTON Robert IliffeNIETZSCHE Michael TannerNINETEENTH-CENTURY BRITAIN Christopher Harvie and H. C. G. MatthewTHE NORMAN CONQUEST George GarnettNORTH AMERICAN INDIANS Theda Perdue and Michael D. GreenNORTHERN IRELAND Marc MulhollandNOTHING Frank CloseNUCLEAR WEAPONS Joseph M. SiracusaNUMBERS Peter M. HigginsTHE OLD TESTAMENT Michael D. CooganORGANIZATIONS Mary Jo HatchPARTICLE PHYSICS Frank ClosePAUL E. P. SandersPENTECOSTALISM William K. KayPHILOSOPHY Edward CraigPHILOSOPHY OF LAW Raymond WacksPHILOSOPHY OF SCIENCE Samir OkashaPHOTOGRAPHY Steve EdwardsPLANETS David A. RotheryPLATO Julia AnnasPOLITICAL PHILOSOPHY David MillerPOLITICS Kenneth MinoguePOSTCOLONIALISM Robert YoungPOSTMODERNISM Christopher But lerPOSTSTRUCTURALISM Catherine BelseyPREHISTORY Chris GosdenPRESOCRATIC PHILOSOPHY Catherine OsbornePRIVACY Raymond WacksPROGRESSIVISM Walter NugentPSYCHIATRY Tom BurnsPSYCHOLOGY Gillian But ler and Freda McManus

PURITANISM Francis J. BremerTHE QUAKERS Pink DandelionQUANTUM THEORY John PolkinghorneRACISM Ali RattansiTHE REAGAN REVOLUTION Gil TroyTHE REFORMATION Peter MarshallRELATIVITY Russell StannardRELIGION IN AMERICA Timothy BealTHE RENAISSANCE Jerry Brot tonRENAISSANCE ART Geraldine A. JohnsonROMAN BRITAIN Peter SalwayTHE ROMAN EMPIRE Christopher KellyROMANTICISM Michael FerberROUSSEAU Robert WoklerRUSSELL A. C. GraylingRUSSIAN LITERATURE Catriona KellyTHE RUSSIAN REVOLUTION S. A. SmithSCHIZOPHRENIA Chris Frith and Eve JohnstoneSCHOPENHAUER Christopher JanawaySCIENCE AND RELIGION Thomas DixonSCOTLAND Rab HoustonSEXUALITY Vronique Mott ierSHAKESPEARE Germaine GreerSIKHISM Eleanor Nesbit tSOCIAL AND CULTURAL ANTHROPOLOGY John Monaghan and Peter JustSOCIALISM Michael NewmanSOCIOLOGY Steve BruceSOCRATES C. C. W. TaylorTHE SOVIET UNION Stephen LovellTHE SPANISH CIVIL WAR Helen GrahamSPANISH LITERATURE Jo LabanyiSPINOZA Roger ScrutonSTATISTICS David J. HandSTUART BRITAIN John MorrillSUPERCONDUCTIVITY Stephen BlundellTERRORISM Charles TownshendTHEOLOGY David F. FordTHOMAS AQUINAS Fergus KerrTOCQUEVILLE Harvey C. MansfieldTRAGEDY Adrian PooleTHE TUDORS John GuyTWENTIETH-CENTURY BRITAIN Kenneth O. MorganTHE UNITED NATIONS Jussi M. HanhimakiTHE U.S. CONGRESS Donald A. RitchieUTOPIANISM Lyman Tower SargentTHE VIKINGS Julian RichardsWITCHCRAFT Malcolm GaskillWITTGENSTEIN A. C. GraylingWORLD MUSIC Philip BohlmanTHE WORLD TRADE ORGANIZATION Amrita NarlikarWRITING AND SCRIPT Andrew Robinson

Available soon:SCIENTI.C REVOLUTION Lawrence M. PrincipeCANCER Nicholas JamesEARLY MUSIC Thomas Kelly

PAGANISM Owen DaviesNUCLEAR POWER Maxwell Irvine

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ORGANIZATIONSA Very Short Introduction

Mary Jo Hatch

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Mary Jo Hatch 2011

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ISBN 978-0-19-958453-6

1 3 5 7 9 10 8 6 4 2

Contents

Preface

Acknowledgements

List of illustrat ions

1 What is organizat ion?

2 What is the best way to organize?

3 What does it mean to be an organizat ion?

4 Who does organizing serve?

5 How does organizing happen?

6 Where do we go from here?

Appendix: Why organizat ional scholars disagree:

polit ics and philosophy

References

Further reading

Index

To all the organizers

Preface

Organizing is interest ing because everyone does it . You may not be conscious of havingorganized anything, but I bet you have. Ever arranged your desk or closet so you could moreeasily find your stuff? How about creat ing a filing system? Perhaps you organized a play orfest ival, threw a party, or led your friends in a collect ive game of dodge ball or fantasy football.Are you part of a family? A church? Ever at tended school? If so, you have been a member ofone or more organizat ions. Maybe you have a job working in a small business or for a bigcorporat ion, a government agency, or a charity. Then youve seen organizat ion from the inside.

Organizat ions are everywhere, and organizing is a key act ivity in life. With or withoutconsciousness of this fact , it remains t rue. Knowing something about organizing can be usefuland fascinat ing. This book will serve as an entry point and guide to thinking aboutorganizat ions and organizing. It will build on your experiences and reveal things about themany organizat ions you have met that you probably never thought about before. In it you willfind insights into your experiences as well as stories based on mine to enliven your reading.

This book is intended for a general audience. You will need lit t le or no prior knowledge ofthe subject matter, but if you already have some, I am sure you will find the book a handyreview that provokes new insight. Throughout you will encounter some fairly abstract ideas,but I will ground these with concrete examples and in this way guide you through the morecomplicated ideas about organizat ions in a gent le way. Curiosity is all that is required for you tohave a rich and rewarding reading experience.

You will also meet some of the greatest organizat ional thinkers and the ideas that theycontributed to the study of organizat ions. There are too many to tell you about all of them, so Ichose the ones I thought you would most like to tell your friends or colleagues about. Anyt imeyou meet someone new you will learn when they lived so that you can see how far back intohistory the knowledge of organizat ions reaches and also get a sense of the order in whichideas were introduced.

My suggest ion is that you read this book straight through (it s short !), with the aim to getthe big picture. Then look back through the chapters again. It is more fun to think aboutorganizat ions when you have a few concepts to mix together, and the ideas will connect asthey spend a lit t le t ime in your brain, where they can work on each other like a good stew.Simmering ideas brings out flavorful nuances and will refine your taste in ideas.

The ideas about organizat ions and organizing have long amazed me with the insight theybring when applied, not just to work, but to life in general. I hope the ideas presented in thisVery Short Introduction will amaze and delight you, and that you will find many uses for whatyou learn about organizat ions to help you now and in the future.

Mary Jo Hatch

Ipswich, Massachusetts

14 November 2010

Acknowledgements

First , I would like to thank my husband, organizat ional psychologist Philip Mirvis, for takingthe t ime to carefully read and thoroughly crit ique the final manuscript of this book. My dearfriend and neighbor Helen Danforth, a musician, was also more than generous with her t ime inreading a complete draft and providing many helpful comments and ideas, including severalthoughtful insights about music. Professor Ulla Johansson, my colleague at GothenburgUniversitys Business and Design Lab, and Kaj Skldberg from the Stockholm School ofBusiness provided encouragement and suggest ions for writ ing about power in organizat ions.Thanks also go to my editors at Oxford University Press, Andrea Keegan, David Musson,Emma Marchant, and Helen Hill, as well as to the anonymous reviewers who approved thisproject and helped guide it to complet ion. Finally, I express deep grat itude to Sri Harold Klemp,the Mahanta, the Living ECK Master, who taught me that t ruth should be delivered in as manydimensions as possible. May you find some of them here.

