Building Blocks for Organization of Future
Management research in the last many decades identified various key elements and processes for building effective organizations. They include strategy, structure, systems, leadership, culture and many other similar concepts[i]. The insights are mostly based on the premise that the exchange process between the firm and environment should be mutually beneficial. This exchange process covers resources, such as capital, manpower, technology, and also includes obligations and expectations from various stakeholders. This perspective, which calls for dynamic equilibrium between firm and environment[ii] provided a broad canvas on which many possible organizational archetypes and building blocks could be drawn. However, when the external environment changes significantly, it calls into debate the likely new features of the organization of future, so that exchange process remains relevant and beneficial. The likely new features could include changes in the existing organizational features, or new concepts that were not considered or implemented previously. The purpose of this paper is to discuss the building blocks of the organizations of the future on the premise that external environment has changed in significant ways from the time and context in which many of current management concepts originated and became mainstream. The first section of this paper therefore draws on main changes in the environment. Management research on organizations is expansive, and any given enquiry has enormous variety and volume. To build a useful, yet manageable debate, it is useful to understand the context and limitations of existing management objectives. This is the purpose of the second section. Third section takes and develops few ideas in the context of limitations of existing ideas and emerging challenges.
1.0 External Environmental Context
While it is recognised that environment has changed, and continues to change, there is a debate on the changes that matter and ways in which they could matter. Though main changes relate to technology, globalisation, demography and economic context, it is also the properties of these changes, such as speed, scope and unpredictability, that matter and influence organizational agenda.
A secondary effect of these main changes, which is increasingly relevant at organizational level, is that each of these changes are being experienced at the same time leading to an important interaction effect. This simultaneity of mega-changes, along with their properties, has implications for organizations, as cause and effect relationships between decisions and outcomes become unclear, and unintended consequences become salient.
Yet another type of mega-change that is only slowly coming in the mainstream deals with the legacy effects of past economic, political and industrial policies of last many decades. At the economic and political level, various societies, regardless of their economic and political beliefs, are at a point, where the long-term effects of many years of policies have accumulated and started showing up and bear upon organizational priorities. These effects relate to economic and political polarisation (most important of them being economic inequality, but also employment opportunities), climate change, lack of requisite diversity, neglect of overall employee well-being, and unintended consequences of regulations.
There is a tradition in organizational research which suggests that organizations are not the passive receiver of the environment. Indeed, firms choose the environmental niches, “enact” their environments, negotiate their environments, and sometimes attempt to change the environments in which they compete[iii]. Environment therefore is not one single quantity or quality, and organizations could make or create choices. It is in this context that these three different types of changes, namely, nature and properties of change drivers, interaction effects, and legacy and unintended consequences of past practices are being discussed. While they seem like a challenge to be addressed, they also present opportunities to be explored.
1.1 Nature and Properties of Change Elements
While technology, economic policies, globalisation and demographic factors are new “change constants” at the macro level, it is also true that they were almost always change drivers. In that context, it is important to analyse what, if any, has changed in these “change constants” and their implications.
An important change that has become mainstream is the prominence of intangible economy. Our organizational templates are mainly based on concepts of strategy, structure, design and leadership, that originated mainly under the tangible economy context, and they continue to be in use today. We are now slowly beginning to develop some appreciation of market forces in the context of intangible economy. Jonathan Haskel and Stian Westlake in their book, Capitalism Without Capital[iv], identified four Ss of ‘intangible investment’, namely, Scalability, Sunkenness, Spillover and Synergies. These four elements, and possibly others, indicate the new context in which new management processes and concepts apply.
In addition, anecdotally speaking, it can be argued that the properties of change, such as range, speed, unpredictability, and likely consequences of change also have increased. Businesses built on digital assets/technologies are also subject to non-linear growth – or decline – and subject to Power Laws[v]. This also has management implications, as it is difficult to predict whether a given change, particularly in areas of technology, will post-facto turn out to be an important or strategic.
