Building organizations with information technology: opportunities and constraints in the search for new organizational forms

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"Man is not the sum of what he has already, but rather the sum of what he does not yet have, of what he could have."

[ean-Paul Sartre, Temporalite, in Situations (1947-49)

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ISBN 82-405-0028-5 Bergen, Norway

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371

15 TOWARD THE MODEL-DRIVEN ORGANIZATION 16 THE NEW ORGANIZATIONS

373

388

APPENDIXES

433

A ApPROACHES TO ORGANIZATION THEORY B A BRIEF HISTORY OF COMPUTER SYSTEMS REFERENCES

SYSTEMATIC TABLE OF CONTENTS

435 456 477

488

The author can be contacted at:

Lars Groth Pharos DA

Dronning Mauds gt. 3 0250 Oslo

Norway

Phone: +47 - 22 83 15 70 Fax: +47 - 22 83 07 80 Email: [email protected]

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Preface

"Sometimes a scream is better than a thesis."

Emerson, Journals, 1836

Apart from secret diaries, texts are usually written to be read by someone else.

Writing is therefore basically an act of communication, although 1 also tend to agree with Mintzberg when he says (in the preface to his The Structuring

of

Organizations), "I write first of all for myself. That is how 1 learn." Noting the ample number of published titles from his hand, however, I feel safe to conclude that he too has at least a secondary purpose in writing: he wants someone else to profit from what he has learned.

This brings up the question of who the reader is-or, indeed, if there will be any readers at all, as the sad fact about doctoral dissertations is that they often come uncomfortably close to the secret diary, with the reviewing committee, the examiners, and maybe a few friends as the only serious readers.

With all the time, effort, and forgone consulting assignments invested in this dissertation, the thought that it should end up as nothing but a dust collector in a few Norwegian university libraries has been too much to bear. I have therefore kept up the hope of a wider circulation and have composed the text with that goal in mind.

Who, then, would the prospective reader be? Sometimes, the answer is easy:

you simply write for the scientific community in your own field, or you write for the practitioners, the ones who actually work in and around organizations. Ifso, you have few problems choosing the presentation form. You know what you can assume to be known, you can use professional jargon, and you generally tie your arguments to the reigning paradigm of the field. If you are writing for people outside your field, the problems are more severe; now you have to be careful to explain and elaborate on your arguments, and you have to find the right level of simplification.

Writing this dissertation, however, I find myself in a still worse predicament.

By choosing a cross-disciplinary subject, I end up writing for two quite different scientific communities, with little common ground-organization theorists and information systems people-and run the risk of estranging all parties involved.

Inaddition to the danger of breaching scientific community tenets comes the fact

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that the explanations needed for one group may bore the living daylights out of the other. Moreover, I know a fair number of professionals outside the scientific community who I hope will be interested as well, and whom I genuinely want to reach.

Clearly, there is no panacea that can resolve this dilemma, and I have had to make a number of choices. The central decision has been to stick to my academic background as an organization sociologist and make the organization perspective the dominating one. Ithas nevertheless been impossible to avoid a certain dose of computerese, and I have tried to explain as I go along. A summary of the history of computing, useful for those who do not know or care about computers (as background information when reading Chapter 8), has been included in Appendix B. For the benefit of those who belong to the computer systems community, a brief overview of the many-faceted field of organization theory has been included in Appendix A.Ifyou know little about organization theory, it may be useful to read it before you embark on Chapters 2 and 3.

In composing a text like the present one, however, one is also presented with constraints on creativity, as the ground rules for scientific discourse are heavily biased toward the analytical, literate mindset. The text must appear as a structured, coherent, and linear presentation of facts and ideas. The ideas presented should be consistent with each other, and the whole presentation must be sufficiently clear and unequivocal to let the reader understand it without having to pose a lot of questions to the author. Diligent use of Occam's Razor is recommended: keep your arguments clear, and eliminate everything that is not needed for your main purpose. Or, as Lee Gremillion advised me after reading an early draft of part of this thesis, quoting what he claimed was an old saying in the United States, "Tell them what you're going to say, say it, and then tell them what you said."

There are good reasons for those rules, but they conflict with the nature of the subject itself, where themes, problems, and solutions are all intertwined, and almost any explanation seems to presuppose the result of a discussion that has to come later. It is tempting to quote from Mintzberg's (1979) preface again, where he laments:

Linearity is what makes all writing so difficult. This book contains about 175,000 words laidend to end in a single linear sequence. But the world is not linear, especially the world of organization structuring. It intermingles all kinds of complex flows-parallel, circular, reciprocal.

The same kind of frustration is vented by Herbert A. Simon in the introduction to his landmark Administrative Behavior, but as a practical rationalist, he also knows that this conflict cannot be resolved by just throwing the traditional rules overboard. Consequently, he devises the necessary compromise (Simon 1976, p. x):

Anyone who tries to write a book soon learns that there is a fundamental incompatibility between the simple linear sequence of words that he has to set down and the complex web of his thoughts. To meet this difficulty, he combs out his thoughts as best he can into long strands and ties them together in as orderly a manner as possible. While preserving the most important relations in the pattern of his ideas, he sacrifices others.

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The conflict is still an unhappy one, however, which I hope technology and the computerate mindset will relieve in the future. Nevertheless, with a conscious eye on the expectations of the readers, the conventions laid down for academic publications, and the limits of the paper paradigm, I have (although somewhat grudgingly) yielded to the thesis format and made an attempt to control the associations that cropped up as I wrote. However, I have not suppressed them completely. IfI did, I would not have been honest, and by not presenting what I think are intriguing thoughts and possibilities related to the subject matter of this thesis, I might have deprived the reader of associations, insights, and new ideas. In addition, such a suppression would have made the dissertation too frustrating and boring to write; it is the small, inspired sparks that spring from the associative cortex thinking through a subject as thoroughly as one does only when writing about it that makes the whole thing endurable-at least for me. Not to let at least some of them survive the final pruning would just have been unbearable. SO please bear with me ifyou think I am straying somewhat from the subject: I will soon return.

