On the upper levels of management as well as in management literature, one will frequently hear the almost ritual complaint about the growing sluggishness of organizations, their lack of agility. As proof, the argument will point to their difficulty to implement necessary radical transformations. Routinely, this will lead to a call for the “bull-dozing” of organizational layers and the radical streamlining of chains of command.

The bull-dozing rationale

The thrust of the underlying reasoning will run as follows: it is not the ever-increasing creativity of management theory and the multiplication of ever more abstract organizational models creating ever more injunctions and hierarchical layers that are to blame for the growing bureaucratization of modern corporations. No, the culprits are the structural complexities of modern corporations as well as the multiple organizational layers and the entrenched intermediaries they produce. Hence the necessity to do away with them and radically simplify organizational structures and chains of command.

This paper will not pretend that the structural complexity of present-day organizations is unproblematic per se or is not partly linked to the bureaucratization of modern corporations. Things have to be done about this trend. Neither will it argue that in many organizations some reduction of organizational layers would not be commendable, as all intermediaries are not equally important or indispensable. However, that is a matter to be dealt with on a case-to-case basis, not by general, decontextualized solutions.

The mental model of transparency

Instead, let us discuss the general, uncontextualized nature of the proposed solution for making “agile” organizations by drastically reducing structure and intermediaries and question the “mental model” this “solution” implicitly builds one: the myth or ideal of the “transparent organization” which itself is based on two premises.

The first says secrecy and non-communication are bad by nature, whereas communication and information sharing are good, as they provide the lifeblood of organizational togetherness.

The second holds that hierarchical layers and intermediaries in organizations are useless filters, only distorting or interrupting the information and communication flows through which the common purpose can be shared, explained, and made meaningful for members of the organization at all levels.

The transparency myth

The idea of the transparent organization builds on the idea that organizations are coherent and homogenous entities, where all participants share a core-purpose, pursue naturally aligning interests and have similar, if not identical understandings of what is going on. The mere spelling out of these implicit premises of the “transparent organization” underscore how unrealistic the whole idea is. It ignores the fundamental heterogeneity of organizations.

Networks of work-contexts

Organizations must be understood as loosely connected networks of work-contexts, in which the organization’s core-purpose takes on distinct colors and meanings. Within them, the diverging interests of the participants are arbitrated on a day-to-day basis in order to construct their difficult but indispensable cooperation. This produces a concrete context of meaning generating a distinct mode of functioning. In going about their tasks, the people in the different places where the actual work is accomplished (whether this be work-shops, project groups, a research department, administrative units of corporate headquarters, etc.) create separate contexts of cooperation the functioning of which does not emerge by itself. It has to be constructed or maintained from day to day. This cannot be done from the top. It is the indispensable job of these “intermediaries” or “middle-managers” who should better be valued as “context managers”. All top management can do is to prevent the various work-contexts to diverge too much in their trajectories, and that itself is a big, often superhuman job. For the rest, it has to leave it up to the context managers to create and maintain the conditions for effective cooperation within the various work-contexts.

Cooperative trade offs

Managing work-contexts is about creating the necessary cooperation between the different participants, which means creating the conditions for the emergence of the local trade-offs between their divergent, often contradictory “interests”. No enduring cooperation will be possible without such trade-offs. They produce the “rules of the game” being played among the participants and define their respective prerogatives, duties and also privileges. No effective functioning is possible without them.

Favoring the emergence and respect of such local “rules of the game” is the foremost job of any context manager: he or she has to construct and maintain a local, contextual governance. And this is the point where the job might put him or her at odds with managerial injunctions created for larger sectors his or her work-context Is part of. This can happen in many ways.

Understanding the rules of the game

Local “rules of the game” and their underlying trade-offs are subtle things. They are implicit and can only be accepted as long as they remain so. Everybody knows how things are but can pretend otherwise. When forced out in the open and put in writing, their implications become obvious, putting their legitimacy and very existence at risk. The implicit and ambiguous nature of “rules of the game” are necessary ingredients of the governance of work-contexts. Force clarity and transparence on them, and you might endanger their very existence and with it, the cooperation they help to achieve.

Also, the rules of the game are always local and contextual: at least some part of them will be specific to a given work-context and could not apply elsewhere. They are therefore always potentially at odds with the many legitimate efforts of the upper levels of management to rationalize and to keep things comparable in order to benchmark. The legitimate nature of these efforts cannot be contested on a general level, even though a good deal of them might be questioned as to their timing and to their overemphasis on standardization and comparability. Whatever, context managers will always observe these efforts with vigilance, if not distrust, lest their implications and impact destabilize his or her capacity to construct and manage the specific trade-offs on which the effective functioning of his or her context depends.