List of illustrations

1 Gett ing organized

2 Differences between the three Os: organizat ion, organizat ions, and organizing

3 The nine levels of general systems theoryBased on Boulding (1956). By permission of Oxford University Press

4 The Googleplex 2008 Google

5 Two organizat ion charts: funct ional and divisional structure

6 Matrix structureBy permission of Oxford University Press

7 A Panopt icon prison Peter Higginbotham Collect ion/Mary Evans Picture Library

8 Technology of the organizat ion

9 Mediat ing, long-linked, and intensive technologiesBy permission of Oxford University Press

10 Task interdependenceBased on Thompson (1967)

11 How txteagle describes its businessNathan Eagle, txteagle Inc.

12 Sectors of the environment that shape organizing pract ices

13 Scheins model of organizat ional cultureAdapted from Organizational Culture and Leadership (p. 14) by E. H. Schein, 1985

Jossey-Bass, San Francisco. John Wiley & Sons Limited

14 Art ifacts of organizat ional cultureBased on Dandridge, Mitroff, and Joyce (1980), Schultz (1995), and Jones (1996). By

permission of Oxford University Press.

15 Symbolism adorning the library at Notre Dame University, South Bend, IndianaPhotograph by Joseph C. Fross

16 How organizat ions depend on their environments

17 Francisco Goyas The Sleep of Reason Produces Monsters (1797-9), etching from theseries Los CaprrichosCourtesy of the Library of Congress

18 An organizat ions developmental stages

19 Ident ity dynamics in individuals and organizat ionsBased on Hatch and Schultz (2008). Burger meal: Ace Stock Limited/Alamy; Super

Size Me: Roadside/Goldwyn/The Kobal Collect ion

20 Model combining organizat ional ident ity with cultural dynamics

21 Nodes and t ies produce a network

22 How organizat ional boundaries reform in the shift from industrial to post-industrialsociety

Chapter 1

What is organization?

Organizat ion happens when people work together to accomplish some desired end stateor goal. It can happen through intent ionally designed act ivity, spontaneous improvisat ion, orsome combinat ion of the two, but it always depends upon coordinated effort . As a simpleexample, think about the goal of moving a large stone, too big for one human working alone topush uphill (Figure 1a). Two or even more wont budge it either (Figure 1b), unless theycoordinate their efforts (Figure 1c).

But people often pursue more complex goals than pushing a stone uphill. Putt ing NeilArmstrong and Buzz Aldrin on the Moon meant coordinat ing everything from cleaning officesand buying paperclips to t raining the astronauts and designing, building, and launching theirspacecraft . Supplying the Tsukiji Fish Market in Tokyo (Japan) that serves the restaurants andfishmongers of the world depends on the coordinated efforts of fishing crews that sail off thecoasts of Cartagena (Spain), Halifax (Canada), Boston (US), and Pusan (South Korea), and onthe most ly Japanese buyers who fly to these places to survey the catch, purchase the bestfish available, and crate and ship them to Tokyo. As these examples show, the coordinat ion ofhuman interests and act ivit ies can range from the simple to the massively complex, and itsgoals from the mundane to the exot ic.

1. Gett ing organized: The person in a) confronts a problem too big to handle alone,moving a large stone to the top of a hill; b) finds help but does not use it in acoordinated way and so the stone remains at the bottom of the hill; c) organizes theact ions of those who came to help and achieves the desired outcome

A little history

Organizing has been with us a long t ime. Prehistoric humans organized to hunt and gather

food, find shelter, and protect and raise their children. To nurture their souls they made art andpract iced religion. By grouping together in pursuing these goals, they formed the first humanorganizat ions families and tribes. Of course, chimpanzees and apes banded together beforehumans appeared, and prior to that ants formed colonies and bees built hives. On some level,all social species realize that organizing improves their chances for survival in a compet it iveecology. Through organizat ion the strength and creat ivity of many can be directed towardsurvival or civilizat ion via developments in technology and the accumulat ion of economic andcultural wealth.

Compet it ion is as important to organizat ion as is cooperat ion. This might seemcontradictory, but it is not. Compet it ion arises from dependence on the environment to providefood and to feed other needs and desires. If resources were unlimited, then the drive toorganize might be minimal. If food dropped off t rees, the climate was temperate all year round,and nothing tried to kill us, we might get by with only those forms of organizat ion required toamuse or enlighten, such as art , religion, and philosophy. But resources have always beenlimited. Life pressures us to compete, whether that compet it ion is over food, territory, desirablemates, or jobs. Individuals compete within their groups over status and posit ion, and groupscompete with each other in their quest to dominate. Thus compet it ion is always part oforganizat ion even though organizat ions depend upon cooperat ion to realize their goals.

Compared to those of other social species like ants, bees, and apes, the complexity ofhuman organizat ions is enormous. Somewhere along the trajectory from being hunters andgatherers to becoming field hands and farmers, t ribes grew into villages, and later into towns,cit ies, city-states, and nat ions. Another t ransformat ion occurred along with organizat ionalcomplexity: specializat ion the pract ice of limit ing ones act ivit ies so that expert ise in aspecific domain or part icular skill can be achieved. For example, your building skills will likelyimprove if you do not also have to tend fields or educate your children. Of course, other speciespract ice specializat ion too. Honeybee colonies can number anywhere from 20,000 to 60,000members, and within them worker bees specialize as nursemaids, guards, construct ionworkers, undertakers, and at tendants to the queen.

Specializat ion serves a society by increasing the quality and variety of goods and servicesavailable to its members and by providing efficiencies in their product ion and delivery that allowmore work to be done with less t ime or effort . As communal life develops throughspecializat ion and the interdependence it creates, human society and its organizat ionsbecome different iated different people adopt different roles, and different types oforganizat ion are created as people with similar talents and interests work together onspecialized tasks. Further encouragement for specializat ion and different iat ion comes frominteract ion between societ ies. Some of this interact ion involves warfare, but in peaceful t imesoften produces exchange relat ionships that grow into economies.

Economies depend on trust between people. This t rust in turn depends upon experiencesof stable, successful exchange. To appreciate what this means in organizat ional termsrequires another concept: inst itut ion a t ime-honored act ivity or organizat ion that addresseswhat would otherwise be a persistent social problem by encouraging behavior that stabilizessociety.

Examples of inst itut ions include the handshake, money, banking, marriage, the family,religion, and government. Take the inst itut ions of money and banking. Both were created toaddress the persistent problem of developing enough trust in t rade to create an economy andkeep it stable. People make rules about handling money that establish organizat ionalinst itut ions like banks, and other inst itut ions (such as courts and prisons) to handle those whoviolate the rules.

As inst itut ions stabilized societ ies and relat ionships between them developed into

different iated city-states and nat ions, t rade and other organized act ivit ies came under formalcontrol through inst itut ional pract ices such as tax collect ion and the licensing of organizat ions.Licensing, or chartering, involves giving organizat ions legal status as ent it ies along with theright to engage in specified act ivit ies (such as t rade, industry, law, educat ion).

Over t ime, inst itut ionalized businesses partnered with churches and armies, combining theirwealth and influence to engage in explorat ion and exploitat ion. Explorat ion and the new tradeit brought permit ted local economies to grow while the potent ial for exploitat ion forgedcompet it ive relat ionships between businesses and societ ies. As this was going on, businesseswere discovering new ways to different iate using technology derived from the invent ion of themachine.

The invent ion of machines to do work led to industrializat ion. Factories that demanded thelabor of many were built to house machines and their operators, and to help owners andsupervisors manage work. Workers came from rural areas to take advantage of newopportunit ies to make a living. Cit ies grew dramat ically as industrializat ion concentrated thepopulat ions of the most economically aggressive nat ions and provided enormous wealth tothose with the means to control the largest organizat ions. Many people moved from farms tocit ies, and urban values replaced rural ones in the ident it ies of industrialized nat ions.

Concentrated populat ions have encouraged the development of service economies that,when combined with the computer, produce another societal t ransformat ion of at least thesame magnitude brought by the change from agriculture to industry. The computer magnifiesthe organizat ional effects of this t ransit ion because computer technology, along with theability to easily t raverse the globe, allows some economically powerful organizat ions to growlarger than many countries. Their growth has promoted capitalism around the world, led bygiants like IBM, McDonalds, ABB, Siemens, Sony, and Unilever, supported by the polit icalalignments of capitalist countries.

The trade in which massive business organizat ions engage has contributed great ly toglobalizat ion, which in turn affects cultures and societ ies by mixing and blending their membersas they travel around the world. These changes bring opportunit ies to further increase thecomplexity of organizat ions, though limits to their growth are becoming more and moreapparent. For example, the increasing power of corporat ions in a globalizing economy has putthe natural resources of the planet under strain.