This brings me to the subject of readability. Personally, I do not believe that the academic value of a text is inversely correlated with its legibility. I hate to struggle through a book where I lose the thread or find that my concentration lapses several times on each page. Even though this is a doctoral dissertation, therefore, I have strived to create a narrative that is both pleasant to read and easy to follow.

You will be the judge of my success, but know at least that I tried.

This is also one of the reasons I have tried to use examples to illustrate the properties of computers and information technology in general-in addition to the obvious purpose of substantiating theoretical arguments. Many of them are actual systems that are or have been in operation; but because my main point is to say something about not just what has been done already, but also what should be possible, I cannot stop there. To illustrate and explain what I see as the potential of information technology, and its fundamental strengths and weaknesses, I have also used imagined examples or thought models of systems that are possible but not yet realized.

This immediately raises an important question about which level of technology those models should assume. To allow only existing products as bases for speculation would be unduly restrictive when the pace of development is as fast as it demonstrably is in the IT industry (this dissertation alone has resided on three generations of computer systems and has been edited with the help of three different word processing programs in a total of seven versions). Any conclusion would then be overtaken by new developments before the document left the printer. On the other side, speculations based on potential technological capabilities fifty years from now would not be very interesting either, since a) we do not have the foggiest idea of what that technology willlook like and what its capabilities will be and b) it would be of no use for those who would like to do something about their organizations today or in the coming decade, since the capabilities assumed might not be available within the span of their entire careers.

I have tried to hit the middle of the road in this matter. In Chapter 8, Information Technology Development Trends, I have given an overview of what I see as the most important probable technological developments during the next ten

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years (1996-2006) and the capabilities that computer-based systems are likely to attain in this period (and sometimes a few years beyond that). We know that most mainstream products today were at the laboratory or prototype stage ten years ago, and it is not unreasonable to assume that most of the mainstream products that will be available at the turn of the century can be seen in today's laboratories.

There are, of course, always surprises, but as an industry matures the number of surprises and completely new product classes tends to diminish.

In addition, for some of the most fundamental parts of computer systems, such as microprocessors, memory, and mass storage, we have had great stability in the pace of development for several decades; the present level of chip complexity was in fact predicted fairly accurately by Gordon Moore in 1964 (Noyce 1977). He overshot the target by less than a factor of 10, which is not bad at all when you bear in mind that the number of components per chip today is more than one million times higher than it was in 1964.We therefore have every reason to believe that the established trends will continue for the next ten years as well, since, as far as we can see, the continued improvement can be attained just by refining existing technology; no new breakthroughs are needed.

I have therefore based my thought models and my discussion of the fundamental capabilities of computer-based systems and the way they alter the preconditions for organizing on the developments outlined in Chapter 8, and have not assumed a level of technology higher than what I believe will become commercially available (and affordable) in the course of the next ten years.

Finally, some words on ambition. When you start to write a dissertation on your most cherished subject, your ambitions are naturally very high. You may acknowledge that your prospective new insights will probably not turn the world over, but you expect at least to rock it a little. As you plod along, your early ambitions (stated or not) come back to haunt you, as you can see no illuminating light in the darkness ahead, no ingenious insight- in fact, nothing new beyond what you wrote in your project proposal-nothing at all to amaze your friends and colleagues. And, worse, nothing to justify the grant money you bum while you work. Therefore, when you start writing, you naturally want to include all the good ideas that come along, you want to write the dissertation to end all dissertation efforts-to write your collected works in one fell swoop. You reign in only when you have entangled yourself in a discomforting number of loose threads that threaten to tie you to the keyboard for ever.

Then comes the moment of truth, when you realize that you are about to make (you hope) a modest contribution to a part of the field of interest. My ambition as I write this preface is to contribute to the understanding of the connection between organization and technology in general, and in particular to explain what kind of organizational advances we may make with the computer as a tool. I also think it has been a very worthwhile effort to extend an established body of organization theory to accommodate possibilities opened up by new technology.

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Acknowledgments

"Gratitude is the poor man's payment."

English proverb

The impetus behind this project was my desire to be able to say something sensible about the interrelationship of information technology and organization, a desire born under circumstances I shall describe in the Introduction. However, without the funding generously supplied by a number of organizations, I would not have been able to embark on this endeavor. I am therefore very grateful to the then Royal Norwegian Council for Technical and Scientific Research (now a part of the Research Council of Norway) for their bold support, which enabled me to attract support also from the the County of Akershus, Elkem Aluminium ANS, the Ministry of Government Administration, the Norwegian National Bank, Norsk Data A/S (later taken over by Siemens Nixdorf), and Norsk Hydro A/S. Norsk Data and the County of Akershus supported the participation of Akershus Central Hospital. In each of these organizations, there are many people who have helped with this project, and I feel grateful to them all. Without their support, this effort could never have succeeded. I would also like to thank my employer during the first half of the project, Avenir A/S, for their understanding when the project started to slip behind schedule. Finally, I would like to express my gratitude to my partners in Pharos DA, who generously provided me with the necessary overdraft facilities when my income dwindled during the intensive last year and a half of writing.

When I started to explore the possibilities for this project, I received crucial support from four persons. First of all I must thank Marie Haavardtun, then managing director of Avenir, who strongly encouraged me to go on and was very helpful in providing contacts with possible sponsors. Tron Espeli, who was secretary of the governing committee for the Research Council's program "Man, Computer, and Work Environment," went out of his way to help me structure the project to meet the Research Council's requirements. Prof. Sverre Lysgaard at the Department of Sociology at the University of Oslo volunteered without hesitation to review my work-as he did more than a decade earlier when I wrote my master's thesis. Finally, my colleague Peter Hidas both urged me on and volunteered to act as my mentor toward the Research Council.

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Sadly, both Sverre Lysgaard and Marie Haavardtun died before the dissertation was finished, and before I could present them with the final results of their generous support. Their premature deaths were a blow to all of us who knew them and regarded them as friends.

Also, Prof. Erling S. Andersen (the Norwegian School of Management, Oslo), Prof. Per Morten Schiefloe (The Norwegian University of Science and Technology, Trondheim), Ass. Prof. Pal Sergaard (University of Oslo), Prof. Kjell Crenhaug, and Prof. Leif B. Meth1ie (both of the Norwegian School of Economics and Business Administration, Bergen), Age Borg Andersen, and OUo Stabenfeldt (both old colleagues from Avenir), Eivind [ahren (Ministry of Government Administration), and Kamar Singh (GE Aircraft Engines) gave of their valuable time to read and comment on my last draft.