Criticisms of context managers

There are legitimate reasons for the often criticized “conservatism” of context managers. Even if they are in complete agreement with the projected transformations that present-day organizations are increasingly engaged in, they need time to implement the many brilliant schemes and initiatives implied by these transformations. This is a necessarily complex process whereby work contexts and their managers first gain a practical understanding of the medium-term impact of the prescriptions to be implemented, and collectively succeed in “digesting” them by inventing the new rules of the game enabling them to translate the projected change into enduring contextualized practice.

This is necessarily a difficult collective learning process. Both interactive and iterative by nature, it needs engaged leadership. Context managers can only exercise such leadership if they have the resources and leeway to, whenever necessary, bend the transformative prescriptions so as to adjust for the local trade-offs which will make them acceptable and practicable for all participants. Without such leadership, without such active engagement in the creation of the renewed trade-offs between the participants of a given work-context, there will be no effective implementation.

The need for context managers

No organization can thrive without engaged context managers. They are the only ones capable of breaking down and translating the core purpose of the organization as well as its overall transformative project into digestible, meaningful and implementable pieces of organizational practice. Whether this will happen, depends on their active engagement but also on the resources and leeway they are allowed to have.

Managerial hubris

The myth of the “transparent organization” is just one more example of the managerial hubris so characteristic of managerial thinking, both in consulting and in the upper echelons of corporations. It shows once more that management theory and practice has decided to ignore the basic uncertainty rooted in the freedom human beings enjoy when they decide whether to engage in collective action. The “transparent organization” is the attempt to respond to top management’s fear of the uncertainty of the behavior of those on whom it depends to keep them informed about what is going on operationally. The “transparent” “agile” organization with its drastically reduced hierarchical lines and organizational layers is about regaining control. It stands and falls on the pretense that top management has all the solutions, if only it is correctly informed. However, that can only be true in a fantasy world.

The fragility of organizations

Organizations are solutions for the problem of collective action. They are the best solutions we can think of, but they are fragile. Management has to live up to that fragility and to its implication, the political nature of the act of managing. Cooperation and control cannot be achieved through automatic devices, nor can they be taken for granted. Creating them is a political activity. Autonomy and effective leeway are the necessary ingredients for such an activity. That is true for all managers, at whatever level they practice their art. And above all this is true for the context managers, without whom no organization could function.

About the Author:

Erhard Friedberg is Professor Emeritus of sociology and former director of the Master of Public Affairs at Sciences Po, Paris

Les limites du management découlent de deux faits empiriques incontournables : Premièrement, l’existence d’une marge de liberté irréductible des individus dans le choix de leurs comportements. Deuxièmement, leur intelligence (leur rationalité) subjective et interactive dans l’usage de leur marge de liberté au service de ce qu’ils considèrent leurs « intérêts ».

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This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Au plan individuel, cette marge de liberté peut paraître négligeable. Mais, dans l’action collective, elle interagit avec les marges de liberté de toutes les parties prenantes. L’agrégation de toutes ces marges de liberté en amplifie la portée et finit par créer cette imprévisibilité des résultats de nos structures d’action collective, qui fait dérailler tant de projets dont la réalisation exige la coopération et crée de l’interdépendance.

L’imprévisibilité des comportements des humains, et de leurs surprenants effets d’agrégation est une réalité empirique incontournable. Mais au lieu de la confronter, la pensée gestionnaire dans les entreprises comme dans la conduite des politiques publiques n’a cessé de chercher à l’escamoter en tentant de la paramétrer pour rendre les comportements individuels prévisibles et donc prédictibles. De l’homo economicus cher à F. Taylor et à son organisation scientifique du travail à « l’homme social » et son « besoin d’appartenir » du mouvement des relations humaines du milieu du siècle dernier, de la pyramide motivationnelle d’A. Maslow (1954) au « besoin d’auto-réalisation » à la Argyris du milieu des années soixante de ce même siècle, les tentatives de paramétrer les motivations humaines pour rendre les comportements dans l’action plus prévisibles se sont finalement révélées peu opérationnelles.

