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Strategic Organizational Diagnosis and Design: Developing Theory for Application

Richard M. Burton and Borge Obel
Dordrecht: Kluwer Academic Publishers
1998, second edition
Cloth: ISBN 0-792-38229-3

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Reviewed by
Chris Goldspink
P.O. Box 591, Tanunda, South Australia 5352.

Cover of book

This book, by Richard Burton and Borge Obel, is presented as a research text and is accompanied by a CD ROM. This contains (Windows) software which implements a decision model (Orgcon) providing what is, in effect, an organisational design 'expert system'. The authors claim this and the text are designed for "... managers, consultants, researchers, and teachers ..." (p. 347). The theoretical basis for the decision model presented is contingency theory, with organisations modelled as 'information processing systems'. The authors stated aim was to draw on and incorporate the contingency theory literature (see Burrell and Morgan 1994 for an overview and contextualisation of this body of theory) in order to produce a guide that is sufficiently specific to be practical but not so specific as to limit its applicability to a wide range of organisations and their environments. This they have (in general) achieved, although, as will be discussed below, the assumptions inherent in the chosen theory still act as a constraint on the scope and applicability of the model.

The book offers a useful aid to research if one has an interest in testing and extending the applications of contingency theory. I am not entirely convinced that this is a fruitful direction for research because of the now widely recognised limitations of this theory and its positivist underpinnings. Burrell and Morgan (1994, p. 167) state for example "In its present state the contingency approach really stands for little more than a loosely organised set of propositions which in principle are committed to an open systems view of organisation, which are committed to some form of multivariate analysis of the relationship between key organisational variables as a basis for organisational analysis, and which endorse the view that there are no universally valid rules of organisation and management." Nevertheless, it has its staunch defenders (see for example Donaldson 1995) and it has wide acceptance as an (albeit often unquestioned) foundation to much contemporary management theory and practice. For those interested in this theory, the book presents a very good synthesis of the key propositions, findings, implications and conclusions of research in the area. The book also discusses related work on leadership and organisational climate. The theory allows the authors to develop a set of prescriptive rules as the basis for their decision model.

Burton and Obel recognise that organisation theory does not begin and end with contingency approaches. They justify the adoption of this theoretical foundation on the basis that, from their perspective, it presents one of the few frameworks that has developed sufficiently to provide a comprehensive set of internally consistent propositions or rules. While they are thorough in addressing the literature, the resulting model seems rather dated and excludes contemporary developments in organisation theory, particularly those which fall outside of the functionalist paradigm (Burrell and Morgan 1994, Goldspink 2000). Organisation theory is of course a diverse field and involves a 'pluralism' (Reed and Hughes 1992) or 'paradigm war' (McKelvey 1997) depending on your perspective. As Burton and Obel note, much organisation theory tends to describe or explain selected phenomena but be of limited value for prescriptive application. Perhaps this is a challenge for many of us, as they appear to be arguing that the practical implications of a great deal of contemporary work are unclear or underdeveloped and thus fail to provide effective guidance to practitioners.

While contingency models are generally organismic (Burrell and Morgan 1994), based on equilibrial dynamical assumptions, the model presented by Burton and Obel reflects a somewhat more mechanistic approach. The authors assume a relatively simple relationship between uncertainty and the need for more information processing capacity for example. They state, "The basic design problem is to create an organisational design that matches the demand for information processing with the information processing capacity ..." (p. 7). This statement and its context suggests that they believe there to be a linear relationship between information supply and demand, rather than considering the possibility of the need for qualitative transformations to deal with different classes of ambiguity (i.e. inherently unpredictable environments vs. inherently predictable but complex environments). This mechanism is, perhaps, a product of their desire for a prescriptive model, which can only be constructed under the assumptions of a linear relationship between cause and effect.

Turning more to the detail of the model, the authors state that it is "... constructed from the bits and pieces of the literature ..." (p. 13) (suggesting a somewhat eclectic approach) and incorporates a range of contingency factors including:

Some 450 decision rules (in the form of If - Then statements) are derived from the literature to generate recommendations depending on the contingencies present. The recommendations relate to organisational "... properties and structural configurations ...", including:

The authors specify and apply to their model four 'fit' criteria to evaluate internal consistency and to ensure 'valid' results are presented.