Unt il recent ly, businesses were governed mainly by their owners, called capitalists becausethey provide the wealth (i.e. capital) needed to supply the resources business organizat ionsdepend upon for their survival. However, a different form of corporate governance is emerging.Known as the stakeholder perspect ive, this view, as art iculated by philosopher R. EdwardFreeman (1951 ), holds that anyone whose life is affected by the act ivit ies of an organizat ionhas a stake in that organizat ion, and thus a right to influence its decisions and act ions.

The term stakeholder refers to customers, employees, and owners (shareholders), but alsoto unions, government regulators, local communit ies, NGOs, and act ivists, as well as to thesuppliers, distributors, and other partners who make up the supply chain. A supply chain linksbusiness organizat ions that extract and supply raw materials to those that use thesematerials to make products and distribute them to end-users. The definit ion of organizat ionexpands considerably when it includes the interests of all these stakeholders.

Some believe that including all stakeholders in the definit ion of an organizat ion creates ademocrat izing force that replaces hierarchy with more collaborat ive organizat ional forms (e.g.networks) and values environmental sustainability and social responsibility as much as profit .The movement to get companies to report on their social responsibility and environmentalimpact as well as their profit collect ively known as the triple bottom line is one effect ofstakeholder influence. That brand and reputat ion are becoming as important to organizat ionsas products and profitability is an indicat ion of the growing influence stakeholders exercise.

Some take a dark view of capitalism and its effects. They say that capitalism manufactures

the need to buy in order to keep itself and the growth it feeds alive. Once consumerismdominates a society, they warn, it enslaves all.

The argument that capitalism shifts economic act ivity away from product ion and towardconsumption is supported by the economies of the United States and Western Europe, whoseindustries have outsourced much of their manufacturing act ivity to the BRIC countries Brazil,Russia, India, and China generat ing a new phase of economic development. But the polit icalsystems and cultures of the BRIC countries are markedly different from those of the UnitedStates and Western Europe, and, while their economies are growing rapidly now, quest ions ofstability and sustainability make their long-term influence on the world and its organizat ionshard to predict .

This short history introduced some of the most enduring ideas associated withorganizat ions: cooperat ion, compet it ion, goals, growth, size, complexity, different iat ion,specializat ion, economy, globalizat ion, structure, power, inst itut ion, and culture. With theseideas in mind, it is t ime to examine the concept of organizat ions and its close associates,organizat ion and organizing.

The three Os: organization, organizations, organizing

It is difficult to say when humans first recognized organizat ion as such, but at some pointthe idea appeared as an abstract concept. It takes disciplined imaginat ion to think aboutorganizat ion. You can experience the discipline by challenging yourself to make dist inct ionsbetween three related words we have been using without definit ion: organizat ion,organizat ions, and organizing let s call them the three Os.

Organizat ion and organizat ions are nouns, while organizing refers to act ion and thus to averb. Nouns name things, for example they can refer to ent it ies, states, or condit ions, as theydo in the terms organizat ions and organizat ion. Verbs, on the other hand, can be inflected toindicate past, present, and future, bringing with them concern for the effects of passing t ime.

Organizat ion and organizat ions (the two nouns) may be more closely related than either isto organizing, but the fact that all three build on the Greek root (organon, meaningtool) suggests that the three Os are going to be difficult to dist inguish. It is worth the effort ,however, as much of what we know about our subject is built on taking one or another ofthese nuanced dist inct ions as primary. An analogy to some basic issues in physics may help,since much organizat ional knowledge derives from insight provided by the physical sciences.

The duality principle in physics states that, depending upon how you observe it , matter canappear as either a part icle or a wave. Something similar can be said about organizat ions.Taking the part icle view, you can locate an organizat ion as an ent ity in t ime and space. Thewave view gives you a sense of organizat ions as patterns of act ivity that recur with regularityin a wavelike fashion. The organizat ional ent ity known as Oxford University can be found in aset of buildings located in Oxford, England, but taking the wave view, its organizat ion can beseen in recurring teaching and learning act ivit ies, term after term.

The two nouns organizat ion and organizat ions are interrelated in a circular way. Whenorganizat ional act ivit ies (e.g. teaching and learning) are repeated, like the frequencies thatrecur to form a wave, they come to be thought of as ent it ies or objects. You might call anent ity arising from patterns of teaching and learning an educat ional inst itut ion and exemplify itusing part icular organizat ions, like Oxford University. When you do this conversion in your mind,you make pract ices associated with a way of being (acts of organizat ion) into ent it ies(organizat ion s) in the same way that a wave becomes a part icle for physicists.

Conversely, you make a conversion similar to the one that turns a part icle into a wave when

you consider what is organizat ional about a part icular ent ity; you think about coordinatedpract ices that lead to desired end states (e.g. teaching and learning leading to educat ion).These ideas are like the two sides of a coin; you cannot view both at the same t ime, but youcannot have one without the other.

Another definit ional challenge arises when you compare organization(s) with organiz ing. Inphysics, the Heisenberg uncertainty principle states that you cannot know with equal certaintya part icles posit ion and velocity; the more you know about where it is, the less you can knowabout where it is going. It is easy to remember the uncertainty principle if you think about anold joke in which Heisenberg gets pulled over by a policeman while driving down the highway.The policeman gets out of his car and walks towards Heisenbergs, mot ioning for him to lowerhis window. The policeman says, Do you know how fast you were driving, sir? to whichHeisenberg replies, No, but I know exact ly where I am!

Like Heisenbergs uncertainty principle, you can think about organizat ion as either outcomeor process, but it is tough to think both ways at once. You have to be present in the momentto experience organiz ing, whereas you can observe organization(s) after the fact of theirbecoming. Yet, like the impossibility of knowing both a part icles posit ion and velocity, we arelikely never to reconcile knowledge of organization(s) with that of organiz ing.

Notice that I just collapsed organizat ion and organizat ions into the compositeorganization(s). Organization(s) refers to both organizat ion and organizat ions as outcomes orent it ies. They are already accomplished states of being. Organiz ing (including acts oforganizat ion) is an ongoing accomplishment, that is, a process of becoming rather than a stateof being.

2. Some ways to think about differences between the three Os:organizat ion,organizat ions, and organizing

Even though the three Os cannot subst itute for one another, they are int imately related.Organizing processes give rise to acts of organizat ion that, in turn, produce organizat ions thatenable and constrain further organizing processes, and so on. This is the reason we have onebasic idea (cooperat ing to achieve shared goals within a compet it ive environment) and threeinterrelated concepts organizat ion, organizat ions, and organizing: the three Os.

If you want to focus on the outcomes of organizing, you can specify either part icularorganizat ions ent it ies like Lufthansa or El Al or characterist ics, such as hierarchy or divisionof labor. If you desire a dynamic understanding of organizing you must focus on the processes

from which organizat ion(s) emerge (e.g. those producing structures or culture) or pract icessuch as those that const itute an airline (e.g. maintaining aircraft , pilot ing, t ransport ingpassengers, and handling baggage).

Historically, managers and organizat ional researchers favored outcome-based definit ionsbecause these lend themselves to object ive measurement and thereby support managementcontrol. However, as both organizat ion(s) and organizing become more complex in the wake ofglobalizat ion and technological change, process knowledge becomes increasingly important. Ifcomplexity makes it impossible to fully describe an organizat ion or predict the outcomes oforganized act ivity with certainty, you can at least increase your odds of success by improvingorganizing processes.

We know from comparisons of successful and unsuccessful organizat ions that formulat ingstrategic vision mot ivates goal achievement, as does structuring roles and relat ionships to aidthe implementat ion of strategy. Furthermore, the use of technology can enhance product ivity,and culture communicates how things really get done. The support ive design of the physicalenvironment of work also contributes to success. Some of this knowledge is based in anoutcome-oriented view, some is process-based, and some mixes the two.

