Is There a New Organization Form in Your Future?

"The future ain't what it used to be."
-Yogi Berra

The Drive to Survive
Though Yogi Berra is no scholar of the natural or social sciences, like Charles Darwin and Max Weber, he clearly grasped the fluidity and dynamism at the heart of evolutionary theory. Species and organizations must adapt to their environments, and those that do so more successfully than their competitors, survive.

For most of the 20th century, the best adapted organizations have been bureaucracies, institutions structured to take advantage of mass production, mass markets and purely economic goals. Characterized by standardization, homogeneity and hierarchy, the raison d'être of the bureaucracy is economic efficiency. But what happens to bureaucratic organizations when globalization, heightened turbulence, fragmentation of markets and quantum leaps in technology transform the socio-economic landscape?

Actually, any of a great number of things can happen as an organization seeks to adapt to changes in its environment. To name just a few of the more widely known organizational responses: outsourcing, downscoping, delayering, globalizing, consolidating and accelerating development cycles. All these reorganizations suggest that managers are not standing idly by, waiting for theoreticians to identify new organization forms. Rather, as bureaucratic structures prove increasingly vulnerable, businesses worldwide are engaged in massive experimentation to reposition their organizations.

"That these experiments will yield new forms is a certainty," states Professor Arie Y. Lewin, who directs the Center for Research on New Organizational Forms. "What is not known is which emergent form will prevail as the true successor to bureaucracy." It is this intriguing uncertainty that has fueled the development of a groundbreaking international research collaboration centered at The Fuqua School of Business.

"Change Accounts"
In 1994, grants from the National Science Foundation and the Japanese government gave Lewin the international endorsement and funds needed to launch an initiative unprecedented in scope and methodology. Currently, the IBM Consulting Group is the Center's lead sponsor. Leading management scholars at universities around the world have been quick to recognize the project's potential and have signed on as collaborating investigators.

For researchers like Professors Erich Frese and Ludwig Theuvsen at the University of Cologne, the project will broaden the scope of research initiatives already underway. "We are very interested in organizational changes taking place in companies," explains Professor Theuvsen. "Nevertheless, we have not been engaged in large-scale empirical investigations on organizational change. So the project is an ideal complement to our ongoing research activities." Collaborating investigator Axel von Werder of the Technical University of Berlin also anticipates the project's contribution to teaching. "When we have a better understanding of what is going on in practice," he says, "We can prepare our students better for their careers."

At present, the collaboration encompasses national research teams from Japan, Germany, Great Britain, Korea and the United States (see chart below). According to Lewin, the project will be expanded to include researchers from southern Europe.

At the center of the project is a global database that captures what Lewin has termed "change accounts," public records of strategic reorientations and organization restructurings at all levels of a company. Currently the database exceeds 35,000 such accounts for major companies (i.e., the Fortune 1000 companies in the U.S. and their equivalents in each of the participating countries) during 1993-94. With input from dozens of researchers, the database is expected to grow by 10,000 accounts per year for the next 10-15 years. Yet the unique power of the database is not its size, but the original and innovative approaches to analyzing and drawing inferences from the wealth of information collected.

Using a sophisticated classification grid, project analysts code each change account, noting its locus within the firm and its strategic intent. Each recorded change is categorized either as exploratory (groundbreaking, experimental, innovative, risk-taking and capability-building), or exploitative (continuously improving, refining, economizing, deepening and standardizing). Change actions are then aggregated by the firm, enabling researchers to distinguish strategies as frontiering, aligning or copycatting.

In managing technology, for example, the firm that seeks to reduce costs by outsourcing its information systems is aligning to industry standards. In contrast, the firm that views IS as a key differentiator to achieve competitive advantage and invests in a proprietary capability is considered frontiering. Lewin emphasizes that within a single company, all three strategies can co-exist. "It's the mix that matters - the survival of a firm is dependent upon its ability to achieve the proper balance." For example, the study found one U.S. bank which is pursuing a policy of frontiering in consumer products such as electronic banking, while aligning to the industry norms of efficiency and cost reduction through its consolidation efforts.

Looking Ahead
Until substantial data covering a period of several years are accumulated and analyzed, the project will remain descriptive. Yet Lewin and his colleagues are strong believers in its long-term, prescriptive potential. While the ability to anticipate and synthesize the emerging new organization forms will necessarily have to await several more years of study, the project is already yielding important theoretical and practical insights ("Emerging Insights," p.19). "We expect our findings to have tremendous impact on managers," says Lewin. "We anticipate being able to identify strategies of high-performing organizations across the globe that can be emulated. In other words, we hope to distinguish the culturally or organizationally idiosyncratic from the generalizable."

Is a successful innovation the result of replicable structural change or merely the charisma of a particular CEO? Could a U.S. firm succeed in exploiting tacit knowledge like its counterparts in Japan, or do U.S. cultural norms constrain the potential application of tacit knowledge? Lewin and his colleagues hope to fit together the pieces of what he calls a "global jigsaw puzzle," in order to learn the answers to vital strategic questions such as these.

Appropriately enough, the project itself is creating precisely what it is studying: a new organizational form dedicated to management research. Like frontiering companies, the project has fully integrated technology, linking researchers via the Internet and exploiting the latest computer search and analysis tools to transform vast quantities of data into strategic information.

Perhaps even more pioneering is the unique relationship among collaborating researchers, who are pursuing both the overall goal of the study and their own research agendas. Professor Andrew Pettigrew of Warwick University in the U.K. explains: "It's not like walking down the hall and conferring with a colleague - international collaboration takes a great deal more time and is certainly more expensive, but the benefits are enormous. This type of collaborative research is an important development in the new social production of knowledge."

Professor Tomoaki Sakano of Tokyo's Waseda University School of Commerce concurs: "In the process of collaborating with colleagues on different continents, I found that understanding social, institutional or cultural backgrounds of other countries is very difficult. Since my Japanese research assistants and I can read English, at least to some degree, we originally planned to obtain U.S. raw data and analyze the content by ourselves. But this did not work - when we analyzed the drivers for change actions, we realized we could not do it without deeply understanding these background factors. Probably this is the major reason why colleagues in different countries have to collaborate."

For Fuqua's Lewin, the key to the project's ongoing success is collaboration based on reciprocity. "Reciprocity is essential to the collaborative nature of the research," he says. "We believe this same principle will be critical to achieving strategic flexibility in the new organization form."