Sunday, November 16, 2008

The Nature of an Organisations

As many will know, I have a problem with the theory that most people still to describe an organisation.

In the light of the exchanges on Toni's Blog, it seems a good time to re-phrase where I am coming from.

Coarse' concept of a nexus of contracts is now stretched to the point that it is no longer practical (and Sonsino's idea of a nexus of conversations is too lightweight).

At every level and in every department, organisations have become porous. They lease the office, factory, computer and machine tool, Like Procter and Gamble, Lego, or IBM they use open source Intellectual Property to compete with products. Manufacture is shipped to another company/country and even the means for payment and distribution belongs beyond the institutional structure. It is not that this is some cyberspace phenomena. It is not a virtual phenomena. This is about hard bricks and mortar, real machines and products you find in every home.

The organisation as it could have been described in 1958 no longer exists. In 50 years it has become an institution held together by relationships. So when we in PR talk of public relations being between an organisation and its public's, we need to have a better idea of what we mean by organisation.

But the changed nature of an organisation does not stop there.

In the past, we recognised the militaristic nature of corporate structures. There were managerial divisions such as R&D, Manufacturing, Finance, Marketing, Sales, Transport. There were ranks such as labourer, clerk, foreman, supervisor, manager, department head and director. Contact between organisational division was discouraged. They were kept in separate locations and often had to make a journey or (expensive) telephone call via an operator to make inter departmental contact.
A clerk would never talk to a manager because the manager knew everything and past on the information that a supervisor needed to know, who in turn told the clerk what to do. You can see it laid out in its perfect symmetry in the Swindon Railway Museum. In 1958, just 50 years ago, that is how it was.

Today the newest, youngest employee can communicate to anyone of any rank in any division or department at will. With a really bright idea, that person can also create a small group of enthusiasts for something that will be just great to make them all rich and the company prosper. The old idea of an organisation is now different. Communications inside the company has changed that.

But hang on.... the organisation outsources lots of stuff.

So this new, junior person and his group of enthusiasts may well be dealing with an external institution (who might also work with competitors).

The nature of this group is that they have built relationships, are able to act independently and within and beyond the boundaries of the organisation. They have wrested control from the organisational 'dominant coalition' and the structure of organisations is changed.

Great theory.... is there any evidence?

Three months ago people who lent money to banks had almost no say in how those banks should be run. Then tax payers money was leant to banks. Now the editor of every newspaper, every Parliamentarian and, it seems, every bar room bore is affecting how banks are run. Outsourcing access to capital to taxpayers changed the way banks are run. The rise and rise of Management Buyouts (still an active market worldwide despite the credit crunch) is a manifestation of control moving inside organisations.
So far, I have avoided including the impact of ICT. But lurking in the background are things like email, low cost telephony and fast data transfer that made all this happen.

For many organisations, there is every appearance that they are monolithic until you look at the bottom of their website, look at the extent of off-balance sheet financing, examine the services they outsource such as recruitment, competitor research (most people don’t realise that Google is the most used form of competitor research in the world) and now we can see just how much control organisations have ceded to institutions beyond their control.

You see, this disintermediation of the 'organisation' comes at us a many ways.