Metaphors for organization

Metaphor is a way to st imulate imaginat ion for new ideas. Management scholar GarethMorgan (1943 ) showed that four metaphors in part icular have proven their worth helpingpeople to form images of organizat ion: the machine, organism (or living system), culture, andpsychic prison. The machine and organism metaphors came first and lend themselves best tovisualizing organizat ion(s) as stat ic structures or systems to be designed and controlled eitherby managers or the environment. The metaphors of culture and psychic prison developed later.Culture presents an image better suited to understanding organizing as a process arising fromsocial interact ion and sensemaking, while the psychic prison metaphor offers a crit ical stancetoward the other three. Taken together the four metaphors mark out the same territorycovered by the three Os, but add lots of color and texture.

Metaphors work by suggest ing similarit ies between their vehicle (e.g. machine, organism,culture, prison) and its target (in this case, the three Os), but they do so on an aesthet ic ratherthan a rat ional basis, which is why metaphor complements scient ific explanat ion. So do notthink you have to choose between art and science, instead try to appreciate both ways ofknowing. It may at first feel strange to think in such different ways, but stretching your mindshould help you embrace the complexity and paradox (e.g. cooperat ion and compet it ion) thatcoming to terms with the three Os requires.

Organizations as machines

The machine metaphor t races its origins back over 300 years to the start of the industrialage. A machine is designed to effect ively perform work of a repet it ive nature. In creat ingscient ific management, for example, Frederick Taylor (1856-1915), an engineer, was inspired byhis knowledge of how machines work to find the most efficient mot ions for humans to usewhen performing manual labor. He then claimed his scient ific approach to managementdramat ically increased industrial labor product ivity, an idea later extended to other types ofwork. Nowadays, the machine metaphor encourages managers to design all aspects of theirorganizat ions to maximize efficiency.

In order to design a machine to do work, one must specify a task (e.g. driving nails, weavingcloth). This is as t rue for organizat ions as it is for machines. However, the task of an

organizat ion is more comprehensive than that of a machine. The organizat ions purpose,mission, and goals define its task; in other words, its task is roughly equal to its funct ion withinsociety. For a business, this funct ion might be to produce airplanes (Airbus), prepare food(McDonalds), or provide management consult ing services (McKinsey & Company). Non-business organizat ions have purposes and goals too, for example to provide higher educat ion(Oxford University) or protect a community (your local police department).

The machine metaphor promotes the belief that organizat ions can be engineered tomaximize their contribut ion and minimize their costs to society. Think of the idea ofengineering automobiles. As a customer, you hope that the company that manufactures yourvehicle will do so in a way that keeps the final cost to you down while also making sure thatthe car you drive is safe and suffers as few breakdowns as possible. Such a companys task isto design, build, deliver, and service a quality automot ive product at a price you can afford. It isthe managers job is to see that this happens efficient ly and effect ively, and withoutunnecessarily harming people or the environment, by organizing resources and the work donewith them.

Applicat ions of the machine metaphor tend to focus at tent ion on the internal workings oforganizat ions how they perform core manufacturing or service-delivery tasks. This is themost fit t ing applicat ion of the machine metaphor. But organizat ions must perform many othertasks, such as purchasing raw materials, selling products and services, and adapt ing tochanges in the environment. Managers too do more than supervise employees, they must alsorecruit and retain them, design their jobs, and formulate and implement a vision to lead them.The machine metaphor is less well suited to describing these tasks.

Even though most managers are at t racted to the idea of t reat ing employees like parts of awell-oiled machine, the human element requires more nuance to be effect ively managed.Furthermore, it can be dangerous to ignore what economists call externalit ies, namely theenvironment upon which organizat ions depend for the resources to do their work. Externalit iesimpose constraints that give others power over organizat ions, and this means organizat ionsmust develop and maintain relat ionships with external agents if they are to survive andprosper. In this they are more like living systems or organisms than machines.

Organizations as organisms (living systems)

The organism metaphor developed later than that of the machine, emerging along withevolut ionary biology, part icularly from not ions such as the survival of the fit test promoted byCharles Darwin (1809-82). An organism is a living system that depends for survival on its abilityto adapt to the environment. Treat ing organizat ions as adapt ive organisms directs at tent ionto the dynamics of compet it ion, to dependence on resources provided by the environment, andto demands for cont inual change. Along with the organism metaphor came ideas such asvariat ion, select ion, and retent ion that help explain success and failure rates within populat ionsof organizat ions. So, too, did the idea that organizat ions, like organisms, have interrelatedparts, an insight no doubt inspired by the pract ice of dissect ion in biology research.

By the end of World War II, when the organism metaphor appeared, it had become popularto think that all the sciences were interrelated and that discovery of a unified theory ofeverything was imminent. The related idea of systems also became influent ial. A system isanything comprised of parts (subsystems) whose interrelat ionships produce a level of orderand funct ion (the system) that t ranscends the sum of the parts. In other words, a system haspropert ies that cannot be fully known by examining its parts in isolat ion. For example, you candissect a human body but you will not be able to isolate thought or ident ity, these areemergent propert ies explained by interact ions among the parts, and between the whole andits environment.

The key contribut ion of systems theory was the idea that different system levels are

nested. All systems exist within higher-order systems exist ing within st ill more complexsystems. According to general systems theory, the name given to this idea by biologist Ludwigvon Bertalanffy (1901-72), each higher-order system includes all the levels beneath or within it .

Kenneth Boulding (1910-93) developed Bertalanffys ideas into a hierarchy of systems (seeFigure 3) with frameworks being the simplest systems, followed by clockworks, open systems,living systems, humans, social organizat ions, and something metaphysical that t ranscends andincludes them all. Since organizat ions contain many lower-level systems, any knowledge aboutlower levels also applies to them. Hence the aptness of using, for example, biological principlesderived from studying living systems to explain the three Os.

3. The nine levels of general systems theory (GST) tell us that everything can bedescribed as a system composed of lower-order subsystems and that each system isitself part of a higher-order system. Each system level has propert ies unique to itsposit ion in this hierarchy, and a system at any part icular level contains lower-ordersystems such that their propert ies also apply to the higher order, in cumulat ivefashion

A human system contains digest ive, anatomical, circulatory, respiratory, and nervoussubsystems all serving different funct ions, such as to take in and convert food to energy,support the weight of the organism and allow it to move around in its environment, t ransferoxygen from the lungs to the blood and thereby to the cells throughout the body, and sensethe environment so as to respond in adapt ive ways. Similarly, the operat ional core of theorganizat ion produces goods and services while staff in finance, market ing, account ing, humanresources, communicat ion, and strategy departments perform other funct ions.

Just as the subsystems of the human body produce the condit ions for a human being to

emerge but do not account for all that a person is, so the parts of the organizat ion cannotexplain a whole organizat ion. Recognit ion of one of the emergent propert ies of an organizat ion its culture introduces a third metaphor.

Organizations as cultures

Imagining organizat ions as machines or as organisms that are living systems relies uponmetaphors drawn from the natural sciences, part icularly physics and biology. Using culture toimagine the three Os taps the social sciences and humanit ies.

Anthropology and literature informed those inclined to see organizat ions as cultures.Cultural anthropologist Clifford Geertz (1926-2006) combined these in offering a symbolic viewof culture. Humanist ic ways of understanding bring with them new quest ions, for instance:what social and emot ional forces derive from belonging to a group, and how do they influencean organizat ions structure or the ways in which technology is used? What do concepts likeart ifact , value, custom, and tradit ion tell us about organizat ions? Can culture explain thesuccess some organizat ions enjoy or the failures of others? What do organizat ions mean, andhow do they produce and influence the meanings they are given?

Many believe that the low-cost carrier Southwest Airlines became successful because itsco-founder Herb Kelleher (1931 ) appreciated organizat ional culture. Kelleher believed thatloyal employees would give his airline dist inct iveness and compet it ive advantage in an industryknown for cut-throat compet it ion and poor customer service. He also knew that the market fort ransportat ion was not being fully served there was room for a low-cost airline that providedpeople with an at t ract ive alternat ive to short- and medium-distance bus, t rain, and automobiletrips. The culture of the airline that Kelleher created to fill this void was built on having fundelivering great service in what was then a stodgy and highly militarist ic industry.

