Blog: Simply Organizing

Organizations around Public, Private, Plural

3 June 2016

In a recent TWOG where I described four basic forms of organizations (machine, entrepreneurial, professional, and project), I characterized our general understanding of organizations as primitive. We need much greater appreciation of the institutions that are so prominent in our lives, from our birth in hospitals through those where we learn, work, and play.

I have written frequently in these TWOGs about the three main sectors of society and the need for balance across them. Here I plot various types of organizations around a circle according to whether they function in the public sector (owned by government, for example agencies and ministries), the private sector (owned by founders or investors, as in widely-held corporations), or the plural sector (owned by members, as in cooperatives, or by no-one, as in NGOs). 

In a recent TWOG where I described four basic forms of organizations (machine, entrepreneurial, professional, and project), I characterized our general understanding of organizations as primitive. We need much greater appreciation of the institutions that are so prominent in our lives, from our birth in hospitals through those where we learn, work, and play.

I have written frequently in these TWOGs about the three main sectors of society and the need for balance across them. Here I plot various types of organizations around a circle according to whether they function in the public sector (owned by government, for example agencies and ministries), the private sector (owned by founders or investors, as in widely-held corporations), or the plural sector (owned by members, as in cooperatives, or by no-one, as in NGOs). 

For those of you using a wide screen, all of this can be seen on the one big circle above. If you are using a smaller screen, this big circle is broken down at the end into the three segments of public private, and plural for easier reading.

You will notice that the organization most typical of each sector is placed in the middle of it, while others are displayed to either side, depending on the extent that they tilt toward another sector. (For example, state-owned enterprises, such as power utilities, may be public, but because they function as businesses, are shown near the private sector. And because many family businesses exhibit a strong sense of community, as is typical in the plural sector, they are are shown near it.)

I make no claim that this circle includes all types of organizations. (I built it from all the notes I have been making for years about these different organizations.) Nor is the placement of these organizations tilting toward one sector or another indisputable, just suggestive. (There are, for example, family businesses that are rather mercenary, not community-oriented.) This framework may be rudimentary, but our understanding of organizations is far more rudimentary. We can use all the help we can get!

A couple of comments about all this: First, you see many more types under plural than under public or private. Of course that is why I call the sector plural! There are all kinds of businesses, but not so many distinct types. And while the range of activities in government is vast, the marching orders that come from being public limit their activities somewhat. The plural sector is the most varied of the three.

Second, the circle indicates that organizations fall into one sector or another. It shows only two hybrids. PPPs are one, namely public-private partnerships, although even these are shown as slanted toward the private sector, because that is where power tends to be these days. (The American “military-industrial complex” is probably the greatest PPP of all time.)  And communes (as well as kibbutzim) are shown as both public and plural, because they can be seen as municipal governments of a sort as well as distinct communities.1

The point, which I emphasize in my book Rebalancing Society, is that the three sectors are, and must remain, distinct as well as strong if our societies are to regain balance. Organizations belong in their place. B Corps may care about more than profit, but they are still businesses. And NGOs should no more be run like businesses than businesses should be run like NGOs. Likewise, the “New Public Management”, so reflective of old corporate values, has been doing a number on many governments for years (as I hope to discuss in next week’s TWOG).

© Henry Mintzberg 2016 Follow this TWOG on Twitter @mintzberg141, or receive the blogs directly in your inbox by subscribing hereTo help disseminate these blogs, we now also have a Facebook page and a LinkedIn.


1 Of course, a company like Volkswagen, owned by both governments and private shareholders, is technically a hybrid too, although the tendency here is to run such enterprises like regular businesses.

 

Ye gods: an efficient orchestra!

21 April 2016

Last week’s TWOG described four different species of organizations, and warned about mixing them up. This week’s TWOG provides a graphic example of doing just that: confusing a professional organization with a machine organization.

A young, enthusiastic MBA student was finally given the opportunity to apply his learning. He was asked to carry out a survey of an organization with which he was not normally familiar and submit recommendations as to how its efficiency could be increased. He selected as his target a symphony orchestra. Having read up on everything he had learned, he attended his first concert and submitted the following analysis:

Last week’s TWOG described four different species of organizations, and warned about mixing them up. This week’s TWOG provides a graphic example of doing just that: confusing a professional organization with a machine organization.

