Organization Theory: Strategy Implementation Process

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Organization Theory Strategy Implementation
Process

• Power, Psychic Prisons, Domination, Flux
• Steven E. Phelan

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Organizations as Political Systems
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Organizations as political systems

• Power the ability to get what you want, when
  you want
• Politics the process of acquiring and using
  power
• As no-one can get everything they want when they
  want it, politics inevitably involves coalitions,
  compromises, and conflict management.
• According to Morgan, many organizations have
  strong autocratic tendencies does that mean
  CEOs always get what they want?

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How politicized is your organization?

• With a partner, think of your organization
• Is it an arena where people join together to
  pursue an organizational goal, pursuing their own
  goals at the same timeOR
• Is the organization an arena where people tend to
  pursue their own goals using the organization for
  their own ends
• Hint the answer is not black and white, think at
  what times and in what areas it is one or the
  other.

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Sources of power

• Coercive power
• Formal authority
• Use of organizational rules and regulations,
• Threats of violence

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Resource Dependency

• Control of
• scarce resources,
• decision processes,
• knowledge/information,
• boundaries,
• technology, uncertainty,
• informal networks,
• counter-organizations
• Power through exchange

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Implications for strategy implementation Quinns
logical incrementalism

• Strategy deals with
• unknowable (irresolvable) uncertainty
• failure brings political fallout
• Therefore
• Proceed experimentally and flexibly
• Conceal true goals and intentions
• Build awareness and credibility to legitimize new
  viewpoints
• Tactical shifts, partial solutions
• Use serendipity to promote supporters, replace
  opponents, fund pet projects
• Broaden political support and overcome opposition
• Encourage others to trial new ideas and create
  pockets of commitment (but dont be associated
  with failure).

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Power and ethics

• Are these tactics from the 48 laws of power
  ethical? Necessary?
• 2 Never put too much trust in friends
• 3 Conceal your intentions
• 7 Get others to do the work but take the credit
• 10 Avoid the unhappy and unlucky
• 11 Learn to keep people dependent on you
• 14 Pose as a friend, work as a spy
• 15 Crush your enemy totally
• 32 Play to peoples fantasies
• 38 Think as you like but behave like others
• 45 Preach the need for change but never reform
  too much

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Other factors

• Structural factors
• Class
• Gender
• Race
• Language
• Symbolism and the management of meaning
• Hegemony and false consciousness
• Self-censorship and propaganda model (Chomsky)

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Strengths of the political metaphor

• We see how all organizational activity is
  interest-based
• Conflict management becomes a key activity
• The myth of organizational rationality is
  debunked rational for whom?
• Organizational integration becomes problematic
• Politics is a natural feature of organization
• It raises fundamental questions about power and
  control in society

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Limitations of the political metaphor

• Politics can breed more politics
• It underplays gross inequalities in power and
  influence

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Organizations as Instruments of Domination
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Organizations as instruments of domination

• Equality of opportunity do we have it?
• Arguably, life is not a level playing field
• Those with poor initial endowments of resources,
  especially health, safety, and education have
  poor prospects
• These people often dont have a voice
• Issue of hegemony and false consciousness
• Concept of Ideal speech situations
• Democracy as window dressing for the elites

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Issues

• Primary and secondary labor markets
• Stress and workaholism
• Occupational Disease
• Exploitation of people and resources
• Class, race, gender, world regions
• Green (environmental) issues
• Poor working conditions in developing countries
  and responsibilities of MNCs
• Implications for strategy implementation?

