ORGANIZATION AND
MANAGEMENT
COEM 6003 – UNIT 1B
EVOLUTION OF MANAGEMENT THINKING
MANAGEMENT AND SCIENCE
Mathematics historically has been the tool of science. Mathematical statistics
emerges before the turn of the 20th century in Europe with the pioneering work
of Karl Pearson, Francis Galton, and Edgeworth. In the United States statistics
were sufficiently a tool of research to be central to the Hawthorne Experiments in
which T. North Whitehead performed the detailed statistical analysis. Also, at
Western Electric was W.A. Shewhart, educated as a physicist, serving as an
engineer at Western Electric and later as researcher at Bell Laboratories.
Shewhart’s Applications of Statistics in Maintaining Quality of a Manufacturing
Product in 1926 is the pioneering work in statistical quality control. Shewhart
directly influenced the work of the quality management guru’s, Deming and
Juran.
Still, statistical techniques and mathematics were seen primarily as tools of the
trade until World War II when exigencies of the war brought together scientists,
mathematicians, and business to win the war. Using mathematics to solve
problems from logistics to precision bombing, “operations research” (OR) was
born.
The British get credit for establishing the first Operations Research group in
the mid-1930's to study and implement the use of radar, but the Americans,
lead by scientists like Philip M. Morse, soon saw the utility in this kind of
teaming of expertise. Each branch of the services formed an operations
research group. After the war, business had learned the practicality of OR and
by 1953 operations research was an established area taught in American
universities.
If Taylor’s “scientific management” was about finding the “one best way”,
management science is about find the “optimal” way. Like Taylorism,
management science is about the application of science to management. The
names associated with the early days are not always found in introductory
business texts: Russel Ackoff, C. West Churchman, Edward Bowman, Robert
Fetter, Elwood Buffa, and Jay Forrester. The language of this approach is
statistics and math to solve problems such as: how much inventory to carry?
How many lines are needed to expedite customer checkout? What is the best
transportation route?
Game theory, mathematic modeling of decision-making, has expanded the
field into management strategy to create complex models that simulate
business conditions, as in war games. By the 1970’s with American
competitiveness seemingly challenged by Japanese industry, the work of
Deming and Juran on statistical quality control refocused management to a
discipline Americans pioneered in the 1930’s.
By the 1970's the use of computers for mathematic computation and
modeling presented new opportunities for growth in Operations Research.
The field of operations research today is integrated into many disciplines,
including the military, government policy, medicine, transportation, computer
sciences, and business. It's defining characteristics are the applications of
mathematics, physics, and systems thinking to problem-solving.
Out of Operations Research also came the introduction of systems thinking. In
the 1950’s and 1960’s through the work of Norbert Wiener, Kenneth
Boulding, and Churchman, systems theory attempted to form an integrative
framework of management.
Systems theory envisions that all things exist as part of a larger complex of
things. An impact on one element has an impact on all elements, perhaps a
minor effect on some parts, but nevertheless all things are interdependent and
linked to one another. While the effort to reduce all knowledge to a General
Systems Theory failed, systems theory remains part of our business vocabulary
to explain relationships and effects and has taken a new direction influenced by
the social scientists in the concept of the “Learning Organization”.
MODERN MANAGEMENT THINKING
Systems View
Systems theory provides a model for investigating organizations and describing how its constituent
elements work together. In its most elementary formulation an organization can be modeled:
To illustrate how the open system works consider:
The firm is a "black box", we are not sure how it works, but we can see that it takes from its
environment certain inputs, like labor and capital. The firm then transforms these resources in
outputs, like goods and services. Control is achieved through feedback by which the firm "learns" to
alter its inputs to achieve a more efficient transformation or attain better effectiveness. Efficiency - a
measure of Output to Input.For example, number of units produced per manhour or Sales/Cost ratio.
Effectiveness - a measure of extent to which goal is attained. For example, Sales Target - Actual Sales
or Production Target/Actual Production ratio. The model is an open system when the "black box"
interacts with its external environment. For example, if there is a shortage of a needed labor skill (e.g.,
nurses or teachers) we can use the model to describe how the change in this external resource affects
efficiency or effectiveness.