A young, enthusiastic MBA student was finally given the opportunity to apply his learning. He was asked to carry out a survey of an organization with which he was not normally familiar and submit recommendations as to how its efficiency could be increased. He selected as his target a symphony orchestra. Having read up on everything he had learned, he attended his first concert and submitted the following analysis:

a.  For considerable periods, the four oboe players had nothing to do. The number of oboes should therefore be reduced, and the work spread more evenly over the whole concert program, thus eliminating the peaks and valleys of activity.

b.  All twenty violins were playing identical notes. This would seem to be an unnecessary duplication, so the staff of this section should be cut drastically.

c.  Obsolescence of equipment is another matter warranting further investigation. The program noted that the leading violinist’s instrument was several hundred years old. Now, if normal depreciation schedules had been applied, the value of this instrument would have been reduced to zero and the purchase of more modern equipment recommended long ago.

d.  Much effort was absorbed in the playing of demisemiquavers, which seems to be an unnecessary refinement. It is recommended that all notes be rounded up to the nearest semiquaver. If this were done, it would be possible to use trainees and lower-grade operatives more extensively.

e.   Finally, there seemed to be too much repetition of some of the musical passages. Therefore, scores should be pruned to a considerable extent. No useful purpose is served by repeating on the horns something that has already been handled by the strings. It is estimated that, if all redundant passages were eliminated, the whole concert time of two hours could be reduced to twenty minutes and there would be no need for an intermission.

If this student had instead chosen a factory, nobody would be laughing, perhaps least of all the people in that factory. In other words, this kind of mixing up is no laughing matter. So what to do? First, get your species of organizations straight (i.e., read last week’s TWOG). Second, beware of efficiency, as well as proficiency, innovation, and leadershipout of their natural contexts (also in last week’s TWOG).

© of the story: unknown, but published more or less as above in the mid 1950s, in an American professor’s bulletin, a Canadian military journal, and Harper’s Magazine, based on an anonymous memorandum that circulated in London and was probably published originally in Her Majesty’s Treasury of the Courts. With minor editing, this was first published here on 3 October 2014. Next week: The mythical manager as orchestra conductor.

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Species of Organizations

14 April 2016

There are species of organizations just as there are species of animals. Don’t mix them up. A bear is not a beaver; one winters in caves, the other in wooden structures they build for themselves. Hospitals are not factories; advertising agencies are not fast food companies.

This may seem obvious, but while we recognize the different species of animals, we often mix up the different species of organizations. How often have management consultants come into one kind of organization and treated it like another—say tried to deal with a hospital the way they have just dealt with an automobile factory. (It might work in the cafeteria, but how about geriatrics?) Of course, we do use these kinds of words—hospitals, advertising agencies—but they designate industries, not the nature of their organizations.

There are species of organizations just as there are species of animals. Don’t mix them up. A bear is not a beaver; one winters in caves, the other in wooden structures they build for themselves. Hospitals are not factories; advertising agencies are not fast food companies.

This may seem obvious, but while we recognize the different species of animals, we often mix up the different species of organizations. How often have management consultants come into one kind of organization and treated it like another—say tried to deal with a hospital the way they have just dealt with an automobile factory. (It might work in the cafeteria, but how about geriatrics?) Of course, we do use these kinds of words—hospitals, advertising agencies—but they designate industries, not the nature of their organizations.

Our vocabulary for understanding organizations is really quite primitive. We use the word organization the way biologists use the word mammal, except that we can’t get past it. Imagine if this was the case in biology.

Two biologists meet to discuss where mammals should spend the winter. “Obviously in a cave”, says the one who studies bears. “Are you kidding?” says the other who studies beavers, “Their predators will come in and kill them. They need to build protective lodges.” They talk past each other, just as does the manager of a hospital who might try to explain to a consultant that it is not a factory.

Years ago I set out to address this problem, in a book called The Structuring of Organizations (later issued in shorter form called Structure in Fives). It has proved to be my most successful book, for many years widely used in schools around the world. But not successful enough: the way we discuss organizations remains primitive. So let me offer my framework of four basic species of organizations.

The Machine Organization  Many organizations function like well-oiled machines. They are about efficiency, namely getting the greatest quantitative bang for the quantitative buck. Accordingly, everything is programmed, to the finest detail—for example how many seconds before a McDonald’s cook turns over a hamburger patty. This makes it easy to train the workers, but not to keep these workers: their jobs can be boring and the controls stifling. The machine organization is great at what it does well—we want that wake-up call in the hotel at 8:00, not 8:01—but not outside its own context. (Would you like to lift the pillow in your hotel room and have a Jack-in-the-box jump up and say “Surprise!” You are not there to be amused. But if you are in a movie theatre, beware of films made by machine-like film companies.)

