wk 1 550

Chapter 3

Nature Intervenes

Organizations as Organisms

Let’s think about organizations as if they were organisms. We find ourselves thinking about them as living systems, existing in a wider environment on which they depend for the satisfaction of various needs. And as we look around the organizational world webegin to see that it is possible to identify different species of organization in different kinds of environments. Just as we find polar bears in arctic regions, camels in deserts, and alligators in swamps, we notice that certain species of organization are better “adapted” to specific environmental conditions than others. We find that bureaucratic organizations tend to work most effectively in environments that are stable or protected in some way and that very different species are found in more competitive and turbulent regions, such as the environments of high-tech firms in the aerospace and microelectronics industries.

In this simple line of inquiry we find the crux of many of the most important developments in organization theory over the past sixty years, for the problems of mechanistic visions of organization have led many organization theorists away from mechanical science and toward biology as a source of ideas for thinking about organization. In the process, organization theory has become a kind of biology in which the distinctions and relations among molecules, cells, complex organisms, species, and ecology are paralleled in those between individuals, groups, organizations, populations (species) of organizations, and their social ecology. In pursuing this line of inquiry, organization theorists have generated many new ideas for understanding how organizations function and the factors that influence their well-being.

In this chapter we will explore these ideas, showing how the organismic metaphor has helped organization theorists identify and study different organizational needs and focus on the following: Organizations as “open systems” The process of adapting organizations to environments Organizational life cycles Factors influencing organizational health and development Different species of organization

The relations between species and their ecology Collectively, these ideas have had an enormous impact on the way we now think about organization. Under the influence of the machine metaphor, organization theory was locked into a form of engineering preoccupied with relations between goals, structures, and efficiency. The idea that organizations are most like organisms has changed all this, guiding our attention toward the more general issues of survival, organization environment relations, and organizational effectiveness. Goals, structures, and efficiency now become subsidiary to problems of survival and other more “biological” concerns.

 

Discovering Organizational Needs

Not surprisingly, organization theory began

its excursion into biology by developing the idea that employees are

people with complex needs that must be satisfied if they are to lead full

and healthy lives and to perform effectively in the workplace. In retrospect, this hardly appears a profound insight because from a modern perspective this seems an obvious fact of life. We all know that employees

work best when motivated by the tasks they have to perform and that the

process of motivation hinges on allowing people to achieve rewards that

satisfy their personal needs. However, in the nineteenth and early twentieth centuries this idea was by no means obvious. For many people, work

was a basic necessity, and those who designed and managed early organizations treated it as such. Hence, as we saw in the previous chapter,

people like Frederick Taylor and the other classical management theorists

were able to view the design of organizations as a technical problem, and

the task of encouraging people to comply with the requirements of the

organizational machine was reduced to a problem of “paying the right

rate for the job.” Although esprit de corps was viewed as a valuable

aid to management, management was viewed primarily as a process of

controlling and directing employees in their work.

Much of organization theory since the late 1920s has rested in overcoming the limitations of this perspective. We can start the story with the

Hawthorne Studies. These were conducted in the 1920s and 1930s under

the leadership of Elton Mayo, at the Hawthorne Plant of the Western

Electric Company in Chicago. At the outset the studies were primarily concerned with investigating the relation between conditions of work and the

incidence of fatigue and boredom among employees. As the research progressed, however, it left this narrow Taylorist perspective to focus on many

other aspects of the work situation as well, including the attitudes and preoccupations of employees and factors in the social environment outside

work. The studies are now famous for identifying the importance of social

needs in the workplace and the way that work groups can satisfy these

needs by restricting output and engaging in all manner of unplanned

activities. In identifying that an “informal organization” based on friendship groups and unplanned interactions can exist alongside the formal

organization documented in the “blueprints” designed by management,

the studies dealt an important blow to classical management theory. They

showed quite clearly that work activities are influenced as much by the

nature of human beings as by formal design and that organization theorists must pay close attention to this human side of organization.

With the Hawthorne Studies, the whole question of work motivation

thus became a burning issue, as did the relations between individuals and

groups. A new theory of organization began to emerge, built on the idea

that individuals and groups, like biological organisms, operate most effectively only when their needs are satisfied.

Theories of motivation such as that pioneered by Abraham Maslow

presented the human being as a kind of psychological organism struggling to satisfy its needs in a quest for full growth and development. This

theory, which suggested that humans are motivated by a hierarchy

of needs progressing through the physiological, the social, and the

psychological, had very powerful implications, for it suggested that

bureaucratic organizations that sought to motivate employees through

money or by merely providing a secure job confined human development

to the lower levels of the need hierarchy. Many management theorists

were quick to see that jobs and interpersonal relations could be

redesigned to create conditions for personal growth that would simultaneously help organizations achieve their aims and objectives.

Thus, the idea of integrating the needs of individuals and organizations

became a powerful force. Organizational psychologists like Chris Argyris,

Frederick Herzberg, and Douglas McGregor began to show how bureaucratic structures, leadership styles, and work organization generally could

be modified to create “enriched,” motivating jobs that would encourage

people to exercise their capacities for self-control and creativity. Under

their influence, alternatives to bureaucratic organization began to emerge.

Particular attention was focused on the idea of making employees feel

more useful and important by giving them meaningful jobs and by giving

as much autonomy, responsibility, and recognition as possible as a means

of getting them involved in their work. Job enrichment, combined with a

more participative, democratic, and employee-centered style of leadership, arose as an alternative to the excessively narrow, authoritarian, and

dehumanizing work orientation generated by scientific management and

classical management theory.

Developed in countless ways, these ideas provided a powerful framework for the development of what is now known as human resource management. Employees were to be seen as valuable resources that could

contribute in rich and varied ways to an organization’s activities if given

an appropriate chance. Maslow’s theory suggested a whole repertoire of

means (summarized in Exhibit 3.1) through which employees could be

motivated at all levels of the need hierarchy. Much of this theorizing has

proved extremely attractive in management circles, for it offered the possibility of motivating employees through “higher level” needs in a way

that could increase involvement and commitment without paying them

any more money.

Since the 1960s, management and organizational researchers have

given much attention to shaping the design of work to increase productivity and job satisfaction while improving work quality and reducing

employee absenteeism and turnover. Human resource management has

become a major focus of attention and the need to integrate the human

and technical aspects of work an important principle.

This dual focus is now reflected in the view that organizations are best

understood as “sociotechnical systems.” The term was coined in the 1950s

by members of the Tavistock Institute of Human Relations in England to

capture the interdependent qualities of work. In their view, these aspects

of work are inseparable because the nature of one element in this configuration always has important consequences for the other. When we choose

a technical system (whether in the form of an organizational structure, job

design, or particular technology) it always has human consequences, and

vice versa.

Exhibit 3.1  Examples of How Organizations Can Satisfy Needs at Different Levels of Maslow’s Hierarchy

This has been particularly well illustrated in many Tavistock studies,

such as that conducted by Eric Trist and Ken Bamforth on technological

change in coal mining in England in the late 1940s. The attempt to mechanize the mining process through the introduction of the “long-wall

method,” which in effect brought assembly-line coal cutting to the coal

face, created severe problems by destroying the informal fabric of social

relations present in the mine. The new technology promised increases in

efficiency yet brought all the social problems now associated with the

modern factory, compounded many times by much worse physical

conditions. The resolution of the problems rested in finding a means of

reconciling human needs and technical efficiency.

Work in most parts of the world has now shown that in designing or

managing any kind of social system, whether it be a small group, an organization, or a society, the interdependence of technical and human needs

must be kept firmly in mind.

The principle now seems very obvious and is clearly recognized in most

popular theories of organization, leadership, and group functioning. But

there is still a tendency in management to fall back into a strictly technical

view of organization. As noted in Chapter 2, this has been the primary

problem facing the “reengineering movement,” which more or less dominated Western management practice in the early 1990s. Aspiring “reengineers” paid a heavy price for ignoring the social dimension. By placing

primary emphasis on the design of technical “business systems” as the key

to change, the majority of reengineering programs mobilized all kinds of

social, cultural, and political resistance that undermined their effectiveness.