However, during the writing process, two people have rendered more help and support than others, and without any formal obligation to do so.

First of all, I would like to thank Lee Gremillion for all his support and encouragement over the last six years. Lee and I first met when I called on him in Boston early in 1990 following an article in Datamation on rapid prototyping, where a project that Lee managed was highlighted. Together with two colleagues, I contacted him to hear more about his experiences, and Lee, in his characteristically forthcoming and friendly way, freely shared his hard-won knowledge with the strangers from a small country far away. Later that year, he came over to Norway as the main speaker at a conference that Avenir organized in Oslo on the same subject. When he heard about my doctoral work, he expressed interest and offered to read my drafts and comment on them. Since then he has been my main reviewer, and whenever I sent something over, his comments returned with a promptness worthy of a rather more profitable client. With his doctorate from Harvard University, his background from academic appointments at Harvard, Indiana University, and Boston University School of Business, and his experience as a partner in Price Waterhouse in Boston, his advice and criticism has been invaluable to me. He has also been an inexhaustible source of encouragement, which has helped greatly in pulling me through the deep troughs that invariably occur in such projects.

The second person I would like to single out is Ass. Prof. Gunnar Christensen at the Norwegian School of Economics and Business Administration in Bergen. We met during work on the Norwegian government's 1992-95 plan for developing the use of information technology in Norwegian industry, and afterward on one of the projects under that plan. I immediately seized upon the chance of recruiting Gunnar as an informal reviewer, and, by and by, he quietly accepted the role as sounding board. Patiently, he responded to my questions, offered suggestions, and listened to my occasional tales of frustration. During the final year, he also read and commented on the complete text, and thus effectively assumed the role Prof. Sverre Lysgaard had before his death. As one of the few researchers in Norway who is equally well versed in organization theory and computer-based systems, Gunnar has been of great help. Of special importance was his assistance during and after my decision to stand for the doctorate in Bergen rather than at my alma mater in Oslo. His help with the formalities as well as with access to the other people there who had to look at my work was vital for the final success of myefforts.

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There are, of course, others to thank as well. [an Heim (then at the Norwegian Computing Center) read my first drafts on our cognitive capacities and offered very valuable advice, and Prof. Ivar Lie (University of Oslo) also helped with valuable information for this chapter. Prof. Tjerk Huppes (University of Groningen) found time to receive me and offer advice, and Ass. Prof. [an Brage Gundersen (University of Oslo) helped me with some of my philosophical excursions. My colleagues in Avenir and in Pharos have also been both helpful and supportive, prodding me on with their interest. I would especially like to thank Dag Solberg for his interest and suggestions. Dag is certainly one of the most experienced practitioners inthe field of modeling in Norway, and he is also theoretically better versed in the subject than many academic specialists. His comments have been very useful.

Lastly, I want to thank my family for enduring the hardships with me. I have read many such statements of gratitude toward a family through the years, and until a few years ago I viewed them as perhaps little more than a social reflex.

Now I know better. To have one of the parents strained by dissertation work year after year, often working both evenings and weekends, is an experience most families could well do without. I am very grateful that you put up with me, supporting me even through the nth delay. I hope I shall never test your love and tolerance in this way again.

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A Platform for the Investigation

In this part, my purpose is to build the foundation for the main analytic thrust of the dissertation. In Chapter 1,Introduction, I explain how I was prodded to initiate the project-how my curiosity for the organizational potential of information technology was aroused to the point where I felt I had to do something about it. I also delineate the project's point of departure and the approach chosen for the analysis: to use the basic human preconditions for organizing as a starting point, and investigate how they are enhanced by technology-first by pre-computer technology and then by information technology itself.

In Chapter 2, Organization and Tools-the Human Advantages, I set out to establish the (in my view) cruciallink between organization and technology and explain the concept space

of

constructible organizations. The chapter ends with a delineation of the scope of the analysis.

In Chapter 3, The Basic Preconditions for Organizing, I discuss the subject of organization, especially how organizations are defined and what their basic elements of structuring are. The structural configurations of Henry Mintzberg (1979) are adopted as the main framework for the analysis. The discussion concludes that coordination is the linchpin of all organization, and a taxonomy of coordinating mechanisms (based on Mintzberg's definitions) is proposed. The chapter ends with the definition of what I see as the basic human preconditions for organizing, which will serve as the foundation for my main analysis.

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1 Introduction

"A man's behavior is the index of the man, and his discourse is the index of his understanding."

Ali Ibn-Abi- Talib, Sentences,seventh century

Prods That Kindled Curiosity

This is a treatise on how the inherent properties of computer-based systems fundamentally alter some of the basic human preconditions for organizing and for work in organizations, and thus open up the possibilities for new organizational arrangements. ^Ithas been my intention to reach an understanding of what those basic preconditions are, and^how they are alleviated by information technology, in order to be able to outline-on the basis of general organization theory-how organizations that really exploit the technology might look like and function.

Although I do not succumb to the folly of thinking I have found the definitive answer, I do believe I have developed an interesting line of argument that may help to elucidate the intimate relationships between information technology and organization. I also hope that my narrative will be of interest both to scientists and to the practitioners of the difficult art of management.

As I write this, a research effort that has absorbed more time than I like to think of and has lasted more years than I like to keep track of (and displaced more billable assignments than I like to add up) is finally drawing to an end. Like many such efforts (probably most), it was inspired by a combination of professional interests, curiosity, and unexpected incidents that served to put a question before me in a way that made me want to search for an answer. As a prelude to the dissertation, and to provide the best possible understanding of what I set out to do, I would like to describe briefly the circumstances that led me to embark on this journey back in 1986.

Scenting a Revolution

An organization sociologist by training, I wanted to work with organization development when I graduated from the University of Oslo in 1977.Fairly soon I became convinced that the rapid spread of computer systems would be the most important driving force for organizational change in the decades to come, and in

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1980I joined a computer consulting firm that wanted to complement its computer- related services with assistance in organization development. That proved to be an uphill battle, however. Customers viewed organizational matters either as something quite irrelevant to their data processing needs or as a trivial detail they could take care of themselves. Even the obvious need for dedicated personnel for user support and restructuring of routines was usually denied.