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Organizations as psychic prisons

• Platos Allegory of the Cave
• Cognitive biases
• Unconscious processes

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Groupthink

• Invulnerability
• We cannot fail
• Morality
• We are right and just, God is with us
• Stereotypes
• the enemy are evil monsters
• Pressure on group members to conform
• Self-censorship
• Unanimity
• acting as though silence equals agreement
• Rationalization of conflicting evidence

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Cognitive biases

• Distorted perceptions (Rumelt)
• Myopia
• Hubris (pride in past accomplishments)
• Denial/defensive behavior
• Superstitious learning
• Faulty analogies

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Cognitive biases

• Availability
• Easily recalled events are judged as having
  higher frequencies
• Crime, earthquakes, plane crashes, tech company
  bankruptcies
• Representativeness
• We make decisions based on representative
  probabilities
• In families we six children, which sequence of
  boys and girls is least likely
• GBGBBG
• BGBBBB
• Hindsight
• We are not surprised by what happened in the past
  we tend to focus on single factor explanations
• Why did Enron fail?

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Cognitive biases

• Escalation of commitment
• If a bet or investment goes poorly we tend to
  increase our efforts next time instead of walking
  away
• Illusion of control
• e.g. tossing dice, playing slots
• Overconfidence
• Managers are overconfident in their judgments
• Set 98 confidence limits on the population of
  the US and Las Vegas
• Managers also tend to dismiss or minimize the
  level of risk

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Unconscious processes (Freud)

• Freud divides the brain into ID, EGO, and
  SUPEREGO
• ID
• operates according to the pleasure principle i.e.
  it seeks pleasure and avoids pain.
• It is our animal instincts need for food,
  sexual pleasure,
• Ego
• Operates according to the reality principle.
• It controls the id's drive for immediate
  satisfaction until an appropriate outlet can be
  found.

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Unconscious processes

• Superego
• the moral part of the personality
• a product of socialization
• Two parts
• the ego-ideal is the standards of good behavior
  that we aspire to.
• the conscience is seen as an "inner voice" that
  tells us when we have done something wrong.
• Tension
• The demands of the id ('I want it, I want it
  now') and the demands of the superego ('no it's
  wrong') frequently conflict. The ego deals with
  this conflict by operating unconscious defense
  mechanisms.

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Defense mechanisms

• Displacement
• This is the transfer of desires or impulses onto
  a substitute person or object. For example, if
  we are reprimanded by our boss, we may 'take it
  out' on a less dangerous substitute (e.g.
  shouting at our children, slamming a door or
  stamping our feet.)
• Projection
• This is where characteristics or desires that are
  unacceptable to a person's ego are externalized
  or projected onto someone else.
• Reaction formation
• Behavior that is the exact opposite of an impulse
  that they dare not express or acknowledge
• Dealing with homosexual feelings by beating up
  gay people

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Defense mechanisms

• Regression
• an individual attempts to avoid current anxiety
  by withdrawing to the behavior patterns of an
  earlier age.
• Repression
• the expulsion of thoughts and memories that might
  provoke anxiety from the conscious mind
• they continue to affect a person's behavior later
  in adulthood in disguised or symbolic forms (such
  as dreams or neurotic behavior).
• Rationalization
• This is an attempt to explain our behavior to
  ourselves and others, in ways that are seen as
  rational and socially acceptable, instead of
  irrational and unacceptable.

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Defense mechanisms

• Denial
• This is where a person may deny some aspect of
  reality. For example, someone who cannot come to
  terms with the death of a loved one may still
  talk to them, lay the table for them and even
  wash and iron their clothes.
• Identification
• this is incorporating an external object (usually
  another person) into one's own personality,
  making them part of one's self. You come to
  think, act and feel as if you were that person.

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Psychoanalysis in the organization

• Ingroup/outgroup
• Idealizing the group or the leader
• Demonizing the other
• Organizational practices/processes as
  transitional objects
• Change threat to personal identity
• Strategic plans as defenses against anxiety about
  an uncertain future
• Implications for implementation?

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Strengths of psychic metaphor

• The metaphor encourages us to challenge basic
  assumptions about how we see and experience the
  world
• We gain important insights into the challenges of
  organizational innovation and change
• The irrational is put in a new perspective
• We are encouraged to integrate and manage
  competing tensions rather than allow one side to
  dominate
• Ethical management acquires a new dimension

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Limitations of psychic metaphor

• A focus on the unconscious may deflect attention
  from other forces of control
• The metaphor underestimates the power of vested
  interests in sustaining the status quo
• There is a danger that the insights of the
  metaphor can be used to exploit the unconscious
  for organizational gain
• Implications for strategy implementation?

