Review notes on Garrett Jones text on organizational theory, sixth edition

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Notes from Gareth Jones “Organizational Theory Design and Change, Sixth Edition”

notes from the preface and introduction:

  1. Jones is looking for a relevance and current textbook to summarize theory – in – use, and notes that he wants to capture the most important global themes and promises to include the following ideas:
    1. stakeholder approach
    2. product teams orientation
    3. outsourcing
    4. network organizations
    5. cultures: the origins and effects thereof
    6. organizational linkages
    7. resource dependency in the supply chain
    8. transaction cost theory
    9. the linkage between strategy and structure
    10. a global view
    11. information technology
    12. practical managerial focus
    13. he asserts that the number, dollar, value and complexity of challenges are increasing.
      1. (My note: this is a common assertion but one that is never offered in measurable context. I see this a lot in military theory which describes the current operational environment as one of unmatched complexity. There is another school of thought which says that times are as complex as they ever were and that we are underestimating the challenges of previous generations because were looking at them through the lens of certainty after the fact. I won’t disagree with the notion that the world is more connected and that there is less slack in between nodes and that feedback loops are multiplying and the consequences seem to be following a power curve in many global domains. This is a working definition of true complexity but one that is rarely defined in the preface of management books.
      2. He describes a sense of managers needing to play catch-up and adopt new forms of structure which communicates the idea of less time for reflection, and a sense that the old forms are not as effective.
      3. He believes small improvements can be exploited for competitive advantages which argues for micro strategy and rapid effective execution and adaptability as opposed to grand unifying visions of strategy to the capital S. We’ll see if that holds true in the discussions of strategy.
      4. The text describes a need for organizations to maintain continuous search to find ways to work smarter, improve efficiency and be more responsive to customers usually expressed through an IT investment. This reflects the influence of Toyota’s model.
      5. He emphasizes the need to increase our rate of innovation which can be defined as creative change that leads directly to bottom-line improvements, and not just creativity for creativity sake. Again the emphasis is on execution

Chapter 1 notes I will cover simply my reactions and points of possible discussion as opposed to restating the chapter content which I find to be a straightforward summary of management theory.

  1. I find the text lacking a discussion of risk management and its relationship as a trade-off between strategy and decision-making. And a discussion of the emergence of the modern Corporation or limited liability company as a way to pool entrepreneurship and resources. The emergence of the Corporation may be the most important political development of the second millennium since it provided the economic framework for rapid expansion of exploration of the new worlds and the development of pools of capital that had effects at the national and international level. This is a clear case of structure and implementation dramatically reshaping the environment that organizations operate in. We normally think of the environment as some immutable collection of uncontrollable processes and forces, but here’s a case where business structure change the landscape.
  2. The initial discussion of diversification is framed as one of a legal requirement and almost halfheartedly acknowledging the competitive advantage that comes from diversification. I contrast this with the modern treatment of diversification by Scott page at University of Michigan who demonstrates with math how important diversification can be as a generic strategy.
  3. I’d like to see some discussion of the tension between the constant search for innovation and adaptive change and the very human need for security and stability in the workforce which can often work against each other. I think we could describe a scale of degree of innovation along which different organizations find themselves is a function of the business environment and maturity of the domain with people naturally gravitating towards that trade-off point between security and change or security and opportunity if you will. We could say that there are national cultures or even regional cultures aligned along the dimension of change versus security. We can see today that the title of entrepreneurial leaders are moving to Asia and emerging markets and away from Europe and the United States. We could even try to tie that to a cultural driver for an entire people.
  4. The discussion of the role of CEOs as heroic leaders is very conventional and one that is dangerous. Even the case study of Malay lady frames her as almost an antihero but definitely a charismatic individual leader, whereas more scholarship is pointing towards collective leadership and cultures of opportunity as opposed to that of individual leaders. The romantic notion of individual leader is hero dominates scholarly and popular literature which is not surprising in that it offers a reward to aggressive individual behavior and plays into the myth of individual exceptionalism.
  5. I found the definition of control to be somewhat surprising in that it was framed in the context of control over the external environment, whereas it’s conventionally thought to be related to achieving specific results with your organization and competition.
  6. The text maintains the conventional idea of stock price as a measure of effectiveness that is within the control of corporate leadership. This is a one-sided view of the functioning of capital markets that is often found in scholarly literature and one which does not withstand scrutiny in practice or in the financial literature. The notion that stock price is controllable and that corporate leadership ought to try to control it leads directly into shortsighted and suboptimal behavior in pursuit of quarterly bottom line’s. That this is accepted and promulgated uncritically is disappointing.
  7. The discussion of the disconnected General Motors between strategy, operations and tactics was particularly well done.

 

Chapter 2 Notes:

  1. there is not enough discussion of the stewardship of pool interests of shareholders expressed through boards of directors. These are stakeholders that are not acknowledged in the text and whose failure generally speaking led to problems in the financial crisis of 2008 to present. Furthermore, the text adopts the language of traditional class warfare to describe top level managers “huge salaries” pejoratively, without a hint of a possibility that exceptional rewards ought to go to exceptional leaders. You can’t on the one hand call for heroic individual leadership and free markets and then present a one-sided view of remuneration as if there is some absolute scale upon which things can be measured. This is a typical assumption and shortcoming of the rational man and central planning schools of thought which have shown repeatedly their own failures in the real world.
  2. As another example, there is discussion of poison pill provisions to protect companies against takeovers as if the only reason to do that is to preserve unreasonable managerial perks. There is no can’t that it might be in a company’s best interest to fend off hostile takeovers in order to maintain their own competitive advantage with the current structure and leadership. You couldn’t detect that idea anywhere in that chapter even if you are looking for it.
  3. The text maintains the class warfare narrative by describing the tensions between managers and the workforce as if that’s the only possible way to understand the human resources dimension of a business. Under what conditions is the CEO not part of the work force you might be tempted to ask, but you won’t find any hint of that idea in the text either.
  4. There is a danger to treat customers as outside stakeholders as the text indicates, because you’re tempted to think of them as something other than the vital life force around which our entire business model is organized. If you see them as some external force that must be dealt with like the weather, you lose sight of the fact that they are your most important asset and an integral part of your business. Consider this idea: it’s much easier to hire a new worker then it is to gain a new customer. And yet there will be extensive discussions in this text on how to leverage your own workforce and not as much discussion on developing maintaining and improving customer relationships as a central challenge to the sustainability of the organization.
  5. Just as all CEOs in high-level managers are inherently bad, on page 32 you read a description of government as a benign force that can do no wrong and whose sole function is to provide adult mature regulation of the marketplace. No discussion whatsoever about the intrusion of government into business and its distorting effect on markets and prices.
  6. I’d like to see some discussion on the tension between openness in the virtual teaming environment of interconnected businesses and the need to maintain proprietary information about processes and customers as a way to preserve competitive advantage in an environment in which even small advantages can be allegedly developed into enduring advantage.
  7. The final irritation I have with this class warfare approach is the description of the workforce as”ordinary people” as if somehow middle managers and CEOs inhabit some after role-playing of privilege and advanced skill that is unknown to the average Joe. This whole stereotype of socioeconomic classes denies the possibility for entrepreneurial spirit throughout the organization and a general flattening of hierarchy which is the modern trend. This is a curious leftover almost approaching an anachronism in many businesses environments. This is particularly the case in non-US businesses in Europe and in Asia.

 

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