1.2 Interaction Effects
An important feature of the new context deals with how various change drivers interact to make the decision making and outcome analysis a complex undertaking. Firms no longer deal with individual change drivers on a stand-alone basis. They are now simultaneously subject to various types of changes happening. By their nature, interaction effects are difficult to reliably understand, except perhaps in controlled experiments. Yet, it is the interaction effects, and interdependencies, involving choices and inter-dependencies from other stakeholders (particularly competitors) that make a system really complex and lend to it many of its properties. Scott Page[vi] referred to this as dancing landscape (the other types being Mount Fuji and Rugged Landscapes). Scott identifies various implications to say that rugged landscapes have a good chance of repaying investment, where dancing landscapes do not; and, how a problem is encoded determines the landscape. If interaction effects contribute to complexity, it calls for identifying features that a complex system gives rise to and that future building blocks should address. In his work, How Complex Systems Fail, Cook[vii] identified eighteen such features. These features require reflection while considering the building blocks of future organizations.
1.3 Legacy and Unintended Consequences of Past Policies
We are seeing legacy and unintended consequences (of past policies) that accumulate slowly and reach a tipping point only after a long time has passed. These consequences include, but not limited to, climate change, lack of requisite diversity, income inequities, regulatory arbitrage, privacy risks, insufficient social responsibility and loss of connection with society and community concerns. It is being increasingly recognised that the consequences of firms’ lack of focus on broader stakeholder needs has led to an economic and political polarisation. This has, in turn, led to loss of trust in organizations and its leaders. It is not necessary if firms caused or played a role in them; what is perhaps important is that such effects are likely to be on the organizational agenda in near future. It can be argued that this also presents a good opportunity for any firm to build strategic advantage by filling in or addressing these challenges.
The above description provides a context on the changes in environment context, and likely implications for the organization of future.
2.0 Framework for the Organization of Future
While the above list of challenges seems daunting, there are few core elements running through them. Firms face phenomenon of organized complexity, which Hayek defined as phenomenon where the “character of the structures … depends not only on the properties of the individual elements of which they are composed, and the relative frequency with which they occur, but also on the manner in which the individual elements are connected with each other”[viii].
Secondly, there is a loss of trust among stakeholders and a feeling of disappointment. This is expressed differently, such as failed capitalism, lack of business credibility, and dis-engaged employees.
Finally, there is a shifting notion of value, most notably, consumer value, but also employee value, social value, and economic value. The notions of value in early days meant the availability of product, preferably at reasonable price and performance level. Employee value largely referred to an engaging and fair job. Social and economic values were largely on creating jobs, so that there is general economic well-being. The notion that organization success and social value could head in different directions, or even become zero-sum game, was hard to conceive in early days of production-led, supplier economies. In early days of economic growth, high production, more profits, and more jobs –possibly more pay – were connected and possibly correlated.
That businesses increasingly deal with challenges with regards to uncertainty, loss of trust and need to create value is anecdotally seen as a given. The Global Financial Crises 2008 contributed further to the urgency of debate on these issues. While organizational inertia and lack of knowledge could be cited as reasons for lack of progress to deal with such challenges, it is also likely that there is abundance of learned helplessness and negative narratives. This abundance leads to self-fulfilling prophecy of firms not becoming effective and opening the discussion for positive ideas. As Ghoshal[ix] argued, unlike physical sciences, management theories have the power to change the reality. In his words,
A theory of subatomic particles or of the universe – right or wrong – does not change the behaviour of those particles or of the universe. If a theory assumes that the sun goes around the earth, it does not change what the sun actually does. So, if the theory is wrong, the truth is preserved for discovery by someone else. In contrast, a management theory – if it gains sufficient currency – changes the behaviours of managers who start acting in accordance with the theory. (pg. 77)
Ghoshal referred to the prevalence of negative narratives as ideology-based gloomy vision and attributed it to the focus towards solving “the negative problem of containing the costs of human imperfections”. An important organizational implication, therefore, is to provide “sufficient currency” to positive narratives or different management ideas, so that momentum to build effective organizations is re-instated. This will involve a re-consideration of existing management ideas with alternatives that build positive narratives. The core ideas that could contribute towards building blocks of future organizations may focus on being purposeful and relevant for various stakeholders by getting better at uncertainty management, trust building, and delivering value.
