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STRUCTURAL ASSUMPTIONS The central beliefs of the structural frame re”ect con!dence in rationality and faith that a suitable array of roles and responsibilities will minimize distracting personal static and maximize people’s performance on the job. Where the human resource approach (to be discussed in Chapters 6 through 8) emphasizes dealing with issues by changing people (through coaching, training, rotation, promotion, or dismissal), the structural perspective

Getting Organized 47

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argues for putting people in the right roles and relationships. Properly designed, these formal arrangements support and accommodate both collective goals and individual differences.

Six assumptions undergird the structural frame:

1.� Organizations exist to achieve established goals and objectives and devise strategies to reach those goals.

2.� Organizations increase ef!ciency and enhance performance through specialization and appropriate division of labor.

3.� Suitable forms of coordination and control ensure that diverse efforts of individuals and units mesh.

4.� Organizations work best when rationality prevails over personal agendas and extra- neous pressures.

5.� Effective structure !ts an organization’s current circumstances (including its strategy, technology, workforce, and environment).

6.� When performance suffers from structural “aws, the remedy is problem solving and restructuring.

ORIGINS OF THE STRUCTURAL PERSPECTIVE The structural view has two principal intellectual roots. The !rst is the work of industrial analysts bent on designing organizations for maximum ef!ciency. The most prominent of these, FrederickW. Taylor (1911), was the father of time-and-motion studies; he founded an approach that he labeled “scienti!c management.” Taylor broke tasks into minute parts and retrained workers to get the most from each motion and moment spent at work. Other theorists who contributed to the scienti!c management approach (Fayol, [1919] 1949; Urwick, 1937; Gulick and Urwick, 1937) developed principles focused on specialization, span of control, authority, and delegation of responsibility.

A second pioneer of structural ideas was the German economist and sociologist Max Weber, who wrote around the beginning of the twentieth century. At the time, formal organization was a relatively new phenomenon. Patriarchy rather than rationality was still the primary organizing principle. A father !gure—who ruled with almost unlimited authority and power—dominated patriarchal organizations. He could reward, punish, promote, or !re on personal whim. Seeing an evolution of new structural models in late-nineteenth-century Europe, Weber described “monocratic bureaucracy” as an ideal

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form that maximized ef!ciency and norms of rationality. His model outlined several major features that were relatively novel at the time, although they are commonplace now:

• A !xed division of labor

• A hierarchy of of!ces

• A set of rules governing performance

• A separation of personal from of!cial property and rights

• The use of technical quali!cations (not family ties or friendship) for selecting personnel

• Employment as primary occupation and long-term career (Weber, 1947)

After World War II, Blau and Scott (1962), Perrow (1986), Thompson (1967), Lawrence and Lorsch (1967), Hall (1963), and others rediscoveredWeber’s ideas. Their work inspired a substantial body of theory and research amplifying the bureaucratic model. They examined relationships among the elements of structure, looked closely at why organiza- tions develop one structure over another, and analyzed the effects of structure on morale, productivity, and effectiveness.

Greatest Hits from Organization Studies Hit Number 5: James D. Thompson, Organizations in Action: Social Science Bases of Administrative Theory (New York: McGraw-Hill, 1967)

“Organizations act, but what determines how and when they will act?” (p. 1). That guiding question opens Thompson’s compact, tightly reasoned book. He answers that “organizations do some of the basic things they do because they must—or else! Because they are expected to produce results, their actions are expected to be reasonable, or rational” (p. 1). As Thompson sees them, organizations operate under “norms of rationality,” but uncertainty makes rationality hard to achieve. “Uncertainties pose major challenges to rationality, and we will argue that technologies and environments are basic sources of uncertainty for organizations. How these facts of organizational life lead organizations to design and structure themselves needs to be explored” (p. 1).

Thompson looked for a way to meld two distinct ways of thinking about organizations. One was to see them as closed, rational systems (as in Taylor’s scienti!c management and Weber’s theory of bureaucracy). The second viewed them as open, natural systems in which “survival of the system is taken to be the goal, and the parts and their relationships are presumably determined through evolutionary processes” (p. 6). Thompson tried to build on a “newer tradition” emerging from the work of March and Simon (1958, number 8 of our greatest hits in organization studies) and Cyert and March (1963, number 3). This tradition viewed organizations as “problem facing and problem solving” in a context of limited information and capacities.

