Reframing Organizations. Lee G. Bolman
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Mom or pop constantly monitor what is going on and exercise complete authority over daily operations. William Hewlett and David Packard began their business in a garage, as did Apple Computer's Steve Jobs and Steve Wozniak. Simple structure has the virtues of flexibility and adaptability. One or two people control the operation and can turn on a dime when needed. But virtues can become vices. Authorities can block as well as initiate change, and they can punish capriciously as well as reward handsomely. A boss too close to day‐to‐day operations is easily distracted by immediate problems, neglecting long‐range strategic issues. A notable exception was Panasonic founder Konosuke Matsushita, who promulgated his 250‐year plan for the future of the business when his young company still had less than 200 employees.
Machine Bureaucracy
McDonald's is a classic machine bureaucracy. Members of the strategic apex make the big decisions. Managers and standardized procedures govern day‐to‐day operations. Like other machine bureaucracies, McDonald's has support staffs and a sizable technostructure that sets standards for the cooking time of French fries or the assembly of a Big Mac or quarter pounder.
For routine tasks, such as making hamburgers and manufacturing automotive parts, a machine‐like operation is efficient and effective. A key challenge is how to motivate and satisfy workers in the operating core. People quickly tire of repetitive work and standardized procedures. Yet offering too much creativity and personal challenge in, say, a McDonald's outlet could undermine consistency and uniformity—two keys to the company's success.
Like other machine bureaucracies, McDonald's deals constantly with tension between local managers and headquarters. Local concerns and tastes weigh heavily on decisions of middle managers. Top executives, aided by analysts armed with massive data, rely more on generic and abstract information. Their decisions are influenced by company‐wide concerns. As a result, a solution from the top may not always match the needs of individual units. Faced with declining sales and market share, McDonald's introduced a new food preparation system in 1998 under the marketing banner “Made for you.” CEO Jack Greenberg was convinced the cook‐to‐order system would produce the fresher, tastier burgers needed to get the company back on the fast track. However, franchisees soon complained that the new system led to long lines and frustrated customers. Unfazed by the criticism, Greenberg invited a couple of skeptical financial analysts to flip burgers at a McDonald's outlet in New Jersey so they could see firsthand that the concerns were unfounded. The experiment backfired. The analysts agreed with local managers that the system was too slow and decided to pass on the stock (Stires, 2002). The board replaced Greenberg at the end of 2002.
Professional Bureaucracy
Harvard University affords a glimpse into the inner workings of a professional bureaucracy. As in other organizations that employ large numbers of highly educated professionals, Harvard's operating core is large relative to other structural elements, although the technostructure has grown in recent years to accommodate mandated programs such as gender and racial equity. At the operating sphere, each individual school has substantial autonomy to chart its own course. Procedures for things like teaching evaluations that are typically campus‐wide at other universities are localized at Harvard. Few managerial levels exist between the strategic apex and the professors, creating a flat and decentralized profile.
Control relies heavily on professional training and indoctrination. Insulated from formal interference, professors have almost unlimited academic freedom to apply their expertise as they choose. Freeing highly trained experts to do what they do best produces many benefits but leads to challenges of coordination and quality control. Tenured professors, for example, are largely immune from formal sanctions. At Harvard, that has often protected senior faculty who were guilty of serial sexual harassment (Bikales, 2020). In the case of a professor whose teaching performance was moving from erratic to bizarre, a Harvard dean did the one thing he felt he could do—he relieved the professor of teaching responsibilities while continuing to pay his full salary. The dean was not disappointed when the professor quit in anger (Rosovsky, 1990).
A professional bureaucracy responds slowly to external change. Waves of reform typically produce little impact, because professionals often view any change in their surroundings as an annoying distraction. The result is a paradox: individual professionals may be at the forefront of their specialty, whereas the institution as a whole changes at a glacial pace. Professional bureaucracies regularly stumble when they try to exercise greater control over the operating core; requiring Harvard professors to follow standard teaching methods would produce a revolt and might do more harm than good.
Divisionalized Form
In a divisionalized organization (see Exhibit 4.2), the bulk of the work is done in semi‐autonomous units, such as freestanding campuses in a multi‐campus university, areas of expertise in a large multi‐specialty hospital, or independent business units in a Fortune 500 firm (Mintzberg, 1979). Johnson & Johnson, for example, is among the world's largest companies (#35 on the Fortune 500 in 2020). It has more than 275 operating companies lodged in over 60 countries. Its medical device division is the world's largest. Its pharmaceutical division is even bigger. Its consumer products division markets an assortment of well‐known brands like Neutrogena, Tylenol, Band‐Aids, and Rogaine.
Although J&J's divisions often have little in common, the company's executives argue that there is a level of shared synergy and stability that have paid off over time. Despite setbacks in the Tylenol crisis of 1982 and a series of product recalls in 2010 and 2012, J&J has raised its dividend every year for more than half a century and in 2020 was one of the last two U.S. companies still carrying a AAA credit rating.
Exhibit 4.2. Divisionalized Form.
Source: Mintzberg (1979, p. 393). Copyright ©1979. Reprinted by permission of Prentice Hall, Upper Saddle River, NJ.
One of the oldest businesses in the United States, Berwind Corporation began in coal‐mining in 1886. It now houses divisions in business sectors as diverse as manufacturing, financial services, real estate, and land management. Each division serves a distinct market and supports its own functional units. Division presidents are accountable to the corporate office in Philadelphia for specific results: profits, sales growth, and return on investment. As long as they deliver, divisions have relatively free rein. Philadelphia manages the strategic portfolio and allocates resources based on its assessment of market opportunities.
Divisionalized structure offers economies of scale, resources, and responsiveness while controlling economic risks, but it creates other tensions. One is a cat‐and‐mouse game between headquarters and divisions. Headquarters wants oversight, while divisional managers try to evade corporate control:
Our top management likes to make all the major decisions. They think they do, but I've seen one case where a division beat them. I received … a request from the division for a chimney. I couldn't see what anyone would do with a chimney … [But] they've built and equipped a whole plant on plant expense orders. The chimney is the only indivisible item that exceeded the $50,000 limit we put on plant expense orders. Apparently they learned that a new plant wouldn't be formally received, so they built the damn thing. (Bower, 1970, p. 189)
Another risk in independent divisions form is that headquarters may lose touch with operations. As one manager put it, “Headquarters is where the rubber meets the air.” Divisionalized enterprises become unwieldy unless goals are measurable and reliable information systems are in place (Mintzberg, 1979).
Adhocracy
Adhocracy is a loose, flexible, self‐renewing organic form tied