3.0 Building Blocks
This paper posits that building a positive narrative and organizational credibility will need a re-consideration of the main concepts, such as organizational strategy and goals, leadership, technology and risk sharing, all of which, if reframed in the context of future organizations and executed in right way, could lead towards creation of unique value to consumers. These specific building blocks could be means or ends, and due to inter-connectedness, they also reinforce each other and be synergistic.
3.1 Organizational Purpose
Organizational purpose held an eminent position as a key building block in the early management writings[x]. The idea that organizations need to be guided by an enduring purpose was manifested variedly in the form of mission statements, core values, organizational culture and organizations as institutions. Strategy literature in late 70s and later, in general, stressed on the product-market choices and industry characteristics. It focussed, with some exceptions, on the “value-appropriation” (or value extraction) as opposed to “value-creation” as key to organizational success[xi]. An example of the ideological and rational/analytical hold of this approach on management practice is perhaps best illustrated in an anecdote from Jim Collins[xii].
“On Aug 23, 1937…, two recently-graduated engineers met to consider founding a new company…” which concluded by a startling statement: “The question of what to manufacture was postponed…. In the early 1990s, I would challenge my students:” Rate this start up on a scale of 1 to 10…the average score would be about a 3, my MBA students blasting the founders for lack of focus, lack of a great idea… lack of just about everything that would earn a passing grade…Then I’d say, “Oh, one more little detail. The names of the founders were Bill Hewlett and David Packard…The students sat in stunned silence… How could this be? “But we’re taught that you need a clear understanding of how you will create competitive advantage—a great idea for launching an enterprise.”… But they had a great idea—the ultimate source of competitive advantage—if you can just see it,” I’d push back. “What might that be?” After ten or fifteen minutes, someone would likely voice the key point: Bill Hewlett and David Packard’s greatest product was not the audio oscillator, the pocket calculator or the minicomputer. Their greatest product was the Hewlett-Packard Company and their greatest idea was The HP Way.”
The rise of agency theory with its focus on stock performance guided management actions towards strategy and share price for the later part of last century, there were also notable exceptions. Barlett and Ghoshal[xiii] stressed on the role organizational purpose and argued that the role of top management should shift from strategy to organizational purpose. In his work, Hammermesh[xiv] sought to integrate strategy and purpose by identifying a three-level framework consisting of institutional strategy (similar to organizational purpose), corporate strategy (the collective organizational diversification profile and choice of businesses) and business strategy (competitive postures within a given product-market). The economic uncertainties of the 1970s stressed the role of culture and values, primarily due to the success of cheap, but high-quality Japanese goods into the US market. The idea of culture as a source of competitive advantage was helped by the works of Ouchi[xv] and Pascale and Athos[xvi]. The famous quote, “Culture eats strategy for breakfast”[xvii] probably signified the role of culture. It is not clear from the research whether organizations acquiesced to culture as a competitive tool or understood and practiced it in strategic terms, as their version of “HP way”.
It is perhaps useful to reflect as to why, despite its early recognition, organizational purpose as a general operating system for organizational effectiveness has not gained currency. Speaking anecdotally, there could be multiple reasons, such as commitment towards purpose is more likely with founders than with professional managers, whose motivations and incentives differ. The short- term nature of decision-making did not encourage senior leaders to look at capability building and purpose as a success matric.
Organization purpose and its variants, such as values and culture are also “soft” in nature and building them over does not create “macho” image with most stakeholders.