It is recognised that more than one contingency factor may have implications for recommendations relating to any given property and vice versa. (In other words, there is a many-to-many relationship.) Consequently, contingencies are mapped to final design recommendations using combinatorial weightings referred to as certainty factors or 'cf'. The weights are assigned based on judgements about the extent to which the contingency influences the chosen design variable and the degree of confidence in the relationship suggested by the empirical research. Hence "... if empirical evidence [of the importance of a factor] is qualified ..." (p. 25) an associated proposition will be assigned a low 'cf' and hence will make only a modest contribution to the recommendations.

Despite having derived their model and its init ial configuration from the empirical literature, the authors emphasise that it can, is, and should be continually refined by comparing recommendations with application. They stress, "... however much we improve it, it remains an imperfect expert system that requires a skilled and experienced user to apply it in a reasonable fashion ..." (p. 34). This raises questions as to the intended audience and I shall return to this matter shortly. Before doing so, it is worth considering the theoretical tradeoffs implied in the commitment made to contingency theory.

As noted previously, the theoretical core used for this model is widely accepted within contemporary management theory and practice. It has however been subjected to a broad critique and is increasingly challenged. Significant challenges to the functionalist paradigm, to which this model belongs, have come from the organisational ecology perspective (McKelvey 1994, Hannan and Freeman 1977) and the postmodern standpoint (Cooper and Burrell 1988, McKinlay and Starkey 1998, and Roos and von Krogh 1995). More recently, there has also been challenge from a complex systems perspective (Chia 1995, McKelvey 1997, Gemmill and Smith 1985, Goldstein 1989, Leifer 1989, Kay and Goldspink 2000). In choosing to select the conservative core of functionalist theory and avoid the more contested areas of the literature, the authors have set aside (or, in some instances made only passing reference to) more recent developments and challenges even within that paradigm. In particular, little to no attention is paid to 'Post Fordist' (Reed 1991) or 'flexible organisation' concepts and approaches (Daft and Lewin 1993, Miles et al. 1997). The model disregards or sets aside 'network', 'cellular' and 'virtual' organisation concepts and emerging ideas for bottom up design or pseudo markets as a basis for organising productive activity (Roy 1998). Several of these concepts are acknowledged in the text (as a boxed vignette), but are not addressed in the model except in a single loosely defined class of 'ad hoc'. The authors justify this by arguing that these new organisational forms can be accommodated within the language and conceptual framework of contingency theory. This is, of course, contrary to a strongly emerging view that new technologies and changing international markets make possible entirely new organisational forms with new and distinct management challenges. It may be true that these new approaches are relatively poorly developed in terms of practical technologies and methods and established results. This is, however, changing with increased attempts to use multi-agent and non-linear methods to research and describe organisations (Prietula et al. 1998, Carley et al. 1998). Given that a key finding of this more recent research is that organisational behaviour is highly history dependent and often characterised by discontinuous and unpredictable change, prescriptive models should not be expected anytime soon and may never be feasible. Organisations, as history dependent entities, trace trajectories that may be highly dependent on even very minor micro-differences or single decisions. It is for this reason that there is a reduced concern with (linear) expert type models and growing interest in non-linear simulation within the social sciences generally and within organisation science in particular (Gilbert and Conte 1995, Kellert 1993).

Putting the theoretical issues aside, it is worth considering the value of the book and software from the perspective and stated intent of its authors. The stated aim is to provide a decision tool for managers, students and consultants as well as to support research in related areas. The focus of the model is on providing prescriptive recommendations on organisational structure. Users are asked to identify contingent variables and the model (implemented in the Orgcon software) generates recommendations deemed appropriate to bring about a fit between these variables and organisational form. Contingency theory addresses many issues of fit between environmental and organisational variables. In the model presented the primary focus of the design task is the development of structural and procedural recommendations. Why macro-structural variables are taken as the primary design imperative is not made clear.