The Professional Organization This second species is programmed too, but in an entirely different way. It is about proficiency more than efficiency. In hospitals, accounting firms, and many engineering offices, the critical work is highly skilled—it takes years of training—yet most of the time it can be surprisingly routine. (Imagine being wheeled into an operating room as a nurse says: “You have nothing to worry about: this is a highly creative surgeon!”) In the professional organization, sometimes people seem to work in teams, but in fact they are usually working largely on their own. Everyone in that operating room is carrying out his or her own procedures according to the predetermined protocols. More to the point, each of the musicians in an orchestra is playing to the notes written for his or her own instrument by Beethoven, more than responding to the conductor (as suggested in the photo above).

The Entrepreneurial Organization  Yet we venerate the orchestra conductor as if this is the epitome of leadership. Again, we are mixing up species. In the entrepreneurial organization, central leadership dominates, while in orchestras there is more going on than this, as suggested above (and as will be discussed in the next two TWOGs).  The best examples of this species are often found in entrepreneurial firms created by visionaries—as in the case of a Steve Jobs at Apple. Sometimes older organizations in crisis take on this form as they centralize power around their leadership to deal with the problem. And let’s not forget totalitarian political regimes, like Putin’s Russia. When the boss of an entrepreneurial organization says “Jump!” the response is “How high sir?” (When the executive director of a hospital says “Jump”, the doctors ask “Why?” In an orchestra, some of the musicians might have a tantrum.)

The Project Organization  This fourth species is different again. Here the work is also highly skilled, but the experts have to work in teams, to combine their efforts for the sake of innovation. Think about film companies, advertising agencies, research laboratories: this is found in many kinds of high tech industries. Here the experts work on projects, to create novel outputs—a film, an ad campaign, a new product. (Over the years I have called this species the Innovative Organization, and Adhocracy.) To understand the project organization, and if you are one of its managers not screw it up entirely, you have to appreciate that it gets its effectiveness by being inefficient. Without some slack, innovation dies.

Each of these species requires its own kind of structure, its own style of management, very different power relationships, and so on. I have no space to go into all of this here—an accessible reference, mentioned at the end, does that. Let me just add that these species don’t just HAVE different cultures; they ARE different cultures. Walk into different ones and you can almost smell the differences.

Yet if you read the popular literature on organizations with these species in mind, you will find that the vast majority of it is about machine organizations, without ever admitting or even realizing it. The bulk of this is about how to become more machine-like: get better systems, do more formal planning, measure everything in sight, tighten up, become more “efficient”. And the rest is about how to compensate for the worst effects of this species—how to make the workers happier, or at least less miserable. Harry Braverman has referred to the human relations (now human resource) people who try to do this as “the maintenance crew for the human machinery.”1

Of course, I have been discussing these species as if all organizations are one or the other. Of course not, although some organizations do come remarkably close—in the order presented, a McDonald's, a Mayo Clinic, Putin’s Russia, a creative film set. Yet even so, a machine-like mass producer can have its adhocratic product development team while a hospital has its machine-like cafeteria (not to mention the need for a creative team when something does go wrong in that operating room). And then there are the hybrids—for example, a pharmaceutical company with adhocracy in its research, professional in its development, and machine in its production.

Does that mean we cannot use this framework? Quite the contrary; we need such a vocabulary even more, so that we can talk more sensibly about what is going on—within our organizations as well as across them.

© Henry Mintzberg 2016. The original book, The Structuring of Organizations (1979), is difficult to get and the shorter version, Structure in Fives (1983) is priced outrageously. Happily though, the best and most recent rendition is readily available and reasonably priced, as Part II (200 pages long) of my book Mintzberg on Management. The situation in other languages is different; all three have been translated into many languages, and may be more readily available. I hope to do a new edition of the book at some point. 

Follow this TWOG on Twitter @mintzberg141, or receive the blogs directly in your inbox by subscribing here. I also just started a new Facebook page.

Next week, the result of treating a symphony orchestra like a machine, and the week after, challenging the metaphor of the manager as orchestra conductor. 


1 H. Braverman, Labor and Monopoly Capital: The degradation of work in the Twentieth Century (Monthly Review Press, 1974:87).