CONTEMPORARY ORGANISATIONAL DESIGN

Contemporary Organisational Design

Contemporary Organisational Design

Much has been written about transformation in which contemporary organisations respond to environmental turbulence by making radical changes in their strategy that moves them to a higher order of complexity. (Ashkenas, Ulrich, Jick, Kerr, 1995)

Less attention has been directed toward changes that respond to turbulence by moving to a lower order of complexity. And yet, contemporary organisations appear to respond to turbulence in just this way. (Ashkenas, Ulrich, Jick, Kerr, 1995) Lost of core competencies seems to prompt an “unraveling” in which one loss leads to another, that can produce sharp reductions in organisational performance, or even failure. This loss of organised complexity may be a factor in the fall from supremacy experienced by many U. S. companies in the past tow decades. For example, when “no frills” strategy of People's Express Airline was countered by competitors that meet their price with a little service the airline, taunted by Hackman (1984) as an exemplar failed.

Did People's Express base its strategy on such a minimal level of organised complexity that it made strategic change impossible? When organisations trim out core competencies by downsizing are there unseen dangers? If so, how does an organisation recognize these dangers and manage them? These questions have motivated our research into radical change that prompts a loss in organised complexity. We call the loss of organised complexity “de-design” and the process that produces this result “devolution”. De-design occurs when there has been an unraveling of core competencies. Even when the move to a lower order of organised complexity is a deliberate strategy of management, organisations are often surprised. (Ashkenas, Ulrich, Jick, Kerr, 1995)

The unraveling can occur at an unanticipated pace with cascading effects that lead to unwanted losses in customer, markets, etc. The chain of events that results can have two negative outcomes. First, organisational leaders may fail to see what can produce a “hard landing” in which losses exceed what was planned or intended. Second, the pain and hardship that could have been anticipated and thereby minimised, go undetected.

Managing Organisational Downturns

Four well regarded approaches for the management of downturns is summarised in Table 1. These four were selected because they appear to have important differences in their recommendations. Levine popularised the notion of “cut-back management”. Levine describes fiscal stress and the need to reform. Cutback has become one of the most widely used strategies to im prove the stock performance of U. S. companies in the past decade. (Ashkenas, Ulrich, Jick, Kerr, 1995)

Kimberly and his associate and Adizes (1989) draw an analogy to product life cycles. Organisations, like products, are believed to move through phases of birth, growth, maturity, decline, and ultimately death. The aim in a life cycle approach is to hold on to the maturity stage. Corrective action is taken to make re-adaptations, modifying practices to match market realities, making this approach reactive in nature. Related literature has emerged from descriptions of how organisations decline. The initial motivation was to study how decline occurs, ...