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Assignment 1 Organizational Environment Theory

design and practice, In Search of Excellence, by Peters and Waterman (1982). Both authors were members of a large consulting firm, McKinsey and Company, and both were experienced consultants. They worked within a schema, the McKinsey 7-S framework, which is more a listing of classes of factors to take into account than a theory of organization. The framework consists of seven factors that in combination are assumed to determine organizational effectiveness. All seven are drawn as interconnected and all are identified by words beginning with the letter S, hence the copyrighted 7-S label: structure, systems, style, staff, skills, strategy, and shared values. These at least serve to remind consultants of things to look for as they advise managements.

Peters and Waterman went beyond such a priori guides, however, in their search for excellent companies. With funding from McKinsey and from client firms, they set up a research project. They chose 75 ''highly regarded companies" and, for the 62 based in the United States, they did a retrospective performance review for the preceding 20 years and conducted structured interviews with some members of management. Six measures of growth and financial performance and a judgmental measure of innovativeness were thus added to the initial rating of "high regard." The use of all these criteria produced a set of companies considered exemplars of excellence: Bechtel, Boeing, Caterpillar Tractor, Dana, Delta Airlines, Digital Equipment, Emerson Electric, Fluor, Hewlett-Packard, IBM, Johnson and Johnson, McDonald's, Proctor and Gamble, and 3M.

Peters and Waterman warned their readers about the limitations of their work: "We don't pretend to account for the perfidy of the market or the whims of investors. … Second, we are asked how we know that the companies we have defined as culturally innovative will stay that way. The answer is we don't" (1982:24-25). Their premonition was justified, as a third of the "excellent" companies performed poorly shortly after publication of their book (Business Week, 1984:76–88).

Doctrine as a Basis for Design

Doctrine-driven design is an approach that applies codified, normative principles to organizational design. These principles are derived from the experiences, beliefs, values, and ideologies of an organization's key leaders and are often influenced by societal values. In the long run (indeed, sometimes across generations of managers), the beliefs, values, and ideologies that become formalized into design doctrine are the result of multitudes of experiences, and the revision of doctrine in the light of experience is often a very slow process. It is important to note that the beliefs and values of an organization's leaders are often determined in great part by the larger society, and also to note that society exerts some degree of influence over the

References

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2. L.B. Mohr, Explaining Organizational Behavior (San Francisco: Jossey-Bass, 1982); P.R. Monge, “Theoretical and Analytical Issues in Studying Organizational Processes,” Organization Science, volume 1, number 4, 1990, pp. 406–430; A.H. Van de Ven, “Suggestions for Studying Strategy Process: A Research Note,” Strategic Management Journal, volume 13, special issue, Summer 1992, pp. 169–188; and A.H. Van de Ven and G. Huber, “Longitudinal Field Research Methods for Studying Processes of Organizational Change,” Organization Science, volume 1, number 3, 1990, pp. 213–219.

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11. Hammer and Champy (1993), pp. 108–109; Kane (1986); and Melan (1989), p. 398.

12. Moen and Nolan (1987); and Robson (1991).

13. Davenport (1993), pp. 10–15; and Hammer and Champy (1993), pp. 32–34.

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16. Kane (1986); and Melan (1985) and (1989).

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20. For example, see: A. March and D.A. Garvin, “Arthur D. Little, Inc.” (Boston: Harvard Business School, case no. 9-396-060, 1995).

21. K.E. Weick, The Social Psychology of Organizing, second edition (Reading, Massachusetts: Addison-Wesley, 1979), p. 34.

22. S.C. Wheelwright and K.B. Clark, Revolutionizing Product Development (New York: Free Press, 1992).

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24. L.A. Hill, Becoming a Manager ( Boston: Harvard Business School Press, 1992), pp. 20–21.

25. For reviews, see: J.L. Bower and Y. Doz, “Strategy Formulation: A Social and Political Process,” in D.H. Schendel and C.H. Hofer, eds., Strategic Management (Boston: Little, Brown, 1979), pp. 152–166; and A.S. Huff and R.K. Reger, “A Review of Strategic Process Research,” Journal of Management, volume 13, number 2, 1987, pp. 211–236.

26. H. Mintzberg, D. Raisinghani, and A. Théorêt, “The Structure of Unstructured Decision Processes,” Administrative Science Quarterly, volume 21, June 1976, pp. 246–275; P.C. Nutt, “Types of Organizational Decision Processes,” Administrative Science Quarterly, volume 29, September 1984, pp. 414–450; and E. Witte, “Field Research on Complex Decision-Making Processes — The Phase Theorem,” International Studies of Management and Organization, volume 2, Summer 1972, pp. 156–182.

