Camping on Seesaws: Prescriptions for a Self-Designing Organization*
Bo L. T. Hedberg, Paul C. Nystrom, and William H. Starbuck
Administrative Science Quarterly, March 1976, volume 21, pp. 41-65.
This article prescribes how an organization can be designed to meet social and technological changes and to reap advantage from them. Long-term viability maximizes in a self-designing organization, in which those who perform activities take primary responsibility for learning and for inventing new methods, and in which nonparticipant designers restrict themselves to a catalytic role. Such an organization is formed by putting together processes, the generators of behaviors. Although the complex interactions among processes make designers’ forecasts unreliable, serious future problems can be avoided by keeping processes dynamically balanced. The desired balance can be caricatured with six aphorisms:
Cooperation requires minimal consensus.
Satisfaction rests upon minimal contentment.
Wealth arises from minimal affluence.
Goals merit minimal faith.
Improvement depends on minimal consistency.
Wisdom demands minimal rationality.
An organization’s history can be broken down in segments of all kinds. One can focus upon single members’ activities in their jobs, or upon the activities involving single functional or geographic units, like the purchasing department or the European division. One can discuss social and intellectual domains, such as chemistry, supervision, or theology. One can attend to contiguous events, such as what happened during January 1962.
Although prevalent, these analyses portray an organization as static, and do not reveal its developmental capabilities. Designing an organization to fit society’s needs implies that it is less important to discover where an organization is than to understand how it got there, and where it can go tomorrow. Analyses that give footholds in time are the appropriate components for assembling trajectories into the future.
Stories, such as myths, sagas, and legends, are one method of portraying dynamics (Clark, 1972; Mitroff and Kilmann, 1976). Some stories describe critical events, and other stories summarize unobtrusive long-run developments, but both types derive from interpretations made after the fact, and both distort what has happened. Stories can spin out desired futures only if the distortions are consistent with an organization’s unknown future needs and environment. If a story describes an organization and environment that no longer exist, the story’s predictions will fail, and its power to generate behavior will undermine the organization’s effectiveness.
An alternative method for analyzing dynamics is to concentrate on the generators of behavior — processes. Processes are the media by which an organization creates future acts out of its past experiences. Yesterday surges in and tomorrow gushes out.
Processes are difficult to comprehend because their visages shift with the events streaming through them: processes' strength and usefulness rest on their adaptability to heterogeneous demands. Yet understanding processes warrants effort, because principles that generalize across diverse circumstances are the keys to both scientific comprehension and effective designs.
This article discusses what kinds of processes exist, how processes interact with one another, and how organizational designs can be constructed from interacting processes. First, it is necessary to assess the designers’ role and the objectives designers pursue.
I. WHY DESIGNERS SHOULD HELP OTHER PEOPLE ERECT AN ORGANIZATIONAL TENT
Designing is widely thought to belong outside the stream of routine activities. Designers are technical specialists who value their noninvolvement. They enter a situation, inventory the problems and capabilities, go off and explore alternative solutions in the abstract, return with an optimal solution, and finally implement their solution. Since implementation requires changes, effective designers initiate and control changes. If the organization adopts these changes, the designers are judged successful.
Even if one accepts this perception of designers, understanding of processes is designers’ most precious skill. Formulating and then implementing designs take time. The organization that existed when designing began will endure only in myths by the time a design is implemented (Brooks, 1963). So designers can achieve greater success by thinking in terms of an organization that will come into being while they are creating a design for it.
Designers can be even more successful if they will discard this generally accepted concept of their role. One reason is that changes start complex causal chains that are hard to predict, and discrete interventions set off reactions that are still harder to predict (Churchman, 1971). An organization persists by developing feedback signals that heighten its resilience to abnormal internal events and to shocks originating in its environment, and abrupt interventions instigate reactions by these feedback systems. Predicting an organization’s future well enough to control it reliably requires greater analytic capability than designers, or any other people, possess.
Another reason designers can benefit from a new role is that their direct influence over organizational participants’ behaviors is weak. Although it is possible to influence activities by setting such premises as choice criteria, information flows, and spans of responsibility, nonparticipant designers are permitted only sporadic, marginal opportunities to alter these premises. Activities are ultimately controlled by those who perform them, and participants often begin repealing designers’ manipulations as soon as the designers withdraw (Nystrom, 1975b).
Designing Process Hierarchies
Rather than seeking to shift how an organization behaves, designers can concentrate on altering the processes that accomplish changes (Beer, 1972; Starbuck, 1975). Processes can be more reliably extrapolated than the behaviors they generate, because they are more versatile and inertial. Designers’ modifications of processes will adapt to most variations in an organization’s capabilities and internal politics or in environmental constraints and opportunities. Indeed, truly effective modifications of processes would improve an organization’s propensities to learn, to correct flaws in its design, and to experiment with alternative structures and strategies.
Designs can themselves be conceived as processes — as generators of dynamic sequences of solutions, in which attempted solutions induce new solutions and attempted designs trigger new designs.
Process designs will both enhance an organization’s flexibility and responsiveness and enhance the aesthetics of design activities. The perception of design as a problem-solution-implementation sequence misrepresents how solutions evolve; and the notion that designs require implementation leads designers astray. Transplanted designs arouse rejection mechanisms that thwart implementations. Moreover, while nonparticipant designers are off inventing solutions, the problems may change or even disappear. For example, defining a problem for a consultant may redefine the problem for the organization’s members, who then begin alleviating the original problem (Hedberg, 1975b).
When designs become processes generating streams of solutions, implementations become second-order processes by which first-order processes are learned. Because those who execute first-order processes must take responsibility for second-order learning (Emery and Thorsrud, 1969; Starbuck, 1975), designers can at best catalyze an organization’s self-designing: not only would the organization’s members define problems for themselves and generate their own solutions, the members would also evaluate and revise their solution-generating processes.
Designers have the opportunity to focus on ideologies and other third-order strategies for carrying out second-order learning. Step-like changes in processes can instigate more troubles than abrupt changes in behavior can. Attempts to force discrete shifts in processes amplify behavioral errors, establish contradictions across parallel processes, and elicit rejection mechanisms, so processes need to be modified gradually in social contexts that acknowledge the transience of what is being done at any time. A self-designing organization functions most smoothly if its ideology cherishes impermanence.
Erecting Tents or Palaces?
This redefined role for designers accompanies revised specifications for the well-designed organization.