At about the same time, there were growing complaints about the missing benefits of investments in computer systems. The expected return on investments did not seem to materialize. Widely published analyses showed zero or even negative productivity growth in the office sector, in spite of heavy investments in information technology. Itwas a stark contrast to the continuous improvement in manufacturing. The complaints were an international phenomenon, and some of the arguments are summed up by Strassman (1985,pp. 151-165).

Whether the complaints were valid was not altogether clear, however. As practitioners, my colleagues and I were often puzzled by the analyses, because our everyday experience indicated that the majority of computer projects paid for themselves within reasonable time. Of course there were always projects that went wrong, and a good number where the profitability was questionable, but according to our experience, they were definitely outnumbered by the successes, at least when it came to structured data processing, such as accounting, inventory control, records management and claims processing. As for more unstructured applications, such as general office support, the record was much less clear.

Indeed, in the mid-1980s, when the data processing societies in the Nordic countries made a survey to locate successful and demonstrably profitable office automation installations, they reportedly found none! The DP societies had planned a public campaign on the benefits of computing and wanted to use the success stories as cases. As you may well understand, the campaign was canceled.

These allegations about lacking productivity were both bewildering and hard to swallow. Like most technocrats, computer people were and are generally very optimistic on behalf of their technology, and their common credo was that computers enhance productivity and open new vistas of unexplored opportunities-be it in business, in education, or in local and central government.

Their conviction was born out of their enthusiasm for the machines they worked with-their raw power, the elegance of their logic, the richness and flexibility of their software, and the incredible pace of their development. I have shared much of this enthusiasm, although I have become more cautious lately-feeling a need to put some distance between myself and the exuberance of the more unrestrained enthusiasts, whose imagination and excitement have now been fired to the point of meltdown by the exploding success of Internet and the notion of a Wired World.

Itlater turned out that many of the reports fueling complaints about missing productivity were built on macroeconomic statistical analyses with doubtful relevance to the subject in question (Panko 1985).However, most people tended to accept them at that time-and it could at least not be denied that even successful projects frequently experienced considerable implementation problems (they often still do). Even accepting that computers ^did increase productivity, therefore, one could justly ask why they did not increase it even more, and why there always seemed to be so much trouble involved.

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An Organization Connection?

Apart from the often obvious effects of the lack of training and support, a mismatch between organization and technology seemed like a possible explanation to me. After all, the technology was new and unexplored, whereas our models for organization and our ways of working seemed old and entrenched.

Time and again, we saw that the introduction of computers just involved an

"electrification" of existing routines; even on-line systems tended to mimic paper files and manual work. Frequently, adjoining routines were not modified to take account of changes in the workflow. For instance, an executive of the Norwegian metals producer Elkem! told me that the underlying routines for data capture and registration of accounting information were not changed when the company headquarters made the transition to computerized accounting (a batch-oriented accounting system) in 1972/73. He also said that the control of the accounts and the finances grew worse when the new system was introduced. With the old bookkeeping machines, status could be checked at any time just by looking at the cards; with the new system, ad hoc listings between the monthly reports had to be specially ordered, cost extra, and were therefore seldom produced.

This is an apt illustration of one of the basic dualities in human nature: that we are both naturally curious and competitive, inclined to experiment and explore the ramifications of new insights, and (simultaneously) heavily influenced and constrained by the awesome power and perseverance of habits and established patterns of thinking. Throw in our very limited mental ability to handle complex problems and foresee consequences where many parameters vary simultaneously, and you have a good explanation for why we almost always change our work and organizations step by step, in small increments.

The consequence of these very basic human traits was that, while we eagerly sought to exploit a new and potentially revolutionary set of tools (computer-based systems), we still built our organizations and arranged our work as if little has happened since the invention of the quill pen. The result was, by all probability, a basic mismatch between organization and technology-a mismatch that not only prevented the full realization of the technology's potential, but that, from time to time, actually created problems that reduced the overall efficiency compared with the situation before the computers were introduced.

Some Questions Come to Nag Me

This organization hypothesis was exciting for an "old" sociologist, and spurred by this realization, I started stressing the importance of organization and user support both in computer magazine articles I wrote as well as in talks I gave to audiences that consisted both of users and computer professionals. At the same time, the subject was gradually becoming more in vogue, at least in the data processing community. (The users, although more willing to accept the theory "in theory," continued to resist the idea that they should squander their IS money in practice by using it for anything other than hardware and software.)

1One of the larger Norwegian industrial companies, with aluminum, ferroalloys, silicon metal, and equipment for environmental protection as main products. Elkem is one of the sponsors of this research project.

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One of the most intriguing statements one could make at the time (it still is!) was that a widespread adoption of advanced computer systems would make it possible to build new organization structures, more efficient and flexible than the ones we were used to. This was always a sure hit, especially with the more well- groomed professional audiences, all members of the chip-chip-hurrah community.

From time to time, however, a few uninitiated participants would have the temerity to ask "how" or "what kind

of

structures," instantly creating that special kind of embarrassed silence experienced in sacred (or political) congregations when newcomers ask "stupid" questions about central dogmas.

Such questions also tended to create a slight panic in the speaker, who time and again had to fall back on the well-worn examples of American Hospital Supply Corporation and American Airlines (and, fortunately, a couple of credible local cases). However, they did not quite seem to fit the bill. The companies in question had undoubtedly changed some aspect of the way they did business, and with notable success, but the systems' organizational impacts were questionable, apart from eliminating a number of positions associated with the old routines.

In fact, most of the success stories that circulated in the business at the time seemed to deal with intrinsically very simple applications, based on the computer's outstanding capabilities in handling large registers with mostly numerical data. As soon as you left these simple and highly structured applications, the success stories thinned out and became more and more difficult to validate.