Prenant acte de cette difficulté, la psychologie organisationnelle a introduit la notion « d’homme complexe » et a implicitement reconnu la multiplicité et l’ambiguïté irréductibles des motivations humaines caractéristiques des situations réelles. Sans en expliciter toutes les implications, elle a ainsi restitué aux individus leur autonomie par rapport à leurs besoins et à leurs motivations psychologiques : avec la notion d’homme complexe, ceux-ci redeviennent actifs et, de ce fait, fondamentalement opaques et imprévisibles.

La perspective cognitiviste proposée par l’économie comportementale aboutit aux mêmes impasses. Elle semble assumer que les individus sont à tout instant et pour toujours les esclaves de leurs biais cognitifs, un peu comme la psychologie organisationnelle des années soixante du siècle dernier (et peu ou prou encore aujourd’hui), voyait les humains esclaves (le plus souvent à leur insu) de leurs besoins psychologiques. De plus, elle repose sur un modèle normatif a priori éminemment contestable, qui prétend pouvoir connaître et définir à l’avance quel est l’intérêt bien compris des individus et donc la (bonne) rationalité de référence, ceci à tout moment et quelles que soient les circonstances.

Ni l’idée de la rationalité économique et du calcul utilitaire, ni le recours à la notion de « besoins psychologiques » ou « caractéristiques culturelles », ni l’invocation des identités de groupe (de race, de genre, d’orientation sexuelle, etc.) ni la perspective cognitiviste de l’économie comportementale n’offrent une voie crédible pour anticiper les comportements des individus concernés par une action collective. Se placer au plan des individus pris isolément ne mène nulle part. En effet, l’utilisation, par les individus, de leur marge de liberté n’est jamais seulement un problème individuel. Par l’interaction avec les marges de liberté des autres parties prenantes, elle est en quelque sorte « socialisée » et échappe à la maîtrise des individus. En ce sens, elle est un fait social, le produit inséparable de dynamiques d’interaction et de leurs effets de composition se développant dans un contexte d’action coopérative, avec ses contraintes toujours spécifiques.

Il s’ensuit que les effets de composition et leur radicale indétermination sont au cœur de la coopération des humains. Du coup, l’incertitude pèse aussi sur les trajectoires de nos structures d’action collective et affecte directement les résultats de l’action gestionnaire. En cherchant à les piloter, celle-ci doit confronter cette incertitude et avec elle, l’omniprésence des résultats non-intentionnels et souvent « pervers », c’est-à-dire contraires aux intentions affichées et aux objectifs poursuivis. C‘est que les structures d’action collective ne sont pas de simples instruments au service d’objectifs bien pensés et clairement expliqués. Ce sont certes des instruments, mais des instruments récalcitrants, pour paraphraser Philip Selznick. Ils développent leurs propres dynamiques que rien ne permet d’anticiper. On peut seulement les observer et tenter de les rectifier ex post.

La reconnaissance de cette réalité empirique impose des limites à l’action managériale et l’oblige à changer de logiciel et de modes d’action. Il lui faut enfin dépasser la compréhension mécanique de la coopération dans les organisations qui semble encore et toujours inspirer la réflexion managériale et sa tendance au constructivisme organisationnel. Celui-ci conçoit le management comme une activité technique reposant pour l’essentiel sur une boîte à outils managériaux censée valoir dans tous les contextes (des organigrammes et des process, des formations, des recettes managériales ou « best practices »), et enrichie en continu par l’extrapolation et l’abstraction de solutions éprouvées avec succès ici ou là. Cela conduit à ce qu’on pourrait appeler un management abstrait, à une réflexion gestionnaire qui pense modèles et outils et se contente d’une perspective générale. Faisant abstraction des complexités des contextes de travail, celle-ci prétend pouvoir prédire les résultats de telle ou telle initiative, sur la base d’une simple connaissance des outils utilisés. Remédier à un problème de fonctionnement organisationnel reviendrait alors à puiser dans cette boite pour apparier le bon outil, l’intervention managériale appropriée au problème de performance identifié.

L’utilité de cette réflexion est limitée par la distance croissante qui la sépare de la pratique gestionnaire au jour le jour qui est politique avant d’être technique. La réflexion gestionnaire doit enfin sortir de son ghetto étroit de technique, et reconnaître sa nature politique au sens noble du terme. Aucun des grands penseurs du management, de Chester Barnard à Peter Drucker, ne me contredirait sur ce point. Le « management » est au cœur de la vie sociale de chacun. C’est cette activité qui, aux différents niveaux de la société, consiste à inventer et à rendre acceptables les arbitrages indispensables pour prendre en compte les tensions et dilemmes inhérents à la coopération humaine dans des situations concrètes. En tant que telle, c’est une modalité essentielle de l’action dans nos sociétés, voire de la vie en société tout court. Thomas Sowell a souvent affirmé: « There are no solutions, only trade-offs”. Et ces trade-offs (arbitrages) ne peuvent être définies que de manière ad hoc et contextualisée.