Designers, and especially management scientists, have long promoted skill specialization, integration, clear objectives, and unambiguous authority structures. These widely accepted values assert that an organization should be internally differentiated and yet harmonious, should use explicit communication channels and explicit decision criteria, and should act decisively and consistently. Such properties could improve the performance of an organization if it inhabited an unchanging environment. Routine activity programs could replace unprogrammed strategic analyses and coordinating messages (J. R. Galbraith, 1973; Hedberg, 1975a; Landau, 1973; Miller and Mintzberg, 1974; Thompson, 1967). Activity programs could be multiplied and pared to their essential elements, then preserved in capital equipment and standard operating procedures (Gershefski, 1969; McGuire, 1963; Starbuck and Dutton, 1973; Thompson, 1967). Communications could be abbreviated with efficient codes, and responsibilities could be sharply delineated (Bennis, 1965; J. R. Galbraith, 1973; Khandwalla, 1974; Miller and Mintzberg, 1974; Starbuck, 1965; Thompson, 1967). In constant surroundings, one could confidently assemble an intricate, rigid structure combining elegant and refined components — an organizational palace.
Yet change is one of the world’s dominant properties (Beer, 1974; Bennis, 1970). An organization’s environment does change. Evolving cause-effect relations render today’s methods obsolete, and what has been learned has to be replaced (Terreberry, 1968). Ansoff (1965) summarized some pressures forcing changes in products, competitive relations, and governmental controls on business enterprises. Hedberg (1974) described how the development of solid-state electronic technology forced revolutions within the business-machines industry. Grinyer and Norburn (1975) found no evidence that consensus about objectives, clearly defined roles, or formal planning correlated positively with financial performances across 21 companies. Instead, financial performances correlated positively with reliance on informal communication and with the diversity of information used to assess company performance.
Designers who erect an organizational palace had better anticipate problems caused by shifting subsoils. Carter (1971) and Miller and Mintzberg (1974) showed how pursuing stability and avoiding uncertainty interfere with an organization’s long-run adaptation and survival. Thompson (1967) observed how difficult it is for an organization to devote enough resources to searching its environment for opportunities, because defensive responses to newly recognized problems consume too many search resources (Cyert and March, 1963). Normann (1971) found that business firms that used formal power and mechanistic procedures to couple subunits were apt to undertake too few product reorientations, and those undertaken often were based on little except advocacy by a single, powerful executive.
One approach to eliminating mismatches between a rigid structure and a changing environment is systematic remodeling. March and Simon (1958) proposed that top executives establish programs for periodically reviewing their organization and its environment. The program-planning and strategic-planning movements represent attempts to routinize organizational reassessments (Gilmore and Brandenburg, 1962; Hitch, 1966; Steiner, 1969). However, systematic procedures offer weak protection against unpredictability, just as increased rigidity does not effectively prepare a building for earthquakes. Some flaws of systematic procedures are inherent in the concept of strategic planning: drafting plans, dismantling an old structure, and erecting a new structure take so long that designers need to forecast how the environment will shift. Since forecasts are only conjectures derived from past experiences, greater reliance on forecasts induces greater design errors (Beer, 1974; Grinyer and Norburn, 1975; McNulty, 1962). Systematic procedures also sap an organization’s flexibility by strengthening its rationality. Interdependence originates when harmony is imposed on contradictory subgoals and disordered activities, and a change in part of an interdependent structure requires changes throughout. The result is an organization that embodies more forecasts and that responds more sluggishly when its forecasts manifest their errors.
Camping in a Tent
Residents of changing environments need a tent. An organizational tent places greater emphasis on flexibility, creativity, immediacy, and initiative than on authority, clarity, decisiveness, or responsiveness; and an organizational tent neither asks for harmony between the activities of different organizational components, nor asks that today’s behavior resemble yesterday’s or tomorrow’s. Why behave more consistently than one’s world does?
An organizational tent actually exploits benefits hidden within properties that designers have generally regarded as liabilities. Ambiguous authority structures, unclear objectives, and contradictory assignments of responsibility can legitimate controversies and challenge traditions (White, 1969). Incoherence and indecision can foster exploration, self-evaluation, and learning. Redundant task allocations can provide experimental replications, and partial incongruities can diversify portfolios of activities. Jönsson (1973) found that unbalanced resources and crises were major forces driving growth and survival in Swedish investment development companies, and that problem solving during crises relied on informal communications. Since the industrial development companies that grew smoothly in balanced increments displayed more concern with conserving their past gains than with developing investment opportunities, Jönsson inferred that imbalances ought to be designed into an organization. Similarly, Burns and Stalker (1961) and Normann (1971) observed that ambiguous role definitions and amorphous communication networks help an organization adapt to marked changes in its environment. J. R. Galbraith (1973) proposed that an organization in a rapidly changing environment divide itself into self-contained units so as to prevent information overloads. Miller and Mintzberg (1974) observed that companies operating successfully in turbulent markets had intensive internal communications, managed themselves participatively, utilized coordinative committees, delegated discretion to components that had to cope with the environment, and devoted considerable effort to scanning the environment.
Those who live in an organizational tent can use good alarm clocks, wash-and-wear clothes, and the ability to plan itineraries quickly. They invent sensors for alerting themselves to significant events, and ceaselessly question their present assumptions and habits (Landau, 1973). They remain ready to replace old methods, and they discard even adequate old methods in order to try new ones, looking upon each development as an experiment that suggests new experiments. They hear descriptions of what exists as statements about the past, and fantasies about what might happen as opportunities to create reality. They regard their organization as a means, not an end (White, 1969). They avoid anchoring their satisfactions in the roles and procedures that are specific to the existing organization, and instead, they draw satisfactions from the skills and relationships that contribute to processes — the processes generating the organization to come.
Of course, today’s organization is unlikely to resemble a tent, and few organizational members act like campers. McGuire (1963) discovered that only 8 percent of manufacturing firms changed their product lines substantially during the 1950s, even though many of the static 92 percent suffered declining sales. Wildavsky (1972) has masterfully summarized the difficulties an organization confronts when trying to evaluate its own achievements and capabilities.
II. HOW PROGRAMS TETHER AN ORGANIZATION TO ITS ENVIRONMENT
When environmental activities seemingly threaten, an organization can adjust its behaviors to accommodate the environment. Processes by which an organization maps its environment into itself can be labeled adaptive. The adaptive processes include selecting environments, monitoring and predicting environmental changes, consulting outsiders, learning, and buffering fluctuations in the flows of resources across organizational boundaries (Normann, 1971; Starbuck, 1976; Starbuck and Dutton, 1973; Thompson, 1967). Alternatively, when an organization sees opportunities arising or believes its environment is pliable, it can undertake to remodel environmental elements. Processes by which an organization impresses itself into its environment can be called manipulative. The manipulative processes include constructing desirable niches and negotiating domains, forming coalitions, educating clients and employees, advertising to potential clients and customers, and resolving conflicts (J.K. Galbraith, 1973; Star-buck, 1975, 1976; Weick, 1969).
Conventional usage implies adaptation and manipulation also differ in timing and psychological orientation: adaptation occurs after an environmental stimulus, and the adapter defends, conforms, or submits; manipulation is an aggressive, proud, perhaps selfish, act that instigates environmental reactions.