Finally, the prescriptions of agency theory, which included maximisation of shareholders’ wealth, could also have contributed to the eclipse of organizational purpose as a building block. A single-minded focus on share price could lead to neglect of organizational purpose, because everything that could lead to purpose may not lead to maximisation of share price and vice versa, and thus optically and in short-run, there could be a zero sum game between the shareholders’ wealth maximisation and organizational purpose. Finally, as Ghoshal argued management theory increasingly focussed on the “the negative problem of containing the costs of human imperfections”, which as a corollary meant less attention on positive aspects of human agency in organizational endeavours.
Organizational purpose as a source of competitive advantage has a long ancestry. Management thinkers, such as Chester Bernard[xviii] and Peter Drucker[xix] stressed on it in their writings. It was also covered with institutional perspective by Peter Selznick[xx]. The works of Jim Collins[xxi] and others also stress on the role of organizational purpose as contributing to long term success. The changes in organizational environments, as outlined in previous sections, suggest that focus on bottom line improvement through cost savings is subject to diminishing returns, and increasingly growth –and top line improvement – may become new organizational imperatives. Growth through new products and innovation requires capabilities that are more aligned to purpose focused organization than to share price focused organization. Finally, the socio-economic and demographic order is undergoing change, and there is an expectation from firms to embrace a broader stakeholders’ perspective.
The role of organizational purpose calls into question the significance of strategy to build organizations. Strategy has been the leading concept, and one of the most researched topics in management research. Much of the work in the past on strategy however was focussed on using it as a “value extraction” as opposed to “value creation” framework. The use of organizational purpose as the higher justification for organizational existence enables the strategy to be value-creation as opposed to value extraction focussed. Viewed in this context, strategy is sub-ordinate to purpose, or as Hamermesh’s framework depicted, corporate strategy is at one level below institutional strategy, which is equivalent to organizational purpose.
3.2 Post Heroic Leadership in Postmodern Organizations
In organizational life, leadership is the main currency in which most organizational debates are traded. It is therefore useful to look at the role of leadership in a broader perspective. Though the leadership research till date is extremely broad and comprehensive, the challenge is not primarily with respect to absence of knowledge, but possibly on why prescriptions of good leadership practices have proved to be so hard to implement. Are these prescriptions dis-connected with real life, or we need a different way to looking at leadership? Do we need more of heroic leadership (given uncertainties and need for strong direction) or less of it (by empowering employees to do the right things)? What are the important challenges that a postmodern organization faces, which leadership needs to prepare organizations for?
The concept of postmodern organizations refers to “organizations that have broken with the traditional principles of organization as defined by modernist theory dominated by rationalism; they are also characterized by having developed new and original forms and practices in response to the changing environmental conditions of postmodern society”[xxii]. In a comparison between modern and postmodern organizations, the leader archetype was seen as heroic in modern organization (in contract to post-heroic in post-modern organization) and employee relations were seen as collective, dialectical and mistrust in modern organizations (in contrast to polyphonic, dialogical and trust in post-modern organizations)[xxiii].
Leadership practice has traditionally celebrated the charismatic and heroic leadership in modern organizations, and there is a growing recognition of this bias. Mintzberg[xxiv] observed that “great organizations, once created, do not need great leaders”. Cain[xxv] drew attention to the value that quiet people bring in all walks of life, including in leadership and organizational contexts. The concept of post-heroic leadership (in post-modern organizations) is still in the formative stage, and debate on it has not yet become mainstream. That said, it is possible to offer few ideas on what post-heroic leadership may look like.
- Perhaps one of the important features of post heroic leadership is likely to be a renewed focus on trust-building. An important feature of modern organizations is loss of trust in businesses and leaders. Research and anecdotal accounts suggest that 87% employees globally are not engaged or actively dis-engaged[xxvi], trust has declined in business and other institutions[xxvii] and the half-life of U.S. publicly traded companies is 10.5 years[xxviii]. While corporate scandals, such as Enron and World.com have eroded public confidence in businesses, the events later-on, such as Global Financial Crises 2008, and, more recently, use of private data for commercial gains have only solidified dis-trust in large businesses, particularly in the digital sector.