Considering the value of the model from the practitioners perspective, it is worth being aware that in real-world organisations, strategic choices and operational configurations are driven by what is politically feasible as much or more than what is theoretically advisable. (This is a point recognised by the authors but not significantly responded to.) Managers are often reluctant to work with a theory driven model, relying instead on their own judgement as to the appropriate tradeoffs between rational and political considerations. This can be a disadvantage as decisions made on this basis tend to be driven by short term considerations and can lead to pendulum swings where a compromise design is patched to solve one problem thus bringing another to the surface, patched again etc. The model presented here has the potential to at least surface the 'rational' solution (based on the limited theory it embraces) and may lead to a longer term perspective. This is one of its strengths and I believe one of the contributions intended by the authors. However, in my experience as an organisational consultant and a manager, and consistent with more recent theory, simple cause effect rationality is not sufficient. It is possible to change a structure to, for example, get greater responsiveness to customers (functional to devolved divisional perhaps) and get exactly the opposite outcome to that intended and that predicted by contingency theory. By changing the task system and ignoring the cultural or values system - the way in which people evaluate and construe the intent - we can get unintended consequences on a grand scale. In short, the model does not capture the complex interplay that commonly occurs between the heterogeneous agents that comprise organisations and the attendant non-linearity, path dependence and sensitivity to initial conditions. For this reason the model would not generally constitute an effective substitute for a skilled and experienced manager/consultant. This reduces its value to such users except as a personal tool for developing and considering alternative possibilities prior to the development of formal recommendation based on a broader set of judgements.

As a practitioner, I also have a concern about the degree of emphasis given within this model to formal structural and procedural issues. This could be indicative of and reinforce a preoccupation with macro-structure at the expense of other aspects of organisational management. I have significant experience of how easily this can occur and how destructive it can be. The preoccupation of many managers with macro-structure is derivative of a machine view of organisation (Morgan 1986). This is a view that leads many to believe that by 're-engineering' structure and task design, it is possible to generate the desired performance. Some become preoccupied with tweaking and fine-tuning these simple machine variables to the point of obsession. The model gives any managers and/or consultants so inclined a simple, seemingly credible tool to aid with the tweaking. Perhaps this is one of the concerns that leads the authors to suggest that the model requires a competent user. It could be argued, however, that a user who has sufficient skill to recognise potentially spurious results and who would use the model in conjunction with other judgements might have sufficient capability not to require the model in the first place.

If the model has, as I am suggesting, only limited value to managers and consultants as a tool to aid but not replace their broader judgement, what of its value to students of organisation and/or management? It is here that I believe the model has greatest potential. In order to realise this potential however, it would need to be embedded in a program which compels students to link and explain recommendations generated from the model with the literature and to critically appraise the recommendations from their own experience. Used in this way, the model would assist students to engage with the widely recognised factors that should be considered when designing organisations and begin to build an appreciation of their relative contribution and importance to the design judgement. Use in such a context also allows the limitations of the theory embedded within the model to be critically examined and permits the broader literature to be considered by way of context. My concern (and that of the authors) is that Orgcon should not be used uncritically as a basis for 'black box' evaluation of organisations. This use has the potential to detract from effective learning rather than enhancing it, obscuring the necessary judgements and decisions. In this respect then, the book and the software are essential partners.

The Orgcon software installs readily enough, although it took some time to find the password information to access it. (This information is located towards the end of the text.) Prospective users should be aware that the version shipping with the book is 16 bit. It was unhappy installed on my NT box and NT was unhappy with it, refusing to uninstall using the accompanying uninstall application. No minimum system configuration is suggested but it should be relatively undemanding in its requirements. The software ran satisfactorily under Windows 98 on my machine, a 200 MHz Pentium with 64MB of RAM. The interface and reporting lack finesse but are quite adequate for the target audience.

* References

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BURRELL G. and G. Morgan 1994. Sociological Paradigms and Organisational Analysis, Virago, London.

CARLEY K. M., M. J. Prietula and L. Zhiang 1998. Design vs. Cognition: The Interaction of Agent Cognition and Organizational Design on Organizational Performance. Journal of Artificial Societies and Social Simulation, 1(3), <http://jasss.soc.surrey.ac.uk/1/ 3/4.html>.

CHIA R. 1995. From Modern to Post-Modern Organizational Analysis. Organization Studies, 16:580-594.

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MCKINLAY A. and K. Starkey eds. 1998. Foucault, Management and Organization Theory, Sage, Thousand Oaks, CA.

MILES R. E., C. C. Snow, J. A. Matthews, G. Miles and H. J. Coleman 1997. Organizing in the Knowledge Age: Anticipating the Cellular Form. Academy of Management Executive, 11:7-24.

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