Timing distinctions between adaptation and manipulation are not merely uninformative, they often deceive. Stimulus-response pairs break behavioral chains into segments so short that a perceiver loses perspective; and vanishing with perspective, goes awareness of subtle maneuvers and unexploited opportunities. An environmental happening only elicits reactions if preparations for it were inadequate. For instance, temporary teachers can be hired as hedges against having to fire tenured faculty when enrollments drop. Conversely, an environment only calls for remodeling insofar as an inhabitant has erroneously adapted to it. For example, investments in equipment can substitute for programs to add skilled workers to the labor market.
Psychological distinctions between adaptation and manipulation are more elusive than timing distinctions, but they can be just as deceptive. Manipulation need not be arrogant or aggressive: an organization may propose a coalition so as to escape impending disaster. Similarly, adaptation is not solely defensive or submissive: learning can prepare for the future as well as accommodate to the past. Unfortunately, acts labeled manipulative may be avoided because an organization does not want to appear hostile, or may be endorsed because the organization wants to demonstrate independence. Acts labeled adaptive may be undertaken to present a cooperative image, or may be spurned in order to evade subservience. When acts are being chosen because of expected effects, the key step is forecasting these effects. Since environmental components do not know whether an organization’s members intend to adapt or to manipulate, the members’ intentions, as such, have insignificant effects.
Tethering with Programmed Chains
Real processes are never purely adaptive or purely manipulative, of course, and since an organization always misunderstands itself and its environment to some degree, processes inevitably spawn unanticipated effects. An intended manipulation is only the first link in a vaguely forecasted chain of adaptations and manipulations.
Over time, these chains of intermingled adaptations and manipulations transform both an organization and its environment. Many an organization creates, or migrates into, a benevolent environment; many another organization finds environmental benevolence springing up about it. A benevolent environment allows large portions of an organization’s activities to be standardized and programmed, with cues automatically evoking different activity programs. Activity programs make efficient use of perceptual and problem-solving capacities (J. R. Galbraith, 1973; Thompson, 1967). Resources are not wasted solving familiar problems, and creative talents can focus where innovation is sought (Penrose, 1959; Starbuck, 1965).
However, programmed behaviors loosen the tethers between an organization and its environment. Activity programs supply little self-doubt and few occasions for reconsidering conventional reactions. The cues triggering activity programs neglect inconsistent, but supposedly unimportant, stimuli, so that some variations in perceived events are absorbed (Cyert and March, 1963; Tuchman, 1973). Because event variations are ignored so long as they satisfy the tolerance limits of the programs in use, programs are adhered to after the conditions for which they were developed no longer hold. Events also merely provoke switches among previously learned programs unless they violate the tolerance limits of every program in the organization’s repertoire (Nystrom, 1 975a). When the situation differs radically from any encountered before, trying out old programs delays attempts to generate entirely new modes of behavior. In essence, an organization has to unlearn its previous activity programs by exhausting the processes that keep behaviors static, before it starts analyzing an unfamiliar situation and devising appropriate new activity programs.
Additional perceptual sensitivity is lost through the contents of programs and through the ways programs are applied.
Members are taught to accept organizationally approved beliefs and trained to conform to standardized role prescriptions (Clark, 1972; Denhardt, 1969; Kaufman, 1960; Starbuck, 1976; Wynia, 1972). Buffers — such as inventories, intermediary agents, and contingencies built into routine decision rules — are inserted at the boundaries between organization and environment and at interfaces between workflow stages inside an organization (Cyert and March, 1963; March and Simon, 1958; Nystrom, 1975a; Thompson, 1967). Slack resources are allowed to build up when affluence rises, then economies and efficiencies are pursued aggressively when affluence wanes (Bonini, 1963; Cyert and March, 1963; Lewin and Wolf, 1972; Nystrom, 1975a).
An organization can choose how it uses programs as tethers between itself and its environment. An unusually dynamic organization shifts products, clients, technologies, or territories because it sees its environment as benevolent. It perceives and investigates abundant opportunities: it develops new products, services, clients, and suppliers; it creates new subunits and realigns old ones; it continuously changes methods, technologies, and task assignments. However, these searches for opportunities and migrations into new niches tend to be turned into programs by even the dynamic organizations (Carter, 1971); revisions of activity programs are induced much more frequently by difficulties than by opportunities (March and Simon, 1958; Newman and Logan, 1955).
Another sort of organization — the usual one — makes changes, but makes as few as possible, and does so only to satisfy environmental pressures. The organization sees its environment as rather static and minimally benevolent, offering few opportunities, but erecting many constraints, and emitting just enough threats to disrupt complacency (Maniha and Per-row, 1965; Normann, 1971; Starbuck, 1976). This is partly a self-confirming perception, for nonadaptation is a form of manipulation. Because the organization responds lethargically and with the least innovative responses feasible, its environment must threaten and constrain to elicit action; and because the organization does not exploit opportunities, opportunities are offered to it fleetingly and diffidently, if at all. To the organization, proposals for changes are criticisms of how things are, its environment appears to change little, and programmed behaviors appear fully adequate to cope with the changes that occur. The organization can elaborate its program repertoire into a palatial hierarchy. But the palace is built on a bit of flotsam in a sea of social and technological changes, and the flotsam is constantly being eroded by impinging events.
Drifting into a Decaying Backwater
Every so often, a bit of flotsam gets washed away, out of the mainstream. An organization drifts along in an environment which it believes is placid and somewhat more than minimally benevolent — until one day it bewilderedly realizes its environment has evolved into a stagnating backwater. Unperceived changes have carried the organization into niches that are decaying and becoming infertile. Even though the niches are not yet totally stagnant, the organization’s continued survival suddenly depends on making drastic changes. Processes tethering the organization to the stagnating environment have become dangerous and must be dismantled. New processes are needed, first for creating or discovering a vital environment, then for mating together organization and environment, and later for reestablishing a dependable, nutrient equilibrium. Although this new equilibrium, if achieved, may not bring forth such extremely self-confident insensitivity as characterized the former equilibrium, the organization will have metamorphosed out of a nonreflective state in which manipulative processes were comparatively dormant and adaptive processes automatic, will have generated pervasive efforts to manipulate and to adapt, and finally will have extinguished the most extreme and disruptive processes.
The reactions of an organization in a stagnating environment can disclose how processes are created, revised, and fitted together. Although a stagnating environment results from abnormalities, an organization in a stagnating environment is only marginally and quantitatively abnormal. The usual organization displays properties qualitatively similar to those of an organization in a stagnating environment, and many an organization only escapes environmental deterioration through the intervention of forces beyond its control. Moreover, an organization in a stagnating environment can be frequently observed, and because so many problems reveal themselves simultaneously, this situation constitutes an efficient context for discovering how an organization diagnoses its difficulties and how it reprograms itself.