- In his work, “Skin in the Game”, Taleb[xxix] lamented that leaders lack the skin in the game in modern world. This is exemplified by the low downside for leaders (and CEOs) who failed their organizations but managed to earn large pay-checks and bonuses for themselves. While skin in the game is characterised by the symmetrical exposure to upside and downside in leadership decisions, Taleb also discussed “Soul in the Game”, which refers to investment in the well-being of collectivist without expectation of upside for self. It is likely that post heroic leadership concept will emphasise a behaviour and approach that falls between “Skin in the Game” and “Soul in the Game”. The idea of skin in the game is also being enforced through regulation, such as Senior Management Regime (SMR) in UK and changes in executive compensation regulations, which allow for malus and clawbacks of incentives, and prohibit severance packages that in case of exits due to leadership failures.
- Noted management thinker and researcher, Jim Collins[xxx] challenged thinking on decision making by arguing that conventional view focusses on what of decision making (e.g., strategy); in reality, great decisions that build organizational excellence were “who” decisions, i.e., people decisions. The conventional focus on “what” leaders do is possibly aligned to the eminence that strategy (as opposed to purpose) has in shaping organizational agenda. An emphasis on “who” decisions over “what” decisions also suggests a negation of heroic leadership. A focus on “who” decisions in essence makes the leadership collective, and this could be another yet another feature of post-heroic leadership.
3.3 Digital Technology and its influence on Risk and Consumer Value
While the important role of digital technologies in modern economy is well recognized, it is likely that the full range of potentialities and uncertainties will become known with the passage of time as emerging technologies evolve and interact in unexpected ways. An increasingly important role of digital technology raises important questions for the firm and leadership: What does technology mean for the firm? Is it a stand-alone technical initiative? What organizational capabilities are needed to harness its scope and potential to the full? Importantly, what are the key leadership challenges involved whilst leveraging on technology?
The answers to above questions are usually framed in terms of using technology to create more consumer choices (through new products and services, experiences, low prices, etc.), increase in productivity and profitability, and better management. Technology could lead to more consumer value, but it could possibly could also lead to loss of consumer trust (as shown by Facebook example), higher risks (as evidenced by various data breaches, and also failure of risk models during 2008 financial crises) leading to a debatable, if not harmful, “consumer” or societal value (as evidenced by hasty deployment of algorithms)[xxxi]. Viewed in this context, role of leadership is creation of a culture, where technology leads to more consumer choices, whilst building consumer value, trust and risk management.
- Consumer value is largely understood in terms of ability of technology to create new products and services, lower prices and improve logistics to create superior consumer choices. While this is true in the aggregate or at macro level, digital technology could also limit consumer choices through a lock-in. In the early days of software, practices known as “bundling” were seen as potential sources of monopoly and restricting consumer choices. Haskel and Westlake identified synergies and spill over as two of the four main characteristics of intangible economy. Synergies and spill overs create an eco-system that increase the incentives for firms to “lock up” consumer choices, and by increasing the switching costs for consumers, dis-incentivises consumers to try out other options. It can be argued that the very nature of intangible economy therefore has a bias towards forming closed system and limiting consumer choices outside of it. Organizations have an important choice as to the extent they want to be open system as opposed to closed system to create consumer value, and whether their perception of consumer choices aligns with consumers’ view or expectations of choices.
In the traditional economic context, competition served the role of increasing consumer value. Digital economy, in theory, is expected to be more competitive through low entry barrier and low capital requirements; however, the acquisition of innovative start-ups by established digital firms (such as Facebook acquisition of WhatsApp and Instagram) limits the consumer choices broadly, as acquired start-ups are integrated into the existing closed eco-system of the main firm. It is debatable, therefore, whether competition creates an effective consumer value and choice in the digital context.
