DGGITMBASEMI 1

Module :VII

Chapter:14Organizing-iv)

Adhocracy- A closer Look

DGGITMBASEMI 2

Learning objectives:1. Describe the strengths and weaknesses of the

matrix.2. Identify the characteristics of Theory Z

organizations.3. Describe how structure can facilitate

innovation.4. Explain how network structures work.

DGGITMBASEMI 3

5. Contrast temporary and permanent forms of adhocracy.

6. Assess the role that adhocracies will play in the design of future organizations.

DGGITMBASEMI 4

1. Introduction: The conditions that demand the flexibility of an adhocracy may not occur every day nor be applicable to most organizations, but that does not reduce the adhocracy’s importance. As organizations take on increasingly demanding, innovative and complex activities, they will very likely turn to adhocracy, or some variant of it, as a necessary means to complete these activities successfully.

DGGITMBASEMI 5

This chapter looks at types of adhocracy designs.It is contextual to mention herein that there is

probably no such thing as a pure adhocracy. An organization design may be generally

adhocratic or moving toward adhocracy but no organization is likely to have all the characteristics attributed to the pure adhocracy model.

DGGITMBASEMI 6

2. Types of Adhocracy:1.The Matrix: The matrix is a structural design

that assigns specialists from specific functional departments to work on one or more interdisciplinary teams, which are led by project leaders. The matrix adds a flexibility dimension to bureaucracy’s economies of specialization.

DGGITMBASEMI 7

And it is the flexibility dimension created by the use of multidisciplinary teams- that places the matrix into the adhocracy classification.

The matrix form is used by an aerospace firm.The most obvious structural characteristic of

matrix is that it breaks unity of command concept – a cornerstone of bureaucracy – which require every employee to have one and only one boss to whom he or she reports.

DGGITMBASEMI 8

Employees in the matrix have two bosses- their functional department manager and their project manager. The matrix has a dual chain of command. There is the normal vertical hierarchy within functional departments, which is overlaid by a form of lateral influence. So the matrix is unique in that it legitimates lateral channels of influence.

DGGITMBASEMI 9

Project managers have authority over those functional members who are part of that manager’s project team. Authority is shared between the two managers.

When should you use matrix?The matrix is being used in advertising agencies,

aerospace firms, research and development laboratories, construction companies, hospitals, government agencies, universities,

DGGITMBASEMI 10

management consultancy firms, and entertainment companies.

The evidence indicates that following three conditions these organizations have in common would lead to the use of matrix design.

1. Environmental pressure from two or more critical sectors.

DGGITMBASEMI 11

2. Interdependence between departments.3. Economies of scale in the use of internal

resources.Two types of matrix structures:1. The projects or products in a matrix can be

undergoing change continuously leading to temporary matrix. The aerospace example depicts temporary matrix.

DGGITMBASEMI 12

2. The projects or products in a matrix can be relatively enduring or stay relatively intact over time leading to permanent matrix.

Large colleges of business use the permanent matrix.

Permanent- matrix structures are also evident in some large retail chains.

DGGITMBASEMI 13

Strengths of the Matrix:- The strengths of matrix lies in its ability to facilitate

coordination when the organization has a multiplicity of complex and interdependent activities.

- It facilitates the efficient allocation of specialists.- It creates increased ability to respond rapidly to

changes in environment.- It offers an effective means for balancing the

customer requirements for project completion and cost control with organization’s need for economic

DGGITMBASEMI 14

efficiency and development of technical capability for the future.

- It offers increased motivation by providing environment more in line with the democratic norms preferred by scientific and professional employees.

DGGITMBASEMI 15

Weaknesses of the Matrix:The major disadvantages of the Matrix lie in the

confusion it creates, its propensity to foster power struggles, and the stress it places on individuals.