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Organizations as Flux and Transformation
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Chaos Theory

• Chaos theory can be compactly defined as "the
  qualitative study of unstable aperiodic behaviour
  in deterministic nonlinear dynamical systems"
• Famous for the butterfly effect (or sensitivity
  to initial conditions) and the concept of strange
  attractors

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Logistic Equation
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Chaos in the Real World

• If the economy is a chaotic system then planning
  is doomed
• Better learn to react and learn quickly rather
  than prepare
• It feels chaotic, but there is little evidence
  that the economy is a chaotic system

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What is complexity theory?

• Based on an agentan ant in a colony, an electron
  in an atom, a worker in a company...
• A complex system is defined as any network of
  interacting agents (or processes or elements)
  that exhibits a dynamic aggregate behavior as a
  result of the individual activities of its
  agents.
• An agent in such a system is adaptive if its
  actions can be given a value (performance,
  utility, payoff, fitness etc.) and the agent
  behaves so as to increase this value over time.

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Complex Adaptive System

• A complex adaptive system is one in which agents
  adapt to higher levels of fitness over time
• A fitness landscape is simply a visual
  representation of the payoffs from taking
  different strategies
• Fitness landscapes can be rugged (with many peaks
  or troughs) or smooth
• Co-evolution creates a dancing fitness landscape

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Modeling Methods

• The development of complexity theory is a direct
  result of new computer technology.
• Increased computing power has given us the
  ability to model the idiosyncratic behavior of
  thousands of individual agents
• artificial intelligence, parallel processing,
  high level programming languages.
• In the past, aggregated models were used
  (e.g. system dynamics)

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Key Result Areas

• Some key results in complexity theory have proved
  important for management
• Emergence
• Agent-Based Search
• Patches
• Self-Organized Criticality

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Emergence

• Emergence
• Order for free no central control!
• Simple/local interactions produce interesting
  (unanticipated) outcomes at the macro-level (e.g.
  boids) Examples
• Craig Reynolds Boids Program
• Separation steer to avoid crowding local
  flockmates
• Alignment steer towards the average heading of
  local flockmates
• Cohesion steer to move toward the average
  position of local flockmates.

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Agent-Based Search

• A rugged fitness landscape can be produced by an
  NK model (also known as a Boolean network or spin
  glass model)
• Imagine N nodes in a lattice with each node
  randomly connected to K other nodes
• The energy of any given node is a function of its
  state (on/off) and the states of the K other
  nodes
• How should the energy of the lattice be
  minimized?
• Brute trial-and-error takes a long time
• Using a pack of agents to explore the landscape
  and zero in on promising regions may be faster

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Patches

• Stu Kauffman found that dividing an NK lattice
  into several patches and minimizing the energy in
  each patch without reference to the global energy
  level gave better solutions than global search on
  very rugged (i.e. complex) landscapes
• Relaxing some constraints may work well in
  complicated problems

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Complexity as Metaphor

• Complexity theory has been extended from biology
  and physics into other arenas
• Undoubtedly, societies, economies, and
  organizations are complex adaptive systems, too.
• If an organization is like an NK model then

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Interpretation

• Adaptation (biology) rather than efficiency
  (machine) should be promoted
• A variety of small experiments should be
  undertaken to explore the fitness landscape
• Rely less on central controls, use simple rules
• Eisenhardt Strategy as simple rules
• Recognize that change can yield big (or small)
  results and solutions can emerge from the
  interaction of agents (workers)

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Strengths and limitations of flux metaphor

• Strengths
• We think of the limits of forecasting,
  prediction, and control
• We think about adaptation rather than
  optimization
• Limitation
• Is there really an analogy between the results of
  computer simulations of physical systems and
  business?