- Since the collapse of dot.com bubble and 2008 Financial Crises, the trust in businesses and its leaders has been under scrutiny, and the recent events of data privacy (e.g., at Facebook) and opening of fake accounts at Wells Fargo have raised larger questions about level of trust in businesses. The nature of loss of trust itself has changed from lack of right motives to lack of awareness and ability to fix things, even if motives are right. In addition, digital technologies create an eco-system of inter-connectedness and unintended consequences. As Kartik Hosanagar[xxxii] explains in the context of Facebook:
By unintended consequences, I’m referring to situations where perhaps you optimize some aspect of a decision, but then something else goes wrong. For example, when Facebook was manually curating its trending stories through human editors, it was accused of having a left-leaning bias–these editors supposedly were choosing left-leaning stories and curating those more often. So Facebook used an algorithm for this curation and then tested it for political bias. It did not have any political bias, but there was something else it had which they hadn’t explicitly tested for, which is fake news. The algorithm curated fake news stories and circulated them. That’s an example of unintended consequences, and algorithm design can drive that.
As the above example indicates, the unexpected and unintended consequences make the task of building trust more challenging. This raises an important question: Given that digital technologies are fraught with unintended consequences, what can leadership do to ensure that the firm keeps trust with its stakeholders. Building trust is about taking proactive steps, such as emphasising the purpose, culture, and understanding the limitations, or dangers, of market driven matrices, such as sales volume, market share, stock price, etc. However, in digital world, it is expected that unexpected trust breaches will happen and that it is practically not feasible to anticipate and plan for everything. In such instances, trust building, or re-pair, is also about leadership and crises management. Johnson and Johnson’s recall of thirty-one millions of Tylenol’s capsules in 1982 “produced a textbook approach to proper crises management that is still considered the gold standard.”[xxxiii] In a digital economy, the unexpected and unintended is likely to happen, an important leadership task is to have organizational capabilities ready for various scenarios and an organizational direction rooted in its purpose.
- Digital technologies influence organizational risk-profile both directly and indirectly. Direct risk impact could be in terms of inadequate quality control in digital products (such as use of inadequately tested algorithms), inadequate data security safeguards, and higher level of confidence and performance claims in the products (e.g., technology based risk models in financial services, which many claim gave false confidence; algorithms[xxxiv]; issues with respect to claims by Lumosity[xxxv] and Theranos[xxxvi]).
In the digital context, it is not enough for a firm to be digitally bulletproof in risk matters – assuming it is possible. Firms are also exposed to a variety of risks, because they operate in a digital eco-system, where actions of a given firm may have consequences for other firms in the other firms. Firms are therefore exposed to systemic risk as much as firm-specific risks, as the experience of 2008 Financial Crises, regular incidents of data-breaches, and growing debates of “fake news” indicate. The risks from digital technologies are not always technical in nature, as any digital product or service exists in a particular social-economic context. Hosanagar[xxxvii] explains this in the context of Microsoft chatbot experience:
“… Microsoft’s experience with a chatbot called “Xiaobing” or “Xiaoice.” This was a chatbot created in the avatar of a teenage girl. It’s meant to engage in fun, playful conversations with young adults and teenagers. This chatbot has about 40 million followers in China, and reports say that roughly a quarter of those followers have said, “I love you” to Xiaoice. That’s the kind of affection and following it has. Inspired by the success of Xiaoice in China, Microsoft decided to test a similar chatbot in the U.S. They created a chatbot in English, which would engage in fun, playful conversations with young adults and teenagers. They launched it on Twitter under the name “Tay,” but this chatbot’s experience was very different and short-lived. Within an hour of launching, the chatbot turned sexist, racist, and fascist. It tweeted very offensively. It said things like, “Hitler was right.” Microsoft shut it down within 24 hours. Later that year, MIT’s Technology Review rated Microsoft’s Tay as the “Worst Technology of the Year.” That incident made me question how two similar chatbots or pieces of AI built by the same company could produce such different results. What does that mean for us in terms of using these systems, these algorithms, for a lot of our decisions in our personal and professional lives?”