Often I ended up saying that the ways and means here were not quite clear yet, as we were all in the forefront of a development that was just taking off, and that, consequently, the new structures and ways of working had yet to emerge.^It was hardly a satisfying answer for the audience, and definitely not a satisfying experience for me-all the more so because I really believed that the possibilities were genuine. I was in dire needed of a qualified answer, since I really wanted to be able to say something about "how" and "what kind of structures." That was when (in 1986)I started to formulate (and obtain funding for!) a research project to look into the matter-a project that started in earnest in 1988, has experienced some pauses along the way, but has stayed alive to produce the dissertation you are about to read. I now believe that I have an answer-perhaps not the answer, but a reasonably logical and coherent set of explanations about what kind of organizational structures that may indeed evolve as we gradually master the new tools provided by the digital computer. I also believe that I can say sensible things about what kinds of organizations will be able to benefit the most.

And, by the way, the doubts about productivity have since largely been dispelled. The definitive public breakthrough of the new view of computers as universal tools of change and improvements in efficiency could be read off the front page ofBusiness Week on June 14, 1993.Under the tabloid-sized heading "The Information Payoff," the special report on computerized productivity increases was heralded with the following:

u.s.

business spent $1 trillion on information technology in the last decade-but showed little gain in efficiency. Now, productivity is finally bursting out, thanks to better software and a reorganization of work itself.

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The Point of Departure

A Quest for Practical Directions

My viewpoint is a practical one. I have been working as a consultant since 1980, and my clients always expect practical advice that will produce concrete improvements in their organizations. That is what they pay to get, and that is what I strive to provide. The basic goal for my research was therefore to be able to offer my clients better advice and perhaps also help others who needed to understand how their organizations could really come to grips with this new and exciting technology. The basic questions I wanted to answer were no more and no less than those I had encountered during my talks:

• What will the organizations look like that really take advantage of the full power of information technology?

• How should they be structured?

• How will they function?

• What will be their benefits and drawbacks?

• Are the opportunities the same across the board, or do they vary among organizations of different kinds?

If I could answer these questions, I felt I would also be in a much better position to help my clients both to take advantage of contemporary systems and to stake out the road ahead-since I would then be able to tell if their particular organizations could benefit from intensive use of information technology, what they would need to do in order to exploit it, and (just as important) how they couldnot exploit it.

However, I found no one who could answer these questions-at least not in a convincing manner. As far as I could ascertain, the research done was largely of a local and empirical nature, investigating the current best practices practice in existing organizations and analyzing the actual impact of their systems-or, rather, the way those organizations had exploited them. I could find few explanations of a more general nature, and none at all that in a coherent and comprehensive way could make clear why information technology seemed to facilitate some organizational innovations and not others. Nor could I find any real attempts to bridge the gulf between these new technology-based developments and the more established body of organization theory. In fact, most organization theorists seemed to be either uninterested or simply unaware of the developments that were taking place.

Quite frankly, I felt at a loss. I felt that I did not understand this field at all, even if I new quite a lot about the reported successes and failures at that time. I remained hard pressed if challenged to judge the potential benefits particular organizations could reap, or point out exactly where in those organizations the greatest potentials were buried.

Actually, I believe most executives (and even consultants!) often feel that way even today. Inundated by a steady stream of success stories reported both in the

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trade press and in the general media, it remains difficult for them to know which of the many alleged roads to success are most appropriate for their own particular organizations. ^Itis my experience that they often feel bewildered, wondering why it is so difficult to see the opportunities and to achieve the same kind of successes at home. Sometimes they may even doubt if all those much-heralded opportunities are reallyreal.After all, people in other organizations cannot simply be that much more ingenious? Or they may wonder if perhaps the opportunities are quite disparate in different kinds of organizations-and, if so, how they can find out which ones apply to their own. Most likely, there are also possibilities within reach now or in the near future that no one has thought about yet. Is it possible to speculate sensibly about such matters at all?

Found Missing: A Theory of Computer-Based Organization

Sometimes one ends up looking for an answer in seemingly unlikely quarters.

One may perhaps think that answers to practical problems are best sought by accumulating experience, but, in this case, I soon concluded that we most of all lacked an adequate body of theory that could help us analyze experience and advance our understanding of the deeper relationships between information technology and organization. This scarcity of theory has also been noted by others;

as late as three years ago a call for such theories was issued in an editorial essay in Organization Science titled "Where Are the Theories for the 'New' Organizational Forms?" (Daft and Lewin1993).

The link here is really quite straightforward. It is my deep conviction that without adequate theory, questions like the ones posed above simply cannot be credibly answered. Without theory to help us interpret our experiences, we will not be able to understand much about what is going on and why, let alone chart a viable course into the future and sense potentials unrealized so far. In order to provide the kind of practical, effective advice I wanted to be able to give my clients, then, factual knowledge and experience is not enough. To obtain a sound understanding of a particular field, experience, factual knowledge and theory are all mandatory. Sometimes an an unconscious, everyday theory-in-use (Argyris 1980) may suffice, but for the large, complex organizations of our age, explicit scientific theories are necessary as well.

As [oAnne Yates says, summing up her very interesting work on the development of methods and technology for management control and communication in American industry between 1850and 1920 (Yates1989, pp. 274- 275,my italics):

Perhaps the most obvious implications concern communication and information technology. [ames R. Beniger has recently argued that the "Control Revolution"

that began in the late nineteenth century contained the seeds of today's information society. Certainly, there are some parallels between the revolution in office technology of the 1880-1920 period and the revolution of the last twenty-five years. Recent innovations in computers and telecommunications have been so spectacular that contemporary commentators tend to focus solely on the technology, seeing it as the driving force causing changes in other parts of the organization. The case studies in this book, however, illustrate some of the problems with simple technological determinism. Technologies were adopted, not necessarily when they were invented, but often when a shift or

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advance in managerial theory led managers to see an application for them.

Moreover, technologies were often adopted simply to facilitate existing managerial methods; potentially more powerful applications, such as the use of the telegraph for railroad dispatching, were ignored for long periods. The technology alone was not enough-the vision to use it in new ways was needed as well.

A related implication for contemporary issues concerns both communication technology and geographical dispersion. Just as the telegraph once opened up possibilities for wider domestic markets and more scattered production facilities to companies such as Scovill and DuPont, worldwide telecommunications systems are now doing the same for international markets. The historical cases suggest, however, that the real potential of these networks cannot be realized through a simple extension of existing patterns of communication. Real gains await innovative thinking about underlying managerial issues.