 

Recognizing the Importance of Environment: Organizations as Open Systems

When we recognize that individuals, groups,

and organizations have needs that must be satisfied, attention is invariably drawn to the fact that they depend on a wider environment for various kinds of sustenance. It is this kind of thinking that now underpins the

“open systems approach” to organization, which takes its main inspiration from the work of Ludwig von Bertalanffy, a theoretical biologist.

Developed simultaneously on both sides of the Atlantic in the 1950s

and 1960s, the systems approach builds on the principle that organizations, like organisms, are “open” to their environment and must achieve

an appropriate relation with that environment if they are to survive.

Developed at a theoretical level, the open-systems approach has generated many new concepts for thinking about organizations (Exhibit 3.2,

page 40). These are often presented as general principles for thinking

about all kinds of systems owing to von Bertalanffy’s having developed

the principles of General Systems Theory as a means of linking different

scientific disciplines. However, he achieved this integration by taking the

living organism as a model for understanding complex open systems,

thus reproducing ideas primarily developed for understanding biological

systems in order to understand the world at large. Early systems theory

thus developed as a biological metaphor in disguise.

At a pragmatic level, the open-systems approach usually focuses on a

number of key issues. First, there is the emphasis on the environment in

which organizations exist. Surprising as it may now seem, the classical

management theorists devoted relatively little attention to the environment. They treated the organization as a “closed” mechanical system and

became preoccupied with principles of internal design. The open-systems

view has changed all this, suggesting that we should always organize with

the environment in mind. Thus, much attention has been devoted to understanding the immediate “task” or “business environment,” defined by the

organization’s direct interactions with customers, competitors, suppliers,

labor unions, and government agencies, as well as the broader “contextual”

or “general environment.” All this has important implications for organizational practice, stressing the importance of being able to scan and sense

changes in task and contextual environments, of being able to bridge and

manage critical boundaries and areas of interdependence, and of being able

to develop appropriate operational and strategic responses. Much of the

widespread interest in corporate strategy is a product of this realization that

organizations must be sensitive to what is occurring in the world beyond.

A second focus of the open-systems approach defines an organization

in terms of interrelated subsystems. Systems are like Chinese boxes in that

they always contain wholes within wholes. Thus, organizations contain

individuals (who are systems on their own account) who belong to

groups or departments that belong to larger organizational divisions. And

so on. If we define the whole organization as a system, then the other

levels can be understood as subsystems, just as molecules, cells, and

organs can be seen as subsystems of a living organism, even though they

are complex open systems on their own account.

Systems theorists are fond of thinking about intra- and interorganizational relations in these terms, using configurations of subsystems to

depict key patterns and interconnections. One popular way of doing this

is to focus on the key “business processes” or sets of needs the organization must satisfy to survive and emphasize the importance of managing

relations between them. Thus, the sociotechnical view of organization

discussed earlier is often expanded to take account of relations between

technical, social, managerial, strategic, and environmental requirements

(Exhibit 3.3). As we will see, this way of thinking has helped us recognize

how everything depends on everything else and find ways of managing

the relations between critical subsystems and the environment.

A third focus in the pragmatic use of the systems approach rests in

the attempt to establish congruencies or “alignments” between different

systems and to identify and eliminate potential dysfunctions. Just as a

sociotechnical approach to work design emphasizes the importance of

matching human and technical requirements, open-systems theory more

generally encourages a matching of the kind of subsystems illustrated in

Exhibit 3.3 on page 43. Here the principles of requisite variety, differentiation and integration, and other systems ideas (discussed in Exhibit 3.2)

can be brought into play. For example, the principle of requisite variety is

particularly important in designing control systems or for the management

of internal and external boundaries—for these must embrace the complexity of the phenomena being controlled or managed to be effective. As we

shall see later, the principle of differentiation and integration is useful for

organizing different kinds of tasks within the same organization.

 

These principles, derived primarily from the study of biological systems,

are now often used in the analysis of organizations as systems:

The concept of an “open system.”

Organic systems at the level of the cell,

complex organism, and population of organisms exist in a continuous

exchange with their environment. This exchange is crucial for sustaining

the life and form of the system, as environmental interaction is the basis

of self-maintenance. It is thus often said that living systems are “open

systems,” characterized by a continuous cycle of input, internal transformation (throughout), output, and feedback (whereby one element of experience influences the next). The idea of openness emphasizes the key

relationships between the environment and the internal functioning of the

system. Environment and system are to be understood as being in a state of

interaction and mutual dependence. The open nature of biological and

social systems contrasts with the “closed” nature of many physical and

mechanical systems, although the degree of openness can vary, as some

open systems may be responsive only to a relatively narrow range of inputs

from the environment. Towers, bridges, and even clockwork toys with predetermined motions are closed systems. A machine that is able to regulate

its internal operation in accordance with variations in the environment may

be considered a partially open system. A living organism, organization, or

social group is a fully open system. (But note the critique of the concept of

openness presented in Chapter 8.)

Homeostasis.

The concept of homeostasis refers to self-regulation and the

ability to maintain a steady state. Biological organisms seek a regularity of

form and distinctness from the environment while maintaining a continuous exchange with that environment. This form and distinctness is achieved

through homeostatic processes that relate and control system operation on

the basis of what is now called “negative feedback,” where deviations from

some standard or norm initiate actions to correct the deviation. Thus, when

our body temperature rises above normal limits, certain bodily functions

operate to try to counteract the rise (e.g., we begin to perspire and breathe

heavily). Social systems also require such homeostatic control processes if

they are to acquire enduring form.

Entropy/negative entropy.

Closed systems are entropic in that they have

a tendency to deteriorate and run down. Open systems, on the other hand,

attempt to sustain themselves by importing energy to try to offset entropic

tendencies. It is thus said that they are characterized by negative entropy.

Structure, function, differentiation, and integration.

The relationship

between these concepts is of crucial importance for understanding living

systems. It is easy to see organization as a structure of parts and to explain

system behavior in terms of relations between the parts, causes and effects,

stimulus and response. Our understanding of living systems warns against

such reduction, emphasizing that structure, function, behavior, and all

other features of system operation are closely intertwined. Although it is

possible to pursue the study of organisms through the study of anatomy, a

full understanding of such systems calls for much more. Even the life of the

simple cell is dependent on a complex web of relations between cellular

structure, metabolism, gas exchange, the acquisition of nutrients, and

numerous other functions. The cell as a system is a system of functional

interdependence that is not reducible to a simple structure. Indeed, the

structure at any one time depends on the existence of these functions

and in many respects is only a manifestation of them. The same is true of

more complex organisms, which reflect increased differentiation and

specialization of function (e.g., with specialized organs performing specific

functions)—and which thus require more complex systems of integration

to maintain the system as a whole (e.g., through the operation of a brain).

Similar relationships between structure, function, differentiation, and integration can also be seen in social systems such as organizations.

Requisite variety.

Related to the idea of differentiation and integration is

the principle of requisite variety, which states that the internal regulatory

mechanisms of a system must be as diverse as the environment with which

it is trying to deal. For only by incorporating required variety into internal

controls can a system deal with the variety and challenge posed by its environment. Any system that insulates itself from diversity in the environment

tends to atrophy and lose its complexity and distinctive nature. Thus,

requisite variety is an important feature of living systems of all kinds.

Equifinality.

This principle captures the idea that in an open system there

may be many different ways of arriving at a given end state. This is in

contrast to more closed systems where system relations are fixed in terms of

structure to produce specific patterns of cause and effect. Living systems

have flexible patterns of organization that allow the achievement of specific

results from different starting points with different resources in different

ways. The structure of the system at a given time is no more than an aspect

or manifestation of a more complex functional process; it does not determine that process.

System evolution.

