Organizational Theories as a Product

¶ … Organizational Theories as a Product of an Evolutionary Process

In analyzing how contemporary organization theories are a product of an evolutionary process, the progression of theories can't be viewed in isolation, they must be seen as influenced by the broader demographic, economic, sociological and more immediate knowledge management and managerial trends within organizations. The progression of top-down organizational structures that were heavily influenced by both the military chain-of-command concepts (Mutch, pp. 751-769) and the bureaucratic approach to management have dramatically changed as organizational theories have transitioned over the last century. From theories that were centered purely on the creation of closed-loop systems that had as their catalyst military chains of command to the more contemporary theories today that stress agility and responsiveness, organizational theories have gone through significant change over the last century. The intent of this paper is to illustrate through example how contemporary organizational theories are have gone through an evolutionary process that has shifted the focus of control from the organizational structure itself to the value and contribution of the individual. Compounding this transition from being centered on the structure of the organization to the value of the contributor has been the need for greater levels of agility and quickness of response to market conditions. This major aspect of organizational theory evolution is accounted for both in the shift to organizations competing on knowledge and the use of information systems technologies to manage this asset effectively (Gupta, Tesluk, Taylor, pp. 885-897)

Organizational Theories' Evolutionary Pattern of Growth

Creating organizational structures that preserved and promoted authority and a strict chain-of-command that ensured continuity of the organization first and foremost, military-influenced organizational theories served as the foundation for bureaucracies being created. The bureaucratic organizational theory evolved, with well-defined functions, structures, roles and closed-loop systems that also reflected the current reasoning of the time that organizational theories needed to first concentrate on efficiency and operations research precision of process above all (Davis, 2006, pp. 114-118). Organizational theories from this period began with a high level of specialization and division of labor, highly centralized authority, a very clear delineation of line vs. staff functions, and very narrow spans of control (Jacobides, 2006, p. 151). From the influence of operations research, specifically time-and-motion studies and the discovery of economies of scale as it relates to human productivity, organizational theories evolved into a scientific management revolution. An obsession with all aspects of operations research took hold and efficiency became paramount, further accentuating the narrow spans of control and fueling the development of more refined scientific management organizational theories. These theories collectively also aligned well with the concentration on a capital-intensive focus in the majority of industries at the time, where the physical plant and equipment was seen as the most critical asset there was in organizations. Organizational theories then further reinforced the efficient use of these assets over the value of intellectual human capital. Differentiation was achieve through economies of scale and by driving down labor hours; the use of labor was incidental and during the era of scientific management organization theories, relatively unskilled. All of these factors contributed to an evolution of organizational theories to concentrate on the elements of operations research over and above the balance of motivational theories that would later emerge.

As organizations began to realize that the majority of their differentiation was being achieved not necessarily by the pure efficiency of their plant and equipment but by the insights their employees were providing, in addition to the reduction in production efficiencies as a competitive advantage and the rise of creativity and innovation in products, which necessitated organizational theories that concentrated more on managing people and less about deriving higher levels of asset utilization and performance. Characteristics of this phase of evolution of organizational theory is most marked by the participation of both line and staff functions in decision-making and discussions, a gradual decentralization of authority, divisions of labor by product instead of by functional area, all of which necessitates a wide and flat organizational structure. Business models had to this point progressed from being purely focused on production as the basis of value generation to being more customer- and market-driven, hence the division of labor by product lines aligned to specific markets. The emergence of organizational theories became more oriented towards motivating and managing people. McGregor's Theory X and Theory Y, Open Systems Theory, and in general a recognition of the complexities of what fosters and supports greater productivity on the part of people.

At this point the evolution of organizational theories begins looking at how the factors of the distribution of knowledge, the integration of process for knowledge management, and in general the recognition of personal productivity as the basis of competitive advantage. This specific phase in the evolution of organizational theories is so fundamentally disruptive to previous theories that the effects are found in global economic theories, including the theory of comparative advantage. One of the thought leaders in the area, Dr. Michael Porter (1990, pp. 32-78) whose groundbreaking analysis of productivity pointed to individual's ability to fundamentally re-order processes would eventually surface in the 21st century as a Business process Management (BPM) revolution. When one considers the evolutionary shift from seeing assets as the primary means of productivity to personal worker productivity, the corresponding growth in organizations' cultures also begins to grow in importance (Cordes, 2007, pp. 747-767). Cultures and their ability to quickly assimilate and create a shared knowledge base, a collective memory if you will, is becoming increasingly critical.