Therefore, when we encounter a new and uncharted territory like the interplay between computers and organizations, "nothing will be so practical as the development of a good new theory," as Daft and Lewin (1993) note (with due reference to Kurt Lewin-). As Yates attests, the future can seldom be forecasted by extrapolation, and to envisage potential new arrangements, it does not suffice to make empirical investigations of the current best practice. Without theory, we cannot distinguish between the significant and the insignificant, we cannot easily perceive causal relationships, and we cannot predict likely outcomes in new situations. Even today we are in the infancy of computer use, and no one would seriously propose that our results so far fathom the technology'S potential or contain the complete blueprint for any future best practice.

So, first of all, I felt an acute need for a theoretical foundation for the study of information technology and organization. Equally important, this foundation should not be built in isolation, but should relate directly to the established body of organization theory. ^It is very unlikely that the introduction of a new technology alone (albeit a powerful one) should alter the basic principles of human interaction beyond recognition, and by segregating the study of computers and organization from the rich body of organization research, we are bound to forgo major insights and take on a crippling burden of parallel research. In a field where there are many different and partly competing theoretical approaches, it is also of significant scientific interest to test established theory by systematically applying it to new problems.

To me, this is also a matter of practical concern; a large part of today's managers know a lot about organization theory and feel quite at home with the main lines of argument. Linking a theory of information technology and organization to one of these traditions will make it much easier for them to relate to it, to understand it, and to use it for their own purposes.

The task I set myself, therefore, was to develop a theoretical basis for understanding the interplay between information technology and organization. ^I wanted tobase the analysis on core social science tenets, and tocarry itout as far as possible within an established framework

of

organization theory. Existing

2Another, older Lewin. Daft and Lewin here refer to the article "The Research Center for Group Dynamics at Massachusetts Institute of Technology" by Kurt Lewin, appearing in Sociometry, 1945 (vol. 8), pp. 126-135.

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empirical material, as documented by other researchers, would serve as illustrations and indications

of

the validity

of

the theoretical conclusions. In particular, ^Iwanted tofocus on organization structuring and design.

It was the unmannerly but very practical questions about the nature of the promised new organizations that sent me searching for an answer, then-and it was the lack of satisfactory answers that inspired the theoretical investigation leading to this dissertation. Hopefully, it will be both readable and useful for practitioners and academics alike.

Attacking the Problem

How I should go about the task I had set for myself was not self-evident.

However, to answer the questions posed above, I needed to do two things: I had to obtain an understanding of the relationship between technology and organization in general, and I had to understand just what it was that information technology contributed over and above earlier technology. With these realizations as guideposts, I worked out a design as outlined below.

Of course, although the basic concept was decided before the work was started in earnest, it has inevitably been modified and refined as the work proceeded- both in order to strengthen the basis for the later steps and in order to create a reasonably coherent account of my work for others to read. The narrative that follows, with its seven major steps, is therefore somewhat more structured and linear than the actual process behind it, even ifthe basic approach has been the same throughout my work. I will state the reasons for the choices described below more thoroughly in Chapter 3.

Step One: The Basic Preconditions for Human Organizing

My basic notion has remained unchanged throughout the project: that our use of technology-any technology-has its roots in our desire to overcome limitations in our natural, physiologically defined capabilities, and that this also applies to the construction of organizations. To gain an understanding of how we might exploit information technology in organizations, I therefore first had to determine our most important limitations with respect to organization building, and how they constrain us in establishing and maintaining organizations.

During the review process, I have had objections to this perspective. One line of argument emphasizes that the human is a creature with amazing talents, and it seems somewhat misconceived to focus on its shortcomings. The other argues that humans are what they are, they experience the world through their bodies, and, as they cannot transcend their given capabilities, it is meaningless to say that they are constrained by their own nature.

I disagree with both of these lines of argument. Both our bodies and our minds do have very reallimitations, which we can experience and sense every day ifwe care to notice, and, since time immemorial, humanity has dreamt of going beyond these limits, as we know from myths and sagas from cultures all over the world.

The story of Icarus is a typical example, proving that we have dreamt of flying for thousands of years before we actually accomplished it. Jules Verne wrote about travels to the moon and under the sea long before they could possibly be realized,

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and modem "myths" such as the stories about Superman continue to express this yearning to transcend our mortal shortcomings. Many of the conceptions of magic and sorcery can also be interpreted as a longing for powers beyond the scope of the normal body; is not levitation considered one of the pinnacles of achievement in Mahareshi's transcendental meditation movement? Even the major religions of this world have as their central theme the final transcendence of our earthly shortcomings.

Ifwe did not constantly strive to transcend our capabilities, if we did not have a vision of reaching beyond our present grasp, we would not seek new knowledge and continue to invent new tools all the time. As Sartre says in his Situations ("Temporalite," v. 1),a quote I decided to use as a motto for this dissertation,

"Man is not the sum of what he has already, but rather the sum of what he does not yet have, of what he could have."

Step Two: The Range

of

Organizations Built on Our Basic Capabilities Alone To learn the fundamental facts about how our abilities and choice of organization structures are related, it was necessary to look into the range of organizations built on these basic capabilities alone, as well as the methods invented to cope without significant tools. Evidence here may be drawn both from history and from the anthropological research of our own century.

Step Three: The Nature

of

Pre-Digital Technology

The next important step was to look into the use of technology, which has from a very early stage been an extremely important aspect of human life and culture. Some of the tools that were developed have had very significant impacts on the possible scope for organization. In order to be able to isolate the possible contributions of information technology, it was therefore necessary to look into the most important of the pre-computer technologies and investigate how they helped us overcome some of our basic limitations.

Step Four: The Organizational Impact

of

Pre-Computer Tools

To follow the chosen path of analysis, I then had to assess the main organizational impacts of the new tools from the development of writing onward.

Some of the potentials created by the expanding inventory of tools were fairly early exploited; some laid dormant. In fact, it was not until the advent of the Industrial Revolution that the potentials were explored to any depth, and it was not until our own century that we came up against the limits of pre-computer tools. An understanding of the nature of those limits is an important prerequisite to understanding IT's potential contributions.