The culture metaphor asks you to imagine Kelleher as the chief of an ancient t ribe thatworships him like a god and follows his lead in everything they do. It is a t ribe with uniquecustoms and rituals that maintains its integrity even under extreme external pressure, such asdeep economic recession. For example, Kelleher part ied hard and long with his employees,often flying to visit them where they worked and then working and playing alongside them.This custom promoted extreme loyalty and also gave him first-hand knowledge of theproblems and opportunit ies his employees faced.

When t imes were tough, Southwest s employees were known to give back some of theirpay when they felt the company needed it to survive. Attachments like these are hard toexplain using the machine or living systems metaphors. It takes the emot ional and aesthet icnuance of cultural understanding to grasp what is at work in cases like Southwest and othercompanies that benefit from having beloved organizat ional cultures.

The culture metaphor emphasizes emot ions and values that create a solid and last ingfoundat ion for the act ivit ies and aspirat ions of organizat ional members. Heroes who personifycultural expectat ions help people understand what they should do as they engage in everydaylife and face the trials and tribulat ions of the workplace. The ceremonies and rituals thatmemorialize people and their exploits bind organizat ional members together, even as tellingtheir stories of the past instructs behavior in the here and now. Taken together, these andother symbols form patterns of meaning that make a culture dist inct ive and help peopleident ify with one another and honor what they share.

Communicat ing with symbols and leaving art ifact t rails allows members to t ransfer theirculture to the next generat ion, creat ing cont inuity across t ime. But although culture providesstability, it also offers cont inuity in the face of unavoidable or irresist ible change. It takes theconfidence of knowing who you are to face a threatening environment or new opportunit iesthat demand taking risk.

There is a darker side to culture. A culture exerts a considerable controlling force over thehearts and minds of its members, who exchange some of their independence for the gift ofbelonging. If an organizat ions culture falls under the spell of its top management subculture,members may come to be imprisoned by norms and expectat ions that do not express theirt rue values and fulfill desires other than their own.

Philosopher Friedrich Engels (1820-95), with whom Karl Marx (1818-83) wrote TheCommunist Manifesto, described this situat ion as false consciousness, that is, the acceptanceof an ideology that conceals realit ies of subordinat ion, dominat ion, and exploitat ion. One suchideology involves accept ing as normal and necessary the dominat ion hidden within hierarchicalrelat ionships. Recognizing hierarchy as a form of dominat ion exposes the prison-like characterof hierarchical organizat ions, suggest ing a fourth metaphor the psychic prison.

Organizations as psychic prisons

Culture and the unconscious can be regarded as opposite sides of the same coin.Psychiatrist Sigmund Freud (1856-1939) considered culture a collect ive phenomenon arisingfrom the unconscious dynamics of its members. Carl Jungs (1875-1961) idea of the collect iveunconscious took the opposing view that our cultural past provides a reservoir of experiencesand memories that we tap as our psyches develop. Either way, connect ing culture with theunconscious provides a novel way to think about the three Os. For example, Freudspsychoanalysis suggests that emot ions such as anxiety and desire produce the realit ieshumans inhabit and thus become part of their organizat ions.

Freud believed that to live in harmony with others, humans control their impulses throughunconscious psychological mechanisms of denial, displacement, project ion, rat ionalizat ion,regression, and sublimat ion. By helping an individual recognize their emot ional impulses andthe psychological mechanisms they use to control them, Freud claimed he could rid a pat ient ofneuroses such as depression, hypochondria, obsession, or narcissism.

Organizat ions have similarly neurot ic tendencies that can manifest as debilitat ing conflictor other dysfunct ional collect ive behavior that threatens their wellbeing. One implicat ion ofextending the idea of the unconscious to organizat ions involves providing therapy to uncoverunconscious mot ives or relieve organizat ional anxiety and stress. Seen in this way, themetaphor of the unconscious provides a route to organizat ional self-knowledge and itspsychological benefits, including the capacity to alter an organizat ions personality or ident ity.

But when they shape an individuals consciousness through collect ive manifestat ions ofgreed, fear, and other negat ive psychological states associated with dominat ion, organizat ionsbecome psychic prisons. For instance, repressing or denying the emot ions that accompanyhierarchical subordinat ion creates oppressive condit ions inside employees minds. Instead oft reat ing whole organizat ions as pat ients, as suggested by the metaphor of organizat ionalneurosis, use of the psychic prison metaphor is typically intended to emancipate employeesfrom the bonds of anxiety and desire that prevent them from seeing the harm organizat ions doto them.

For some, modern capitalism is responsible for the dehumanizat ion and exploitat iondescribed by the psychic prison metaphor. They focus on how our personalit ies, beliefs, tastes,and preferences develop within contexts of mass product ion and consumption characterist icof Western capitalism. To strengthen their point , they may stress the destruct ive influence ofcapitalist organizat ions on nature, society, and the underprivileged.

For example, the environmental sustainability movement challenges old expectat ions aboutthe costs an organizat ion should bear, arguing in favor of new rules such as a carbonemissions tax to cover the costs of cleaning up industrial waste and pollut ion. Similarly, social

responsibility advocates pressure organizat ions to pay a living wage to those who work forthem, including employees of subcontractors, and to provide their workers with safe andhealthy work environments. Some even suggest that organizat ions take responsibility forthose who live in poverty worldwide on the grounds that the poor pay a price for the wealththe rest enjoy.

Applying the metaphor of a psychic prison raises quest ions about how organizat ions mightbring about posit ive change for workers and society, such as freedom, diversity, and respect forour planet and all the forms of life that it nourishes. Portraying the organizat ion as a psychicprison encourages crit icism of mainstream management and is intended to awaken ourconsciousness in the hope of changing organizat ions for the betterment of the world and all itsinhabitants.

Chapter 2

What is the best way to organize?

In addit ion to metaphors, there are two common means of visualizing organizat ions; bothdepict structural features. First , you can look at an organizat ions buildings, their orientat ion toone another, and the landscape surrounding them. Paying a visit to Google Earth offers anoverview of a complex of buildings, such as those of Googles own Googleplex in MountainView, California, shown in Figure 4. You can also look at architectural elevat ions and floor plans.Such images tell you much about the physical shapes organizat ions take and the places theyoccupy.

A second way to visualize an organizat ion is to draw an organigram, a clever namecombining the idea of an organizat ion chart with a diagram. Organigrams depict people andthe posit ions they hold within an organizat ion, typically showing jobs grouped intodepartments. Each posit ion and/or department is drawn within a box, and each box is linked toother boxes by lines, as shown in Figure 5. Vert ical lines represent report ing relat ionshipsconnect ing all the different levels of the organizat ion from top to bottom. Horizontal lines showlateral relat ionships between those working at the same level of the organizat ion which, whendotted, depict liaison or other coordinat ion roles.

The organigram represents an organizat ions social structure, while photographs andarchitectural drawings show aspects of its physical structure. Social and physical structuresare part of every organizat ion whether or not they are deliberately designed. When they areleft to develop on their own, these structures emerge out of the more or less self-managedact ivit ies of organizat ional members as they interact with each other and their physicalsurroundings. When designed deliberately, they are typically implemented by managerssupported by staff specialists in finance, account ing, HR (human resources), market ing, andcommunicat ion.

4. The roofs of the Googleplex carry 9,000 solar panels, while inside every employeemust be located within a few feet of free food by corporate policy

5. Two organizat ion charts:a) shows a funct ional structure so called because theunits represent specialized act ivit ies broken into funct ions such as market ing, HR,and finance; and b) a divisional structure whose (usually much larger) operat ional

units or divisions may or may not be funct ionally organized

Organizat ional design begins by considering the purpose of organizing and theorganizat ions strategy. Purpose and strategy, in turn, inform decisions about theorganizat ions products and services and the ways in which product ion and delivery goals willbe met. Product ion and service delivery methods define an organizat ions technology. Sincetechnology is the means of delivering the organizat ions output, on which its survival depends,organizat ion designers t ry to understand how the organizat ions technical core operates inorder to design an efficient and effect ive organizat ional structure to support it .

In designing organizat ional structures, designers also need to consider the environment. Anorganizat ions environment controls the resources required to operate the technical core, soorganizat ions adapt to the demands of their environments in order to manage their resourcedependencies. The need to support and protect the technical core means that organizat ionalstructures must also conform to or fit the environment. But since environments are composedof organizat ions that constant ly adapt in order to stay compet it ive, environments also change.An organizat ions design should therefore reflect the amount and frequency of adaptat ionrequired to retain organizat ion-environment fit .

