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? • Would democracy be better for organizations?

4. Types of Power (Lukes) • Type I • Power is decision making • Whoever makes the decisions has “power” • Exercised in formal institutions • Measured by the outcomes of decisions • Type II • Decision making PLUS agenda-setting • Need to consider extent of informal influence • Do lobbyists in Washington have power?

5. Sources of power • Coercive power • Use or threats of violence • Use of organizational rules and regulations, • The ability to reward or punish (or threaten to do so) • Is threatening someone’s income stream a form of economic violence? • Formal authority • What does this mean given Lukes critique? • Ultimately, based in law (e.g. ‘at will’ employment)

6. Resource Dependency • Control of: • scarce resources, • decision making – premises, processes, objectives • knowledge/information, • boundaries, • technology, uncertainty, • informal networks, • counter-organizations

7. 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

8. Thoughts • Is lack of power a major constraint? • How important should power considerations be in management action? • Should I strive to increase my power (perhaps by creating resource dependencies or coalitions) • Does being in a coalition constrain me? • Can I make my organization less political? • The bigger the prize, the more self-interest, and the more politics – do you agree? • Politicking can also lead to gridlock

9. 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

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

11. Organizations as Instruments of Domination

12. Lukes’ Third Type of Power • Shapes preferences via values, norms, ideologies • All social interaction involves power because ideas operate behind all language and action • Not obviously measurable: we must infer its existence (how?) • These become routine… • we don’t consciously ‘think’ of them • We see them as natural or normal • Examples? • Wall street bailout is an interesting example • Teenagers went from ‘adults’ to ‘children’ during depression

13. Critical Theory • Structural factors • Class • Gender • Race • Symbolism and the management of meaning • Hegemony and ‘false consciousness’ (Gramsci) • Self-censorship and propaganda model (Chomsky) • Ideal speech situations

14. Postmodernism • Since truth cannot be verified then no idea is more privileged than another • The very development and use of the rhetoric of objectivity …represents a mere play for power, a way of silencing … ‘other ways of knowing’ ” • Weaker forms seek to unmask the social and political processes that create privileged and elitist ways of knowing – this is the power behind culture • More radical forms seek to alter the social structure to admit other ways of knowing and thereby share (or destroy) power.

15. Deconstruction • Deconstruct the narrative that… • CEOs are entitled to high salaries • The American dream is within everyone’s reach • There is a pay gap between men and women • Cutting taxes on the wealthy creates a trickle down effect • The Iraq war is being fought for freedom • Share the wealth • Is there generally a dominant discourse or competing discourses in an organization?

16. 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

17. Thoughts • Do you have constraints if the dominant discourse does not favor your group? • Are rich white men more privileged in America? If so, how? • What can be done to remove constraints created by language and beliefs? • How does this affect a CEOs ability to act? • Can corporations been seen as too dominant? • What are the implications of this? Does this create its own constraints on the powerful?

18. Organizations as psychic prisons

19. 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

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

21. 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 of 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?

22. 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

23. Unconscious processes (Freud) • 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.

24. 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

25. 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.

26. 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.

27. 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

28. Thoughts • Do what degree to psychic processes constrain the process of free choice? • How prevalent are these issues in organizations and management?

29. Organizations as Flux and Transformation

30. 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

31. Logistic Equation

32. 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

33. 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.

34. 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’

35. 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)

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

37. 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.

38. 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

39. 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

40. 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…

41. 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)

42. 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?

43. Thoughts • If small seemingly unimportant events can trigger large consequences then how much are we “in control” of events • Similarly, by putting rules in place we can direct the organization to evolve in novel directions without direct control • Do these workers have free will or are they constrained? Are these constraints better than traditional rules?

44. Disclosure (1994) • Why the title “Disclosure”? • Why did Meredith come on the Tom? • Why was everyone so ready to believe that Tom was guilty? • How did chaos theory undo Meredith numerous times in the movie? • Is this realistic or a “deus ex machina”? • Was Stephanie Kaplan a better politician than Meredith? • Why did they want to set Tom up a second time? • Why use Meredith?

45. Disclosure Quotes • "Sexual harassment is not about sex, it's about power. She has it, you don't” • “You must pounce because we don't have the harassment. It must be that Sanders is incompetent. It'll be in public. With reporters. Bob's counting on you.” • “Did it ever occur to you, Meredith, that maybe I set you up? “