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VERTICAL COORDINATION With vertical coordination, higher levels coordinate and control the work of subordinates through authority, rules and policies, and planning and control systems.

Authority The most basic and ubiquitous way to harmonize the efforts of individuals, units, or divisions is to designate a boss with formal authority. Authorities—executives, managers, and supervisors—are charged with keeping action aligned with strategy and objectives. They do this by making decisions, resolving con”icts, solving problems, evaluating performance and output, and distributing rewards and sanctions. A chain of command is a hierarchy of managerial and supervisory strata, each with legitimate power to shape and direct the behavior of those at lower levels. It works best when authority is both endorsed by

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subordinates and authorized by superiors (Dornbusch and Scott, 1975). In military organizations such as an aircraft carrier or a commando team, for example, the chain of command is usually clear and universally accepted. In schools and human service organizations authority relations are often fuzzier or more contested.

Rules and Policies Rules, policies, standards, and standard operating procedures are developed to ensure that individual behavior is predictable and consistent. Rules and policies govern conditions of work and specify standard ways of completing tasks, handling personnel issues, and relating to customers and others. The goal is to ensure the handling of similar situations in comparable ways and to avoid “particularism” (Perrow, 1986)—responding to speci!c issues based on personal whims or political pressures. Two citizens’ complaints about a tax bill are supposed to be treated similarly, even if one citizen is a prominent politician and the other a shoe clerk. Once a situation is de!ned as !tting a particular rule, the course of action is clear, straightforward and, in an ideal world, almost automatic.

A standard is a benchmark to ensure that goods and services maintain a speci!ed level of quality. Measurement against the standard makes it possible to identify and !x problems. During the 1970s and 1980s, American manufacturing standards lagged, while Japanese manufacturers were scrupulous in ensuring that high standards were widely known and universally accepted. In one case, an American company ordered ball bearings from a Japanese plant. The Americans insisted on what they saw as a daunting standard—no more than 20 defective parts per thousand. The order arrived with a separate bag of 20 defective bearings and a note: “We were not sure why you wanted these, but here they are.” More recently, pressure for world-class quality has spawned growing interest in “Six Sigma,” a statistical standard of near perfection (Pyzdek, 2003). Although Six Sigma has raised quality standards in many companies around the world, its laser focus on measurable aspects of work processes and outcomes has sometimes hampered creativity in innovative companies such as 3M (Hindo, 2007, pp. 8–12). Safe and measurable may crowd out the elusive breakthroughs a !rm needs.

Standard operating procedures (SOPs) reduce variance in routine tasks that have little margin for error. Commercial airline pilots typically “y with a different crew every month. Cockpit actions are tightly intertwined, the need for coordination is high, and mistakes can kill. SOPs consequently govern much of the work of “ying a plane. Pilots are trained extensively in the procedures and seldom violate them. But a signi!cant percentage of aviation accidents occur in the rare case in which someone does. More than one airplane has crashed on takeoff after the crew missed a required checklist item.

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SOPs can fall short, however, in the face of “black swans” (Taleb, 2007)—freak surprises that the SOPs were never designed to handle. In the 9/11 terrorist attacks, pilots followed standard procedures for dealing with hijackers: cooperate with their demands and try to get the plane on the ground quickly. These SOPs were based on a long history of hijackers who wanted to make a statement, not wreak destruction on a suicide mission. Passengers on United Airlines “ight 93, who had learned via cell phones that hijackers were using aircraft as bombs rather than bully pulpits, abandoned this approach. They lost their lives !ghting to regain control of the plane, but theirs was the only one of four hijacked jets that failed to devastate a high-pro!le building.

Planning and Control Systems Reliance on planning and control systems—forecasting and measuring—has mushroomed since the dawn of the computer era. Retailers, for example, need to know what’s selling and what isn’t. Point-of-sale terminals now yield that information instantly. Data “ow freely up and down the hierarchy, greatly enhancing management’s ability to oversee performance and respond in real time.

Mintzberg (1979) distinguishes two major approaches to control and planning: per- formance control and action planning. Performance control speci!es results (for example, “increase sales by 10 percent this year”) without specifying how to achieve them. Performance control measures and motivates individual efforts, particularly when targets are reasonably clear and calculable. Locke and Latham (2002) make the case that clear and challenging goals are a powerful incentive to high performance. Performance control is less successful when goals are ambiguous, hard to measure, or of dubious relevance. A notorious example was the use of enemy body counts by the U.S. military to measure combat effectiveness in Vietnam. Field commanders became obsessed with “getting the numbers up,” and were often successful. The numbers painted a picture of progress, even as the war was being lost. Meanwhile, as an unintended consequence, American troops had an incentive to kill unarmed civilians in order to raise the count (Turse, 2013).

Action planning speci!es how to do something—methods and time frames as in “increase this month’s sales by using a companywide sales pitch” (Mintzberg, 1979, pp. 153–154). Action planning works best when it is easier to assess how a job is done than to measure its outcome. This is often true of service jobs. McDonald’s has clear speci!cations for how counter employees are to greet customers (for example, with a smile and a cheerful welcome). United Parcel Service has a detailed policy manual that speci!es how a package should be delivered. The objective is customer satisfaction, but it is easier to monitor employees’ behavior than customers’ reactions. An inevitable risk in action planning is that

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the link between action and outcome may fail. When that happens, employees may get bad results by doing just what they’re supposed to do. Unions sometimes use this as a bargaining chip by telling employees to “work to rule”—scrupulously observing every detail in every procedure—because it is often an effective way to slow work to a crawl.

LATERAL COORDINATION Behavior in organizations is often remarkably untouched by commands, rules, and systems. Lateral techniques—formal and informal meetings, task forces, coordinating roles, matrix structures, and networks—pop up to !ll the gaps. Lateral forms are typically less formal and more”exible thanauthority-based systemsand rules.Theyareoften simpler andquicker aswell.

Meetings Formal gatherings and informal exchanges are the cornerstone of lateral coordination. All organizations have regular meetings. Boards confer to make policy. Executive committees gather to make strategic decisions. In some government agencies, review committees (sometimes known as “murder boards”) convene to examine proposals from lower levels. Formal meetings provide the lion’s share of lateral harmonization in relatively simple, stable organizations—for example, a railroad with a predictable market, a manufacturer with a stable product, or a life insurance company selling standard policies.

But in fast-paced, turbulent environments, more spontaneous and informal contacts and exchanges are vital to take up slack and help glue things together. Pixar, the animation studio whose series of hits includes Toy Story (1, 2, and 3); Finding Nemo (and Dory); Monsters, Inc.;WALL-E; andUp, relies on a constant stream of informal connections among managers, artists, and engineers in its three major groups. Technologists develop graphics tools, artists create stories and pictures, and production experts knit the pieces together in the !nal !lm. “What makes it all work is [Pixar’s] insistence that these groups constantly talk to each other. So a producer of a scene can deal with the animator without having to navigate through higher-ups” (Schlender, 2004, p. 212).

Task Forces When organizations face complex and fast-changing environments, demand for lateral communication mushrooms. Additional face-to-face coordination devices are needed. Task forces assemble when new problems or opportunities require collaboration of diverse specialties or functions. High-technology !rms and consulting !rms rely heavily on project teams or task forces to synchronize the development of new products or services.

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