The capacity of a system to evolve depends on an ability to move to more complex forms of differentiation and integration, and

greater variety in the system facilitating its ability to deal with challenges

and opportunities posed by the environment. This involves a cyclical

process of variation, selection, and retention of the selected characteristics.

Exhibit 3.2  A Glossary of Some Open-Systems Concepts

Collectively, these ideas have pointed the way to theories of organization and management that allow us to break free of bureaucratic thinking

and to organize in a way that meets the requirements of the environment.

These insights are now usually marshaled under the perspective known as

“contingency theory” and in the practice of organizational development.

 

Contingency Theory: Adapting Organization to Environment

 

“Organizations are open systems that need

careful management to satisfy and balance

internal needs and to adapt to environmental circumstances.”

“There is no one best way of organizing.

The appropriate form depends on the kind

of task or environment with which one is

dealing.”

“Management must be concerned, above all

else, with achieving alignments and ‘good

fits.’”

“Different approaches to management may

be necessary to perform different tasks

within the same organization.”

“Different types or ‘species’ of organizations are needed in different types of

environments.”

 

In a nutshell, these are the main ideas underlying the contingency

approach to organization, which has established itself as a dominant

perspective in modern organizational analysis.

One of the most influential studies establishing the credentials of

this approach was conducted in the 1950s by two British researchers,

Tom Burns and G. M. Stalker. Their work is famous for establishing the

distinction between “mechanistic” and “organic” approaches to organization and management.

Organization, like organisms, can be conceived of as sets of interacting subsystems.

These subsystems can be defined in many ways. Here is one example stressing

relations between the different variables that influence the functioning of an

organization, thereby providing a useful diagnostic tool.

 

Exhibit 3.3  How an Organization Can Be Seen as a Set of Subsystems

SOURCE: Adapted from CONTINGENCY VIEW OF ORGANIZATION AND MANAGEMENT by Fremont E. Kast and James E. Rosenzweig. © 1973, Science Research Associates.

Focusing on firms in a variety of industries (e.g., man-made fibers,

engineering, and electronics), Burns and Stalker illustrated that when

change in the environment becomes the order of the day, as when changing technological and market conditions pose new problems and challenges, open and flexible styles of organization and management are

required. Exhibit 3.4 captures salient aspects of their study, illustrating

patterns of organization and management in four successful firms experiencing different rates of environmental change.

The rayon mill faced a relatively stable environment, employed a technology that was routine and well understood, and was organized in a

highly mechanistic way. The firm had a “factory bible,” which was held

by every head of a department and defined required action in almost

every situation. People in the organization thus knew precisely what was

expected of them and attended to their job responsibilities in a narrow yet

efficient way to create a competitively priced product. The firm was relatively successful in meeting the demands placed upon it, treating problematic situations as temporary deviations from the norm and doing

whatever it could to stabilize its operating environment. For example, the

sales office was sometimes asked to restrain sales in the interests of sustaining an even and trouble-free production schedule.

 

Exhibit 3.4.  Patterns of Organization and Management in Four Successful Organizations Facing Different Rates of Environmental Change

SOURCE: Based on Burns and Stalker (1961).

 

In other successful organizations facing more uncertain and turbulent environmental conditions, the mechanistic approach to organization

tended to be abandoned; more organic and flexible approaches to organization were required for successful operation. Thus, in a switch-gear firm

operating in an area of the engineering industry, where product developments hinged on improvements in design and cutting costs and where

products were frequently made to customer specifications, systems of

authority, communication, and work organization were geared to the

contingencies of changing situations. Great use was made of meetings as

a means of exchanging information and identifying problems, particularly those relating to the coordination of work, so that an alternative

system of organization existed alongside the formal hierarchy defining

relationships between specialist tasks.

In successful firms in the electronics industry, the departure from the

mechanistic mode was even more pronounced. For example, in a firm

involved in radio and television manufacture, at the more stable end of

the electronics spectrum, the need to keep abreast of market and technological change through frequent product modification and the need to

link developments in research and production called for free and open

collaboration and communication across departments and levels of

seniority. Meetings were again a central feature, driving and dominating

day-to-day work activities. This approach to organization has grown in

prominence since the publication of Burns and Stalker’s work. It is most

evident in the “project” or “matrix” form of organization, which makes

use of project teams to deal with the continuous flow of problems and

projects associated with changes in corporate policy and the external

environment.

In successful organizations in even more unpredictable areas of the

electronics field, where the need to innovate was an essential condition

for survival, the mode of organization was even more open. Here, jobs

were allowed to shape themselves, people being appointed to the organization for their general ability and expertise and allowed and encouraged

to find their own place and define the contribution that they could make.

This style of open, “organic” management is fully consistent with the

way the electronics industry has evolved. When the first commercial

electronics firms began operating at the end of World War II, there was no

commercial market for electronics products to speak of, for peacetime

applications of this newly emerging technology had yet to be found. The

electronics industry literally had to invent both products and markets and

at the same time cope with the rapid technological change that has converted computers from room-size giants into devices that fit our pockets.

As we are all so well aware, countless new applications have been found

for the basic technology.

From the start, firms in this industry operated in an organic and flexible manner, creating or searching for opportunities in the environment

and adapting themselves to take advantage of these opportunities. In the

firms observed by Burns and Stalker, the process of finding out what

one should be doing proved unending, defining a mode of organization

linking inquiry and action, and the process has continued. Successful electronics firms avoided organizational hierarchies and avoided narrow

departmentalization, with individuals and groups defining and redefining roles in a collaborative manner in connection with the tasks facing the

organization as a whole. They created innovative, team-based organizations having more in common with an amoeba than a machine.

Burns and Stalker’s idea that it is possible to identify various organizational forms ranging from mechanistic to organic and that more flexible

forms are required to deal with changing environments quickly received

support from other studies conducted in the late 1950s and early 1960s.

For example, Joan Woodward, in a study of firms in England, discerned a

relationship between technology and the structure of successful organizations. She showed that the principles of classical management theory

were not always the right ones to follow, for different technologies impose

different demands on individuals and organization that have to be met

through appropriate structure. Her evidence suggested that bureaucraticmechanistic organization might be appropriate for firms employing massproduction technologies but that firms with unit, small-batch, or process

systems of production needed a different approach.

Woodward’s findings also suggested that given any technology a range

of possible organizational forms may be employed. Although suggesting

that successful organizations matched structure and technology, she

demonstrated that this relationship was ultimately one of strategic choice.

Burns and Stalker also made a similar point in stressing that there was

absolutely no guarantee that firms would find the appropriate mode of

organization for dealing with their environment. Their study emphasized

that successful adaptation of organization to environment depended on

the ability of top management to interpret the conditions facing the firm

in an appropriate manner and to adopt relevant courses of action. Both

these studies thus demonstrated that, in the process of organizing, a lot

of choices have to be made and that effective organization depends on

achieving a balance or compatibility between strategy, structure, technology, the commitments and needs of people, and the external environment.

We find here the essence of modern contingency theory. But it took an

important study by several Harvard researchers, led by Paul Lawrence

and Jay Lorsch, to hammer the point home. Their research was built

around two principal ideas: (a) that different kinds of organizations are

needed to deal with different market and technological conditions and

(b) that organizations operating in uncertain and turbulent environments

need to achieve a higher degree of internal differentiation (e.g., between

departments) than those in environments that are less complex and more

stable. To test their ideas, they studied high- and low-performance organizations in three industries experiencing high, moderate, and low rates

of growth and technological and market change. The plastics industry

was selected as an example of a turbulent environment and the standardized container industry as an example of a stable environment, with the

food industry in between. Lawrence and Lorsch’s results supported their

hypotheses, showing that successful firms in each environment achieved

an appropriate degree of differentiation and integration and that the

degree of differentiation between departments tended to be greater in the

plastics industry than in the food industry, which was in turn greater than

that in the standardized container industry.

