Organization Theory: Strategy Implementation Process Power, Psychic Prisons, Flux, Domination Steven E. Phelan Today’s Agenda Organizations as: Political systems Psychic prisons Flux and transformation Instruments of domination 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? 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 time OR 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 regulations, Threats of violence Resource Dependency Control of: scarce resources, decision processes, knowledge/information, boundaries, technology, uncertainty, informal networks, counter-organizations Power through exchange Other factors Structural factors Gender Race Class Language 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? 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 Strengths of the political metaphor 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 metaphor 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 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). Organizations as psychic prisons Plato’s Allegory of the Cave Cognitive biases Unconscious processes 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 Cognitive biases Distorted perceptions (Rumelt) Myopia Hubris (pride in past accomplishments) Denial/defensive behavior Superstitious learning Faulty analogies 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? 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 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. 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. Defense mechanism 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 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. 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. Example 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 Result 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 dominate Ethical management acquires a new dimension 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? The flux metaphor Seeing the world as a complex and chaotic system System Dynamics Developed by Jay Forrester at MIT in the 1960s 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 + Deposits + Interest Principal + Interest Rate + Withdrawals 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 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 strategies Fitness landscapes can be rugged (with many peaks or troughs) or smooth Co-evolution creates a ‘dancing fitness landscape’ 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 Emergence Agent-Based Search Patches Self-Organized Criticality 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. 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 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 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… 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) 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? 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 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?