The next section of this article describes how an organization in a stagnating environment reacts, and the sections following draw inferences from these reactions.
III. HOW TO CONVERT A CRISIS INTO A LETHAL TRAGEDY AND OCCASIONALLY SURVIVE
Since activity programs foster perceptual insensitivity, there is risk that an organization will see its behaviors as succeeding long after their effectiveness fails.
Success, or the appearance of it, breeds somnolence. Sensors for scanning the environment wither away (Miller and Mintzberg, 1974; Thompson, 1967). Gradual, evolutionary changes in the environment are no longer perceived, and gradual, evolutionary changes in the organization are resisted. The organization’s structure rigidifies, as coordination is accomplished through planning, and as the communication channels linking subunits atrophy (J. R. Galbraith, 1973; Khandwalla, 1972; Miller and Mintzberg, 1974). Activity programs are rationalized through embedding in organizational ideologies and myths (Clark, 1972; Mitroff and Kilmann, 1976). Confidence in myths and programs strengthens the longer success appears to continue. Motivation to undertake strategic innovations evaporates, because managers measure their achievements by criteria for administrative maintenance rather than by entrepreneurial criteria (Miller and Mintzberg, 1974; Thompson, 1967). Past success is interpreted as readiness for the future (Thompson, 1967), and a prototypic prescription is “Don’t change a winning team.”
These properties reach pathological acuteness in an organization in a stagnating environment. The organization gradually slides so far out of touch with what is happening, both within itself and in its environment, that a potentially fatal disaster develops unseen. Then when reality begins to intrude, the organization misapprehends its difficulties and responds in ways that amplify the crisis. Of course, a stagnating environment is a diagnosis by an organization which is nearly blind: the critical defects do not lie in the environment at all, and environmental deterioration is only ordinary technological and social evolution which the organization meets ineptly.
Studies of organizations in stagnating environments — primarily case studies conducted by Hedberg (1973, 1974, 1975a) and by Miller and Mintzberg (1974) — suggest that an organization’s reactions divide into three heuristic phases.
Weathering the Storm
At the outset, an organization does not entertain the notion that its environment has irreversibly changed. The environment is only temporarily deviating from its usual, benevolent state. Sales have declined, applications are lower, the currency has been devalued, competition is fiercer than usual, fuel is more expensive, perhaps hard to find. This deviation presents something of a challenge: everyone must pull together, work as a team, and tolerate temporary constraints. However, the trouble originates outside the organization, and a return to normal is imminent. Since the organization itself remains strong, the challenge can be overcome through intensified efforts — do as before, but more. A marketing-oriented company increases its advertising and sales efforts, and a production-oriented company acquires new equipment. Quality and cost control systems and budgeting procedures are strengthened; standard operating procedures are followed strictly; and innovations and informal communications outside approved channels are suppressed.
As time passes, the spirit of jauntily facing a challenge together fades. Shortages of liquid funds force more stringent economies, and actions are taken to improve the accounting statements. Excised are superfluous goals, such as intercollegiate athletics, job tenure, egalitarian decision making, high wages, organizational image, high admission standards, pollution control, full product lines, or equal employment opportunities. Short-run improvements are sought at the expense of long-run progress. Investments are postponed, maintenance deferred, and costs cut; advertising, education, recruitment, research, and training activities are slashed; retirees and resignees are not replaced; people are laid off; wages are reduced; efforts are made to renegotiate contracts. Friendly camaraderie vanishes and dissension develops. Members, especially low-level ones, are alienated. Those in charge are criticized, and some people or subunits are made scapegoats. Decision making is centralized, controls are added to compensate for dissension, communications increase up and down the managerial hierarchy, and a strong task orientation is demanded (Beer, 1974; Hall and Mansfield, 1971; Thompson, 1967; Vickers, 1959).
An organization’s initial diagnoses are remarkably simplistic. Only superficial attempts are made to understand the root causes of difficulty, and actions aim instead at removing the symptoms. Since the symptoms are communicated by the accounting system, the focus is on promptly improving the accounting reports. What is required is a better bank balance, a better income statement, a better balance sheet. Many of the steps taken to achieve such improvements undermine the organization’s future viability by squandering resources to gain time and by abrading already precarious relations with the environment. Buildings, land, and equipment are sold to obtain operating cash. Projects to modernize products or to develop new products are terminated; even well-advanced efforts to attract new categories of clients are discontinued, and advertising stops; experimental curricula are deleted; long-time clients are denied credit; equipment is not repaired; investments in know-how, such as groups of specialists, are foreclosed; and prices and tuition fees are raised.
Moreover, if an organization succeeds in eliminating the signs of distress from its formal reports, it brakes its efforts to reform, and discounts the need for fundamental strategic changes over the long run. Things are improving. Not only have the temporary obstacles been overcome, but the primary means to success have been centralized control and adherence to those activity programs that have traditionally formed the strategic core. The effectiveness of activity programs and the wisdom of top management have been demonstrated once again. The organization’s structure has been pared of unproductive and burdensome fat — redundant machines and buildings, nontraditional products and services, excessively skilled personnel, the football team, advertising and research specialists, preventive medicine and diagnostic clinics, and informal communication channels.
Perhaps the funds shortages, negative profits, and falling revenues never cease, or perhaps they disappear and then reappear in an organization that no longer has the resources to buy delay. In either case, the permanence of change manifests itself, and the organization’s members must decide what permanent actions to take.
The first step toward new behaviors is unlearning old behaviors. The effectiveness of existing activity programs and traditional strategies is disconfirmed, and the processes binding the organization to today’s behavioral patterns are disengaged.
Unlearning actually began, but was not recognized as such, while measures were being taken for weathering the storm. Stress engendered feelings of uncertainty (Kahn et al., 1964). People were displaced from familiar roles and forced to reconcile competing roles. Trust in and affection for leaders diminished. Snarling quarrels over the shrinking resource carcass built up antagonisms between people and between subunits. Favorite activities were deleted and cherished goals dropped; the organization’s goal structure may have been stripped to a skeleton composed only of cynicism and opportunism (Vickers, 1959).
When members discover that their organization may not survive, unlearning mounts: doubts multiply concerning the organization’s appropriate domain, and followers abandon their leaders, especially the leaders associated with past programs and strategies.
This collapse of faith brings the potential benefit of opening the way for new viewpoints (Normann, 1971; Thompson, 1967). The organization’s survival will depend on transferring influence to leaders having entrepreneurial propensities and possessing expertise related to new strategic alternatives. However, new leaders and new ideas escalate conflict in an already conflicted organization. The perilous financial condition means that only a few strategic experiments can be tried, at most, and that new activities cannot be added without subtracting old activities. Priorities have to be set, and there must be losers as well as winners. Unfortunately, an organization that has continuously inhabited a benevolent environment probably lacks processes for resolving conflicts on the basis of substantive criteria, because growth in its resources allowed it to escape conflicts by distributing a little more to almost every claimant (Olofsson et al., 1973).