The Lawrence and Lorsch study thus refined the contingency

approach by showing that styles of organization may need to vary

between organizational subunits because of the detailed characteristics of

their subenvironments. At the time of their study, production departments typically faced task environments characterized by more clear-cut

goals and shorter time horizons. They adopted more formal or bureaucratic modes of interaction. Research and development departments,

especially those engaged in fundamental as opposed to applied research,

faced even more ambiguous goals, had longer time horizons, and usually

adopted even more informal modes of interaction. The study showed that

the degree of required differentiation in managerial and organizational

styles between departments varied according to the nature of the industry and its environment and that an appropriate degree of integration was

also needed to tie the differentiated parts together again.

The study also yielded important insights on modes of integration. For

example, in relatively stable environments, conventional bureaucratic

modes of integration such as hierarchy and rules appeared to work quite

well. But in more turbulent environments they needed to be replaced by

other modes, such as the use of multidisciplinary project teams and the

appointment of personnel skilled in the art of coordination and conflict

resolution. The successful use of these integrative devices was also shown

to be dependent on achieving an intermediate stance between the units

being coordinated; on the power, status, and competence of those involved;

and on the presence of a structure of rewards favoring integration.

Lawrence and Lorsch gave precision and refinement to the general idea

that certain organizations need to be more organic than others, suggesting

that the degree of organicism required varies from one organizational

subunit to another. Using their ideas, we can appreciate that even in the

dynamic context of an electronics firm, where the dominant ethic may be

to remain open, flexible, and innovative, there may be exceptions to the

rule. For example, certain aspects of production or financial administration may require clearer definition and control than work in other areas.

The Lawrence and Lorsch study thus reinforced and developed the

ideas emerging from the other studies discussed above, marking an

important turning point in favor of contingency theory. This work served

to popularize the idea that in different environmental circumstances some

species of organization are better able to survive than others and that

since the relations between organization and environment are the product

of human choices, they may become maladapted. In such cases, organizations are likely to experience many problems both in dealing with the

environment and in their internal functioning. Such ideas naturally give

rise to a desire to know more about the nature of organizational species

and the requirements for designing and maintaining healthy organizations. Not surprisingly, these concerns have been an important feature of

recent research.

 

The Variety of the Species

The ideas discussed in the previous sections

go a long way toward showing us what species of organization are successful and under what conditions. But since the 1960s, hundreds of

research studies have further addressed the job of specifying organizational characteristics and their success in dealing with different tasks and

environmental conditions. These studies have added rich insight to the

mechanistic-organic continuum developed by Burns and Stalker.

Consider, for example, the work of Henry Mintzberg of McGill

University, which identifies five configurations or species of organization:

the machine bureaucracy, the divisionalized form, the professional bureaucracy,

the simple structure, and the species that we refer to as the adhocracy. The

thrust of this work, which has been extended and refined in many ways

by Mintzberg’s colleagues Danny Miller and Peter Friesen, is to show that

effective organization depends on developing a cohesive set of relations

between structural design; the age, size, and technology of the firm; and

the conditions of the industry in which it is operating.

The work of the McGill researchers confirms that the machine bureaucracy and the divisionalized form (both of which were discussed in

Chapter 2) tend to be ineffective except under conditions where tasks and

environment are simple and stable. Their highly centralized systems of

control tend to make them slow and ineffective in dealing with changing

circumstances. While appropriate for firms that are “production driven”

or “efficiency driven,” they are often inappropriate for firms that are

“market” or “environment driven.”

The professional bureaucracy modifies the principles of centralized

control to allow greater autonomy to staff and is appropriate for dealing

with relatively stable conditions where tasks are relatively complicated.

This has proved an appropriate structure for universities, hospitals, and

other professional organizations where people with key skills and abilities need a large measure of autonomy and discretion to be effective in

their work. But, since the 1980s, its effectiveness has been severely challenged by the changing environments with which these kinds of organizations have had to deal. The structure of the professional bureaucracy

tends to be fairly flat, tall hierarchies being replaced by a decentralized

system of authority. Standardization and integration are achieved

through professional training and the acceptance of key operating norms

rather than through more direct forms of control.

The simple structure and “adhocracy” tend to work best in unstable

environmental conditions. The former usually comprises a chief executive, often the founder or an entrepreneur, who may have a group of

support staff along with a group of operators who do the basic work.

Organization is very informal and flexible and, although run in a highly

centralized way by the chief executive, is ideal for achieving quick

changes and maneuvers. This form of organization works very well in

entrepreneurial organizations where speedy decision making is at a premium, provided that tasks are not too complex. It is typical of successful

young and innovative companies.

The “adhocracy,” a term coined by Warren Bennis to characterize organizations that are temporary by design, approximates Burns and Stalker’s

organic form of organization. It is a form highly suited for the performance of complex and uncertain tasks in turbulent environments.

The adhocracy usually involves project teams that come together to

perform a task and disappear when the task is over, with members

regrouping in other teams devoted to other projects. Sometimes, this kind

of enterprise is called a “virtual” or “network” organization, especially

when teams and team members are spread geographically, using electronic technology and occasional face-to-face meetings to integrate their

activities.

Adhocracies, “virtual teams,” and “virtual organizations” now abound

in innovative firms in the electronic and other high-tech and rapidly

changing industries. They are the norm in all kinds of project-oriented

companies, such as consulting firms and advertising agencies, and in the

movie industry. This form of organization also sometimes emerges as a

differentiated unit of a larger organization: for example, an ad hoc task

group or project team performing a limited assignment or contributing to

the strategic planning and development of the organization as a whole. It

is also frequently used in R&D work.

As organizational environments have become more complex, differentiated, and turbulent, more and more “species” of organizations seem to

have emerged. Charles Handy identifies “federal” and “shamrock” organizations, James Brian Quinn talks about “cluster” organizations, and, of

course, there’s the well-known “matrix” form. Each species seems to have

distinct characteristics and distinctive niches in which it excels.

More often than not, the label or name applied to these different types

of organizations seeks to capture the visual configuration that appears

when the basic structure or “skeleton” is drawn on paper. Consider, for

example, the concept of “matrix organization,” a species with many variations, some of which look like modified bureaucracies while others have

more free-flowing forms.

The term

matrix organization was coined to capture a visual impression

or organizations that systematically attempt to combine the kind of functional or departmental structure of organization found in a bureaucracy

with a project-team structure (Exhibit 3.5). The functional units are equivalent to the columns of a matrix, while the teams form the rows.

The fully developed matrix is team driven, in that priority is given to

business, program, product, or project areas, with functional specialisms

providing support. In this form, it is like the adhocracy: The focus on an

end product rather than on functional contributions encourages flexible,

innovative, and adaptive behavior. In some matrix organizations, however, the functional divisions retain most of the control, so the teams are

set within a bureaucratic structure from which it is often difficult to break

free. As a result, they often fail to innovate and perform their project tasks

in an effective way.

Matrix and other team-based organizations provide a means of breaking down the barriers between specialisms and allowing members from

different functional backgrounds to fuse their skills and abilities in an

attack on common problems. Such organizations may establish project

teams to cope with the design and production of specific products, to

tackle a corporate planning problem, or to deal with ad hoc issues such as

the relocation of a plant or offices. Some organizations may establish

few teams; others may be dominated by team activity. Teams may be

temporary and be treated as a departure from normal operations, or they

may be seen as a feature of the way business ought to be done.

 

Matrix organizations, sometimes described as “project organizations,” adapt the

functional-bureaucratic form to meet the demands of special situations through

the establishment of subunits or teams with membership drawn from different

functional areas or departments:

Exhibit 3.5  Matrix Organization

SOURCE: Diagram from Kolodny (1981: 20). Copyright, 1981, by the Foundation for the School of Business at Indiana University. Reprinted by permission.

 

Team-based organization typically increases the adaptability of organizations in dealing with their environments, improves coordination

between functional specialisms, and makes good use of human resources.

The approach also diffuses influence and control, allowing people at the

middle and lower levels of an organization to make contributions that

might otherwise be denied. The fusion of functional expertise with a

product, client, project, or other business orientation also helps create a

healthy competition for internal resources while preserving a focus in

relation to key business challenges and the external environment.