27. Witte (1972), p. 179.

28. Mintzberg et al. (1976); and Nutt (1984).

29. For studies on capital budgeting, see: R.W. Ackerman, “Influence of Integration and Diversity on the Investment Process,” Administrative Science Quarterly, volume 15, September 1970, pp. 341–351; and J.L. Bower, Managing the Resource Allocation Process (Boston: Harvard Business School, Division of Research, 1970). For studies on foreign investments, see: Y. Aharoni, The Foreign Investment Decision Process (Boston: Harvard Business School, Division of Research, 1966). For studies on strategic planning, see: P. Haspeslagh, “Portfolio Planning: Uses and Limits,” Harvard Business Review, volume 60, January–February 1982, pp. 58–74; and R. Simons, “Planning, Control, and Uncertainty: A Process View,” in W.J. Bruns, Jr. and R.S. Kaplan, eds., Accounting and Management: Field Study Perspectives (Boston: Harvard Business School Press, 1987), pp. 339–367. For studies on internal corporate venturing, see: R.A. Burgelman, “A Process Model of Internal Corporate Venturing in the Diversified Major Firm,” Administrative Science Quarterly, volume 28, June 1983, pp. 223–244; and R.A. Burgelman, “Strategy Making as a Social Learning Process: The Case of Internal Corporate Venturing,” Interfaces, volume 18, number 3, 1988, pp. 74–85. For studies on business exit, see: R.A. Burgelman, “Fading Memories: A Process Theory of Strategic Business Exit in Dynamic Environments,” Administrative Science Quarterly, volume 39, March 1994, pp. 24–56.

30. Bower (1970).

31. G.T. Allison, Essence of Decision (Boston: Little, Brown, 1971); I.L. Janis, Victims of Groupthink (Boston: Houghton Mifflin, 1972); L.J. Bourgeois, III and K.M. Eisenhardt, “Strategic Decision Processes in High-Velocity Environments: Four Cases in the Microcomputer Industry,” Management Science, volume 34, number 7, 1988, pp. 816–835; K.M. Eisenhardt, “Speed and Strategic Choice: How Managers Accelerate Decision Making,” California Management Review, volume 32, Spring 1990, pp. 39–54; J.W. Fredrickson and T.R. Mitchell, “Strategic Decision Processes: Comprehensiveness and Performance in an Industry with an Unstable Environment,” Academy of Management Journal, volume 27, number 2, 1984, pp. 399–423; J.W. Fredrickson, “The Comprehensiveness of Strategic Decision Processes: Extension, Observations, Future Directions,” Academy of Management Journal, volume 27, number 4, 1984, pp. 445–466; and I. Nonaka and J.K. Johansson, “Organizational Learning in Japanese Companies,” in R. Lamb and P. Shrivastava, eds., Advances in Strategic Management, volume 3 (Greenwich, Connecticut: JAI Press, 1985), pp. 277–296.

32. Janis (1972).

33. A.C. Amason, “Distinguishing the Effects of Functional and Dysfunctional Conflict on Strategic Decision Making: Resolving a Paradox for Top Management Teams,” Academy of Management Journal, volume 39, number 1, 1996, pp. 123–148; D.M. Schweiger, W.R. Sandberg, and J.W. Ragan, “Group Approaches for Improving Strategic Decision Making,” Academy of Management Journal, volume 29, number 1, 1986, pp. 51–71; and D.M. Schweiger, W.R. Sandberg, and P.L. Rechner, “Experimental Effects of Dialectical Inquiry, Devil’s Advocacy, and Consensus Approaches to Strategic Decision Making,” Academy of Management Journal, volume 32, number 4, 1989, pp. 745–772.

34. Janis (1972), pp. 146–149.

35. Bourgeois and Eisenhardt (1988).

36. E.H. Schein, Process Consultation: Its Role in Organization Development, second edition (Reading, Massachusetts: Addison-Wesley, 1988), pp. 17–19.

37. D.G. Ancona and D.A. Nadler, “Top Hats and Executive Tales: Designing the Senior Team,” Sloan Management Review, volume 31, Fall 1989, pp. 19–28; and D.C. Hambrick, “Top Management Groups: A Conceptual Integration and Reconsideration of the ‘Team’ Label,” in B.M. Staw and L.L. Cummings, eds., Research in Organizational Behavior, volume 16 (Greenwich, Connecticut: JAI Press, 1994), pp. 171–214.