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With these premises, Thompson developed a series of propositions about how organizations design and manage themselves as they seek rationality in an uncertain world. The two primary sources of uncertainty, in his view, are technology and the environment. He distinguished three kinds of technology—pooled, sequential, and reciprocal—each making different demands on communication and coordination. Because demands and intrusions from the environment threaten ef!ciency, organizations try to increase their ability to anticipate and control the environment and attempt to insulate their technical core from environmental “uctuations. Still another source of uncertainty is the “variable human.” The more uncertainty an organization faces, the more discretion individuals need to cope with it, but there is the risk that discretion will run amok. “Paradoxically, the administrative process must reduce uncertainty but at the same time search for “exibility” (Thompson, pp. 157–158).

STRATEGY Strategy comes from a Greek word that originally referred to the art of military leaders. It was imported into the business context in the twentieth century as a way to talk about an organization’s overall approach to goals and methods. Strategy has been de!ned in many ways. Mintzberg (1987), for example, offers !ve of them, all beginning with the letter P:

1.� Plan: a conscious and intentional course of action.

2.� Perspective: an organization’s way of framing where it wants to go and how it intends to get there.

3.� Pattern: a consistent pattern of decisions.

4.� Position: the way an organization positions itself in relationship to its environment.

5.� Ploy: a plan or decision whose purpose is to provoke a reaction from competitors.

Some of Mintzberg’s Ps focus on thinking while others are more about action. All are elements of a coherent strategy. Roberts (2004) argues that the job of the general manager is to de!ne a strategy that includes objectives, a statement of scope, a speci!cation of the organization’s competitive advantage, and the logic for how the organization will succeed. Structural logic dictates that an organization’s success requires alignment of strategy, structure, and environment. But, as Chandler noted in 1962, “structure follows strategy.” A good strategy needs to be speci!c enough to provide direction but elastic enough to adapt to changing circumstances.

Eastman Kodak provides a classic case in point. Kodak developed a strategy that made it a dominant player in the !lm industry for many decades, but stayed with its approach too

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long and !nally ended in bankruptcy. In 1880, George Eastman developed a formula for gelatin-based dry plates, the basis for the then nascent !eld of photography. For the next 125 years the company’s strategy sought to capitalize on this technology by introducing products such as the Kodak Brownie camera, Kodachrome, the Kodak Instamatic camera, and gold standard motion picture !lm—as well as producing thousands of patents in related !elds. Pursuing this strategy the company’s performance soared. At its zenith, Kodak employed over 145,000 people and earned billions of dollars in sales (Brachmann, 2014). It was one of America’s best-known and most-admired companies.

Threats to Kodak’s !lm-based strategy surfaced as early as 1950 with the introduction of instant photography and the Polaroid camera. In the 1980s, Fuji!lm, an upstart Japanese competitor, was able to mass produce !lm and sell it at a cheaper price to discount retailers like Walmart. Kodak couldn’t compete and lost a large share of the !lmmarket (Brachmann, 2014).

The death knell for Kodak came in the midseventies with the invention of the digital camera. Ironically, it was invented in one of the company’s labs by one of its own engineers. Upper management’s reaction: “It’s cute but don’t tell anyone about it” (Chunka, 2012). Kodak’s protection of its !lm-based strategy and inability to see that digital would capture the market led to its decline and eventual bankruptcy !ling in January, 2012.

What kept Kodak from adapting to a changing world? The strategy led to an organizational structure that channeled the activities and thinking of top management in one primary direction: !lm! In that context, any effort to promote digital cameras required swimming upstream against a strong current.

A similar thing happened at Xerox. Xerox researchers had developed the concepts for the graphical user interface and mouse, but the company’s structure and business model were built around photocopying, not computers. Steve Jobs at Apple and Bill Gates at Microsoft immediately saw the market potential that Xerox executives missed. Kodak and Xerox, like many other companies, were never able to capitalize on their own inventions because they fell outside the corporate strategy. Christensen (1997) calls it “the innovator’s dilemma,” and notes that one reason !rms get stuck in the past is that standard cost-bene!t analysis usually tells them that they will get a better return by investing in the tried and true instead of something new and unproven. As at Kodak and Xerox, the game is usually lost before the numbers tell a different story.

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