Organization Theory:
Strategy Implementation
Power, Psychic Prisons, Flux,
Steven E. Phelan
Today’s Agenda
Organizations as:
Political systems
Psychic prisons
Flux and transformation
Instruments of domination
Organizations as political
Power – the ability to get what you want, when
you want
Politics – the process of acquiring and using
As no-one can get everything they want when
they want it, politics inevitably involves
coalitions, compromises, and conflict
According to Morgan, many organizations have
strong autocratic tendencies – does that mean
CEOs always get what they want?
How politicized is your
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 time
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.
Sources of power
Coercive power
Formal authority
Use of organizational rules and
Threats of violence
Resource Dependency
Control of:
 scarce
 decision processes,
 knowledge/information,
 boundaries,
 technology, uncertainty,
 informal networks,
 counter-organizations
Power through exchange
Other factors
Structural factors
Symbolism and the management of meaning
Hegemony and ‘false consciousness’
Expectations management
Power and ethics
Are these tactics from the 48 laws of power ethical?
#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
Strengths of the political
We see how all organizational activity is interestbased
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
Limitations of the political
Politics can breed more politics
It underplays gross inequalities in power
and influence
Implications for strategy implementation:
Quinn’s logical incrementalism
Strategy deals with:
unknowable (irresolvable) uncertainty
failure brings political fallout
Proceed experimentally and flexibly
Conceal true goals and intentions
Build awareness and credibility to legitimize new
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
Organizations as psychic
Plato’s Allegory of the Cave
Cognitive biases
Unconscious processes
We cannot fail
We are right and just, God is with us
the enemy are evil monsters
Pressure on group members to conform
acting as though silence equals agreement
Rationalization of conflicting evidence
Cognitive biases
Distorted perceptions (Rumelt)
Hubris (pride in past accomplishments)
Denial/defensive behavior
Superstitious learning
Faulty analogies
Cognitive biases
Easily recalled events are judged as having higher frequencies
Crime, earthquakes, plane crashes, tech company bankruptcies
We make decisions based on representative probabilities
In families we six children, which sequence of boys and girls is
least likely:
We are not surprised by what happened in the past – we tend to
focus on single factor explanations
Why did Enron fail?
Cognitive biases
Escalation of commitment
If a bet or investment goes poorly we tend to
increase our efforts next time instead of walking
Illusion of control
e.g. tossing dice, playing slots
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
Unconscious processes
Freud divides the brain into ID, EGO, and
operates according to the pleasure principle i.e. it
seeks pleasure and avoids pain.
It is our animal instincts – need for food, sexual
Operates according to the reality principle.
It controls the id's drive for immediate satisfaction
until an appropriate outlet can be found.
Unconscious processes
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.
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.
Defense mechanism
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.)
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
Defense mechanisms
an individual attempts to avoid current anxiety by
withdrawing to the behavior patterns of an earlier age.
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
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.
Defense mechanisms
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.
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.
Psychoanalysis of political correctness
Various disadvantaged groups clamoring for
recognition and compensation
Importance of being seen as the victim
Lots of dissent within PC groups
A case of regression and projection
All my problems will be solved if X happens
This is a narcissistic ID phantasy
Projection of unconscious desire onto others
(fellow victims)
Rejection of reality principle and ego/superego
never happy, not happy for others, can never be happy
Dreaming of a utopian ideal of perfect love from mother
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
Ethical management acquires a new dimension
Limitations of psychic
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
There is a danger that the insights of the
metaphor can be used to exploit the
unconscious for organizational gain
Implications for strategy implementation?
The flux metaphor
Seeing the world as a complex and
chaotic system
System Dynamics
Developed by Jay Forrester at MIT in the
Concepts include:
positive and negative feedback loops,
stocks and flows
Re-popularized by Peter Senge in the 1990s
as the Fifth Discipline
Forrester moved from industrial dynamics to
city dynamics to world dynamics over a ten
year period
Simple SD Model
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
Logistic Equation
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
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 as any 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.
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
Fitness landscapes can be rugged (with many
peaks or troughs) or smooth
Co-evolution creates a ‘dancing fitness
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)
Key Result Areas
Some key results in complexity theory
have proved important for management
Agent-Based Search
Self-Organized Criticality
“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
Cohesion: steer to move toward the average position of
local flockmates.
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
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
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
Complexity as Metaphor
Complexity theory has been extended
from biology and physics into other
Undoubtedly, societies, economies, and
organizations are complex adaptive
systems, too.
If an organization is like an NK model
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)
Strengths and limitations of
flux metaphor
We think of the limits of forecasting,
prediction, and control
We think about adaptation rather than
Is there really an analogy between the
results of computer simulations of physical
systems and business?
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
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
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?

Corporate Strategy