It is nearly impossible for an organization to survive through this nadir. Changes in structure, strategy, personnel, and ideology must now be revolutionary; marginal, gradual modifications that fit into historical trends will no longer suffice. Reality has to be discovered. A new environment must be found, and the organization must restyle itself to match this environment (Khandwalla, 1972; Starbuck and Dutton, 1973). Yet the organization was riddled with defects before the recent threats demonstrated themselves, and since then, the organization has not only been centralized and further routinized, but stripped of its creativity, heterogeneity, and mutual trust. Almost no human or financial resources can now be marshalled for information gathering or experimenting.
Nonetheless, a rare organization does make it. To do so, it must act swiftly and decisively. It realistically assesses today’s desperate plight, yet simultaneously arouses the courage to seek out tomorrow’s opportunities (King, 1974). It emphasizes contests to wrest more resources from external sources instead of intraorganizational contests over the limited resources already at hand. It shoots out sensors for perceiving potential new niches, and strives boldly to manipulate its environment. It finds entrepreneurial personnel, gives them discretion, and avoids punishing them for taking risks. Disregarding precedents, it takes on a fluid and ambiguous structure in which there is much communication and minimal consensus. It sets priorities and makes wise choices about the projects that should come first. It counteracts dissension and inefficiency with participation, coordination, and trust (Normann, 1971; Schendel et al., 1975; White, 1969).
Both adaptive and manipulative strategies are fundamentally inadequate. An organization in a stagnating environment dare not adapt to its present niches, for that would reinforce its burdens. Yet paradoxes inhere in matching an organization to a future environment that has still to be defined: curricula cannot be tailored to the unique needs of unknown students; unspecified customers or suppliers cannot influence strategic planning. On the other hand, there are paradoxes in significantly manipulating an environment that has yet to be explored: premature attempts to persuade may evoke undesired interpretations; innovative products or methods may not survive the transition from controlled experimentation to regular, large-scale operation.
Adaptation and manipulation are interspersed, and manipulative efforts predominate when the turn-around begins. First, experiments are tried to construct a potentially nutrient environment or to wedge the organization into existing niches; then the organization is modified in the direction of its projected future; then more experiments are run. Problem solving alternates back and forth between present capabilities and idealizations of what ought to be.
A further complication is the organization’s struggle against desires for certainty. Having been immersed in stress and change for some time, the organization’s members feel very uncertain even before they acknowledge that the organization’s former environment has been stagnating. Facing up to reality adds further uncertainty. Exploring unknown, possibly hostile, alternative environments, while simultaneously trying out new roles, new methods, and new structural arrangements inside the organization, adds even more uncertainty. Members with low tolerances for ambiguity are likely to leave voluntarily, but the remaining members and new arrivals exhibit generalized propensities for reducing uncertainty. They conduct surveys, install computerized information systems, make sophisticated statistical analyses, assemble simulation models, and consult outsiders who seem knowledgeable about potential environments.
Insofar as such methods bring in valid information and alleviate fright, they facilitate survival. However, benefits are not always realized. Analyses of available data may absorb manpower and funds that could be more usefully allocated to experimenting and to gathering data with greater relevance. Formalized information systems tend to be mechanistic and inflexible, and they incorporate assumptions that their designers have already identified the organizational and environmental properties deserving attention. People who invest time and energy in solving problems develop commitments to the solutions they generate; and in turbulent situations, they are likely to become committed to solutions for the wrong problems (Mitroff and Featheringham, 1974). Uncertainty is often reduced by stressing the elegance of methods used to solve problems rather than the importance of the problems themselves, but an organization in a stagnating environment needs imaginative suggestions more than it does concrete, documented answers. Consultants hired to provide data often go on to interpret the data, to reformulate the problems, to suggest solutions, and to manipulate the organizational client for their personal ends (Normann, 1971).
Methods for reducing uncertainty become increasingly plausible as an organization achieves mastery within its new environmental niches. Surveillance of the environment can be routinized. Thought can be given to frequently arising situations, and activity programs developed for dealing with them, thus ensuring that the heterogeneity of solutions matches the heterogeneity of problems. Activity programs that arise spontaneously can be made compatible with one another. Subunits can be set up to encompass crucial contingencies in the flow of activities and to manage the boundaries between organization and environment. Subunits’ capabilities can be tailored to the tasks they regularly perform; and plans, programs, and inventories can replace informal communications as the primary means of coordination. Consensus can be fostered among members as to what goals the organization will pursue and how it will develop over the long run (Beer, 1972; Khandwalla, 1974; Normann, 1971; Starbuck and Dutton, 1973; Thompson, 1967).
Of course, someone who stayed with an organization while it drifted into a stagnating environment and then had to fight its way out, might wonder, “Are we going to go through it all again?”
IV. HOW AN ORGANIZATION CAN FLY WITHOUT FLYING APART
The reactions of an organization in a stagnating environment suggest several inferences about the ways processes interact with one another, about the guidelines these interactions follow, and about the rules for effectively managing processes.
Different processes hold different potentials for change. Change is often accelerated by such processes as enlisting new members, appointing new leaders, acquiring subsidiary organizations, buying complete packages of methods, or consulting outside experts. These accelerators either increase the speed of change in present directions or divert change into new directions; they enable an organization to absorb new experiences and concepts rapidly, they reinforce or inhibit forces acting on an organization’s environment, and they stimulate new visions and experiments. Active processes, such as evaluating the past performances of people or subunits, retiring, firing, or retraining members, competing with other organizations, or consulting outside experts, often decelerate by reducing the speed of change in present directions. These active decelerators erase memories of past events and weaken organizational traditions; they sever links between an organization and its environment; they confront fantasy with reality and raise doubts about the usefulness of today’s practices. Many other decelerator processes act passively, in that they tie an organization to its past states but do not aggressively oppose the accelerating forces. Some processes that can passively decelerate are indoctrinating new members, accounting, investing pride in the skills used to perform current tasks, and myth making. Finally, some processes stabilize speeds and directions of change and weave strands of consistency through behaviors at different times. These stabilizer processes characteristically include reinforcing the use of activities that seem to succeed, standardizing procedures, training, switching around among activity programs, limiting people and subunits to specialized activities, and ignoring small variations in perceived events.
Interactions between accelerator, decelerator, and stabilizer processes generate contests in which coherence struggles against fragmentation. An organization does not automatically travel along as one compact cluster of activities; it tends to separate into fragments flying at different speeds in divergent directions. Continued viability requires that an organization remain coherent without becoming rigid, and requires that an organization’s speeds and directions of change approximate those of its environment. Outlying fragments have to be restrained, diverted, stimulated, or chopped off, and dynamic balances must be struck among the diverse forces.