Contingency Theory
Well, the answer to most business problems is "It depends!" Yes, but on what? That thinking is the
basis of contingency theory: a search for factors that affect an organization and for the implications
of the organization's dependence on the factor. In the 1950's Burns and Stalker found that
organizations respond to differing environments, answering the question: How do firms organize
given their environment? It depends on what type of environment the organization is in. If the
environment is fast changing, the type of structure is organic - a flat, low hierarchical form. If the
environment is stable over time, the structure is mechanistic - a tall, bureaucratic form.
According to Taylor, Fayol, Weber and other classical theorists, there is a single best way for
organization to be structured. Contingency theory has sought to formulate broad generalizations
about the formal structures that are typically associated with or best fit the use of different
technologies. The perspective originated with the work of Joan Woodward who argued that
technologies directly determine differences in such organizational attributes as span of control,
centralization of authority, and the formalization of rules and procedures.
The leading practitioners of contingency theory were Tom Burns, Joan
Woodward, Paul Lawrence, and Jay Lorsch, an otherwise theoretically eclectic
group who were nevertheless united in their belief that no single organizational
structure was inherently more efficient than all others. They suggested that
previous theories such as Weber's bureaucracy and Taylor's scientific
management had failed because they neglected that management style and
organizational structure were influenced by various aspects of the environment:
the contingency factors. There could not be "one best way" for leadership or
organization.
Thomas Watson, Jr. (1914-1993) played a significant role in shaping today's
IBM—not so much technologically as culturally. Watson said that an
organisation’s culture could only be sustained by "a sound set of beliefs, on
which it premises all its policies and actions." As CEO, he established many of
those. And, as Watson observed, beliefs rarely change
Thomas J Peters (1942- ) an American writer on business management practices, best-
known for In Search of Excellence co-authored with Robert H. Waterman, Jr. The book
marked a watershed in business book publishing that offered American businesses an
answer to Japanese manufacturing and marketing successes. The platform for Peters
and Waterman onto which the In Search of Excellence research and theorising was
built, was the McKinsey 7-S model:
McKinsey 7-S model elements
1. structure
2. strategy
3. systems
4. style of management
5. skills - corporate strengths
6. staff
7. shared values
Peters and Waterman examined 43 of Fortune 500's top performing companies. They
started with a list of 62 of the best performing McKinsey clients and then applied
performance measures to weed out what they thought to be the weaker companies.
General Electric was one of the casualties which failed to make the cut. Peters says
that one of his personal drivers in carrying out his research was to prove that certain
established methods - particularly heavily systemised philosophies and practices -
were wrong, notably those used by Xerox, and advocated by Peter Drucker and Robert
McNamara. Peters says that he wanted - with a passion - to prove how crucial people
are to business success , and to release business from the 'tyranny of the bean
counters'.
In Search of Excellence - the eight themes
1. A bias for action, active decision making - 'getting on with it'.
2 .Close to the customer - learning from the people served by the business.
3. Autonomy and entrepreneurship - fostering innovation and nurturing 'champions'.
4. Productivity through people - treating rank and file employees as a source of
quality.
5. Hands-on, value-driven - management philosophy that guides everyday practice -
management showing its commitment.
6. Stick to the knitting - stay with the business that you know.
7. Simple form, lean staff - some of the best companies have minimal HQ staff.
8. Simultaneous loose-tight properties - autonomy in shop-floor activities plus
centralised values.
Charles Handy (1932-) introduced the concept of "discontinuity of change" in 1989 in
his book The Age of Unreason, but his talk about change would never be more
appropriate than today. After all, his age of unreason is "a time when what we used to
take for granted may no longer hold true, a time when the only prediction that will
hold true is that no predictions will hold." The organization of the future he advocates:
a "federal organization that allows units and divisions individual independence while
preserving corporate unity."
Marshall Goldsmith (1949-) is considered the foremost expert in helping leaders make
positive, measurable change in behavior: for themselves, their employees and their
teams. In 2000, Forbes listed him as one of the five top executive coaches and Human
Resources magazine ranked him as one of the world's leading HR consultants.
Recently, the London Times named Marshall Goldsmith one of the top 50 most
influential living management thinkers. The American Management Association
named him as one of 50 great thinkers and leaders who have influenced the field of
management over the past 80 years and Business Week listed him as one of the most
influential practitioners in the history of leadership development.