Organizat ion designers use strategy, technology, and knowledge about the environment toindicate the form their organizat ion should take, but since size mult iplies organizing challenges,size also plays a role in structuring organizat ions. As the old saying goes, size matters. Thisphrase is part icularly germane to organizat ions because growth beyond a certain size bringsbureaucracy as well as increased influence over other organizat ions and sometimes theenvironment itself.

Organizational social structure and design

Organizat ional social structure is created by patterns of interact ion and relat ionshipthrough which the work of an organizat ion is accomplished and its purpose realized.Organizat ions are structured by relat ionships that grow from interact ions, the repet it ion ofwhich (e.g. in organizat ional rout ines) provides stability and helps to ensure cooperat ion.

In the most general terms, organizat ional design concerns creat ing structures thatmaximize organizat ional performance in order to be efficient and effect ive in achievingorganizat ional goals, while minimizing the need to use scarce resources. But designers can getbogged down in their search for the right answers to myriad structural quest ions.

For example: how should we distribute the authority to establish goals and direct act ivit iestoward achieving them? Should we keep our structure integrated by forming one big group towork toward our goals shoulder to shoulder, or should we different iate tasks by breaking workinto its components assigning the pieces to subgroups? Should work be specialized so thattrained workers perform a smaller repertoire of tasks more expert ly? If we use subgroups, howlarge should they be such that the span of control of a single manager does not overwhelm heror him? Should all decisions be made at the top (centralized) or should authority be delegated(de-centralized)?

Although these are interest ing and important considerat ions, designing the rightorganizat ion structures demands deeper understanding of what organizat ion structure is andhow it works. The basic idea most organizat ional designers use is that a structure is effect ive ifit focuses the at tent ion of employees on the act ivit ies for which they are responsible, andpromotes communicat ion of crit ical informat ion across the organizat ion. It is efficient if itminimizes the t ime, effort , capital, and other resource inputs needed to meet goals whilemaximizing output. This is not as easy as it sounds.

Because it is created from behavior, organizat ional social structure can never beimplemented exact ly as designed. Social structures are as much constructed by behavior asthe other way around. Furthermore, structure influences strategy as much as strategyinfluences structure because structure shapes the ways in which strategy is realized inorganizat ional behavior. Strategy, structure, and behavior are mutually influent ial andinterdependent.

What is more, because social structure defines the distribut ion of organizat ional power (e.g.the authority to assign tasks and determine reward and promot ion opportunit ies), even themost rat ional of intent ions to design an effect ive and efficient organizat ion are affected by thedesire to control others and the anxiety of being controlled. Sociologist Max Weber (1864-1920) believed that bureaucracy, at least in theory, combats the perversions of unbridledpower making room for reasoned choice. Working under this assumption, Weber defined themain components of an organizat ions social structure: hierarchy, division of labor, anddepartmentalizat ion.

Hierarchy

When you first thought about organizat ions, you might have been tempted to usehierarchy as your sole definit ion because hierarchy is such a common feature among them.Technically, the term refers to the vert ical distribut ion of authority among organizat ionalposit ions such that each posit ion is made subordinate to some other. Think of the vert ical lineslinking the top to the bottom of an organigram.

Vert ical lines of authority channel the right to direct and control the act ivity of others.Authority can be used to make decisions, allocate resources, and reward and punish, so itfacilitates the exercise of power. Of course, in addit ion to this formal authority, there are othersources of power people use in organizat ions, such as expert ise, personal influence, charisma,control over informat ion, or access to powerful others.

Organizat ional hierarchy creates an authoritat ive command and control structure throughwhich goals cascade from top to bottom, allowing leaders to give direct ion to all organizat ionalact ivity. It also defines the scope of each employees decision-making authority by indicat ingwhen an employee can make their own decisions and when they need to seek approval fromthe boss. While the distribut ion of authority to direct act ivity defines the command part of thecommand-and-control structure, the control part involves using authority to make and enforcethe rules governing behavior.

The same structure that channels authority from top to bottom, channels informat ion frombottom to top. Informat ion flow permits monitoring organizat ional and individual performance,and authority permits the sanct ioning of any infract ions commit ted by those who do not meetperformance expectat ions. The delegated power to reward and punish those beneath a givenposit ion in the hierarchy gives formal authority its teeth.

Many people believe that hierarchy is a fundamental aspect of life. After all, social lifeappears to be hierarchically organized throughout much of the animal kingdom. If you watch agroup of male rams interact during mat ing season, you are likely to observe a fair amount ofhead-butt ing, and the strongest male lion eats the most food after a kill (or after feeding hiscubs if he is a new father). An organizat ional hierarchy is, according to this view, supported bynatural law.

Sometimes hierarchys natural order is used to argue that human forms of aggression arenatural. However, throughout the animal kingdom, hierarchy is as much about promot ingharmony as it is about dominance. Close observat ion of gray wolves, for example, suggeststhat the dominant pair in a wolf pack, known as the alphas, assign responsibilit ies, reinforceroles, and decide where the pack will sleep, what it will hunt, and how to react to approaching

animals.

Interest ingly, the hierarchical order in a wolf pack is far more likely to be aggressivelydefended by wolves held in capt ivity than in the wild. Could human organizat ions fit t ing themetaphor of the psychic prison simulate the effect of capt ivity on wolf packs? It is hard toknow without more study, but one thing seems certain, hierarchical status is aggressivelydefended in most human organizat ions, mainly through the mechanisms of compet it ion amongdominant members (the alphas) of these human packs.

Division of labor

In a complex society, no one is self-sufficient ; there are simply too many tasks to performfor one person to master all. Division of labor provides a solut ion and it has been around sinceat least Neolithic t imes, when evidence shows early hominids performing different iated rolessuch as warrior, forager, chief, and shaman. In The Republic, the ancient Greek philosopherPlato (c. 427347 BC) referred to the division of labor when he mused about the fulfillment of asocietys needs: Well then, how will our state supply these needs? It will need a farmer, abuilder, and a weaver, and also, I think, a shoemaker and one or two others to provide for ourbodily needs. He overlooked the roles women and slaves held such as cooking, cleaning, andtending children, though of course these too sustain society.

Trades eventually integrated into organizat ions, such as within the Dutch shipbuildingindustry, where workers who specialized in building only one part of a ship worked under amaster shipbuilder. But it was the economist Adam Smith (1723-90) who first explained theimportance of the division of labor for industrial society. In his 1776 bookAn Inquiry into theNature and Causes of the Wealth of Nations, Smith explained that concentrat ing workers onsubtasks to refine their skills allows a group to minimize its costs and maximize its product ivity,thereby producing greater wealth. Let me illustrate with a personal anecdote.

An art ist who came to me for advice some years ago had been commissioned to maketwelve stained-glass windows for a church. It was a much bigger order than she had ever filledbefore, and she asked me to help her organize her workers to make the windows in the shortamount of t ime she had to complete the job. She had never heard of the division of labor, butwhen I told her about it , she agreed to give it a t ry.

She divided the job into subtasks such as making the window frames, cut t ing and placingthe colored glass inside the frames, connect ing the glass with lead, and welding the leadtogether. She designed the windows and managed the glass cutt ing and assembly, pitching inwhenever anyone had trouble with their job, thereby ensuring the quality of the product. Whenthey finished, she told me she was amazed by how much faster the work progressed than itwould have if workers had assembled ent ire windows individually. But she also confessed thatnobody had as much fun doing the work or as great a sense of accomplishment at itsconclusion.

Organizat ions pay a human price for t reat ing people like machines, and over the course ofhistory, the effects of the division of labor have met many crit ics. Adam Smith himself, forexample, worried that specializat ion led to uncreat ive, ignorant workers disconnected fromsociety, a theme Marx later echoed in his writ ings on alienat ion as a consequence ofindustrializat ion. Around the same t ime Marx was writ ing, naturalist and transcendentalistHenry David Thoreau (1817-62) claimed in Walden that disconnect ion from society caused bythe division of labor made the average person in civilized society less wealthy (e.g. in terms ofhappiness) than one in savage society. This is because savages t reat one another as wholepersons whereas the civilized act like cogs in a machine.

