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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.

56 Reframing Organizations

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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

Getting Organized 57

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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.

58 Reframing Organizations

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Coordinating Roles Coordinating roles or groups use persuasion and negotiation to help dovetail the efforts of different units. They are boundary-spanners with diplomatic status who are artful in dealing across specialized turfs. For example, a product manager in a consumer goods company, responsible for the performance of a laundry detergent or low-fat snack, spends much of the day pulling together functions essential to the product’s success such as R&D, manufactur- ing, marketing, and sales.

Matrix Structures Until the mid-twentieth century, most companies were functionally organized. Responding to strategic complexity during the late 1950s and early 1960s, many companies shed their functional structures in favor of divisional forms pioneered by DuPont and General Motors in the 1920s. Beginning in the mid-1960s, many organizations in unwieldy environments began to develop matrix structures, even though they are often cumbersome (Peters, 1979; Davis and Lawrence, 1978.) When organizations !gure out how to make matrix structures work, they solve many problems (Vantrappen and Wirtz, 2016). By the mid-1990s, Asea Brown Boveri (ABB), the Swiss-based electrical engineering giant, had grown to encompass some 1,300 separate companies and more than 200,000 employees worldwide. To hold this complex collection together, ABB developed a matrix structure crisscrossing approximately 100 countries with about 65 business sectors (Rappaport, 1992). Each subsidiary reported to both a country manager (Sweden, Germany, and so on) and a sector manager (power transformers, transportation, and the like).

The design carried the inevitable risk of confusion, tension, and con”ict between sector and country managers. ABB aimed for structural cohesion at the top with a small executive coordinating committee (11 individuals from seven countries in 2016), an elite cadre of some 500 global managers, and a policy of communicating in English, even though it was a second language for most employees. Variations on ABB’s structure—a matrix with business or product lines on one axis and countries or regions on another—are common in global corporations. Familiar brands like Starbucks and Whole Foods rely on matrix structures to support their successful international operations (Business Management, 2015).

Networks Networks have always been around, more so in some places than others. Cochran (2000) describes how both Western and Japanese !rms doing business in China in the nineteenth and twentieth centuries had to adapt their hierarchical structures to accommodate powerful

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social networks deeply embedded in Chinese culture. One British !rm tried for years, with little success, to limit the control of “Number Ones” (powerful informal leaders who headed local networks based on kinship and village) over the hiring and wages of its workforce. The proliferation of information technology beginning in the 1980s led to an explosive growth of digital networks—everything from small local grids to the global Internet. These powerful new lateral communication devices often supplanted vertical strategies and spurred the development of network structures within and between organizations (Steward, 1994). Powell, Koput, and Smith-Doerr (1996) describe the mushrooming of “interorganizational networks” in fast-moving !elds like biotechnology, where knowledge is so complex and widely dispersed that no organization can go it alone. They give an example of research on Alzheimer’s disease that was carried out by thirty-four scientists from three corporations, a university, a government laboratory, and a private research institute.

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