Problems do arise, however, especially when conflicts develop

between departmental and team loyalties and responsibilities. This is

particularly true in formal matrix organizations where project teams are

superimposed on a strong bureaucratic structure. In such situations, team

members are often seen as representatives of functional departments and

held accountable for their actions by departmental heads upon whose

favor their career may ultimately depend. They are often confined to “sitting in” on team meetings with the responsibility of “reporting back” to

their boss. They thus find it difficult to become fully committed members

of their team, and the dual loyalties and responsibilities usually erode

team effectiveness. In fully developed matrix organizations, this tension

between team and departmental loyalties and responsibilities is usually

resolved in favor of an emphasis on team commitments. Appropriate

authority and rewards are stacked in ways that encourage dynamic

teams. Otherwise, the organization gets the worst of both worlds, producing an inefficient form of bureaucracy. Matrix and other team-based

organizations tend to be driven by meetings that, at times, can be very

time-consuming but when working effectively can be incredibly productive. In terms of effective management, close attention has to be paid to

the conflicts that inevitably develop, and team members need to possess

a high degree of collegiality and interpersonal skill.

Our discussion of the varieties of matrix organization illustrates some

of the difficulties encountered in attempting to identify discrete types

of organization, for unlike in nature, where species are distinguished by

discrete clusters of attributes, organizational characteristics are often distributed in a more continuous way. One form often tends to blend with

another, producing organizations that have hybrid characteristics.

However, if we focus on

successful organizations, their specieslike

character becomes much clearer. Successful organizations seem to share

“configurations” or “patterns” of distinctive characteristics that are appropriate for dealing with their particular environments.

For example, as organizational researchers such as Raymond Miles,

Charles Snow, and Danny Miller have shown, highly successful companies that strive to keep on the edge of change invariably pursue strategies

of constant innovation and product breakthrough backed by flexible,

organic structures. Successful companies that seek to build competitive

advantage around high-quality, cost-effective “second-generation” products that are highly innovative but not always at the leading edge combine flexibility and control in a more structured way. Organizations that

have a well-established niche that they can defend through low-cost,

high-quality strategies that keep potential competitors away have bureaucratized tightly controlled structures.

Like organizations in the natural world, it seems that successful organizations evolve appropriate structures and processes for dealing with the

challenges of their external environments. The basic pattern revealed by

Burns and Stalker in the 1960s seems to be confirmed time and again,

although the proliferation of species equipped to deal with high degrees

of change seems to be a major trend. As technological and market changes

challenge traditional niches, many old-style bureaucracies are becoming

extinct and being replaced by more nimble competitors. However, despite

a high degree of consensus about the nature of this basic trend, organization and management researchers are deeply split in terms of their explanations of how organizations can strike an appropriate relationship with

the environment. One school of thought argues that managers can use the

insights of contingency theory to develop a “good fit” between organization and environment; the other argues that, although short-term innovation and adjustments are always possible, the forces of natural selection

and the environment are ultimately in control. These contrasting views

are explored in the following sections of this chapter.

 

Contingency Theory: Promoting Organizational Health and Development

 

How can an organization systematically achieve a good “fit” with its environment?

How can it adapt to changing environmental circumstances?

How can it ensure that internal relations are balanced and appropriate?

What does this mean in operational terms?

 

These and related questions have become the focus of attention for

numerous consultancy-oriented researchers working in the field of organizational development, popularly known as “OD.” They have helped bring

the insights generated by the contingency theorists and by the systems

approach right down to earth by developing diagnostic and prescriptive

models to identify organizational ailments and to prescribe some kind of

cure. In effect, they have adopted the role of “organizational doctors.”

Given an understanding of the ideas discussed in previous sections, it

is easy to see how such diagnosis and prescription can proceed. All we

really need to do is take the insights generated about organizational subsystems and pose a series of questions about the existing relations internally and between organization and environment:

 

1.

What is the nature of the organization’s environment? Is it simple

and stable or complex and turbulent? Is it easy to see interconnections

between various elements of the environment? What changes are occurring in the economic, technological, market, labor relations, and sociopolitical dimensions? What is the chance of some development transforming

the whole environment—some development that will create a new opportunity or challenge the viability of existing operations?

 

2.

What kind of strategy is being employed? Is the organization adopting

a nonstrategy, simply reacting to whatever change comes along? Is the

organization attempting to defend a particular niche that it has created in

the environment? Is the organization systematically analyzing the environment to identify new threats and opportunities? Is the organization

adopting an innovative, proactive stance, constantly searching for new

opportunities and evaluating existing activities? Is the stance toward the

environment competitive or collaborative?

 

3. What kind of technology (mechanical and nonmechanical) is being used?

Are the processes used to transform inputs into outputs standardized and

routinized? Does the technology create jobs with high or low scope for

responsibility and autonomy? Does the technology rigidify operations, or

is it flexible and open-ended? What technological choices face the organization? Can it replace rigid systems with more flexible forms?

 

4.

What kinds of people are employed, and what is the dominant “culture” or

ethos within the organization? What orientations do people bring to their

work? Is a narrow “I’m here for the money” commitment the norm, or are

people searching for challenge and involvement? What are the core values and beliefs shaping patterns of corporate culture and subculture?

 

5.

How is the organization structured, and what are the dominant managerial philosophies? Is the organization bureaucratic, or are matrix/organic

forms of organization the norm? Is the dominant managerial philosophy

authoritarian, stressing accountability and close control? Or is it more

democratic, encouraging initiative and enterprise throughout the organization? Does the philosophy stress safe but sure approaches, or is it innovative and risk taking?

 

This scheme of questioning can be used to identify organizational

characteristics and to determine the compatibility between the different

elements. In asking these questions we are building on the idea that the

organization consists of interrelated subsystems of a strategic, human,

technological, structural, and managerial nature (see Exhibit 3.3 discussed

earlier), which need to be internally consistent and adapted to environmental conditions. Our answers can be plotted as shown in Exhibit 3.6, to

reveal congruencies and incongruencies.

Three examples of congruent relations between organizational and

environmental characteristics are represented by the positions (A), (B),

and (C) in Exhibit 3.6. In accordance with the conclusions of contingency

theory, each is likely to be highly effective. Position (A) represents an

organization in a stable environment adopting a defensive strategy to protect its niche. Perhaps it is an organization commanding a secure market

on the basis of a good-quality product produced in a cost-efficient way.

The organization employs a mass-production technology and is structured and managed mechanistically. The people employed are content

with their narrowly defined roles, and the organization operates in an

efficient and trouble-free manner.

Position (C) represents an organization encountering a moderate

degree of change in its environment. Technological developments are

occurring at a regular pace, and markets are in a constant state of transition. The organization has to keep abreast of these developments, analyzing emergent trends, updating production methods, and creating a flow

of product modifications rather like the radio and television firm in Burns

and Stalker’s study. It is not on the cutting edge of innovation. Its competitive advantage rests in being able to produce a better product in a

cost-effective way. The organization adopts an effective project-driven

matrix organization and commands the required flexibility and commitment from its staff.

Position (B) represents the case of a firm in a highly turbulent environment where products and technologies are constantly changing and often

have a very short life span. This means that it has to search for new ideas

and opportunities on a continuous basis. The firm is a kind of “prospector,”

always looking for new places where it can strike gold. It relies on getting

there first, recognizing that type (C) organizations will soon move in with

a competitive product. Innovation is the lifeblood of this organization. It

employs people who are prepared to make massive commitments to their

work and who are motivated and managed in an organic way. Again, this

organization is balanced internally and in relation to its environment.

 

Exhibit 3.6  Congruence and Incongruence Between Organizational Subsystems

SOURCE: Adapted from Burrell and Morgan (1979: 177).