Those who defend the division of labor accuse crit ics of romant icizing the pre-industrialpast. Even if some must work hard at less than appealing jobs, they reason, everyone now has

at least some leisure t ime thanks to the product ivity the division of labor brings.

Departmentalization

Love it or hate it , most organizat ions divide their work among employees who each performa piece of the whole. The division of labor is designed into an organizat ion by defining thescope and scale of task responsibilit ies for each posit ion in the hierarchy. Different jobs arethen grouped according to similarit ies (a funct ional structure including departments ofmarket ing, account ing, manufacturing, sales, and so on), or according to the products, type ofcustomer, or geographical region served (a divisional structure). Thus, in addit ion to defining ahierarchy and specifying a division of labor, organizat ion design involves departmentalizingact ivit ies, in other words, finding an effect ive way to group tasks and jobs.

Matrix structures (Figure 6) provide another way of departmentalizing work that is commonin engineering, design, and consult ing firms. In a matrix, each worker reports to at least twodifferent managers, one a funct ional expert who manages everyone with the same funct ionalspecialty regardless of their project team assignments, and the other a project manager incharge of everyone assigned to the same project . Since individuals may have a skill useful tomore than one project team, they may be assigned to more than one project and thus reportto mult iple project managers as well as a funct ional boss.

Start ing or ending a project is as simple as assembling or dispersing a team and thusaffects only a few people. Therefore, matrix organizat ions are fast and flexible when comparedto other structural types where change involves restructuring the ent ire organizat ion. For thisreason, matrix structures adapt well to rapidly changing environments.

The flexibility of a matrix is well suited to organizat ions that employ many experts whowould be too cost ly to keep on the payroll were they not fully employed. Because expert isecan be shared across many temporary work units, the high salaries experts command can bejust ified. Moreover, the highly educated professionals typical of matrix organizat ions canhandle the greater complexity of working in an organizat ion that requires them to juggle thedemands of mult iple managers and ever-changing work requirements.

6. A matrix structure allows for greater flexibility than does a funct ional ordivisional structure because project teams can be formed and disbanded withoutrestructuring the ent ire organizat ion

Bureaucracy

Almost every organizat ion develops bureaucracy as it grows. Bureaucracy is characterist icof most governments, nearly every university, established religious orders, and largecorporat ions the world over. According to Weber, it emerged from the Middle Ages as aresponse to rampant nepot ism and other abuses of power occurring throughout feudalsociet ies. Heralded at the t ime as morally superior to the available alternat ives such asfiefdoms, bureaucracy relies upon rat ionality (e.g. opt imizing decisions for the sake of goalachievement) rather than favorit ism to govern the fair distribut ion and use of resources andauthority.

Bureaucracy emerges when systems are large, rely upon recognized technical expert ise, orcont inue indefinitely, as government agencies and large businesses often do. It ischaracterized by a fixed division of labor, a hierarchy of bureaus (e.g. departments, ministries)with their own well-defined spheres of governance, and a set of rules governing performance.Those appointed to work for a bureaucracy are selected on the basis of their technicalqualificat ions and promot ions are based on seniority or achievement as determined bysuperiors operat ing within the rules of their office. Strict discipline and control is expectedthroughout.

Ideally, bureaucracy is a system for turning employees of quite average ability into rat ionaldecision-makers able to serve their const ituencies, clients, or customers with impart iality andefficiency. The bureaucrat ic form promises reliable decision-making, merit -based select ion and

promotion, and the impersonal and, therefore, fair applicat ion of rules. When organizat ions arelarge and operate rout ine technologies in fairly stable environments, bureaucracy will generallyproduce these benefits, though not without some negat ive consequences.

Although Weber was one of the first to promote bureaucracy as an ant idote to the feudalstructures from which they arose, he was also quite crit ical of it , referring to the polar night oficy darkness bureaucracy brings to society. As other crit ics have since noted, bureaucracydefines tasks so narrowly and renders organizat ion so complex that its part icipants ult imatelylose sight of their larger purposes. Regardless of what it was originally designed to do, theysay, bureaucracy ult imately only perpetuates itself. Weber declared the fully establishedbureaucracy as among those social structures which are the hardest to destroy, and heregarded bureaucracy as an iron cage because of its impersonal and dehumanizing nature, forbetter and worse, eliminat ing from official business love, hatred, and all purely personal,irrat ional, and emot ional elements.

Because of its many limitat ions, bureaucracy is decidedly inappropriate in many situat ions.Small organizat ions do not need bureaucracy; their size makes direct supervision andcentralized decision-making easy and natural. In these situat ions, informal controls are cheap,and since they are more sat isfying for organizat ional members, the codified rules ofbureaucracy are unnecessary, they waste t ime, and de-mot ivate employees.

Nor can bureaucracy accommodate constant and rapid change. Change requires rewrit ingpolicies and rules and disseminat ing revisions to decision-makers who must then rememberthem or constant ly refer to manuals and memos to implement them properly. Thus, wheneverflexibility is a primary considerat ion, bureaucracy becomes a hindrance. What is more, manypeople detest bureaucracy, as is indicated by such familiar expressions as the bureaucrat icrun around and red tape.

Organizat ions that employ large numbers of professionals will not perform well if theybecome overly bureaucrat ic. Professionals are highly t rained and socialized to accept highstandards of performance so that bureaucrat ic rules and procedures just get in their way. Anorganizat ion will not receive full value from its professional employees if it insists that they doonly what they are told. Professionals hired for their knowledge and expert ise must have thediscret ion to use their skills and training or much of their value will be wasted. Such waste isinefficient from the point of view of the organizat ion, and frustrat ing and offensive from theperspect ive of employees.

The professionalizat ion of management through the Master of Business Administrat ion(MBA) and Master of Public Administrat ion (MPA) degrees has created interest ing tensionsaround bureaucrat ic values. Professional managers have come into increasing conflict with theinflexibility of bureaucracy. The great wave of privat izat ion that swept capitalist countries inresponse to the globalizat ion of capital flows brought a shift away from bureaucracy in manysociet ies.

However, the dangers of relinquishing bureaucracys commitment to fairness and rule-mindedness have been made abundant ly clear by recent scandals in the banking sectorfollowed by global recession and the collapse of several nat ional economies. It seems there willalways be a tension between the forces for adaptat ion and those for st icking to what we knowworks, and we may be wise to t read carefully the line separat ing too much and too lit t lebureaucracy.

The physical structure of organizations

For a long t ime, organizat ion designers believed in the old adage form follows funct ion. Butfunct ion also follows form, which can be observed in the ways we adapt to a new office or

home by reorganizing our belongings and establishing new pathways between locat ions wevisit regularly. As former Brit ish prime minister Winston Churchill (1874-1965) once observed:We shape our buildings and afterward our buildings shape us.

Architects know that the design of buildings influences how people move around and usespace, and who they meet as they do so. A well-designed organizat ion takes account of theeffects of physical structure, but regardless of whether an organizat ion is well designed from aphysical standpoint , its physical structure influences how people work and the relat ionshipsthey form with one another. Because relat ionships are affected by where we sit and how welike our work environment, physical structure influences social structure.

To repay the favor, social structure has a big say in what spaces organizat ional membersoccupy and how much control they have over their allotment how they decorate it , who getsto enter at will, who can observe them. The most potent example of physical space interact ingwith social structure comes from Brit ish philosopher and social theorist Jeremy Bentham(1748-1832), whose brother designed what Bentham called a Panopt icon and described as anew principle of construct ion applicable to any sort of establishment, in which persons of anydescript ion are to be kept under inspect ion.

In a prison, for example, the Panopt icon arranges prison cells in a ring facing a central towerto be occupied by guards who are shielded from view. According to Bentham:

the more constant ly the persons to be inspected are under the eyes of the personswho should inspect them, the more perfect ly will the purpose of the establishment havebeen at tained. Ideal perfect ion, if that were the object , would require that each personshould actually be in that predicament, during every instant of t ime. This being impossible,the next thing to be wished for is, that , at every instant, seeing reason to believe as much,and not being able to sat isfy himself to the contrary, he should conceive himself to be so.