However, an organization has much discretion among ways to achieve viability. It can strive to adapt promptly to the motions of its present niches, or it can set out to construct, through manipulative acts, a sequence of environments that will nurture its evolution along a planned flight path. Neither of these extreme strategies is likely to succeed, because adaptive and manipulative acts complement one another. Somewhere between the extremes is a balanced organization that regards its environment as partly an unknown to be discovered, partly a set of constraints to be satisfied, partly an alternative to be selected, and partly a setting to be resculptured.
An organization generally has similar discretion about the balance between processes furthering long-run goals and those furthering short-run goals. Some goals of both sorts deserve to be pursued simultaneously: crises are eluded by meeting urgent needs, and self-determination comes from discovering long-run options. However, apparently pressing needs often disappear if ignored, most plans are never realized, and many efforts to develop future options yield no lasting results (Cohen et al., 1972; McNulty, 1962; Grinyer and Norburn, 1975). So beyond some essential minima, emphasizing either short-run goals or long-run goals wastes resources.
An organization also has latitude for choosing how coherent to be. Each strategic maneuver can be systematically echoed throughout the organization; subunits can be left free to develop autonomously with only minimal concern for their inter-dependencies; or, somewhere between these two extremes, members can endlessly debate whether subunits should be more or less coherent, and debate which subunits should be more or less autonomous.
Nonetheless, the prevalence of organizational failure demonstrates that discretion is largely an illusion which forms when a single behavioral dimension is examined in isolation. Not only is it possible to swerve too far in one dimension, but the many dimensions of behavior interact. For example, the studies of organizations in stagnating environments suggest that shifts in emphasis toward adaptive processes and away from manipulative ones accompany shifts toward coherence and increased emphases on short-run goals; and if any of these shifts extend too far, either absolutely or relatively to the others, troubles start multiplying. Such complex interactions among dimensions greatly narrow the dynamic fulcra on which processes must balance. Although the fulcra are not quite ground down to knife-edges, they are also not really the broad plateaus seen from the perspective of one dimension at a time.
An organization finds itself in a stagnating environment because it failed to stay balanced on fulcra. The organization thought its environment was not optional, not unknown, not constraining, and not in need of manipulation; and it believed so strongly in its long-run goals that it ignored daily changes in itself and its environment. This perceptual insensitivity was nourished by a lack of conscious attention to choices about coherence; mechanistic communication procedures were relied on to coordinate subunits.
Suddenly, the organization decides that a short-run emergency exists. All efforts concentrate on adapting to this temporary crisis; long-run goals and resources are sacrificed to obtain immediate relief; and control is centralized. The imbalances which allowed the organization to disregard environmental deterioration have now been supplanted by new imbalances, characteristically fatal ones. Survival becomes possible only if the organization finally discovers fulcra and dynamically balances its processes.
V. HOW TO RECOGNIZE FLYABLE SEESAWS
Processes should balance on six fulcra — more or less. All six fulcra are so closely related that adjacent ones could be merged; and each of the six could be partitioned into two or more components.
The six fulcra share influence over organizational inertia: an organization’s ability to uncouple stabilizer processes, to install or to terminate accelerator and decelerator processes, to recognize that accelerations or decelerations are needed. Inertia is not always undesirable; it has an optimum value that varies with the organization’s strategy and its environment. The usual organization probably has too much inertia. Inertia that is only moderately excessive causes an organization to respond a little too slowly, to gloss over situations that deserve some attention, or to adopt slightly inadequate remedies. Moderately deficient inertia compels an organization to respond somewhat too quickly, to respond to relatively unimportant signals, or to take inordinate corrective measures. Gross deviations from optimum, however, produce truly serious consequences: massive inertia is one reason an organization drifts into a stagnating environment.
To emphasize the difficulties of staying balanced, the fulcra are stated as if an organization ought to seek minimal amounts of desirable characteristics. Although it would be equally correct to say an organization should seek minimal amounts of the opposite characteristics, this latter approach might be misinterpreted as only reaffirming the values that an organizational palace is intended to maximize.
An organization can extract advantages from both consensus and dissension simultaneously. Balance implies that consensus does not become regimentation and dissension does not become warfare.
Since the usual organization seeks more consensus than is useful, since it often settles for superficial symbols that subordinates are properly submissive, and since it suppresses conflicts that could be genuinely resolved, additional dissension would confer benefits.
Every organization is blind to some phenomena, of course, but a better organization perceives more, comprehends more of what it perceives, and brings more of its comprehension to bear on decisions (Grinyer and Norburn, 1975; Starbuck, 1965). Perceptions are extended by some sources of dissension, such as heterogeneity across personnel and subunits, delegating responsibilities to autonomous people and subunits, redundant and partly inharmonious assignments of responsibility, and diversified portfolios of activities (Jönsson, 1973; Starbuck, 1974, 1976; White, 1969). Diverse perceptions are more likely to be used effectively if the heterogeneous personnel participate in decision making, if information flows are intense and not rigidly channeled, if deviations are sometimes permitted from standard operating procedures, if authority is diffused, and if dissent and debate are prevalent and tolerated (Landau, 1973; Mason, 1969; Miller and Mintzberg, 1974; Mitroff and Betz, 1972; Wildavsky, 1972). Participative decision making and delegation of responsibility also narrow the gaps between policy formulation and implementation, for policies become more practical and more likely to be followed (Dunbar, 1971; Locke, 1968; Pressman and Wildavsky, 1973).
Dissension stimulates reconsideration of implicit or conventional assumptions, encourages strategic diversification, and deters maladaptive stresses from aggregating into crises (Coser, 1956; Smith, 1966). However, excessive dissension debilitates. Autonomous subunits, ambiguous goals, and nonuniform perceptions generate competing claims that have to be settled by assigning priorities; they also foster disagreements, some of which deserve constructive resolution. But conflict resolution is blocked by distrust, insufficient communication, and personal criticisms. Extremely ambiguous authority structures or lack of confidence in leaders may prevent arbitration, and generalized disputes about long-run goals may preclude disagreements being settled on substantive grounds. So there is a lower bound below which the level of consensus dare not fall if the organization is to control its coherence (Etzioni, 1968; Moore and Tumin, 1949; Schneider, 1962; Wildavsky, 1972).
The usual organization seeks happy, contented members. At least, this is the policy enunciated for public consumption. An organization strives to satisfy its members, and its failures to make everyone completely contented result from unavoidable competitions among claimants, from inexorable constraints imposed by the environment, or from the unrealistic demands of some members. Observers voice doubts about this overt policy after noting that people who allocate resources often behave selfishly: unions bargain for higher wages than labor’s productivity deserves, managers pay themselves excessive salaries and sit smugly in plush offices, and faculties assign themselves light teaching loads. But these doubts concern the ways satisfactions are distributed; though the doubters suggest some members ought to receive smaller or larger pieces of the satisfaction pie, they do not challenge the desirability of an organization satisfying its members.