Position (D) presents a set of relations where the strategic stance, technology, and approach to organization and management are incongruent with the nature of the environment and the general orientations of the people within the organization. The situation is characteristic of an organization that is overbureaucratized, being more inclined to defend the position it has achieved than to search out new opportunities. It is a frustrating place in which to work because the employees are looking for more open and demanding jobs than the strategy, technology, organization, and managerial style allow. Contingency theorists suggest that the organization should be designed and managed like organization (C). If a way could be found to allow the people who are highly involved with the organization to initiate changes in the required direction, it could achieve a much more effective configuration of relations. At present, the incongruencies get in the way of effective operations, and the organization is likely to find difficulty in sustaining its position within the industry.

The kind of analytical diagnosis presented above can first be conducted

at the level of a total organization or major division, but it will also need

to be conducted at the level of subunits within the organization to take

account of Lawrence and Lorsch’s point about the need for appropriate

differentiation and integration. The analysis at this level will identify the

pattern of relations necessary for dealing with various subenvironments

and show the required differentiation and integration. However, in an

analysis at this subunit level, care must be taken to ensure that the

requirements of the parts do not take priority over those of the whole and

that critical competencies are kept firmly in mind. For example, in organizations where frontline innovation is the basis of survival, the design

and management of subunits must accommodate the primary task of

innovation rather than the reverse.

Our discussion thus demonstrates how contingency theory and an

understanding of organization needs can provide the basis for a detailed

organizational analysis. The analysis helps us describe detailed patterns of

organizational relations, and it shows us possible solutions to the problems

revealed. For example, organizational development practitioners confronted with the situation in organization (D) could attempt to improve the

alignment of relations by persuading management to move closer to a (C)

configuration. This organizational change strategy could involve action on

a number of fronts—in relation to strategy, technology, organization structure, and management style. It would also involve an attempt to change

the culture of the organization, namely, the systems of belief and practice

that hold the organization in its ineffective configuration.

The task of successful organizational change and development thus

often hinges on bringing variables into closer alignment so that the organization can meet the challenges and opportunities posed by the environment. In nature we find that organisms are endowed with a harmonious

pattern of internal and external relations as a result of evolution. In organizations, however, the degree of internal harmony and fit with the environment is a product of human decision, action, and inaction so that

incongruence and conflict are often the rule. As a result, there are usually

many problems to keep managers and organizational consultants favoring a contingency approach very busy.

 

Natural Selection: The Population Ecology View of Organizations

Up to now our use of the organismic

metaphor has focused on organizations as the key units of analysis. We

have discussed how organizations and their members can be seen as

having different sets of “needs” and examined how organizations can

develop patterns of relations that allow them to adapt to their environment. Survival has been presented as a problem of adaptation, with contingency theory offered as a means of identifying patterns of “good fit”

and showing how these can be achieved.

Popular as this approach has been, in recent years it has attracted

growing criticism from theorists and researchers subscribing to a “natural

selection” view of organizations. In their opinion, the idea that organizations can adapt to their environments attributes too much flexibility and

power to the organization and too little to the environment as a force in

organizational survival. They advocate that we must counteract this

imbalance by focusing on the way environments “select” organizations

and that this can best be done by analysis at the level of populations of

organizations and their wider ecology.

This “population ecology” view of organization brings Darwin’s

theory of evolution right into the center of organizational analysis. In

essence, the argument is as follows. Organizations, like organisms in

nature, depend for survival on their ability to acquire an adequate supply

of the resources necessary to sustain existence. In this effort, they have to

face competition from other organizations, and since there is usually a

resource scarcity, only the fittest survive. The nature, numbers, and distribution of organizations at any given time are dependent on resource

availability and on competition within and between different species of

organizations. The environment is thus the critical factor in determining

which organizations succeed and which fail, “selecting” the most robust

competitors through elimination of the weaker ones.

As Darwin frequently emphasizes in his writings, although selection

may be the mechanism through which evolution occurs, it depends on

there being variation in individual characteristics. Without variation there

is nothing to select. Most applications of Darwin’s theory thus build on a

cyclical model that allows for the variation, selection, retention, and modification of species characteristics. Variations in a species typically arise as a

result of cross-reproduction and random variation of characteristics.

Some of these variations may confer a competitive advantage in the survival process, leading to a better chance of selection, or of evolving along

with changes in the environment. Because the surviving members of

a species, or emerging new species, provide a foundation for the next

stage of reproduction, there is a strong chance that the new characteristics

will be retained. In turn, these characteristics will be subject to random

modification, creating the variety that allows the process to continue. In

this way, new species and ecological patterns evolve from variations in

the old.

Although evolution occurs through modification of individual

members of a species, the population ecologists argue that it is more

important to understand evolutionary dynamics at the level of the population. When the environment changes or when a new species makes an

inroad on the resource niche traditionally held by another, ultimately the

change is reflected in population structure. Because members of a species

tend to share similar strengths and weaknesses, it is the whole species that

tends to survive or fail. Although some individual members may be fitter

than others, they are often not as fit as the incoming species and thus tend

to share the fate of their population in the long run.

This population perspective opens many new avenues of inquiry, for it

encourages us to understand the dynamics influencing whole populations of organizations. Thus, as Howard Aldrich, John Freeman, Michael

Hannan, and others who have popularized the approach suggest, organizational analysis shifts from explaining how individual organizations

adapt to their environments to understanding how different species rise

and decline in importance. Why are there so many different kinds of organizations? What factors influence their numbers and distribution? What

factors influence a population’s ability to acquire or retain a resource

niche?

Under the influence of these and related questions the population

ecologists have begun to develop a form of organizational demography.

Numerous research studies are attempting to identify species or populations (typically defined as sets of organizations sharing certain characteristics or a common fate with regard to environmental circumstances)

and the birth rates, death rates, and general factors influencing organizational life cycles, growth, and decline. Considerable attention has also

been devoted to understanding organizations and their environments in

terms of “resource dependencies” and the patterning and availability of

resource niches.

The perspective has created many interesting insights. For example, in

critiquing the “adaptation” view of organization, the population ecologists have highlighted the importance of inertial pressures that often

prevent organizations from changing in response to their environments.

Specialization of production plants and personnel, established ideas and

“mind-sets” of top managers, inadequate information, the difficulty of

restructuring technology and personnel in unionized plants, the force

of tradition, barriers to entry created by legal, fiscal, and other circumstances, and many other factors may make it impossible for organizations

to engage in timely and efficient changes. Faced with new kinds of competition or environmental circumstances, whole industries or types of

organization may come and go. Large traditional steel mills may give way

to small, technologically advanced competitors. Department stores may

give way to specialty stores in shopping malls or to “factory outlets.” Coal

mines and oil companies may give way to entrepreneurial solar energy

firms. Bureaucracies may give way to more flexible project-oriented firms,

or “market driven” competitors. Firms offering traditional products and

services throughout the economy may find themselves eliminated by

information technology companies serving customers in a completely

different way. Public sector organizations in government, education, or

health care may find once secure niches completely eroded by more

nimble service-oriented firms in the private sector.

In the population ecologists’ view, it is the ability to obtain a resource

niche and outperform one’s competitors that is all-important, and in the

long run, relative superiority in being able to command resources applies

to whole populations of organizations. Perhaps one particularly skillful or

efficient steel mill or department store may be able to hold off new forms

of competition a little longer than other members of their species, but in

the long run they too may become extinct as a result of environmental

changes they are ill equipped to deal with compared with species of

better fit.

Two other important insights generated by the population-ecology

approach are the importance of resource limitations in shaping the growth,

development, and decline of organizations and the role of successful

innovations in shaping new species of organization. An awareness of the

changing structure of critical resource niches and patterns of resource

dependencies can make important contributions to our understanding of

the success and power of different organizations. The way that new populations of organizations can emerge through the dissemination of innovations or new practices, as has happened in the computer and electronics

sector, does much to explain the changing structure of industry.