Thinking you might be watched at any t ime creates pressure to behave as if you arewatched all the t ime. Self-monitoring by the prisoners cuts down on the actual monitoringneeded and thus on the number of guards required. The Panopt icon is thus an efficient devicefor achieving control, which is why it is a favorite example of those who employ the metaphorof the psychic prison to describe modern organizat ions. In their terms, the Panopt iconestablishes the Gaze, the psychic presence of authority that works through self-monitoring tocontrol subjects, whether they are prison inmates, pat ients in hospitals or psychiatric wards, orworkers on assembly lines.

7. A Panopticon prison, like the design Jeremy Bentham described, has a thecentral tower surrounded by cells from which wardens can observe prisoners withoutthemselves being observed

Less ominous, perhaps, but no less powerful, the physical structures of our homes, schools,churches, businesses, and other organizat ions influence the patterns of act ivity that takeplace within them. The walls in your home define the paths you can follow as you move, sayfrom the kitchen to your bedroom, and their thickness determines what you will hear andoverhear. The locat ion of your living and working spaces relat ive to those of your co-workersdetermines the likelihood and frequency with which you will informally meet as you go aboutyour daily act ivit ies. Proximity of spaces occupied is related to amount of contact , which, inturn, influences your chances of forming working relat ionships, friendships, and, for some, evenwho they will marry.

There are many elements of physical structure that affect how various act ivit ies areaccomplished and how we feel as we engage in them. These elements include buildings andtheir locales, decor, furniture, equipment, and even human bodies. And dont forget theimportance of locat ion. How these elements are arranged forms the physical structure of theorganizat ion, and while all of these features can be designed by architects, engineers, andinterior designers, they will exist even when no one intent ionally designs them.

All organizat ions, no matter how small, are affected by the design of their physicalstructure. While large expansive organizat ions, like global airlines, mult inat ionals, franchises,and retail chains, might superimpose their geographies on a map of a nat ion or the world, smallorganizat ions can draw their geographies on the floor plan of the building they occupy. Withina specific building, the internal placement of objects, especially walls, large pieces of furniture,equipment, and artwork, carve up and help to define the interior spaces of buildings. Theassignment of people to specific locat ions and groups to part icular areas within a building isanother key aspect of internal layout.

Layout affects the way in which individuals and groups communicate and coordinate theirefforts, including formal report ing as well as grapevines and rumor mills. The most obviousexample of the relat ionship between layout and coordinat ion is the assembly line with peopleand tools located at fixed posit ions past which the material to be assembled moves. If thelayout of an assembly line is well designed, many inefficiencies and inconveniences will beavoided in the product ion process. But regardless of the technology they use, employees areaffected by the distribut ion and arrangement of the spaces they occupy, so designing physicalspace to support technology promotes efficiency and effect iveness.

What is more, the relat ionships people establish with their spaces produce meanings thatbecome part of organizat ional culture. How they decorate and arrange space allows them toexpress their values within that culture. Think about how college professors surroundthemselves with their books and diplomas, or execut ives with expensive furnishings, fine art , orother symbols of power and achievement. Status is often at t ributed to those who occupylarge, well-appointed offices with at t ract ive views, or to whom parking spaces have beenassigned.

Facade, landscaping, furnishings and appointments, the use of color and form, displays ofproducts or technology, and many other features of design and dcor contribute to themessages an organizat ion communicates both internally and externally. Design and dcoroffer a visual language through which employees indicate their status and power to oneanother, while they offer important clues about the organizat ions culture and values to theworld outside its walls. Take the example of an organizat ion occupying low-rent facilit iesfurnished minimally. Such an organizat ion may communicate its commitment to a low-coststrategy or tell you that it is unaware or unconcerned about its physical appearance orperhaps even about its employees wellbeing.

Because the physical appearance of an organizat ion is a potent medium in which to createa last ing impression, some managers at tempt to influence organizat ional ident ity andcorporate image by focusing on elements of physical structure. Elements with part icularpotent ial to represent organizat ional ident ity or to influence corporate image include: dramat icarchitectural features (facade, roofline, light ing effects, office interiors, decorat ing themes),product design, logo, corporate literature (e.g. annual reports, brochures), and uniforms or dresscodes.

When they are carefully designed to complement each other, these physical designelements influence impressions of organizat ional credibility and character and can symbolicallyreinforce strategic vision. Keep in mind, however, that their interpretat ions, and hence theirmeanings, are open to other influences than those intended by managers and designers.

The influence of technology and the environment

Long before humans arrived on the scene, chimpanzees used st icks and rocks to knockfood from trees, crush nuts and berries, and dig insects out of the ground. Gorillas have beenspotted using tree branches to test the depth of river water. They are using technology, whichrefers to knowledge-enhanced means of doing something pract ical with tools.

Knowledge of how to control fire, the invent ion of the wheel, the print ing press, and thecomputer are all examples of technologies that altered the course of human civilizat ion.Anthropologists t race the first human technology back at least 2.5 million years to the StoneAge, when early hominids used bones and stones to cut , scrap, and pulverize as they foragedfor food, butchered dead animals, and tanned hides to make shelter and clothing.

Flint tools are a part icularly interest ing early technology. They are formed by using stonesor bones to chip flakes from a piece of flint , leaving behind an extremely sharp edge. Flint toolsshow that early humans learned to use one tool (stone or bone) to make others (axes andarrowheads). In their turn, arrowheads were combined with st icks and string made from plantfiber to create arrows and spears. The making and use of flint tools mark the start of aprogression of innovat ion that cont inues today: the use of one tool suggests and enables themaking of other tools with different uses, and so on.

By definit ion, technology involves tools, machines, and other equipment devised for doingwork, and the craft or knowledge it takes to produce and operate them. But the idea oftechnology also carries associat ions to human development. In this respect, it can evokestrong and decidedly different emot ions, for instance the belief in technologically driveninnovat ion as a means to sustain or improve life, or the opposite a fear of the ult imateconsequences of addict ion to technology and its threat to planet Earth.

Technology affects society and the environment in many ways, some good and others not.In many societ ies, technology develops advanced economy and creates efficiencies that, whencombined with the division of labor, allow more leisure t ime. However, many technologicalprocesses are non-sustainable in that they deplete or destroy natural resources. For betterand worse, technology influences our values, and technological advances often present ethicalquest ions never faced before, such as deciding who is to receive the benefits of life-saving butexpensive new medical technologies, or whether the use of fossil fuels to provide energyshould be cont inued in the face of global warming.

Philosophers Mart in Heidegger (1889-1976) and Herbert Marcuse (1898-1979) believedthat societ ies become flawed by their dependence on technological solut ions to theirproblems, leading to the loss of freedom or diminished psychological health rather thanpromised improvements in living condit ions. Heidegger presented such a view in The Question

Concerning Technology, in which he stated, we shall never experience our relat ionship to theessence of technology so long as we merely conceive and push forward the technological, putup with it , or evade it . Everywhere we remain unfree and chained to technology, whether wepassionately affirm or deny it . Read George Orwells novel Nineteen Eighty-Four, or watch theWachowski brothers film The Matrix for similarly dystopian views of technology.

Returning to metaphors, recall how the machine metaphor encouraged us to t ransfer theidea of efficient energy use from machines to humans, thereby inspiring the psychic prisonmetaphor. Depending on which metaphor you apply, you will consider what comes next verydifferent ly. Many economists, engineers, and managers think of ent ire organizat ions ascomplex tools or machines for product ion, that is, as technologies a society uses to provide itsmembers with the things that they need and desire. For example, electronics firms aretechnologies for the design and manufacture of semiconductors and other componentsassembled into computers, electronic equipment, tools, games, and toys. Hospitals aretechnologies to care for people who are ill and universit ies technologies for educat ing cit izens.

Exchanges of the products, services, and informat ion enabled by technology create aneconomy. In these terms, an economy is powered by a vast sea of organizat ions whosetechnologies collect ively produce a nat ions gross domest ic product (GDP) or total output ofgoods and services. The term technology used in this way refers to the means organizat ionsuse to convert raw inputs into finished outputs, and to deliver products and services tocustomers and clients, as diagrammed in Figure 8.

Depending upon what role an organizat ion plays in society, its technology will differ fromthat of other kinds of organizat ions doing different things. Three generic technologies mediat ing, long-linked, and intensive w