| Complexity
and Organizational Structure by Emily F. Breuner |
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Chapter
9 |
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| Not surprisingly, the data collected in this project raises as many questions as it answers. I am satisfied that these two organizations can serve as prototypes for future organizational design, but further research needs to be done in order to find out how best to apply this analysis to other organizational contexts. Some ideas for further research appear below. | |
Larger Sample SizeThe similarities between Internet and Visa are so striking that it is easy to draw conclusions and forget that the sample size is only two. The next step of this research would be to use the preceding analysis to look at other organizations to determine how valid these conclusions are in other situations. Specifically, it would be interesting to look at both successful and unsuccessful cooperative, decentralized structures to see how well the analysis predicts the outcomes and explains the context of each. In addition, it is important to test these ideas in organizations that are not formal exchange infrastructures like both the Internet and Visa. |
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Some ideas: Proctor and Gamble |
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| Pharmaceuticals In a recent article in the Harvard Business Review, Rebecca Henderson of the Sloan School presented findings regarding the research and development functions of pharmaceutical companies.(1) These companies also have "federated" product development groups as well as "dictatorships," and some application of this analysis to her research seems in order. In the companies she studied, a shared resource dependency of corporate funding seems to act as the coordination mechanism much as the market does for product innovation in Visa. Comparing her data to these findings might provide some refinements to my observations. |
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| The American Airlines Reservation System Some years ago, hotels, car rental agencies and other entities entered a joint venture with American Airlines to try to develop a generic reservation system. After years and millions of dollars, the project was abandoned in failure. Could this analysis be useful in understanding why? |
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| UNIX Vendors This analysis should be used to examine the various UNIX operating system vendors. Working together, they could cooperatively develop standards for the UNIX operating system that would elevate UNIX's interoperability and appeal due to positive network externalities. They have, however, been largely unsuccessful. Why, and what course of action would this analysis recommend? |
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| Semco Ricardo Semler has written a series of articles for the Harvard Business Review about the way he has changed Semco, a large Brazilian conglomerate, into a decentralized organization. Gaining entry into his organization to test this analysis would be an interesting project. This company makes everything from plastics to jet fuel, so they must have come up against the product liability issues. Analysis of how they have dealt with accountability would be valuable.(2) |
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| Barings Might Barings still be around today if they had organized with fractal principles in mind? Would they have been able to structure the company in such a way to manage the risk that one trader could bankrupt the company? As part of the structured thesis project, Sunny Youn has examined risk management in financial institutions and her work should be related to this analysis.(3) |
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| The Shopping Mall Every shopping mall in the US is an example of this same structure. Competing retailers come together in one mall because together they draw more customers than they do when they are spread apart across a geographic area. How are joint decisions among retailers made and what constraints are built into mall "membership?" |
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| The University Universities are another good example of an organizational structure that embodies cooperation and competition. Different academic departments within a university share resources and reputation, yet they compete for grants and recognition as well. Examining these institutions in light of this analysis might reveal further insights. |
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| The Silicon Valley Model In their article "How Architecture Wins Technology Wars,"(4) Morris and Ferguson talk about the Silicon Valley Model of doing business. Many of their observations about how open systems companies do business have parallels in this thesis. How well would analysis developed in this thesis apply to greater industry structures in which cooperation and competition (some call it coopetition) are the norm? They identify the following characteristics of the Silicon Valley business model:
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| The similarities indicate that perhaps the Silicon Valley Model should be analyzed as a complex adaptive system that has already evolved to deal with the rapidly changing information age. | |
Level of AnalysisAnother important feature of my analysis is that it has taken a "black box" view of both organizations; that is, I have looked at these organizations from the outside in without regard for the internal dynamics and how they might impact the success of the decentralized structure. There are many dynamics going in within Visa and the Internet that I have not had time to explore due to the scope of the project. For example, what are the power and political structures like in the Internet or at Visa? How are the various Visa corporations run and how are their organizations impacted by the decentralization of power? Hock suggested that if each regional Visa organization were analyzed, one would find very different views of Visa, and this research should be done. Also, how does one engender loyalty and commitment to the common good within these agent organizations? How far down in these agent organizations must the shared values be understood in order to have the system function? If lessons are to be taken away from these two examples and applied toward the design of future organizations, these things need to be better understood. |
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| Similarly, on a more macro level, it is important to consider what happens when a cooperative entity comes into conflict with another cooperative entity. In a sense this is happening right now on the Internet. New commercial entities are becoming part of the Internet's environment, and their values and purpose might be very different than those of the current agents'. How does the organization as an agent adapt to these new conditions? Do the same rules for sharing authority apply in these new conditions? These questions are beyond the scope of this thesis but must be explored if the analysis is to be useful. | |
Teaching Decentralized ThinkingIt is easy to look at these two organizations, "get religion," and commit oneself toward decentralization. However, Westerners are not trained to look at the world as though there is no central authority. In fact, many would look at Visa International and argue that indeed it is the central command and control center of the card program. That view may be true at the tactical level, but the essence of the organization is far different. Thus, teaching tools that help people break out of long ingrained centralized thinking need to be developed that will engender an intuitive understanding of decentralization. Mitchel Resnick of the MIT Media Lab is working on just such applications, and any way in which they can be extended to illustrate how business situation can best be coordinated in a decentralized manner would be of great importance to training organizational architects of the future. |
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Dimensions of the HierarchyPreviously I hinted that Visa has chosen to organize itself based on a geographic dimension. The Internet organizes its working groups based on the technology underlying the solutions under consideration. What possible heuristics might be determined for how to choose what dimension on which to base one's hierarchy is still unclear with this small sample size. I suspect the answer is very much linked to the important expertise (technological knowledge on the Internet) or the key limiting factors (local regulation and cultural attitudes). If I am correct in applying Weick's "cycles" and concluding that a key function of the hierarchy structure is to "unequivocate" information, then it seems that the structure of the hierarchy should be based on expertise or local knowledge that achieves this. However, I think further analysis of this concept in other industries is essential. |
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| It is my hope that other may choose to extend the work begun in this thesis. I have had the sense in working on this project that all of these concepts will be central to society's leap into the information age, but I feel that I have only been able to expose the top crystal of the tip of the iceberg. Hopefully this work will not end here. | |
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Footnotes (1) Rebecca Henderson, "Managing Innovation in the Information Age," Harvard Business Review, January-February, 1994: 100-105. (2) Ricardo Semler, "Why My Former Employees Still Work For Me," Harvard Business Review, January-February, 1994: 64-74. (3) Sunny Youn, MIT Master's thesis, June 1995. (4) Charles R. Morris and Charles H. Ferguson, "How Architecture Wins Technology Wars," Harvard Business Review, March-April, 1993: 86-96. |
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