About the Author:

Erhard Friedberg est Professeur émérite des Universités de Sciences Po, Paris, où il a été Directeur du Master of Public Affairs de 2006 à 2012

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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The limits to management are grounded in two empirical facts: First, the existence of the margin of freedom individuals have in the choice of their day to day behavior. Second, the subjective and interactive intelligence (rationality) with which individuals use their margin of freedom in the service of what they consider to be their “interest”.

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum

At the level of the individual, this margin of freedom might seem negligible. But in collective action, it interacts with all the margins of freedom of all the other stakeholders in the action. The aggregation of all these margins of freedom amplifies the overall impact, and ends up creating the unpredictable results of our structures for collective action that derails so many projects which create interdependence and therefore require cooperation.

The unpredictability of the behavior of humans, as well as the surprising results of their aggregation, are an undeniable empirical reality. However, instead of facing up to it, managerial thinking in the public as well as in the private domain, has attempted to get around it by trying to produce models in which individual behavior becomes predictable. From F.W. Taylor’s “homo economicus” and his scientifically grounded pay-schemes, to the “homo socialis” and his “need to belong” of the human relations movement of the 1940s and 1950s, from Maslow’s (1954) motivational pyramid to Argyris’ “need for self-realization” in the late 1960s, countless attempts to render human behavior more predictable by modelling individual motivations have ultimately ended in failure. Introducing the notion of “complex man”, organizational psychology has recognized this failure and accepted the irreducible multiplicity and ambiguity of human motivations in the real world, implicitly acknowledging the autonomy of individuals in relation to their “needs” or psychological motivations. Thus “complex man” brings us back to the starting point: his or her behavior is basically opaque and unpredictable.

The cognitive perspective proposed by behavioral economics offers no way out of this dilemma. First, it reasons as if individuals were at all times the slaves of their cognitive biases, just as organizational psychology of the 1960s (and even today) considered individuals to be the slaves of their (most often unconscious) needs. Moreover, behavioral economics is based on an a priori normative and very disputable model which presumes the ability to know and define in advance the « real » interest of individuals, and therefore the (good) rationality of reference at any moment and whatever the circumstances. 

Neither the idea of economic rationality and utilitarian calculation, nor the use of the notion of “psychological needs” or “cultural characteristics”, nor the recourse to group identities (of race, of gender, of sexual orientation and others), nor the cognitive perspective of behavioral economics offer a credible way to anticipate the behavior of individuals engaged in collective action. Looking at the problem from the angle of the individual leads nowhere, precisely because the way in which individuals use their margin of freedom is never solely a problem of the individual. By its interaction with the margins of freedom of all the other stakeholders, the individual’s margin of freedom is, so to say, “socialized“ and thus beyond the strict control of any individual. In this sense, it is a social fact, the inseparable product of the interaction dynamics and their aggregation (composition) effects which emerge in a context of cooperative action with its always specific constraints.

As a result, the interactive dynamics as well as their composition effects with their radical unpredictability are at the heart of human cooperation. They directly impact the trajectories of the structures of collective action as well as the results of all managerial initiatives. When trying to monitor structures of collective action, managerial action has to take that uncertainty into account, meaning It has to accept the ubiquity of unintended and often ”perverse” consequences that are contrary to proclaimed intentions or objectives. Structures of collective action are never simple instruments in the service of objectives, however thought through, well intentioned and clearly explained they might be. They are instruments for sure, but recalcitrant instruments, to paraphrase Philip Selznick. They develop their own dynamics which can never be completely anticipated. One can merely observe them and try, whenever necessary, to rectify them after the fact.

Recognition of that empirical reality leads us to acknowledge the limits of managerial action and forces us to change its modes of reasoning and action. Management has at last to go beyond the mechanical understanding of human cooperation which to this day seems to inspire managerial thinking and explains why it tends to adopt a strictly constructionist perspective. Such a perspective reduces organizational management to an exclusively technical activity reliant on a box of standard managerial tools (different kinds of organization charts, processes, training programs, managerial recipes and “best practices”). These tools are defined without reference to any specific context and abstracted from the original conditions within which they have been created and their list is constantly enriched by the extrapolation of solutions that have been successful here or there. This produces a wholly abstract view of management in which managers are led to think in decontextualized models and tools (labelled best practices) that can be readily transposed as solutions from one context to the next.