It is vital that people be at least minimally contented with their personal rewards, with their current activities, and with the organization’s long-run goals and prospects. An organization loses essential heterogeneity if members grow so discontented that they refuse to participate (Hirschman, 1970). Although voiced opinions may say an organization is doing the right things, consensus appears merely because dissenters have withdrawn physically or psychologically. Moreover, risk taking, initiative, and experimentation depend on contentment. Members will only experiment if they believe their organization can continue to exist, believe their own membership can continue, and believe unsuccessful experiments will not cause organizational failure (Thompson, 1967). Experimentation also hangs on members being satisfied that their fellow members have talent and skill, that cooperation and joint problem solving can yield good solutions, that leaders can be trusted to promote the mutual welfare, and that the visible decision procedures and criteria resemble the real ones (Schneider, 1962). In effect, minimal contentment can buffer against the short-run reductions in satisfactions and expectations that changes involve.
On the other hand, excessive contentment incubates crises. Low levels of contentment sharpen an organization’s perceptions. Changes in an organization and its environment are signaled primarily by processes for monitoring what is going wrong; the more sensitive these error monitoring processes, the better able an organization is to perceive gradual changes (March and Simon, 1958; Newman and Logan, 1955). Although error monitoring processes can be programmed and depersonalized, programs are liable to overlook subtle unanticipated events or to misinterpret them. The important unprogrammed processes for monitoring errors utilize discontent and emit signals through dissent, complaint, disagreement, and controversy (Mason, 1969; Mitroff and Betz, 1972; Starbuck, 1975). Sufficient discontent to induce people to speak up about what they think is going wrong provides crucial insurance against surprises of crisis proportions, because the higher the basal levels of discontent, the more likely it is that small errors will trip off alarms (Coser, 1956; Pettigrew, 1974).
Discontent generally decreases as an organization gains affluence. Slack resources build up (Bonini, 1963; Cyert and March, 1963; Hedberg, 1975a). Everyone can receive a little more, mutual self-satisfaction grows, and self-confident complacency sets in. Insensitivity toward environmental and organizational happenings accumulates and spreads. Since the usual organization is seeking as much affluence as possible, it can be charged with striving to maximize its unawareness of reality.
Affluence does offer advantages. It affords a margin which absorbs consequences of failure and which loosens the tethers between organization and environment. Opportunities can be given to display initiative and to experiment. Long-run goals can be pursued and strategies analyzed, and decisions need not be made immediately, without reflection. Members can be retrained and their knowledge updated. Alternative structures can be tried within the organization.
So a small buffer of flexible resources is an asset. However, excessive affluence can be as serious a liability as is poverty. An organization requires reminding that its environment is partly unknown, evolves, and sometimes turns hostile. Outdated activity programs have to be explicitly proven ineffective and then purposefully unlearned; inadequate paradigms must be actively disconfirmed, perceptual frameworks clearly shown invalid, and dysfunctional political coalitions undermined (Hedberg, 1973, 1974). Not every claimant deserves a share of resources.
The case studies of organizations in stagnating environments suggest that insufficient affluence is the most frightening signal emitted by error monitoring processes, and that insufficient cash rouses special excitement. This doubtless indicates that an organization in a stagnating environment has such rudimentary monitoring processes that it does not realize something is awry until it has run out of cash. Such an organization relies inordinately on formal accounting — which is a decelerator process — and fails to use virtually all of the other monitoring processes it might. However, concern about affluence is not always pathological. Every organization measures its financial states and flows much more precisely than it measures its other characteristics; and societies as wholes develop elaborate technologies for measuring wealth accurately, for keeping track of wealth positions, and for transferring wealth from one social unit to another. They do so because money is the commodity which substitutes and does not rot. Although money changes in value over time, it can be stored in totally abstract form, and it embodies the cumulative efforts of civilizations to invent a commodity which exchanges for all other commodities. The consequence is that wealth can inventory flexibility as protection against an uncertain future.
An organization should plan its future but not rely on its plans. Plans and long-run goals allow an organization to anticipate what will be required tomorrow, and the more realistic the organization’s problem-solving processes, the more tomorrows it can accurately anticipate (Vickers, 1959). Challenging current practices on the basis of plans is a means of creating the lead times needed for abrogating commitments, for unlearning, and for inventing new methods before they are required. Plans also serve as the key premises for appraising potential environments, for constructing performance measures that take account of future costs and benefits, for deciding which short-run demands actually warrant attention, for reacting to immediate problems in ways that do not destroy desired opportunities, and for reassuring members that changes will turn out well.
However, an organization needs balanced criteria for developing plans and goals. Because every organization fails to predict some events, extremely detailed plans or plans extending far into the future waste problem-solving capacities and also discourage responsiveness (McNulty, 1962; Newman and
Logan, 1955; Starbuck, 1965; Wickesberg, 1961). Moreover, plans and goals are frequently too systematic and rational; useful goals are somewhat unclear, and useful plans are somewhat disorganized, erratic, and uncertain (Moore and Tumin, 1949; Schneider, 1962).
A realistic organization keeps itself ready to replace plans and goals in order to match and to exploit environmental unpredictability (Beer, 1972, 1974; Starbuck, 1965, 1975). Since events that disprove invalid hypotheses or suggest useful conjectures might emerge at any time, alertness snares knowledge and flexibility captures opportunities. Experiments can breed opportunities and expose nascent challenges; they help an organization alternate between practical assessments of what it is and ideas about what it can become. Diversified, inharmonious activities can hedge against misunderstandings and erroneous beliefs. Unexpected strategic reorientations remind members that explicit plans and goals are merely images of evolving aspirations (Landau, 1973; Wildavsky, 1972).
The usual organization behaves as if it prefers revolution to evolution.
Some changes can be postponed but not escaped; other changes are desirable. If an organization avoids changes, its effectiveness degrades, its capacity to accept changes weakens, and needs for change build up. By the time changes can no longer be held off, needs may have accumulated to revolutionary proportions, and the organization may have lost most of its ability to take changes in stride. Yet the usual organization systematically avoids changes through inflexible policies, strict conformity to standard procedures, indoctrination programs for new personnel, clear and rationalized goals, reward structures that discourage risk taking, sharply delineated responsibilities, blocked communication channels, punishment of dissent, insistence upon overt consensus, and centralized control. Activities and strategies are reinforced, rewarded, inhibited, or eliminated because of consequences they seemingly have already produced, or because of their consistency or inconsistency with precedents. Monitoring processes are carefully turned to the signals from current and former environments, and internal communications are channeled for efficiently executing former and current tasks (Clark, 1972; Hedberg, 1975a; Starbuck, 1976).