Besides the direct, indirect, systemic and cultural risk implications of digital technologies, there is also a change in the risk-profile of “risks” itself. Digital technologies have enabled a greater interconnectedness in data ecosystems, but also in logistics and distribution systems making complex and efficient supply chains possible. This interconnectedness has led to portfolio of risks, which as an individual risk have a small probability, but when seen in the context of large number of such small probability risk events, the cumulative risk exposure is higher. Condoleezza Rice and Amy Zegart[xxxviii] made the point with respect to political risk in 21st century, presumably in a digital context. In their words,
“While the probability that a single political risk will affect a company’s business in a particular city tomorrow may be low, the probability that over time some political risk somewhere in the world will significantly affect its business is surprisingly high. Add up a string of rare events, and you’ll find that the overall incidence is not so rare after all.”
The above suggests that digital technologies lead to their own unique risks, but also change the profile of “traditional” risks, because of interconnectedness and cumulative risks. Organizations are therefore subject to risk profiles, which are different in quantitative and qualitative terms from the traditional risk profiles. Given this analysis, it is perhaps important to ask, what can leaders do to prepare firms for the “new” risk profiles? In their article, Taleb, Goldstein and Spitznagel[xxxix] suggested six mistakes that executives make in risk management, which are:
- Thinking that risk can be managed by predicting extreme events
- Belief that studying the past will help to manage risk
- Do’s listen to advice about what we should not do
- Assume that risk can be measured by standard deviation
- Do not understand what is mathematically equivalent is not psychologically so
- Belief that efficiency and maximising shareholder value don’t tolerate redundancy.
In a roundtable on “Managing Risk in the New World”, Robert Simon[xl] argued that using the mind-set of risk-return trade-off (applicable to portfolio and individual investment decisions) to analysis of risks that “affect customers, employees and the long-term viability of a firm. The danger with those risks is that if we start talking about risk-return trade-off, we might rationalize getting into things that we should stay out of. The best firms, I think, have a clear sense of what they will not do under any circumstances”.
The purpose of this paper was to identify the building blocks of postmodern organizations, which may exhibit different characteristics from modern organizations dominated by rationalism ideas. The article argued that firms (which in our framework are postmodern organizations) are subject to changes that are qualitatively different and anchored in properties of change (unpredictability, cope and speed), interaction effects among various change elements, and implications of legacy choices made at firm and also macro-economic levels. Organization writings and belief systems have in last many decades been guided by Agency theory and its prescriptions, including primacy of shareholder’s wealth maximisation as firms’ objective. This encouraged a context, where, noted management scholar, Ghosal argued that bad management theories started destroying good management practices. Noble prize-winning economist Hayek pointed to such risks in his noble lecture, where he drew attention to the phenomena of organized complexity and argued that it is closer to the context and reality of social sciences. The prescriptions of agency theory are increasingly under debate and challenge for multiple reasons including financial crises and its impact, growing income and wealth inequities, corporate governance failures and organizational disconnect from other stakeholders. This article argues organizational purpose, post-heroic leadership in postmodern organization, and leveraging digital technologies with emphasis on customer value, trust and risk management as the building blocks of postmodern organization.
[i] There are many frameworks that identify and build frameworks on such elements. Perhaps an important one in terms of impact on business practice was by Robert H Waterman and Tom Peters, In Search of Excellence: Lessons from America’s Best-Run Companies, (London: Profile Books Ltd, 2015)
[ii] Thompson, James D, Organizations in Action: Social Science Bases of Administrative Theory. (London: McGraw-Hill, 1967)
[iii] Pfeffer, Jeffrey and Salancik, Gerald R, The External Control of Organizations: A Resource Dependence Perspective (London: Harper & Row, 1978)
[iv] Jonathan Haskel and Stian Westlake, Capitalism without Capital. The Rise of the Intangible Economy”. (Oxfordshire: Princeton University Press, 2018)
[v] Buchanan, Mark (2004) Power Laws & the New Science of Complexity Management. strategy+business. Spring 2004. Issue 4. (originally published by Booz & Company). Accessed 11 Nov 2019. https://www.strategy-business.com/article/04107. In statistics, a power law is a functional relationship between two quantities, where a relative change in one quantity results in a proportional relative change in the other quantity, independent of the initial size of those quantities: one quantity varies as a power of another.
