Organization Theory: Strategy Implementation Process

1. Organization Theory: Strategy Implementation Process Power, Psychic Prisons, Domination, Flux Steven E. Phelan

2. Organizations as Political Systems

3. 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?

4. 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.

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

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

7. Implications for strategy implementation: Quinn’s 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 don’t be associated with failure).

8. 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 people’s fantasies • #38 Think as you like but behave like others • #45 Preach the need for change but never reform too much

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

10. 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

11. Limitations of the political metaphor • Politics can breed more politics • It underplays gross inequalities in power and influence

12. Organizations as Instruments of Domination

13. 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 don’t have a voice • Issue of hegemony and false consciousness • Concept of “Ideal speech situations” • Democracy as window dressing for the elites

14. 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?

15. Organizations as psychic prisons • Plato’s Allegory of the Cave • Cognitive biases • Unconscious processes

16. 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

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

18. 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?

19. 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

20. 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.

21. 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.

22. 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

23. 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.

24. 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.

25. 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?

26. 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

27. 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?

28. Organizations as Flux and Transformation

29. 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

30. Logistic Equation

31. 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

32. What is complexity theory? • Based on an agent…an ant in a colony, an electron in an atom, a worker in a company... • A complex system is defined asany 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.

33. 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’

34. 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)

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

36. Emergence • Emergence • “Order for free” – no central control! • Simple/local interactions produce “interesting” (unanticipated) outcomes at the macro-level (e.g. boids) Examples • Craig Reynold’s 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.

37. 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

38. 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

39. 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…

40. 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)

41. 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?