Step Five: The Basic Properties

of

IT

The properties of computer-based systems had to be analyzed in some depth to ensure that all important aspects of the technology were covered. In many ways, this meant shooting at a moving target, as the technology is still developing very rapidly. I have tried both to describe the properties of the technology as it stands today and to establish the main trends of development for the next ten years as a basis for analyzing its potential for organizational innovation.

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Step Six: The New, IT-Based Preconditions for Organizing

At this point, it should finally be possible to establish what the new preconditions for organizing are like and how they differ from the preconditions provided by earlier technology. I will try to show how, where and why information technology can be used to reshape organizations.

Step Seven: The Potential for Organizational Change

on

the basis of the analysis of the IT-based preconditions for organizing, it should at last be possible to fathom the potential they offer for new patterns of organization, and for making organizations both more effective and more efficient.

Itshould also be possible to say something about what they will require from us, and how it will be to work there.

A Key to Parts and Chapters

As indicated in the Preface, I have tried to write a narrative that is easy to follow and pleasant to read. However, even with the best intentions on my side, readers may at places be confronted with leaps of thought that remain invisible to one who has been steeped in this material for years. Using the seven steps outlined above as a background, I will therefore say a few words about how each part and each chapter fits into the scheme.

Part I: A Platform for the Investigation

In Part I, my purpose is to build the foundation for the analysis itself. In the Introduction, I have explained how I was prodded to initiate the project-how my curiosity about computers and organization was aroused to the point where I felt I had to do something about it. I have also delineated my approach: to use the basic human preconditions for organizing as a starting point and investigate how they are enhanced by technology-first by pre-computer technology and then by information technology itself.

In Organization and Tools-The Human Advantages, I set out to establish the crucial1ink between organization and technology and explain the concept space

of

constructible organizations, ending with a delineation of the scope of my analysis.

In The Basic Preconditions for Organizing, I discuss the subject of organization, especially how organizations are defined and what their basic elements of structuring are. The goal is to identify a suitable framework from the body of organization theory on which I could base my own analysis. Mintzberg's structural configurations are adopted as the main framework, and the discussion concludes that coordination is the linchpin of organization. A taxonomy of coordinating mechanisms, based on Mintzberg, is proposed. The chapter ends with a definition of the basic human preconditions for organizing, which are to serve as the foundation for the analysis of technology use. This completes the first of the seven steps outlined above.

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Part 11:Individual Capacity and Organization before the Computer In Part 11, my purpose is to analyze the contributions of pre-computer technology. Confined by Physiology begins by looking at the six basic human preconditions in more detail. I also discuss important traditional methods for alleviating or circumventing some of these constraints.

In The Dawn

of

Organization, I explore the problems of organization building in societies without significant tools for organizational purposes, and try to determine the extent of the space of constructible organizations in such societies.

The analysis focuses on the methods and techniques used to build and maintain preliterate organizations. The analysis corroborates the conclusion that coordination is the essence of organization, and ends with what I see as the basic principles of preliterate organization. This concludes step two in my ladder of analysis.

InThe Power ofTechnology, I discuss the nature of tools and the way the most important pre-computer technologies have alleviated our original constraints, gradually allowing for extensions of the space of constructible organizations. The single, most important innovation was undoubtedly the art of writing, and the great impact writing has had on our mental capacities is explored. Next, I discuss the communications revolution of the nineteenth century, and the chapter (and step three in my analysis) ends with some thoughts on complexity and the nature of automation.

In The Modern Organization, I try to assess the relationship between the development of pre-computer tools and the emergence of the modern organization. I conclude that the new forms of organization, especially the Machine Bureaucracy, were based on a new and vastly more efficient concept of coordination: the transition from direct to indirect supervision through standardization of work processes in the form of explicit routines and automation.

I also propose that the emergence of the modern organization involved another breakthrough: the emergence of the explicit conceptual model and the concomitant explicit design of organizations. The chapter ends with a short discussion of the effect of culture on organizational forms. This is step four in the analyticalladder.

Part Ill: IT and the Preconditions for Organizing

With the platform for analyzing the impact of information technology finally in place, I start out inInformation Technology Development Trends by assessing the state of the art of the technology and the likely achievements in basic performance improvements during the next decade (step five in the analysis). In The Impact

of

^IT on Individual Capabilities, I proceed to analyze how information technology can improve the capabilities of the individual beyond the contributions of earlier technology. This constitutes step six in my initial outline and will form the foundation for the subsequent analysis of possible new organization forms and practices.

While working on this part, I felt it necessary to balance a fairly technocentric analysis in Chapter 9, and emphasise that human nature is not exclusively defined by logic and reason. In Chapter 10,Emotional Barriers and Defenses, I therefore discuss how our emotional side may put a spoke in the best technological wheel.

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Part IV: Extending the Space of Constructible Organizations

In The Individual and the Group I begin a prelude to the kernel by analyzing the possibilities that information technology provides on the individual and group level. This is necessary both because they represent the primordial elements of organization as well as the fundamental building blocks of larger organizations, and because there are a number of application types (among them some of the most hyped ones) that apply foremost to these levels.

Then I move on to the core of the matter: the larger organizational context and the tools and potentials that apply to the organization as a whole. First I look at Routines and Automation, which in my view will continue to represent an extremely important contribution to the development of modem societies, allowing enormous increases in productivity-something that will also have a number of interesting side effects. Computer-based automation also includes automatic routines at various levels, which is a very important prerequisite for two later themes. One of them, Coordination by Default, is about how databases can contribute to the age-old problem of coordinating work, both improving on existing arrangements as well as providing new ones. The second I have called Comprehension and Control; it is about how information technology can improve our understanding and control of both our work and our organizations by making information more accessible and even enabling the procurement of information that was previously unavailable. This has clear implications for organization structure and the way organizations can be run.

At the end of each of these three chapters, I discuss the possible extensions that information technology may offer to the space of constructible organizations.

Part V: Models and Configurations

I then close in on the final target in Part V. First, inToward the Model-Driven Organization, I discuss what it really means to build organizations with information technology: That computer programs become ever more prominent parts of the organizational fabric, and therefore also become part of the very patterns of actions that constitute organizations. Next, I return to the conceptual model: With the introduction of computers and computer programming the model and modeling activities have become very explicit, and they are becoming extremely important within the computerate paradigm. In my view, active models will make up the central element in most organizations in the future.

