Organizations as decision-makers
The post where I respond to reader mail
In a first for General Rules & Specific Cases, we have reader mail! And honestly, it’s come at the perfect time to serve as a springboard for my first post since I decided to announce my book project and, like a cross-fit enthusiast, make it my whole personality. The paraphrased message went something along the lines of:
Hey Jeff, long time reader, first time writer. You say you’re writing a book about organizational decision-making but you didn’t specify which decision-makers. Are you writing about executives, middle managers, front-line staff? Or something more generic like decision-making cultures?
- Reductionist Reader
It’s a good question and highlights one of the main reasons I’m undertaking this project. Here I’ll lay out my case of organizations as decision-making actors.
In my last post, I wrote that common explanations of organizational decision-making tend towards the rational and reductionist. Rational in as much as they assume organizations have defined goals, deploy some set of mechanisms to evaluate among alternatives, and take decisions on the basis of some definition of “good” (either inputs or anticipated outcomes) derived from those evaluations. The reductionism manifests in our reader’s question. Organizations are considered wrappers where people - self-contained and sovereign - do things that then flow through to other people who in turn do stuff, ad infinitum. Decision-making in this context is goal-oriented, evaluated according to some definable logic, and executed by people. These assumptions broadly work to elide the organization. Reducing it to a wrapper for the real action - what happens in people’s heads or the post-hoc claims they make. And while it’s nice to think that if we just search hard enough we will eventually uncover the ultimate individual or group of individuals responsible for things, that’s just a soothing story.
Let me offer a silly example to illustrate my point.
First a quick definition. I’m going to broadly follow James March and Herbert Simon and define organizations as systems of coordinated action where the component parts have varying preferences, interests, knowledge, and information.1 Organizations are therefore bounded entities pursuing some set of objectives. They have defined insides and outsides, linked via three primary mechanisms: a division of labor; coordination; and decision rights. I want to refine this but it’ll do for now.
Let’s imagine we have an organization that needs to buy office supplies. Like all administrative entities it captures information and creates outputs and that requires printer paper, pens, pencils, notebooks, folders, filing cabinets, etc., and supplies are dwindling. This need has created an opportunity to make a decision. This opportunity joins a host of others of various sizes, scales, content areas, age, and stages of development all working their way through the organization. While mundane, the opportunity catalyzes various components of the organization to act. Becoming a vessel into which different plans, needs, objectives, desires, hopes, and dreams may be poured. It may also even create new ones. As the opportunity cuts across different parts of the organization - all parts of the organization need office supplies - it may well bring them together into a new configuration, the resulting interaction creating new interests / objectives altogether.
Continuing the example, let’s pretend we have a CEO who wants to use the office supply replenishment as an opportunity to drive a digitalisation project. Why order more paper when we could store all these documents in the cloud? But the CEO is not a technology expert so the question is sent to another part of the business to evaluate options. As this once mundane activity has now been elevated to executive attention, other parts of the business now want to participate in this decision.
A contrarian marketing team sees an opportunity to move back to paper flyers. The finance team spot an opportunity to revamp the accounts payable system. HR want to replace the new joiner branded pen and notebook with a digital engagement platform. All the while the IT team toil away defining options, speaking with external consultants, and competing internally over legacy vs. new systems. As office supply stocks continue to diminish the operations team are unable to send the paper reports mandated by the regulator. This spurs legal to contact finance for emergency funding to buy paper. The CFO suddenly alerted to unexpected transaction outside of agreed purchase guidelines mentions in passing to the CEO that the organization needs tighter controls and maybe even some process redesign. And the office manager runs out of pens just as the CEO’s assistant swings by for a stationary re-up.2
There were a huge number of decisions (as well as avoidance of decisions) here. Who made them? Was it the CEO who saw an opportunity to drive some change by piggy-backing a mundane process? Was it operations who didn’t run a parallel program of supply management? Maybe it was the IT team who didn’t hive off their work as a separate project distinct from immediate need? Or finance? Maybe HR? Reductionist explanations tell us we should be able to find “one throat to choke.”3 But what’s apparent from my silly - but believable to anyone who’s spent more than 15 minutes in an organization with more than five people in it - example is that the organization took those decisions. The division of labor and the means by which it was coordinated brought all these varying interests with their differing objectives together. Those interactions remade the initial decision opportunity, created new demands, and redirected efforts once allocated to solve one problem - making sure the business had enough paper - to solve others - everything from financial controls to digital frippery.
So, this is my response, Reductionist Reader. The process of organizing is one of creating new entities that are greater than and not reducible to their individual parts. And while we may be able to identify definable components, even tracking them within and across organizational contexts, the example above shows that we fool ourselves in believing that we may explain decisions by making recourse to their actions alone. Organizations, as things in and for themselves, are capable of acting and making decisions, just not in ways that we (incorrectly) assume individuals do.
I’ve adapted this from the 1993 edition of March and Simon’s Organizations (p.2).
In the absence of an opportunity to teach a organizational sociology course based on the The Wire, I will drop references wherever possible.
This was a phrase I heard everywhere in the worst client I ever worked with. Naturally not a single throat was ever choked.