A brief study of Contemporary Organization Structures: It is contextual to take up brief study of contemporary Organization structures with emphasis on different criteria based on difference in value system

DGGITMBASEMI 16

Theory A Organizations

Theory JOrganizations

Theory ZOrganizations

American Japanese Japanese- Improved Version

Short -term employment

Life-time employment

Long-term employment

Specialized career paths

Non Specialized career paths

Moderately Specialized career paths

Individual decision making

Consensual decision making

Consensual decision making

Individual responsibility

Collective responsibility

Individual responsibility

Frequent appraisal Infrequent appraisal Infrequent appraisal

Explicit, formalized appraisal

Implicit, informal appraisal

Implicit, informal appraisal with explicit, formalized measures

DGGITMBASEMI 17

American Japanese Japanese- Improved Version

Rapid promotion Slow promotion Slow promotion

Segmented concern for people

Comprehensive concern for people

Comprehensive concern for people

DGGITMBASEMI 18

2. The Collateral Form:This form of adhocracy was designed in America to

rediscover the value of entrepreneurship.The Collateral form is a loosely structured organic

appendage designed to co exit side by side with a bureaucracy on a relatively permanent basis. They are typically small teams or separate business units that are given independence and resources to experiment.

DGGITMBASEMI 19

They can pursue their own ideas without the rules, time-consuming analysis and approvals from multiple levels of management that are required in bureaucracies. In contrast to the bureaucratic mainframe, which is designed to solve organization’s structured problems effectively, the Collateral appendage has flexibility to solve ill-structured problems. Innovative ideas to unique problems can be tried, and if they fail, the costs to the overall organization are usually relatively small.

DGGITMBASEMI 20

Strength of the Collateral form: The strength of the Collateral form is the

achievement of the advantages from bureaucracy’s high efficiency through standardization while at the same time, obtaining flexibility from entrepreneurship.

By creating adhocracies within bureaucracies, a large corporation can stimulate creativity and innovation,

DGGITMBASEMI 21

cut-product development time, and hold on to bright and achievement-oriented employees who might otherwise leave to work for another firm or start their own small firm.

Weakness of the Collateral Form: Innovation does not come without a price. The price, for the organizations that adopt the collateral form is usually disorder.

DGGITMBASEMI 22

Meshing bureaucratic and organic units creates a clash of culture- one valuing order and the other flexibility. The primary challenge lies with top management.

Companies such as General Electric, DuPont, Texas Instruments, IBM, and AT&T are experimenting with collateral organization design.

DGGITMBASEMI 23

3. The Network Structure: The network structure is a small central organization that relies on other organizations to perform manufacturing, distribution, marketing, or other critical functions on a contract basis.

This is through creation of organization of relationships.

DGGITMBASEMI 24

They connect with independent designers, manufacturers, commissioned sales representatives, or the like to perform, on a contract basis, the functions they need.

The network stands in sharp contrast to more traditional structures. In the network structure most of the functions are bought outside the organization. This gives management a high degree of flexibility and allows organization to concentrate on what it does best.

DGGITMBASEMI 25

Some very large companies such as Nike, Esprit de Coop apparel, Emerson Radio and Schwinn Bicycle have used Network structure of Organization successfully. Most American firms focus on design or marketing and buying manufacturing facilities outside.

Strengths of Network Structure:It fits industrial companies like toy and apparel firms,

which require very high flexibility in order to respond quickly to fashion changes.

DGGITMBASEMI 26

It also fits firms whose manufacturing operations require low-cost-labor that is available by contracting with foreign suppliers.

Weaknesses of Network Structure:Management in network structures lacks the

close control of manufacturing operations that exists in more traditional organizations.

DGGITMBASEMI 27

Reliability of supply is also less predictableAny innovation in design that a network

organization acquires is susceptible to being ripped off.

With networking in the organizations through computers, the networking structure is becoming an increasingly viable alternative.

DGGITMBASEMI 28

4. Other examples of Adhocracy:Three other examples of adhocracies have

gained popularity in the OT literature. These are as follows:

A. The Task Force: The task force is a temporary structure formed to accomplish a specific, well-defined and complex task that involves a number of organizational subunits.