However, while there is much to commend the population-ecology

view, many organization theorists believe that it is far too deterministic a

theory to provide a satisfactory explanation of how organizations actually

evolve. For example, if we accept at face value the theory that environments select organizations for survival, then in the long run it really

doesn’t matter what managers and decision makers do. Even an efficient

and successful firm that adapts to its environment is liable to fail as the

result of environmental changes that influence the structure of its resource

niche. Not surprisingly, therefore, the population-ecology view has been

much criticized for downplaying the importance of the choice of strategic

direction for an organization. Despite inertial pressures, an organization

may be able to transform itself from one kind of organization into another

or shift from a declining niche to a more profitable one. Take, for example,

how companies like General Electric have shifted out of their core business, in this case the electrical business, to become diversified conglomerates spanning many different sectors.

The population-ecology approach has also been criticized for offering

a rather one-sided view of the evolutionary process. In particular, the

emphasis on resource scarcity and competition, which lie at the basis of

selection, underplays the fact that resources can be abundant and selfrenewing and that organisms can collaborate as well as compete.

Organizations that focus on value creation may be able to create resource

niches that never existed before. For example, many aspects of development in the information technology industry, bioengineering, and the

electronic media business are fueled by this kind of process. Social and

economic resources, especially in a knowledge economy, are inherently

self-generating. When these neglected aspects of population ecology are

brought into consideration, a more optimistic view of the ecology of organizations begins to emerge.

 

Organizational Ecology: The Creation of Shared Futures

The population-ecology and contingency

views of organization both view organizations as existing in a state of

tension or struggle with their environments. Both presume that organizations and environments are separate phenomena. Under the influence of

developments in modern systems theory, however, this kind of assumption has attracted increasing criticism. Organizations, like organisms, are

not really discrete entities, even though it may be convenient to think of

them as such. They do not live in isolation and are not self-sufficient.

Rather, they exist as elements in a complex ecosystem.

Many biologists now believe that it is the whole ecosystem that evolves

and that the process of evolution can really be understood only at the

level of the total ecology. This has important implications because it suggests that organisms do not evolve by adapting to environmental changes

or as a result of these changes selecting the organisms that are to survive.

Rather, it suggests that evolution is always evolution of a pattern of

relations embracing organisms and their environments. It is the pattern,

not just the separate units composing this pattern, that evolves. Or as

Kenneth Boulding has put it, evolution involves the “survival of the

fitting,” not just the survival of the fittest.

When we attempt to understand the ecology of organizations with this

perspective in mind, it becomes necessary to understand that organizations and their environments are engaged in a pattern of co-creation,

where each produces the other. Just as in nature, where the environment

of an organism is composed of other organisms, organizational environments are in large measure composed of other organizations. Once we

recognize this, it becomes clear that organizations are, in principle, able to

influence the nature of their environment. They can play an active role in

shaping their future, especially when acting in concert with other organizations. Environments then become in some measure always negotiated

environments rather than independent external forces.

If we look at the organizational world, we find that, as in nature, collaboration is often as common as competition. Organizations in the same

industry frequently get together under the umbrella of trade and professional associations to collaborate in relation to shared interests. Formal

and informal cartels for price fixing, agreements regarding areas of

competition and market sharing, and the joint sponsorship of lobbies

designed to influence government legislation are obvious examples. The

Tobacco Trust, which was established by leading U.S. tobacco companies

to help shape research on the link between cancer and smoking, presents

a particularly striking example of cooperation between firms that are

normally engaged in fierce competition.

Examples of day-to-day collaborative relations between organizations

in different industries or in different parts of the same industry are also

very common. For example, firms often cultivate interlocking directorships to create a measure of shared decision making and control, engage

in joint ventures to pool expertise or share risk in research and development, strike agreements with suppliers or manufacturers to achieve a

measure of “vertical integration” of production, and engage in numerous

kinds of informal networking. They also sometimes establish informal

joint organizations to link firms that have an interest in special problems

or lines of development. For example, in the financial services industry it

is not uncommon for banks, trust companies, insurance firms, and other

interested agencies to offer joint services, in effect creating a new form of

organization at the level of the industry. Similar developments can be seen

in many other areas as well.

An ecological perspective that emphasizes the importance of collaboration can make an important contribution to how we understand and

manage the world of organizations. Under the influence of interpretations

of evolution that emphasize the survival of the fittest, competition is often

encouraged as the basic rule of organizational life. Under the influence of

more ecological interpretations stressing the “survival of the fitting,” the

ethic of collaboration receives much more attention.

A number of social scientists inspired by the work of the late Eric Trist

have now begun to develop this view of organizational ecology, investigating the possibility of developing new patterns of interorganizational

relations that can help shape the future in a proactive way. Building on the

observation that these relations emerge as a natural response to complexity and turbulence in the environment, Trist argued that they should be

encouraged to help make the turbulence more manageable. In several

“action projects,” he and his colleagues sought to develop “referent

organizations” to regulate relations between stakeholders in broad-based

“domains.” The idea of such domain-based organizations is to embrace

the organization-environment relations of a whole set of constituent

organizations so that what were once external relations—for example,

between competing or interdependent firms or between labor and

management—now in some measure become internal relations that are

open to collaborative action. The approach has been applied in a wide

variety of settings to tackle problems of environmental pollution, regional

and community economic development, and the development of industrial associations. Trist and his colleagues also encourage the development

of informal learning networks that can generate domain-based exchange

and discussion, promote shared appreciations of concerns and problems,

facilitate the emergence of common values and norms, and thus possibly

find new solutions to shared problems.

The concern in both cases is to allow the ecology of organizational relations to evolve and survive. Just as natural ecologists are concerned about

the disastrous effects of industrial pollution on the natural world, Trist

and his successors believe that our organizational ecology is menaced by

highly individualistic lines of action that threaten to make the social

world completely unmanageable. The concept of organizational ecology

is thus marshaled as a new and creative way of thinking and acting in

relation to these problems.

 

Strengths and Limitations of the Organismic Metaphor

We began this chapter with the invitation to

view organizations as organisms and have ended up with a review of

some of the central ideas of modern organization theory. This is because

most modern organization theorists have looked to nature to understand

organizations and organizational life. The ideas identified provide an

excellent illustration of how a metaphor can open our minds to a systematic and novel way of thinking. By exploring the parallels between organisms and organizations in terms of organic functioning, relations with

the environment, relations between species, and the wider ecology, it has

been possible to produce different theories and explanations that have

very practical implications for organization and management.

Given the rich and varied insights thus generated, it is difficult to

identify strengths and limitations that apply equally to all variations of

the metaphor. However, there are a number of important commonalities.

One of the main strengths of the metaphor stems from the emphasis

placed on understanding relations between organizations and their environments. The mechanical theories explored in Chapter 2 more or less

ignored the role of the environment, treating organizations as relatively

closed systems that could be designed as clearly defined structures of

parts. In contrast, the ideas considered in this chapter stress that organizations are open systems and are best understood as ongoing processes

rather than as collections of parts. Using the image of an organism in

constant exchange with the environment, we are encouraged to take an

open and flexible view of organization. We can recognize that so long as

key processes are functioning in an effective manner, everything may be

going well.

This leads us to the second strength of the metaphor: The management

of organizations can often be improved through systematic attention to

the “needs” that must be satisfied if the organization is to survive. The

metaphor emphasizes survival as the key aim or primary task facing any

organization. This contrasts with the classical focus on specific operational goals. Survival is a process, whereas goals are often targets or end

points to be achieved. This reorientation gives management an increased

flexibility, for if survival is seen as the primary orientation, specific goals

are framed by a more basic and enduring process that helps prevent them

from becoming ends in themselves, a common fate in many organizations. The focus on the use and acquisition of resources also helps emphasize that the process of organizing is much broader and more basic than

the task of achieving specific goals.

The focus on “needs” also encourages us to see organizations as interacting processes that have to be balanced internally as well as in relation

to the environment. Thus, we see strategy, structure, technology, and the

human and managerial dimensions of organization as subsystems with

living needs that must be satisfied in a mutually acceptable way.

