Understanding Business Organizations - Organizational styles

[Bruce Epstein]

Michael Christie said:

I do not view the average industrial organization as being "democratic" or "socialist". More like monarchial (heirarchical). What are your views, and how can we use this understanding to forge better organization inside the plant?

I took a Management course a few years back that described several possible organizational styles, including "Royal" (think of the court, the need to pay tribute, the guards at the doors, etc.), and "Feudal" (think of fiefdoms, lords and serfs, etc.). I don't remember the others off the top of my head. I will have to dig through my garage for the course notes.

In any case, a bit of business history is in order. When the first large corporations started emerging late in the Industrial Revolution, the only existing institutions in Europe of comparable size and complexity were the Catholic Church and the Military. To construct the early models for building large organizations, the Management gurus of the era performed some "benchmarking" against these two venerable institutions, and appropriated the aspects that seemed to work. In other words, deep hierarchies with a command-and-control communications structure. It has taken several centuries for alternative management theories to finally begin to gain acceptance.

So, to kick off the discussion, what lessons can we learn from all this?

Personally, I feel that it is of utmost importance to understand the unique characteristics of any particular organization: who holds the power, how did they obtain this power, and are they sharing it or hoarding it. From that, you can best determine how to proceed.

Just my 2 euro-cents' worth.

Bruce

 

[Bruce Epstein]

I found my course notes.

I had the first two models conceptually correct but I had chosen the wrong metaphor.

The first style is called "Zeus -- the Power Culture" and is represented as a spider web (although I would have prefered a hub and spokes). There is one all-powerful person (or inner circle) at the center and all communications and decisions must pass through this center. This corresponds to the monarchistic styles.

The second style is called "Apollo -- the Role Culture" and is represented by a Greek Temple (both for shape and for inflexibility). The columns represent the functional stovepipes which support the upper levels of the hierarchy. This corresponds to military or religious organizations, and is also how Empires were often structured (think Rome or Napoleon).

The third style is called "Athena -- the Task Culture" and is represented by a grid -- a network of loosely-coupled entities. This corresponds to how the Internet is organized (at a first order approximation).

The reference on the bottom of the page gives credit to Charles Handy, "The Gods of Management".

Anyway, a lot of companies aspire (at least publicly) to being Athena, when in reality they are trapped in Zeus or Apollo modes.

Bruce

 

[Claes Gefvenberg]

The lifespan of an organisation

Personally, I feel that it is of utmost importance to understand the unique characteristics of any particular organization: who holds the power, how did they obtain this power, and are they sharing it or hoarding it. From that, you can best determine how to proceed.

I agree with that. This thread could become very interesting. I would like to complicate matters a bit further (sorry about that) by adding the lifespan of an organisation as a factor.

One can regard an organisation as a living creature with a lifespan. I guess it goes through a number of phases just like a person, with the difference that it can be rejuvenated by reorganisations, mergers, splits, layoffs and other more or less upsetting events. However, sometime someday it dies too.

Perhaps it goes through a number of the organisation types Bruce talked about during its life?

Just as it's important to understand what type of organisation you're dealing with, I think it's important to learn the "age" of it too.

( Alright, yes.. I *am* feeling a bit philosophical today ) / Claes

 

[Randy Stewart]

The company my wife runs (painting contractor) is a "Zeus" type (single proprietor) but is venturing into the "Apollo" realm as she has more estimators and formen working for her. From what I've seen, the more start up capital you have the higher up the organization type chart you can start.

 

[Atul Khandekar]

Indian Scenario

I like the word "feudal" for family-owned and run business. In India most of the businesses would classify as that. Here is an interesting news item that appeared in today's newspaper:
----
The next 10 years will see most family-owned businesses coming under severe threat because of conflict of interests among members of families, according to a McKinsey study. Addressing a seminar "Competing in Challenging Times", organized by CII (Confederaton of Indian Industries), McKinsey director Ashok Alexander said family-owned businesses must introduce best practices and lay down clear rules on governance and leadership.

The Study included 30 leading family-owned businesses in the country. Around 80% of the Indian companies are family-owned.

"The family-owned businesses are giving lip-service rather than bringing in best practices. Our study reveals that these Indian firms are severely threatened."

"Such businesses are moving towards third-generation ownership, the most critical phase. However, their counterparts in the West had been wiser in this regard and introduced best practices", Alexander said.

...It came to light at the seminar that only 7% of the fully family-owned businesses have survived beyond the third generation
--------------

 

[Marc]

Re: The lifespan of an organisation

Claes Gefvenberg said:

One can regard an organisation as a living creature with a lifespan. I guess it goes through a number of phases just like a person, with the difference that it can be rejuvenated by reorganisations, mergers, splits, layoffs and other more or less upsetting events. However, sometime someday it dies too.

Perhaps it goes through a number of the organisation types Bruce talked about during its life?

Just as it's important to understand what type of organisation you're dealing with, I think it's important to learn the "age" of it too.

My background is in biology. It was my major in college. I have long looked at organizations as organisms. I believe that part of my background / training put me in a good position to understand businesses work. Interacting systems and processes. Right down to the Krebs Citric Acid Cycle...

Yes Claes, an excellent analogy. Companies evolve and there is the survival of the fittest aspect. Complexity of systems / processes / etc. are major factors as well.

So - we have:

1. Age
2. Complexity
3. Number of Employees
4. Company Personality
5. Organization Type --> "Zeus", "Apollo", "Athena"
6. 'Political' --> "Royal", "Feudal", etc.
   [/list=1]What other factors can we think of?

 

[Claes Gefvenberg]

Atul wrote:

The Study included 30 leading family-owned businesses in the country. Around 80% of the Indian companies are family-owned.

"The family-owned businesses are giving lip-service rather than bringing in best practices. Our study reveals that these Indian firms are severely threatened."

"Such businesses are moving towards third-generation ownership, the most critical phase. However, their counterparts in the West had been wiser in this regard and introduced best practices", Alexander said.

...It came to light at the seminar that only 7% of the fully family-owned businesses have survived beyond the third generation

Interesting... Seen from the organisation life span point of view I guess that would put them where? Close to retirement? Fortunately, organisations can be rejuvenated (Though that process is usually painful). People is a different kettle of fish.

/Claes

P.s. Came to think of it. Shouldn't this thread be under "Gurus, Philosophy and Evolution"?

 

[Claes Gefvenberg]

Re: Re: The lifespan of an organisation

Marc said:

So - we have:

1. Age
2. Complexity
3. Number of Employees
4. Company Personality
5. Organization Type --> "Zeus", "Apollo", "Athena"
6. 'Political' --> "Royal", "Feudal", etc.

What other factors can we think of?

Hmmm.... How about the society (or societys if it's multinational) the company is active in? Running a business in todays western society would be a bit different from doing it in one ruled by ...shall we say Attila the Hun...?

/Claes

 

[Andrei Viorel - 2009]

Type of organization - International Culture, Training and the Organization

1. Parochial - Our way is the only way. Very common
2. Ethnocentric - Our way is the best way. Common
3. Synergistic - The combination of our way and their way may be the best way. Very uncommon

From “Overcoming the problems of cultural differences to establish success for international management teams”, by Malcolm Higgs

vio