DGGITMBASEMI 29

Members serve on the task force until its goal is achieved, at which time the task force is disbanded. Then the members move on to a new task force, return to their permanent home departments in the organization or leave the organization.

DGGITMBASEMI 30

When an organization is confronted with a task whose success is critical to the organization, which has specific time and performance standards, is unique and unfamiliar and requires functions that are interdependent, a task force can be desirable. These conditions explain why Ford Motor co. went to the task-force concept in the early 1980s to develop Taurus.

DGGITMBASEMI 31

Dubbed ‘Team Taurus’ this task force took a completely different approach than traditionally followed in the U.S auto industry.

By attaching task-force structure to the mechanistic mainframe, organizations like Ford can get best of both words: flexibility and efficiency.

DGGITMBASEMI 32

B. The Committee Form: When it is desired that a broad range of experience and backgrounds be brought to bear on a decision, when those who will be affected by a decision are allowed to be represented, when it is believed desirable to spread work load, or during periods of management transition when no single individual is ready to lead the organization, committee structures may be highly effective.

DGGITMBASEMI 33

Committees may be temporary or permanent. A temporary committee typically is one and the same with a task force. Permanent committees, however facilitate the bringing together of diverse inputs like the task force plus the stability and consistency of the matrix. When permanent committees are established at the top level of the organization, we frequently refer to the positions as forming plural executive.

DGGITMBASEMI 34

Du Pont has utilized the plural-executive concept for a number of decades.

Westinghouse and General Electric use a three person management committee at the top. Some universities and state governments have also introduced plural-executive committee.

DGGITMBASEMI 35

C. The Collegial Form: A structural form of adhocracy fashionable in universities, research labs and other highly professional organizations is the collegial form. Its unique characteristic is full democracy in the making of all important decisions. This is in contrast to the task force or committee structure that utilize representative decision making.

DGGITMBASEMI 36

The collegial structure represents the utmost decentralization.

The collegial structure provides employees with extremely high autonomy, a minimum of formalization and collegial decision making, which allows highly skilled professionals to adapt rapidly to the changing needs of their work.

DGGITMBASEMI 37

3.Two Contemporary Views on Tomorrow’s Organizations:

Management Gurus Peter Drucker and Tom Peters both agree that tomorrow’s organizations are going to be flatter, less hierarchical and more decentralized. In other words, they are going to be more adhocratic.

DGGITMBASEMI 38

It is interesting to consider how they arrive at their conclusions and the specific form they think future organizations will take. Drucker essentially proposes a technology explanation. Future organizations will look more like large symphony orchestras than the traditional pyramid-shaped corporate bureaucracies because the typical organization will become information-based.

DGGITMBASEMI 39

An information-based technology will require adhocracy.

Peters, on the other hand, offers an environmental uncertainty argument. He says that unprecedented change and uncertainty in the environment will require organizations to cherish impermanence. They will thrive on chaos and appear to be something akin to focused anarchies.

DGGITMBASEMI 40

4. Critical Evaluation of Adhocracies :Critics say that all forms of Adhocracy is nice theory but

subject to critical evaluation on valid grounds as brought out below:

First, usage in wide range of organizations should not be confused with wide acceptance. Adhocracies are the dominant structure only in small minority of industries.

DGGITMBASEMI 41

Second, this form is used most popularly as adjunct to bureaucracy.

Third, adhocracies that require top management to give up control will face strong constant resistance.

Finally, where adhocracy is found it is more accurate to conceive it as vehicle propelling the organization toward bureaucracy or failure rather than as an on going structure.

DGGITMBASEMI 42

In the final conclusion, it is apt to point out that adhocracy should rarely be an organization’s dominant structure and that it is unlikely to become tomorrow’s primary structural form.

DGGITMBASEMI 43

Any Questions?

Thank you