STRUCTURE IS NOT ORGANIZATION

STRUCTURE IS NOT ORGANIZATION

Diagnosing and solving organizational problems means looking

not merely to structural reorganization for answers but to a

framework that includes structure and several related factors.

14

ROBERT H. WATERMAN, J R . , THOMAS J . PETERS, AND JULIEN R. PHILLIPS

The Belgian surrealist Ren~ Magritte painted a

series of pipes and titled the series Ceci n'est

pas une pipe: this is not a pipe. The picture of

the thing is not the thing. In the same way, a

s t ruc tur e is not an organization. We all know

that, b u t like as not, when we reorganize what

we do is to restructure. Intellectually all

managers and consultants know that much

more goes on in the process of organizing

than the charts, boxes, dotted lines, position

descriptions, and matrices can possibly depict.

But all too often we behave as though we

didn't know it; if we want change we change

the structure.

Early in 1977, a general concern with the

problems of organization effectiveness, and a

ROBERT H. WATERMAN, JR. is a Director,

THOMAS J. PETERS a Principal, and JULIEN R.

PHILLIPS an Associate in the San Francisco office of

McKinsey & Company. Mssrs. Waterman and Peters

are co-leaders of McKinsey's Organizational Effectiveness

practice.

particular concern about the nature o f the

relationship between structure and organization,

led us to assemble an internal task force

to review our client work. The natural first

step was to talk extensively to consultants

and client executives around the world who

were known for their skill and experience in

organization design. We found that they too

were dissatisfied with conventional approaches.

All were disillusioned about the

usual structural solutions, b u t they were also

skeptical about anyone's ability to do be t t e r .

In their expe r i enc e , the techniques of the

behavioral sciences were not providing useful

alternatives to structural design. True, the

notion that structure follows strategy (get the

strategy right and the structure follows)

The authors want to offer special acknowledgement

and thanks to Anthony G. Athos of Harvard University,

who was instrumental in the development of the

7-S framework and who, in his capacity as our

consultant, helped generally to advance our thinking

on organization effectiveness.

BUSINESS HORIZONS

Structure Is Not Organization

looked like an important addition to the

organizational tool kit; yet strategy rarely

seemed to dictate unique structural solutions.

Moreover, the main problem in strategy had

turned out to be execution: getting it done.

And that, to a very large extent, meant

organization. So the problem of organization

effectiveness threatened to prove circular. The

dearth of practical additions to old ways of

thought was painfully apparent.

OUTSIDE EXPLORATIONS

Our next step was to look ouside for help. We

visited a dozen business schools in the United

States and Europe and about as many superbly

performing companies. Both academic

theorists and business leaders, we found, were

wrestling with the same concerns.

Our timing in looking at the academic

environment was good. The state of theory is

in great turmoil but moving toward a new

consensus. Some researchers continue to write

about structure, particularly its latest and

most modish variant, the matrix organization.

But primarily the ferment is around another

stream of ideas that follow from some startling

premises about the limited capacity of

decision makers to process information and

reach what we usually think of as "rational"

decisions.

The stream that today's researchers are

tapping is an old one, started in the late 1930s

by Fritz Roethlisberger and Chester Barnard,

then both at Harvard (Barnard had been

president of New Jersey Bell). They challenged

rationalist theory, first-in Roethlisberger's

case-on the shop floors of Western

Electric's Hawthorne plant. Roethlisberger

found that simply paying attention provided a

stimulus to productivity that far exceeded

that induced by formal rewards. In a study of

workplace hygiene, they turned the lights up

and got an expected productivity increase.

Then to validate their results they turned the

lights down. But something surprising was

wrong: productivity went up again. Attention,

they concluded, not working conditions

per se, made the difference.

Barnard, speaking from the chief executive's

perspective, asserted that the CEO's role

is to harness the social forces in the organization,

to shape and guide values. He described

good value-shapers as effective managers, contrasting

them with the mere manipulators of

formal rewards who dealt only with the

narrower concept of efficiency.

Barnard's words, though quickly picked

up by Herbert Simon (whom we'll come back

to later), lay dormant for thirty years while

the primary management issues focused on

decentralization and structure-the appropriate

and burning issue of the time.

But then, as the decentralized structure

proved to be less than a panacea for all time,

and its substitute, the matrix, ran into worse

trouble, Barnard's and Simon's ideas triggered

a new wave of thinking. On the theory side, it

is exemplified by the work of James March

and Karl Weick, who attacked the rational

model with a vengeance. Weick suggests that

organizations learn-and adapt-very slowly.

They pay obsessive attention to internal cues

long after their practical value has ceased.

Important business assumptions are buried

deep in the minutiae of organizational systems

and other habitual routines whose origins

have been long obscured by time. March

goes further. He introduced, only slightly

facetiously, the garbage can as an organizational

metaphor. March pictures organizational

learning and decision making as a stream of

choices, solutions, decision makers, and opportunities

interacting almost randomly to

make decisions that carry the organization

toward the future. His observations about

large organizations parallel Truman's about

the presidency: "You issue orders from this

office and if you can find out what happens

to them after that, you're a better man than I

am."

Other researchers have accumulated data

which support this unconventional view.

15

JUNE 1980

ROBERT H. WATERMAN, JR., THOMAS J. PETERS, AND JULIEN R. PHILLIPS

"In the face of complexity and multiple competing demands, organizations

simply can't handle decision-making in a totally rational way. Not

surprisingly, then, a single blunt instrument like structuremis unlikely

to prove the master tool that can change organizations with best effect."

16

Henry Mintzberg made one of the few rigorous

studies of how senior managers actually

use time. They don't block out large chunks

of time for planning, organizing, motivating,

and controlling as some suggest they should.

Their time, in fact, is appallingly but perhaps

necessarily fragmented. Andrew Pettigrew

studied the politics of strategic decision and

was fascinated by the inertial properties of

organizations. He showed that organizations

frequently hold onto faulty assumptions

about their world for as long as a decade,

despite overwhelming evidence that it has

changed and they probably should too.

In sum, what the researchers tell us is:

"We can explain why you have problems." In

the face of complexity and multiple competing

demands, organizations simply can't

handle decision making in a totally rational

way. Not surprisingly, then, a single blunt

instrument-like structure-is unlikely to

prove the master tool that can change organizations

with best effect.

Somewhat to our surprise, senior executives

in the top-performing companies that we

interviewed proved to be speaking very much

the same language. They were concerned that

the inherent limitations of structural approaches

could render their companies insensitive

to an unstable business environment

marked by rapidly changing threats and opportunities

from every quarter-competitors,

governments, and unions at home and overseas.

Their organizations, they said, had to

learn how to build capabilities for rapid and

flexible response. Their favored tactic was to

choose a temporary focus, facing perhaps one

major issue this year and another next year or

...