Finally, inThe New Organizations, I discuss if and how the extensions to the space of constructible organizations combine to modify Mintzberg's configurations, and I find three significant new variants: theJoystick Organization, an entrepreneur's dream evolving from the Simple Structure; the Flexible Bureaucracy,a formidable fighter growing from the Machine Bureaucracy, and the Interactive Adhocracy, an Adhocracy where system-mediated communication allows true mutual adjustment to work in much larger settings than before. I end by proposing two altogether new configurations: the Meta-Organization,a closely coupled group of separate organizations, and the Organized Cloud, which challenges our notions of what an organization really is.

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Some Central Terms

Throughout this dissertation, there will be copious use of a number of terms related to the technology. Some of them, such as "processor," "memory," "disk,"

and "program" have fairly clear meanings. Others, such as "information technology" and "computer-based systems," are a bit fuzzier around the edges.

All of them, however, are in daily use throughout both the industry and the research community, and I have found it fruitless to try to establish my own

"local" definitions for the purpose of this document. That would only make it harder to read, and it would probably introduce more confusion rather than preventing it. For those who are in doubt, however, I would like to explain my understanding of three of the fuzzier terms.

Byinformation technology I denote all the technologies that today depend on digital, electronic processing-which broadly means computing in all its nuances, from industrial automation to word processing, as well as telecommunications.

The transmission and processing of sound and pictures are included, insofar as it is digital. Traditional broadcasting is thus not generally included. Telephones are, even though they are still mainly analog-switching is now largely done by computerized switches, and the use of telephones, telephone lines, and fax emulations are increasingly integrated with the use of computers in office environments.

Bycomputer-based systems I generally mean systems where computers have a more recognizable role, such as administrative systems and production control systems. Industrial automation on a larger scale, such as process control and automated production lines, are also included, but single machines, such as computer-controlled lathes or milling machines are not.

Acomputer is understood to be a combination of a processor, primary memory and a secondary storage device.^Itdoes not necessarily refer to a PC, server, mini, or mainframe, although all of these are, of course, included in the definition.

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2 Organization and Tools- the Human Advantages

"Man is a tool-using animal ... Without tools he is nothing, with tools he is all."

Thomas Carlyle,Sartor Resarius, 1833-34.

A Crucial Link

The basic notion behind this dissertation is that technology has been a very important factor in the emergence, development, and design of organizations throughout history, and that changes in organization-relevant technology will spur changes in the structure and functioning of organizations as well. Why do I believe this?

Apart from the commonsense assumption that telephones and computers must matter, and convincing empirical evidence that railroads and the telegraph did so in the past (Chandler 1977,Beniger 1986),there are also theoretically well- founded reasons for believing so, and I would like to elaborate a little on this theme before proceeding to identify which of our abilities and limitations are most relevant for our organizing efforts.

The discussion that follows to some degree presupposes a knowledge of some of the main approaches to organization theory. Those who are not familiar with the subject and the theorists, terms, and ideas discussed in the following sections will find a summary that may prove helpful in Appendix A, highlighting some of the milestones in the development of organizational theory most relevant to the discussion.1t is partly based on Scott (1987),with some emissions and additions. It is, admittedly, somewhat biased toward my prime interest in this dissertation:

organizational structure, the interaction between organization and technology, and the theories most relevant to this. I have no intention of presenting a balanced condensation of the history of organization theory.

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To Be Human Is to Be Organized ...

Everything we know about ourselves tells us that organizing is a fundamental part of human life;-for as long as we know, humans have organized themselves in order to accomplish tasks that are not within the reach of single individuals. All that archeology and anthropology have discovered supports this; humans are and have always been social animals, and the isolated individual is an anomaly.

Organization may well be rudimentary, as in the small bands of hunter / gatherers believed to constitute the primordial form of human society, but they nevertheless have a social structure and a basal role diversification, and a number of the hunter / gatherers we know of from historic (and present) times in fact have quite sophisticated social structures. Some of the oldest texts known, such as the Epic of Gi1gamesh (believed to have been written down as early as in the beginning of the second millennium B.c.),contain descriptions of elaborate social organization. In the opening verse in the Epic of Gi1gamesh alone, there are mentions of the king, of nobles, of warriors, and the concept "shepherd of the people/city" (Sandars 1964, p.60):

Gilgamesh went abroad in the world, but he met with none who could withstand his arms till he returned to Uruk. But the men of Uruk muttered in their houses, "Gilgamesh sounds the tocsin for his amusement, his arrogance has no bounds by day or night. No son is left with his father, for Gilgamesh takes them all; yet the king should be a shepherd to his people. His lust leaves no virgin to her lover, neither the warriors daughter nor the wife of the noble;

yet this is the shepherd of the city, wise, comely, and resolute. "

The Bible even contains concrete directions-and reasons-for organizing (King Iames version! , Exodus 18:13-23):

And it came to pass on the morrow, that Moses sat to judge the people: and the people stood by Moses from the morning unto the evening.

And when Moses' father in law saw all that he did to the people, he said, What is this thing that thou doest to the people? why sittest thou thyself alone, and all the people stand by thee from morning unto even?

And Moses said unto his father in law, Because the people come unto me to enquire of God:

When they have a matter, they come unto me; and I judge between one and another, and I do make them know the statutes of God, and his laws.

And Moses' father in law said unto him, The thing that thou doest is not good.

Thou wilt surely wear away, both thou, and this people that is with thee: for this thing is too heavy for thee; thou art not able to perform it thyself alone.

Hearken now unto my voice, Iwill give thee counsel, and God shall be with thee: Be thou for the people to God-ward, that thou mayest bring the causes untoGod:

And thou shalt teach them ordinances and laws, and shalt shew them the way wherein they must walk, and the work that they must do.

Moreover thou shalt provide out of all the people able men, such as fear God, men of truth, hating covetousness; and place such over them, to be rulers of thousands, and rulers of hundreds, rulers of fifties, and rulers of tens:

1CD-ROM edition by Andromeda Interactive, 1995.