What an organization should be avoiding is drastic revolutions. Since sudden changes do not allow enough time for each subunit to adjust to the recent behavioral changes of other subunits, coordination efforts may founder (Starbuck, 1974). Task forces and committees set up to cope with emergencies expose conflicts among goals, values, and responsibilities: consequently, doubts escalate about the legitimacy of entrepreneurial experiments by others, heterogeneity and unplanned diversity are deleted from activity portfolios, conformity and dependence increase, responsibility is depersonalized and transferred to groups, and fewer higher-risk experiments replace more lower-risk experiments. Stress elicits simplistic analyses and uses up much energy on behavior that serves no purpose beyond emotional tension release. Needs for quick action drive out problem-solving modes of behavior and interfere with the development of priorities founded on substantive analyses. Instead, issues are resolved through bargaining between coalitions that are rooted in the past rather than the future. If levels of conflict exceed the conflict-resolution capacities of the available communication channels, interpersonal warfare breaks out and inflicts lasting damage.
Costs such as hostilities, demotivation, wasted energies, ill-founded rationalities, and foolish risks can be lowered by nurturing small disruptions and incremental reorientations — by substituting evolution for revolution.
The primary requirements for evolutionary change are ideological, conceptual, and procedural. An organization can never be satisfied to continue behaving as it has, for perfection itself justifies dissatisfaction. Even in the face of apparent optimality, incremental experiments are needed to sharpen perceptions, to test assumptions, and to keep learning processes vital (Box and Draper, 1969; Starbuck, 1974). Long-standing traditions handicap, and precedents and sunk costs are bad reasons for future behaviors. Being prepared for the future implies that major investments are carefully screened for prompt payback and for adaptability to unexpected events, that technologies use labor rather intensively and avoid specialized skills, that task assignments and statuses change frequently, and that training programs diversify members’ skills and prepare members for continued learning (Kaplan, 1967; Wilson, 1966). Only when new products are easily introduced, when freedom from competition is assured, and when long-term pools of customers are reliably forecast, is it safe to delete redundancies and to standardize products (Starbuck and Dutton, 1973).
At the same time, an organization can generally avoid abrupt leaps to radically different procedures (Braybrooke and Lindblom, 1963; Cartwright, 1973; Lindblom, 1959; Starbuck, 1974; Vickers, 1959). Improving procedures as quickly as possible ultimately produces less benefit than does breaking down major improvements into small increments spread out over time. When each increment is small enough to leave intact most of the activities and perceptions of most people, and small enough to uncover only partial conflicts of interest and only marginal contradictions among goals and responsibilities, an organization avoids the mammoth losses that revolutions impose. Incremental changes also limit the trust placed in current knowledge, leave time for analyzing the results of experiments, and preserve latitude for taking advantage of new discoveries. Balanced and continuous innovation aims at rates of acceleration and deceleration that interpolate between what the organization has been assimilating and what it expects. An organization needs either awareness of its unique past or, better, a stable concept of its destiny, because these help it attain identity as a distinct subculture and focus members’ loyalties toward this subculture.
On the other hand, shifting responsibilities mean that tasks are given to inexperienced people who make naive mistakes and that people are trained to fill positions already occupied by persons having skill and experience. Shifting responsibilities also increase misallocations of resources, inefficiencies, and uses of crude problem-solving methods. Inconsistencies over time expend effort undoing what has just been achieved, and ceaseless experimenting sets aside optimal solutions so as to try suboptimal ones. Breaking down major improvements into small ones delays benefits. Nevertheless, these costs of evolution are more than offset by the savings from avoided revolutions (Day and Tinney, 1968).
The organization has traditionally been viewed as a vehicle for rationality, and bureaucracy has been characterized as the most rational of social systems. The self-designing organization advocated here is anything but bureaucratic, however. In a self-designing organization, objectivity should be fostered, responsibilities delegated, and conflicts resolved impersonally on substantive criteria; but also, expertise should be diluted, authority ambiguous, statuses inconstant, responsibilities overlapping, activities mutually competitive, rules volatile, decision criteria varying, communication networks amorphous, behavior patterns unstable, analytic methods unsophisticated, subunits conflicting, and efficiency a subordinate goal.
Indeed, rationality itself warrants cautious pursuit. One danger lies in oversimplifying models. The models used to choose rational solutions inevitably abstract from reality, and usually, the more explicit and manipulable they are, the more detail they omit. Models also incorporate false assumptions introduced for analytic convenience. Although an exceptionally talented model builder can oversimplify and distort and still retain the essential characteristics of reality, an organization cannot count on having exceptional model builders, and even very good models beget mistakes after the modeled situation evolves. When adopting a model means suppressing alternative formulations, as it nearly always does, an organization binds itself to fallacy (Lindblom, 1959).
A related danger is emphasizing means to the exclusion of ends. When solutions are generated and evaluated, criteria of excellence often have more to do with how analyses are conducted than with what results the analyses produce. Are measurements accurate? Are statistical coefficients significant? Is the computational algorithm efficient? Analyses conducted by professional specialists are especially prone to this corruption. The crucial issues, frequently ignored, include: Is the problem important? How realistic are the assumptions? How much does the solution alter when the problem varies slightly? Are the pursued goals really in the organization’s long-run interest?
Still another related danger is developing rational answers to the wrong questions. Questions may be asked solely because ways appear for answering them (Cohen et al., 1972); then the people who invent answers shackle themselves to their answers. Large-scale projects produce many commitments that do not hinge on how good answers are: power struggles to get a project launched and social relations among staff members generate strong emotional bonds to the project’s outputs, yet the outputs may be distinctly suboptimal, or may be transient local optima. Questions may be incorrectly stated, or the key questions may not even have been conceived (Mitroff and Featheringham, 1974). Wise decisions about what questions to leave unanswered probably contribute more to an organization’s viability than do wise decisions about what questions to answer (Starbuck, 1975).
The general point is that rationality is not easily identified. The usual organization pursues a superficial image of rationality which understates the value of imperfection. Not only can every organization expect imperfection, a self-designing organization should seek it. An optimal degree of imperfection attaches no more certainty to assumptions than their credibility deserves, converts imbalances into motivators, and uses unclear goals to keep an organization as ready for change as its environment is (Baumol and Quandt, 1964; Day et aI., 1971; Hedberg, 1974; Jönsson, 1973; Landau, 1973; Starbuck, 1974). A self-designing organization can attain dynamic balances through overlapping, unplanned, and nonrational proliferations of its processes; and these proliferating processes collide, contest, and interact with one another to generate wisdom.
*The authors are indebted to Kathleen S. Christoffel, Richard H. Franke, Thomas M. Lodahl, J. Robert Moore, C. Edward Weber, and Antoinette M. Wilkinson for constructive criticism.
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