38. Schein (1988), p. 21.

39. Ibid., pp. 22–39.

40. O. Hauptman, “Making Communication Work,” Prism, second quarter, 1992, pp. 71–81; and D. Krackhardt and J.R. Hanson, “Informal Networks: The Company behind the Chart,” Harvard Business Review, volume 71, July–August 1993, pp. 104–111.

41. Ancona and Nadler (1989), p. 24; Schein (1988), p. 50.

42. D. McGregor, The Professional Manager (New York: McGraw-Hill. 1967), pp. 173–174; and Schein (1988), pp. 57–58, 81–82.

43. R.L. Daft and G.P. Huber, “How Organizations Learn: A Communication Framework,” in S.B. Bacharach and N. DiTomaso, eds., Research in the Sociology of Organizations, volume 5 (Greenwich, Connecticut: JAI Press, 1987), pp. 1–36; C.M. Fiol and M.A. Lyles, “Organizational Learning,” Academy of Management Review, volume 10, number 4, 1985, pp. 803–813; G.P. Huber, “Organizational Learning: The Contributing Processes and the Literatures,” Organization Science, volume 2, number 1,1991, pp. 88–115; B. Levitt and J.G. March, “Organizational Learning,” Annual Review of Sociology, volume 14, 1988, pp. 319–340; and P. Shrivastava, “A Typology of Organizational Learning Systems,” Journal of Management Studies, volume 20, number 1, 1983, pp. 7–28.

44. P.M. Brenner, “Assessing the Learning Capabilities of an Organization” (Cambridge, Massachusetts: MIT Sloan School of Management, unpublished master’s thesis, 1994); Daft and Huber (1987), pp. 24–28; D.A. Garvin, “Building a Learning Organization,” Harvard Business Review, volume 71, July–August 1993, pp. 78–91; Levitt and March (1988), p. 320; and E.C. Nevis, A.J. DiBella, and J.M. Gould, “Understanding Organizations as Learning Systems,” Sloan Management Review, volume 37, Winter 1995, pp. 73–85.

45. Nevis et al. (1995), p. 76.

46. T. Kiely, “The Idea Makers,” Technology Review, 96, January 1993, pp. 32–40; M.A. Cusumano and R.W. Selby, Microsoft Secrets (New York: Free Press, 1995); Garvin (1993); J. Simpson, L. Field, and D.A. Garvin, “The Boeing 767: From Concept to Production (A)” (Boston: Harvard Business School, case 9-688-040, 1988); R.C. Camp, Benchmarking (Milwaukee, Wisconsin: ASQC Quality Press, 1989); and R.E. Mittelstaedt, Jr., “Benchmarking: How to Learn from Best-in-Class Practices,” National Productivity Review, volume 11, Summer 1992, pp. 301–315; A. De Geus, “Planning as Learning,” Harvard Business Review, volume 66, March–April 1988, pp. 70–74; Huber (1991), pp. 105–107; Levitt and March (1988), pp. 326–329; and J.P. Walsh and G.R. Ungson, “Organizational Memory,” Academy of Management Review, volume 16, number 1, 1991, pp. 57–91.

47. Shrivastava (1983), p. 16.

48. Bourgeois and Eisenhardt (1988); and Eisenhardt (1990).

49. B. Blumenthal and P. Haspeslagh, “Toward a Definition of Corporate Transformation,” Sloan Management Review, volume 35, Spring 1994, pp. 101–106.

50. A.M. Pettigrew, “Longitudinal Field Research: Theory and Practice,” Organization Science, volume 1, number 3, 1990, pp. 267–292, quote from p. 270.

51. Van de Ven (1992), p. 80.

52. Van de Ven and Huber (1990).

53. C.J.G. Gersick, “Revolutionary Change Theories: A Multilevel Exploration of the Punctuated Equilibrium Paradigm,” Academy of Management Review, volume 16, number 1, 1991, pp. 10–36.

54. For studies on creation, see: D.N.T. Perkins, V.F. Nieva, and E.E. Lawler III, Managing Creation: The Challenge of Building a New Organization (New York: Wiley, 1983); S.B. Sarason, The Creation of Settings and the Future Societies (San Francisco: Jossey-Bass, 1972); and A.H. Van de Ven, “Early Planning, Implementation, and Performance of New Organizations,” in J.R. Kimberly, R.H. Miles, and associates, The Organizational Life Cycle (San Francisco: Jossey-Bass, 1980), pp. 83–134. For studies on growth, see: W.H. Starbuck, ed., Organizational Growth and Development: Selected Readings (Middlesex, England: Penguin, 1971). For studies on transformation, see: J.R. Kimberly and R.E. Quinn, eds., New Futures: The Challenge of Managing Corporate Transitions (Homewood, Illinois: Dow Jones-Irwin, 1984); A.M. Mohrman, Jr., S.A. Mohrman, G.E. Ledford, Jr., T.G. Cummings, E.E. Lawler III, and associates, Large-Scale Organizational Change (San-Francisco: Jossey-Bass, 1989). For studies on decline, see: D.C. Hambrick and R.A. D’Aveni, “Large Corporate Failures as Downward Spirals,” Administrative Science Quarterly, volume 33, March 1988, pp. 1–23; R.I. Sutton, “Organizational Decline Processes: A Social Psychological Perspective,” in B.M. Staw and L.L. Cummings, eds., Research in Organizational Behavior, volume 12 (Greenwich, Connecticut: JAI Press, 1990), pp. 205–253; and S. Venkataraman, A.H. Van de Ven, J. Buckeye, and R. Hudson, “Starting Up in a Turbulent Environment,” Journal of Business Venturing, volume 5, number 5, 1990, pp. 277–295.

55. Gersick (1991), p. 10.

56. M. Crozier, The Bureaucratic Phenomenon (Chicago: University of Chicago Press, 1964), p. 196; Gersick (1991); H. Mintzberg, “Patterns in Strategy Formation,” Management Science, volume 24, number 9, 1978, pp. 934–948; Starbuck (1971), p. 68; and Van de Ven (1992).

57. L.E. Greiner, “Evolution and Revolution as Organizations Grow,” Harvard Business Review, volume 50, July–August 1972, pp. 37–46; and M.L. Tushman and P. Anderson, “Technological Discontinuities and Organizational Environments,” Administrative Science Quarterly, volume 31, September 1986, pp. 439–465.

58. P. Selznick, Leadership in Administration (Berkeley: University of California Press, 1957), pp. 103–104.

59. Tushman, W.H. Newman, and E. Romanelli, “Convergence and Upheaval: Managing the Unsteady Pace of Organizational Evolution,” California Management Review, volume 29, Fall 1986, pp. 29–44.

60. R.M. Kanter, B.A. Stein, and T.D. Jick, The Challenge of Organizational Change (New York: Free Press, 1992), pp. 375–377.

61. R. Beckhard and R.T. Harris, Organizational Transitions, second edition (Reading, Massachusetts: Addison-Wesley, 1987); K. Lewin, Field Theory in Social Science (New York: Harper, 1951); E.H. Schein, Professional Education (New York: McGraw-Hill, 1972), pp. 76–84; and N. Tichy and M. Devanna, The Transformational Leader (New York: Wiley, 1986).

62. A. Abbott, “A Primer on Sequence Methods,” Organization Science, volume 1, number 4, 1990, pp. 375–392; Monge (1990); A. Strauss and J. Corbin, Basics of Qualitative Research (Newbury Park, California: Sage, 1990: chapter 9; and Witte (1972).

63. C. Perrow, “A Framework for the Comparative Analysis of Organizations,” American Sociological Review, volume 32, number 2, 1967, pp. 194–208, quote from p. 195.

64. D.A. Garvin, “Leveraging Processes for Strategic Advantage, Harvard Business Review, volume 73, September–October 1995, pp. 76–90.

65. See, for example: Galbraith (1977); and Schlesinger, Sathe, Schlesinger, and Kotter (1992).

66. W.G. Astley and A.H. Van de Ven, “Central Perspectives and Debates in Organization Theory,” Administrative Science Quarterly, volume 28, June 1983, pp. 245–273, quote from p. 263.

67. C.A. Bartlett and S. Ghoshal, “Beyond the M-Form: Toward a Managerial Theory of the Firm,” Strategic Management Journal, volume 14, special issue, Winter 1993, pp. 23–46.

68. Hales (1986); Mintzberg (1973); Sayles (1989); and L.R. Sayles, Managerial Behavior (New York: McGraw-Hill, 1964).

69. J. Pfeffer, “Understanding Power in Organizations,” California Management Review, volume 34, Winter 1992, pp. 29–50, quote from p. 29.

70. Crozier (1964); J.G. March, “The Business Firm as a Political Coalition,” Journal of Politics, volume 24, number 4, 1962, pp. 662–678; Sayles (1989); and M.L. Tushman, “A Political Approach to Organizations: A Review and Rationale,” Academy of Management Review, volume 2, April 1977, pp. 206–216.

71. Hales (1986); J.P. Kotter, The General Managers (New York: Free Press, 1982); Mintzberg (1973); and H.E. Wrapp, “Good Managers Don’t Make Policy Decisions,” Harvard Business Review, volume 45, September–October 1967, pp. 91–99.

72. E.M. Leifer and H.C. White, “Wheeling and Annealing: Federal and Multidivisional Control,” in J.F. Short, Jr., ed., The Social Fabric (Beverly Hills, California: Sage, 1986), pp. 223–242.

73. Hill (1992); and Kotter (1982).

74. W. Skinner and W.E. Sasser, “Managers with Impact: Versatile and Inconsistent,” Harvard Business Review, volume 55, November–December 1977, pp. 140–148.

75. Examples include The Soul of a New Machine, featuring Tom West, the leader of a project to build a new minicomputer at Data General Corporation, and My Years with General Motors, written by Alfred Sloan, who resurrected General Motors in the more than twenty years that he served as the company’s chief executive and chairman. See: J.T. Kidder, The Soul of a New Machine (Boston: Little, Brown, 1981); and A.P. Sloan, Jr., My Years with General Motors (New York: Doubleday, 1963).

76. Mintzberg (1973), p. 92; Sayles (1964), chapter 9; and Hales (1986).

77. Kotter (1982).

78. J.J. Gabarro, The Dynamics of Taking Charge (Boston: Harvard Business School Press, 1987); and R. Simons, “How New Top Managers Use Control Systems as Levers of Strategic Renewal,” Strategic Management Journal, volume 15, number 3, 1994, pp. 169–189.

79. Sayles (1964).

80. Hill (1992); Kotter (1982); F. Luthans, R.M. Hodgetts, and S.A. Rosenkrantz, Real Managers (Cambridge, Massachusetts: Ballinger, 1988); and Mintzberg (1973).

81. D.J. Isenberg, “How Senior Managers Think,” Harvard Business Review, volume 62, November–December 1984, pp. 80–90, quote from p. 84.

82. Sayles (1964).

83. J.E. Dutton and S.J. Ashford, “Selling Issues to Top Management,” Academy of Management Review, volume 18, number 3, 1993, pp. 397–428; and I.C. MacMillan and W.D. Guth, “Strategy Implementation and Middle Management Coalitions,” in R. Lamb and P. Shrivastava, eds., Advances in Strategic Management, volume 3 (Greenwich, Connecticut: JAI Press, 1985), pp. 233–254.

84. D.C. Hambrick and A.A. Cannella, “Strategy Implementation as Substance and Selling,” Academy of Management Executive, volume 3, number 4, 1989, pp. 278–285.

85. Mintzberg (1973), pp. 67–71; and Sayles (1964).

86. Isenberg (1984); and M.A. Lyles and I.I. Mitroff, “Organizational Problem Formulation: An Empirical Study,” Administrative Science Quarterly, volume 25, March 1980, pp. 102–119.

87. Sayles (1964), pp. 170.

88. Mintzberg (1973), pp. 67–71.

89. D.A. Schön, The Reflective Practitioner (New York: Basic Books, 1983), chapters 1, 2, and 8.

90. MacMillan and Guth (1985); and Bower and Doz (1979), pp.152–153.

91. Mohr (1982), p. 43.

92. E.D. Chapple and L.R. Sayles, The Measure of Management (New York: Macmillan, 1961), pp. 49–50.

93. Garvin (1995).

94. E.H. Schein, Process Consultation: Lessons for Managers and Consultants (Reading, Massachusetts: Addison-Wesley, 1987); and Schein (1988).

Acknowledgments

I would like to thank Christopher Bartlett, Joseph Bower, Robert Burgelman, Roland Christensen, Michael Cusumano, Alison Davis-Blake, Lynn Garvin, Donald Hambrick, Carl Kaysen, Ashish Nanda, Philip Rosenzweig, Malcolm Salter, Leonard Sayles, Leonard Schlesinger, David Upton, Richard Walton, Gerry Zaltman, and two anonymous referees for helpful comments on earlier drafts of this article, and the Division of Research, Harvard Business School, for financial support.

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