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Notes for a


for Understanding Organizations

ORGmuze / Barry Sugarman 



On previous pages we have outlined a “story” about ORGs using two main characters (Bureaucracy & Adhocracy) on a large stage. They represent two alternative directions or models for ORGs if they survived their start-up challenges and grew large. Bureaucracy gets much credit all through the Industrial Revolution, right up to the Second World War and the post-war recovery (mid 20th century). But in our present highly competitive, highly connected global economy rapid innovation is required, which favors Adhocracy, the antithesis of Bureaucracy. 


This is a huge dilemma: how do we even frame the question?

Do we want to get rid of all Bureaucracy and replace it with a full Adhoc system?

OR do want want to combine certain features of BOTH systems?

I.e.  to create a "third way"?

But how can this be possible?

In theory these constructs seem incompatible

Let's explore a case.

Too Much Bureaucracy


Bureaucracy is still around; there is plenty of it; and sometimes it works well - not just in public agencies.  For example it worked very well for IBM for decades until the 1990's. Then the sky fell: fierce new competitors with new technology and far lower prices devastated IBM’s market share, core business and profits. Year after year IBM’s huge losses grew only worse, also massive lay-offs.  


Recovery for IBM was finally achieved with very drastic management changes and amazing luck. A new, outsider CEO brought a whole new approach and rebuilt IBM as a major success. Was the new success formula  - "Switch over to Adhocracy management?"

NO, no, no..  Far more complicated; it involved something new - a serious focus on the customers' needs, plus re-purposing some major IBM assets - its vast technical expertise and the broad scope of its business .


The new IBM was forced to lose a lot of its old complacency and arrogance  and learn a more open and flexible way of working (culture) - more like a Learning Organization. Strategically the new leadership took a huge risk on launching a new computer technology that IBM still had to finish and validate. There they had good luck. In the words of  IBM’s turn-around CEO Louis Gerstner, Who Says Elephants Can't Dance? - the title of his book about this recovery story .


One further layer to the IBM innovation story: after their struggle back to profitability IBM sales and service leaders noticed that many of their large company customers were eager to hear them sharing what they had learned from the turnaround experience. These customers for IBM’s new computer systems needed to make similar changes to their ORG management. This new knowledge that IBM had acquired the hard way  became the basis for the lucrative new IBM Global Services division - which now produces one third of IBM's total revenue. (Source: Cortada & Hargraves, Into the Networked Age.)


Too Much Adhocracy


Managing a large ORG in fast-moving global competition today seems to call clearly for Adhocracy with much decentralization - except for one serious long-term concern.  Each program in each division runs its own business in its own way, unencumbered by rigid, slow bureaucracy.  Close to its local customers each one innovates constantly to keep ahead of competition.

 The appeal of Adhoc ORGs (UnBureaucracy) lies in our hope that de-centralization within huge ORGs can recapture the energy and entrepreneurial spirit we associate with small-scale workplaces; generating employee engagement and ORG learning.


But WAIT.  

Sooner or later there is a major disruption in the market that wrecks their success formula. ORG top managers identify a new opportunity but it will require several divisions to work together in a totally new direction. Will these divisional “barons" now pivot and start working across divisions with new partners in new ways, to implement the new strategy of the ORG's Top Management Team?


 Sometimes NO. They may not say “No” but they just don’t do what is needed to change direction. They are used to their Adhocratic independence and stick firmly to the way they worked  (and thought) before the pesky disruption. This ORG had a “strong culture” of decentralization without enough of the Learning ORG discipline of rigorous honest assessment.  Many managers live in fear of this situation and it causes them to oppose anything they associate with ORG Learning and Adhoc thinking.

 Something similar happened at DEC (Digital Equipment Co.) at one time the third largest computer maker, one of several problems that caused its failure (sold to Compaq).  (Ed Schein, DEC is Dead.)


Back to the Dilemma (Bureaucracy plus Adhocracy). 


In theory it might seem dangerous, very hard, or impossible to combine Bureaucracy and Adhocracy in the same ORG. 