The usefulness of this thinking is limited by its increasing distance from the day-to-day practice of management, which is political, not technical. To go beyond these limitations, managerial thinking has to step outside of its narrow technical perspective and to accept the profoundly political nature of management. None of the great thinkers of management, from Chester Barnard to Peter Drucker, would contradict me on that point. Management is at the heart of everybody’s social life. It is the activity which consists, at the different levels of society, of inventing and making acceptable the unavoidable trade-offs that might solve the tensions and dilemmas inherent in human cooperation in concrete situations. As such it is an essential modality of social action in our societies. As Thomas Sowell has stated repeatedly: “There are no solutions, only trade-offs”. And trade-offs can only be defined in a contextualized and ad hoc manner.

About the Author:

Erhard Friedberg is Professor Emeritus of sociology and former director of the Master of Public Affairs at Sciences Po, Paris

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum

Describing in his HBR article of May-June 1993 the challenges an ecological approach to business strategy brings with it, James Moore emphasized that we have to keep in mind that business ecosystems are not co-evolving organisms, but social systems the larger patterns of which are maintained by a complex network of choices made by real people with their bounded rationalities.

The obvious implication of this remark is that when talking about ecosystems, we have to leave the lofty heights of strategy, targets, goals and corporate communication, to focus instead on what Philip Selznick has called the operative systems on which the functioning of ecosystems will depend. The view from the top argues that the functioning of ecosystems implies a fundamental transformation of the way the game of cooperation and competition is played. The key question then becomes how this functional requirement translates into the day-to-day practice of the actors in the operative systems of the organizations destined to become part of an ecosystem. And that is no small affair. It entails a complex process during which all levels of the organizations have to learn to play their game differently.

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This article is one in the “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems” taking place on November 21 & 22, 2019 in Vienna, Austria.
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The word “learn”, however, is misleading. It suggests that communication, discourse and pedagogy will make the difference : if the members of the operative systems are addressed correctly, they will understand what the switch is all about and then change their behavior accordingly. If it were true that it is all merely a question of cognition, understanding and agreement, then companies could be run and function on rational argumentation.

However, things are more complicated. The behavior resulting from the interdependent choices Moore talks about, can and should be understood as a boundedly rational reaction of the people involved at all levels of an organization, to the web of mutual dependencies that they have to manage to succeed in their respective tasks.

Their behavior draws its rationality from this ongoing attempt. This being so, the transformations needed at all levels to function as an ecosystem, implies not just individual but a process of collective learning, in which a set of mutually dependent individuals succeed together in restructuring their transactions in such a way as to enable them to progressively discover new ways of dealing with, and structuring their interdependence, and in so doing, invent new rules to play the game of cooperation and competition, congruent with the functional requirements of ecosystems.

Business ecosystems are not only social systems. They are also political systems. The direction and result of the collective learning which their implementation calls for, are distributed processes taking place simultaneously at all levels of the organization. Their outcome cannot be determined by decision or targets, nor can it be fully mastered or planned. As they unfold, they produce all sorts of unanticipated consequences which are beyond the intentions of any of the participants. Their emergent properties cannot be dealt with by algorithms alone. They need to be appraised and monitored by humans on a day to day basis, where and when they occur.

This is where the new world of ecosystems meets the old world of the management of organizations, its familiar dilemmas as well as the anthropological limits to transparency, openness, flatness and fluidity of functions and borders that earlier waves of organizational transformations have come up against. It is true that these anthropological limits are not immutable: People can learn, and do. But learning takes experience in time, and time, we are told, is short in supply. We might want to believe that the new platform technology and AI will incorporate ready-made solutions for these dilemmas and produce the needed fluidity, openness and transparency. Our experience with the two preceding waves of what was not yet called digitalization should moderate such technological optimism.

It remains to be seen how the transition to the ecosystem approach will be managed in the traditional sectors of the economy, how the anthropological limits referred to above will have been overcome or more probably simply pushed back, and what new kinds of organizations and organizational life this will produce.

About the Author:

Erhard Friedberg is professor emeritus of Sociology at Sciences Po Paris and former director of the Master of Public Affairs at SciencesPo

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems