An organization is an adaptive system that seeks to accomplish more as a collective body than it can as self-organizing individuals. Over time, organizations evolve by making changes to their structure in order to balance the forces which the organization is under. This is important since the throughput of an organization over time is a function of an organization's ability to shape its performance in response to these forces. The success in performing these pivots is largely determined by the the behaviors of its actors, the ability to discover real customer needs, the clarity of interfaces, and crispness of transactional exchanges. These factors determine what utility an organization can offer to its customers, and the resilience it possesses as stress is introduced into its operating environment.
As described in the book Improving Performance:
An organization is a processing system that converts various resource inputs into product and service outputs, which it provides to receiving systems or markets. It also provides financial value, in the form of equity and dividends, to its shareholders. The organization is guided by its own internal criteria and feedback but is ultimately driven by the feedback from the market. The competition is also drawing on those resources and providing its products and services to the market. This entire business scenario is played out in the social, economic, and political environment.
Looking inside the organization, we see functions, or subsystems, which exist to convert the various inputs into products or services. These internal functions, or departments, have the same systems characteristics as the total organization. Finally, the organization has a control mechanism - management - that interprets and reacts to the internal and external feedback, so that the organization keeps in balance with the external environment. The intelligent use of feedback is at the heart of what has begun to be called the 'learning organization' (Senge, 1990).
An organization's effectiveness in using this feedback is a critical factor in each unit's ability to improve their performance. In Managing the Design Factory, Donald Reinertsen highlights how these interactions determine the value which a particular organization's architecture can achieve:
Like any system, the organization is composed of parts that have relationships to each other, and these relationships or interfaces determine the value of the organization. Without them the efforts of a group of people could never exceed the sum of their individual abilities. We create relationships between elements of an organization because we believe we will create some value that is not present in the individual parts. If we create this value, then we created a useful organization. If we do not we have failed in designing the organization.
It is in the nature of human endeavors to try to divide things into neat packages with well-defined boundaries around each. Nations are drawn in a map with sharp boundary lines encompassing them. Universities are divided into departments of chemistry, physics, business administration, and so on. Companies draw organization charts that partition and subdivide tasks, disciplines, and projects.
Providing that the problems, conditions, and tasks are not too complex, all of these boundaries have served remarkably well. Indeed, the applied science of systems engineering depends on just such well-defined, albeit artificial, divisions and interfaces.
Artificial boundaries, as might be expected, cause problems of their own. Geographical boundaries have caused conflicts from neighborhood squabbles to world wars. Discipline boundaries in universities, as in interdisciplinary programs like electrical engineering and chemistry, make interdisciplinary programs like electrochemistry very difficult to manage. Organization charts more often create competition than cooperation. "Turf wars", as they are called, are at the core of university, company, military service, and agency politics.
Complex systems and organizations are particularly prone to how boundaries are specified because... the interrelationships are what create the added value at the system level.
The effectiveness of the communications channels across these boundaries can delay the signal, and amplify the noise implicit in needed feedback signals necessary to refine performance.
Transferring (communicating) information up and down organizational levels can severely distort and attenuate it, unheard of in hardware. The attenuation process is a perfectly understandable one. A top-level meeting is held to discuss a new policy. All participants are told to inform their subordinates of what happened. Each does, taking perhaps 12 minutes each and certainly not the original 2 hours. The listeners are asked to inform their subordinates, which they do quickly, the policy appearing to be just one more order from above. And so on. Each "summary" cuts the volume by a factor of 10. Each "pass the word” transfer distorts the original meaning depending on who is talking and who is listening (or not).
Or, going in the opposite direction, a meeting of managers reaches conclusions that need to be interpreted and summarized for the next level supervisor, who interprets the gist of them to those above. This distortion and attenuation effect is not unique to companies. lt also afflicts military chains of command. Needless to say, it breeds a certain mistrust, if not outright cynicism up and down a chain in which a four star general is eight levels away from a second lieutenant and still more from a private on the combat line.
It takes deliberate actions to address these forces, and overcome the effect of long periods of cultural dominance, as it seeks to retain power and position, and thus resists change. As Upton Sinclair said, "It is difficult to get a man to understand something when his salary depends on his not understanding it". But self-interest is not the only factor that reinforce the status quo. Christopher Alexander explains how other patterns of tradition unfold:
Consider a simple example of a design problem, the choice of the materials to be used in the mass production of any simple household object like a vacuum cleaner. Time and motion studies show that the fewer different kinds of materials there are, the more efficient factory assembly is - and therefore demand a certain simplicity in the variety of materials used. This need for simplicity conflicts with the fact that the form will function better if we choose the best material for each separate purpose separately.
But then; on the other hand, functional diversity of materials makes for expensive and complicated joints between components, which is liable to make maintenance less easy. Further still, all three issues, simplicity, performance, and jointing, are at odds with our desire to minimize the cost of the materials. For if we choose the cheapest material for each separate task, we shall not necessarily have simplicity, nor optimum performance, nor materials which can be cleanly jointed.
Regardless of what the origins of an organization's architecture are, its robustness and utility will have a profound effect on the ability to influence and shape the group dynamics of its members, and the reliability and efficiency of the organization in producing its outputs. This is because the architecture of an organization determines how effectively the roles and responsibilities of this organization can be executed (individually and collectively), and how quickly their collective contributions can be leveraged to increase value to its customers.
There are many ways for an organization to tap into the available value - its strategies, its reward systems, its ability to embrace useful technologies, through the robustness of processes, and in ways that interactions are structured with its customers. To integrate and realize these sources of value, the organization's technical and management activities should be designed to support these 5 basic functions, which must work together across three distinct, but interrelated perspectives: work packages, processes, and jobs. Without adequate design attention to the organization's component structure and the interoperability of these components, layers will not be reconciled. Even with thoughtful design, tensions can arise between what is optimum for management control, and what is best for efficient production of outputs. Inevitably, the role of the leaders as components themselves in this system is crucial, as they are simultaneously operating within two frames of reference. First, they must balance the needs of the people and the business, as Robert Samuelson reports:
The manager mediates between the hard demands of the stock market and the soft demands of workers. On paper, there is no tension. Workers will be committed and creative if they are respected and consulted. Good ideas will bubble up from below. Managers will be rewarded for their openness and understanding. But in real life, conflicts abound. Galvanizing consensus is often time-consuming. Sometimes it’s undesirable because some ideas are better than others. And getting people to obey without alienating them is hard if they 1) disagree with you; 2) hate you; 3) are incompetent; or 4) spend the day surfing the Net...
Perhaps managers could once succeed - or at least survive - on status and technical competence. There was a chain of command. Authority was respected or feared. Machines regulated production jobs. This era has ended. The almost universal task of managers today, in our culture, is to serve twin masters, each of whom has grown more demanding. There’s the Organization with its imperatives; and there’s the Individual - each with “needs.” This is a tough job, and somebody’s got to do it.
Second, they must confront and reconcile their own limits of control, as Phillip Armour describes in The Reorg Cycle:
...the managerial problem arises from the fact that management control structures (reporting channels, accountabilities, chain-of-command) are predominantly a semi-rigid hierarchical synchronizing and controlling system, whereas what it is attempting to control is predominantly a network of fluid, event-driven interdependencies.
Pressure to perform can further amplify these control limitations, delays, and turbulence resulting from the uneven flow of work. Areas that are perceived to be under-performing typically get greater attention from senior leaders, with expectations to demonstrate immediate progress, and provide more frequent information about what is happening. Unfortunately, existing situations are usually the consequences of past behaviors, and immediate signals may just reinforce mistaken beliefs, unless the management system has been designed to incorporate responsive control mechanisms. Should many situations like this arise concurrently, the overall effect will ripple throughout the organization.
An orderly approach to organizational design is essential for component behaviors to be understood and effectively managed. Such an approach is the only way to reliably achieve meaningful and sustainable gains in effectiveness during and after any reorganization. Since change is inevitable, a commitment to periodic adjustments in the selected approach should also be made, to accommodate the evolving needs of the business over time.
The following articles describe an orderly approach for enhancing execution performance which takes account of these factors.