Reframing Organizations. Lee G. Bolman
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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 figure—who ruled with almost unlimited authority and power—dominated patriarchal organizations. He could reward, punish, promote, or fire on personal whim—akin to the approach Donald Trump brought to the presidency. Seeing an evolution of new structural models in late‐nineteenth‐century Europe, Weber described “monocratic bureaucracy” as an ideal form that maximized efficiency and norms of rationality. His model outlined several major features that were relatively novel at the time, although commonplace now:
a fixed division of labor
a hierarchy of offices
a set of rules governing performance
a separation of personal from official property and rights
the use of technical qualifications (not family ties or friendship) for selecting and promoting 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 rediscovered Weber'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 organizations develop one structure over another, and analyzed the effects of structure on morale, productivity, and effectiveness.
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 defined in many ways. Mintzberg (1987), for example, offers five 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 form 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 5 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 define a strategy that includes objectives, a statement of scope, a specification 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 specific 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 film industry for a century, but stayed too long with the same approach and finally ended in bankruptcy. Kodak began in 1880, when George Eastman developed a formula for gelatin‐based dry plates, the basis for the then nascent field of photography. For the next 125 years the company's strategy sought to build on this technology by introducing products such as the Kodak Brownie camera, Kodachrome, the Kodak Instamatic camera, and gold standard motion picture film—as well as producing thousands of patents in related fields. Pursuing this strategy, the company's performance soared. At its zenith, Kodak was one of America's best‐known and most‐admired companies with over 145,000 employees and billions of dollars in sales (Brachmann, 2014).
Threats to Kodak's film‐based strategy surfaced as early as 1950 with the introduction of instant photography and the Polaroid camera. In the 1980s, Fujifilm, an upstart Japanese competitor, was able to mass‐produce film and sell it at a cheaper price to discount retailers like Walmart. Kodak couldn't compete and lost a large share of the film market (Brachmann, 2014).
The death knell for Kodak came in the mid‐1970s with the invention of the digital camera. Ironically, it was invented in one of the company's labs by one of its own engineers in an era when Kodak sold more than 85 percent of cameras and 90 percent of film in the U.S. Upper management's reaction: “It's cute, but don't tell anyone about it” (Chunka, 2012). Kodak's protection of its film‐based strategy and inability to see that digital would come to dominate the marketplace led to its decline and eventual bankruptcy in January, 2012. What kept Kodak from adapting to a changing world? Kodak's structuring led to a system that channeled the activities and thinking of top management in one primary direction: film. 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 personal 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 mind‐set. Christensen (1997) calls it “the innovator's dilemma,” and notes that one reason firms get stuck in the past is that standard cost‐benefit 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 often lost before the numbers begin to tell a different story.
STRUCTURAL FORMS AND FUNCTIONS
Structure provides the architecture for pursuing an organization's strategic goals. It is a blueprint for expectations and exchanges among internal players (executives, managers, employees) and external constituencies (such as customers, competitors, regulators, and clients). Like an animal's skeleton or a building's framework, structure both enhances and constrains what an organization can do. The alternative design possibilities are virtually infinite, limited only by human preferences and capacities, technological limits, and constraints in the surroundings.
Think about the structural variations possible in a four‐person traditional nuclear family. Maybe Dad makes major economic decisions, while Mom deals with the home front and supervises kids. Or Mom works, Dad putters, kids are pretty much left to their own devices and conflict centers around who is responsible for shopping and making meals. Or kids leave for college, Mom and Dad both work, and they hire a housekeeper to handle domestic chores. Questions arise concerning who is responsible for managing the new employee and how much discretion this new person will have to make home‐front decisions. The possibilities are infinite.
Exhibit 3.1. Structures of Six Tech Companies.
Source: © 2011, Manu Cornet. Used by permission of artist.
Imagine then the range of structural options in a large company. Manu Cornet provides a provocative example in his images of organization charts for six prominent tech companies (see Exhibit 3.1). Even though his depictions are more impressionistic than literal, they capture characteristics that traditional corporate portrayals miss. Microsoft's official chart never depicted different divisions at war with one another, and one tech executive suggested that Facebook's structure probably has “a bit more centralized gravitational pull” (Lambert, 2011). But the depiction of Apple as a hub with many