BUT many ORGs attempt something similar anyway.  

This could be our opportunity to learn something - more ingenious ways to find feasible, productive  Bu and Ad meeting points. 


HOW do they do it? At what COST?  Under what conditions? This research will need reports from the inside - from employees, business partners,  


What are we talking about?   Examples 

    (i) A publishing company has two divisions: one seeks out and cultivates creative content (Adhoc) and the other prints/produces and markets the books, movies, music, etc. (Bureauc).

    (ii) A manufacturing company with overall Bureaucratic culture holds an annual Innovation Festival, a Learning /Sharing Event (Adhoc) for all company members and affiliates. This event is produced by a network of ORG Learning (Adhoc) enthusiasts mainly within the company.  

    (iii) Ambidextrous Management is a known and researched (but not widely implemented) approach to protect and nurture an innovative (next generation) project (safely) off to the side of a larger, established (Bu) ORG.  

                           Click for more info.

    (iv) A large, diverse entertainment company (e.g. Disney) has many different divisions (e.g. movies, theme parks, cruise ships); each one with its Bureaucratic business formula/strategy. They may have “creative spirits” around the company, innovators who try to bring freshness to the production machine. Can they get heard? Where? How?  One big, rare example: Disney’s “The Lion King”. (Do you agree? Do you see other examples?)

   (v)  A “Team-Based” ORG Approach

One substantial body of  well-founded knowledge on current ORGs that could be helpful for our purpose can be found in Designing Team-Based Organizations (Mohrman, et al.). This book is based on an in-depth study of 213 teams in 11 companies whose business is knowledge-heavy. These ORGs maximize the use of horizontal networking and collaboration (integration )both within teams and through cross-team teams. Teams are not committees though - decisions are not delayed. The Top Management Team heads a networked hierarchy or pyramid of teams. Some links between teams may be prescribed formally (B) but other  collaborative links are always developed as needed (Ad hoc). The Matrix (3-D) management concept hovers in the background.  

(Source: Susan A. Mohrman, Susan G. Cohen, Allan M. Mohrman, Designing Team-Based Orgs., SF: Jossey-Bass, 1995.)

Any ORG proceeds with its own attempts to implement some “solution” to this B/A challenge, perhaps in hybrid form. Some succeed (for how long?); others do not.  So many questions beg for attention - for more data, even from anecdotes and  speculation. More questions are needed too. E.g. what changes in context  seem to shift the viability of the hybrid attempt?

Where are identifiable Bureauc/Adhoc encounters, past and present? 

What do they look like?  What do participants think is happening?  Are there Pro and Con factions? Is there a “Reform Faction" (or more than one) promoting what they consider a solution? How does the balance of power shift?

Who gets hurt?  Who gets rich?  Who salvages gems from the ashes to generate new innovations? What different interpretations come out of the experiment?  

Which consequences stay in-house?  Which travel to a known new home? Which become common property? 




There is no standard solution or way forward for an ORG facing these Both/And challenges. We have cited a few cases where it seemed there was a clear lesson to be learned. Many ORGs try many different ways to find a way forward through the dangers and confusion. We might consider them as Both/And Hybrids.  “Hopeless Hybrids” but less hopeless than any single A or B choice. Can a metaphor help us here?  Imagine a pre-industrial contest for high stakes: we must harness two  incompatible beasts to haul an unconventional collection of wagons over a hazardous route. That scenario can represent either a hybrid Adhocratic ORG or a sleek cruise ship representeing a classic Bureaucratic/Machine ORG. 


I believe that the Both/And challenge explains a significant part of the troubles of many current large ORGs, their managers and members. Even when it happens at one ORG they find an arrangement that apparently works for them in their situation we should not expect long-term stability. It is a shifting collection of systems and parts, some in synch with some others and in tension with other others. So many stories are still hidden; so few are captured and understood.

Are there any constants and general principles? Maybe. 

Let's keep looking ... and sharing.

Here at ORGmuze I should dearly love to learn of your findings and thoughts.

Barry Sugarman

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