Otherwise, the openness and health of the overall system suffer. Imagine

a socio-technical system where human needs characteristic of the higher

reaches of Maslow’s need hierarchy meet a technology characterized by

routine, boring, low-discretion jobs. The result is one of human boredom

and alienation where game playing and sabotage often emerge as means

of gaining self-respect. The abrasive interaction between subsystems in

this case is likely to produce an ongoing battle between workers and

management, high absenteeism, job turnover when new jobs are freely

available, poor-quality products, and low organizational self-image. The

socio-technical approach suggests that, by accommodating and balancing

basic needs, strategic management can create a much more harmonious

and productive work environment.

The third principal advantage of the metaphor is that in identifying

different “species” of organization we are alerted to the fact that in organizing we always have a range of options. The ideas relating to matrix

and other team-based and organic forms of organization and the research

showing how effective organization is contingent on environmental circumstances emphasize that managers and those involved in organization

design always have choice and that effective organization depends on the

quality of choice. Although those favoring a population-ecology perspective may adopt the rather pessimistic stance that this choice will never

count for much because environmental forces ultimately have the upper

hand in determining the fate of an organization, the contingency view

offers a new flexibility of approach.

The fourth major strength of the metaphor is that it stresses the virtue

of organic forms of organization in the process of innovation. It would be

an exaggeration to suggest that mechanistic organizations do not innovate, but the point contains an important kernel of truth. The ideas

explored in this chapter are at one in suggesting that if innovation is a priority, then flexible, dynamic, project-oriented matrix or organic forms of

organization will be superior to the mechanistic-bureaucratic ones.

Another obvious strength of the organismic metaphor rests in its contributions to the theory and practice of organizational development, especially through the contingency approach. The metaphor has also had a

major impact upon the theory and practice of corporate strategy, which

for the most part now focuses on achieving an appropriate fit between

organization and environment.

Finally, the metaphor is making important contributions through a

focus on “ecology” and interorganizational relations. Researchers adopting ecological views have reinforced the idea that a theory of interorganizational relations is necessary if we are to understand how the world of

organization actually evolves. If the organizational ecologists are correct,

it may also be necessary to create new forms of interorganizational

relations to deal with the complex environments that modern organizations now face.

As noted in Chapter 1, a way of seeing is a way of not seeing. Now that

the organismic image of organization has established its powerful credentials, it is difficult to see how the classical theorists could have given

so little attention to the influence of the environment. It is also difficult to

see how they could have believed that there are uniform principles of

management worthy of universal application. Yet we have to remember

that the organizational world was much simpler then. The rise in importance of the organismic metaphor is in many respects a product of

changing times that have undermined the efficiency of bureaucratic organizations. Organization theorists did not simply discover the organismic

metaphor; they needed it to keep abreast of developments, and as we

have seen, they have exploited its insights in many different ways.

This said and done, the metaphor does have major limitations, most of

which are associated with the basic way of seeing that the metaphor

encourages. The first of these is the fact that we are led to view organizations and their environments in a way that is far too concrete. We know

that organisms live in a natural world with material properties that determine the life and welfare of its inhabitants. We can see this world. We can

touch and feel it. Nature presents itself as being objective and real in every

aspect. However, this image breaks down when applied to society and

organization because organizations and their environments can, at least to

some extent, be understood as socially constructed phenomena. As we will

discuss in some detail in Chapter 5, organizations are very much products

of visions, ideas, norms, and beliefs, so their shape and structure is much

more fragile and tentative than the material structure of an organism. True,

there are many material aspects of organizations, such as land, buildings,

machines, and money, but organizations fundamentally depend for life—

in the form of ongoing organizational activity—upon the creative actions

of human beings. Organizational environments can also be seen as being

products of human creativity because they are made through the actions of

the individuals, groups, and organizations who populate them.

In view of this, it is misleading to suggest that organizations need to

“adapt” to their environments, as do the contingency theorists, or that

environments “select” the organizations that are to survive, as do the

population ecologists. Both views tend to make organizations and their

members dependent upon forces operating in an external world rather

than recognizing that they are active agents operating with others in the

construction of that world. The natural selection view of organizational

evolution in particular gives the individual organization little influence in

the struggle for survival. This view undermines the power of organizations and their members to help make their own futures. Organizations,

unlike organisms, have a choice as to whether they are to compete or to

collaborate. We may agree that an organization acting in isolation can

have little impact on the environment, and hence that the environment

presents itself as external and real in its effects, but it is quite a different

matter when we consider the possibility of organizations collaborating in

pursuit of plural interests to shape the environment they desire.

A second limitation of the organismic metaphor rests in its assumption

of “functional unity.” If we look at organisms in the natural world we find

them characterized by a functional interdependence where every element

of the system under normal circumstances works for all the other elements. Thus, in the human body the blood, heart, lungs, arms, and legs

normally work together to preserve the homeostatic functioning of the

whole. The system is unified and shares a common life and a common

future. Circumstances in which one element works in a way that sabotages the whole, as when appendicitis or a heart attack threatens one’s

life, are exceptional and potentially pathological.

If we look at most organizations, however, we find that the times

at which their different elements operate with the degree of harmony

discussed above are often more exceptional than normal. Most organizations are not as functionally unified as organisms. The different elements

of an organization are usually capable of living separate lives and often

do so. Although organizations may at times be highly unified, with

people in different departments working in a selfless way for the organization as a whole, they may at other times be characterized by schism

and major conflict.

The organismic metaphor has had a subtle yet important impact on our

general thinking by encouraging us to believe in a state of unity where

everyone is “pulling together.” This style of thought usually leads us to see

“political” and other self-interested activity as abnormal or dysfunctional

features that should be absent in the healthy organization. As will become

apparent from discussion in Chapter 6, where we will be examining organizations as political systems, the emphasis upon unity rather than conflict

as the normal state of organization may be an inherent weakness of the

organismic metaphor. In recent years, those favoring the metaphor have

begun to recognize this weakness by giving more attention to the role of

power in organizations, but they rarely have gone so far as to abandon the

ideal of functional unity. There are good reasons for this. The idea that organizations can work in a functionally unified way is popular, particularly

among managers charged with the task of holding organizations together.

The above point brings us to the final limitation of the organismic

metaphor to be considered here: the danger of the metaphor becoming an

ideology. This is always a problem in applied social science where images

or theories come to serve as normative guidelines for shaping practice.

We have already seen the impact of the machine metaphor on classical

management theory: The idea that the organization is a machine sets the

basis for the idea that it ought to be run like a machine. With the organismic metaphor, this “ought” takes a number of forms. For example, the

fact that organisms are functionally integrated can easily set the basis for

the idea that organizations should be the same way. Much of organizational development attempts to achieve this ideal by finding ways of integrating individual and organization—for example, by designing work

that allows people to satisfy their personal needs through the organization. Whereas Frederick Taylor’s scientific management provided an

ideology based on the idea that “efficiency and productivity is in the

interests of all,” ideologies associated with “OD” tend to emphasize that

we can live full and satisfying lives if we fulfill our personal needs

through the organizations that dominate the contemporary scene. Many

argue that this style of thinking runs the danger of producing an organizational society populated by the “organization man” and the “organization woman.” People become resources to be developed rather than

human beings who are valued in themselves and who are encouraged to

choose and shape their own future. This issue directs attention to the values that underlie much organizational development and, by implication,

to the values associated with the use of the organismic metaphor as a

basis for theorizing.

Another important ideological dimension of some of the theories

discussed in this chapter is found in their links with the social philosophy

of the nineteenth century. For example, the population-ecology view of

organizations revives the ideology of social Darwinism, which stressed

that social life is based on the laws of nature and that only the fittest will

survive. Social Darwinism arose as an ideology supporting the early

development of capitalism in which small firms competed for survival on

a free and open basis. The population-ecology view of organization in

effect develops an equivalent ideology for modern times, holding up a

mirror to the organizational world and suggesting that the view we see

reflects a law of nature. In effect, natural law is invoked to legitimize the

organization of society. Obviously, there are real dangers in doing this

because when we take the parallels between nature and society too seriously we fail to see that human beings, in principle, have a large measure

of influence and choice over what their world can be.