There is one fundamental insight underlying all management science. It is that the business enterprise is a system of the highest order: a system whose parts are human beings contributing voluntarily of their knowledge, skill, and dedication to a joint venture. And one thing characterizes all genuine systems, whether they be mechanical like the control of a missile, biological like a tree, or social like the business enterprise: it is interdependence. The whole of a system is not necessarily improved if one particular function or part is improved or made more efficient. In fact, the system may well be damaged thereby, or even destroyed. In some cases the best way to strengthen the system may be to weaken a part–to make it less precise or less efficient. For what matters in any system is the performance of the whole; this is the result of growth and of dynamic balance, adjustment, and integration, rather than of mere technical efficiency.
Primary emphasis on the efficiency of parts in management sciences is therefore bound to do damage. It is bound to optimize precision of the tool at the expense of the health and performance of the whole.
Landmarks of Tomorrow
Management: Tasks, Responsibilities, Practices
Organizations, like individuals, can avoid identity crises by deciding what it is they wish to be and then pursuing it with a healthy obsession.
Some organizations do indeed achieve and maintain an internal consistency. But then they find that it is designed for an environment the organization is no longer in. To have a nice, neat machine bureaucracy in a dynamic industry calling for constant innovation or, alternately, a flexible adhocracy in a stable industry calling for minimum cost makes no sense. Remember that these are configurations of situation as well as structure. Indeed, the very notion of configuration is that all the elements interact in a system. One element does not cause another; instead, all influence each other interactively. Structure is no more designed to fit the situation than situation is selected to fit the structure.
The way to deal with the right structure in the wrong environment may be to change the environment, not the structure. Often, in fact, it is far easier to shift industries or retreat to a suitable niche in an industry than to undo a cohesive structure.
Essentially, the organization has two choices. It can adapt continuously to the environment at the expense of internal consistency—that is, steadily redesign its structure to maintain external fit. Or it can maintain internal consistency at the expense of a gradually worsening fit with its environment, at least until the fit becomes so bad that it must undergo sudden structural redesign to achieve a new internally consistent configuration. In other words, the choice is between evolution and revolution, between perpetual mild adaptation, which favors external fit over time, and infrequent major realignment, which favors internal consistency over time.
The paper presents initial findings of a continuing project (view/follow project on ResearchGate) to develop and refine a generalized organizational agent-based model that includes both formal organization hierarchy (i.e., a so-called “organization chart”) and the informal networks that really matter in a company (i.e., what David Krackhardt and Jeffrey R. Hanson aptly called “the company behind the chart“). Such a generalized model would be useful to create simulations of a variety of individual and organizational processes at multiple levels (e.g., employees, managers, executives, and overall organization) and to precisely quantify processes as the simulations unfold.
Initial findings from early model runs suggest potential decreases in both individual and organizational productivity as supervisory span-of-control increases in organizations with cultures of micromanagement.
Below you can read the paper abstract and find out more information about the model.
Few computational network models contrasting formal organization and informal networks have been published. A generalized organizational agent-based model (ABM) containing both formal organizational hierarchy and informal social networks was developed to simulate organizational processes that occur over both formal network ties and informal networks. Preliminary results from the current effort demonstrate “traffic jams” of work at the problematic middle manager level, which varies with the degree of micromanagement culture and supervisory span of control. Results also indicate that some informal network ties are used reciprocally while others are practically unidirectional.