[vi] “Simple, Rugged, and Dancing Landscapes Lecture 2 I Understanding Complexity (Course number 5181) I Page, Scott E.” The Great Courses. Accessed August 26, 2019. https://www.thegreatcourses.co.uk/courses/understanding-complexity.html
In the lecture 2 referred to above, Scott Page referred to three categories of landscapes: Mount Fuji (single global peak), rugged (many local peaks; could be difficult to find the global peak) and dancing landscapes (single or multiple peaks, but they could change over time as landscape dances). Scott highlighted difference between rugged and dancing landscape in terms of interactions involved. In rugged landscapes, the interactions are between agent’s choices, while in case of dancing landscape, there are interdependencies between agent’s choices and action of others.
[vii] Cook, Richard I (2000). How Complex Systems Fail. Cognitive technologies Laboratory. Revision D (00.04.21). Pp 1-5. Accessed August 26, 2019. https://web.mit.edu/2.75/resources/random/How%20Complex%20Systems%20Fail.pdf
The 18 features of complexity are contained in the paper above.
[viii] Friedrich von Hayek, “The Pretence of Knowledge,” The Nobel Prize, Friedrich von Hayek Prize Lecture, December 11, 1974, Accessed November 9, 2019. https://www.nobelprize.org/prizes/economic-sciences/1974/hayek/lecture/
[ix] Ghoshal, Sumantra (2005), Bad Management Theories Are Destroying Good Management Practices. Academy of Management Learning & Education. Vol 4. No 1. 75-91.
[x] The concept was covered in various works, such as Barnard, C. I. (1938) The Function of the Executive. Cambridge, Mass.: Harvard University Press,
[xi] Nahapiet, Janine and Ghoshal, Sumantra (1998). Social Capital, Intellectual Capital and The Organizational Advantage. The Academy of Management Review. Vol 23. No 2, 242-266.
[xii] Collins, Jim, Foreword to “The HP Way, By David Packard” Jim Collins, May 2005, Accessed November 9, 2019. https://www.jimcollins.com/article_topics/articles/the-hp-way.html
[xiii] Bartlett, Christopher A., and Ghoshal, Sumantra. 1994. “Changing the Role of Top Management: Beyond Strategy to Purpose.” Harvard Business Review (November – December): 79 – 88.
[xiv] Hamermesh, Richard G. (1986) Making Strategy Work: How Senior Managers Produce Results. John Wiley & Sons
[xv] Ouchi, William G. (1983). Theory Z. Avon Books.
[xvi] Pascale, Richard T and Athos, Anthony J (1986) The Art of Japanese Management. Penguin.
[xvii] The quote “Culture eats strategy for breakfast” is generally attributed to Peter Drucker.
[xviii] Barnard, C. I. (1938) The Function of the Executive. Cambridge, Mass.: Harvard University Press,
[xix] Drucker, Peter (2015) Management: Tasks, Responsibilities, Practices. Routledge.
[xx] Selznick, Philip (1957) Leadership in Administration: A Sociological Perspective. New York: Row, Peterson and Company
[xxi] Jim Collins (2001). Good to Great. London: Random House
[xxii] Postmodern Organizations, Sociology of Organizations, Sociology. Accessed November 9, 2019. http://sociology.iresearchnet.com/sociology-of-organizations/postmodern-organizations/
[xxv] Cain, Susan. (2012). Quiet. London: Penguin Books Ltd.
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