Mintzberg: The three last configurations

1
Mintzberg The three last configurations

• Pål Sørgaard, Telenor RD and IfI
• INF 5250
• September 26, 2005

2
Curriculum covered

• The more modern configurations
• professional bureaucracy
• divisionalised form
• adhocracy
• Chapters 10-12
• Material that deserves a recapitulation
• Read the book again when you have been working
  for a year

3
The professional bureaucracy (ch 10)

• Characteristics
• prime coordinating mechanism standardisation of
  skills
• key part operating core
• main design parameters training, horizontal job
  specialisation, vertical and horizontal
  decentralisation
• situational factors complex, stable environment
  nonregulating, nonsophisticated technical system
  fashionable
• Examples
• universities, general hospitals, social-work
  agencies, craft production firms, law firms,
  courts, accounting firms
• Core condition complex enough to require
  professionals, stable enough to use standardised
  skills

4
A different kind of bureaucracy

• Bureaucratic in the sense that coordination is
  achieved by standards, by design
• The standards are set by the professions involved
• e.g. medical faculties and Lægeforeningen
• not by the technostructure
• Classification, pigeonholing as a core process
• clients and cases are put in neat, predetermined
  categories (diagnosis)
• programs of action for each category are then
  applied
• schools build and maintain categories
• Pigeonholing creates equivalence between
  functional and market bases for grouping

5
Focus on operating core

• Professional autonomy
• little behaviour formalisation
• little use of planning and control systems
• responsible to whom?
• Support staff developed
• In order to serve the professionals
• IT may be used heavily by the operating core
  (e.g. X-ray)
• Little or weak use of IT in order to run the
  business
• not highly regulating, not sophisticated, not
  automated technical system

6
The administrative structure

• The professionals try to control the
  administrative structure
• Sometimes two hierarchies
• one bottom-up for the professionals
• one top-down for the support staff
• just like the University of Oslo!
• The administrators have limited power

7
Some issues

• Relatively weak at coordination
• standardisation of skills is a loose mechanism
• need for more coordination may require other
  configurations
• Pigeonholing is not perfect
• Hard to deal with incompetent or unconscientious
  professionals
• some ignore the needs of the clients
• Inflexible structure
• little innovation, hard to change
• sometimes good at learning from its practice, but
  not always

8
Can professional bureaucracies be better managed?

• Direct supervision by managers not in the
  profession is hard
• Other kinds of standardisation do not apply well
• Measuring performance may result in trouble
• Complex work must be under the control of those
  who do it
• More control has negative impact on innovation
  and dialogue with clients
• Change comes mainly with new professionals,
  through their schools and associations

9
The divisionalised form (ch 11)

• Characteristics
• prime coordinating mechanism standardisation of
  outputs
• key part middle line
• main design parameters market grouping,
  performance control system, limited vertical
  decentralisation
• situational factors diversified markets
  (particularly products or services) old, large
  power needs of middle managers fashionable
• Examples
• common among large industrial corporations
  Hydro, Orkla
• other kinds of examples are Helse Øst, Høgskolen
  i Oslo
• Not a complete structure, an aggregate

10
Typically

• The divisions are fairly autonomous
• There is little interdependence between divisions
• Divisions address separate markets
• Divisional leaders are very strong
• Headquarters focus on performance (economic
  result)
• Divisions are driven towards machine bureaucracy
• Comes as a result of diversification or
  acquisitions
• Split in separate organisations is a realistic
  alternative

11
Powers of the headquarters

• Decisions on what divisions there should be
• Allocation of overall financial resources
• Definition of the performance control system
• Appointment of divisional managers
• Monitoring of the divisions on a personal basis
• Provision of certain common support services

12
Conditions

• First of all market (esp. product) diversity
• and divisionalisation encourages further
  diversification
• Divisionalisation based only on client or
  regional diversification often turns out to be
  incomplete
• hybrid carbon-copy bureaucracy
• Technical system split in segments, one per
  division
• Environment preferably simple and stable
• other environments often lead to hybrids
• Large and old (except federations)
• Power games and aggregation of power important
  factors

13
Stages of divisionalisation (fig 11-3)
Integrated form(pure functional)
By-product form
Related product form
Conglomerate form(pure divisional)
14
Advantages compared to machine bureaucracy, but

• Allocation of capital
• better done by the capital market?
• corporations priced lower than the sum of their
  parts
• Helps training managers
• better than a small, independent company?
• Spreads risk across markets
• conceals failures and bankruptcies too long, may
  cause others to fall?
• Strategically responsive
• focus on short term performance and the impact on
  structure in the division may be negative?

15
Centralisation and synergies

• Tendency to centralise decision at headquarters
  based on MIS-data (management information system)
• A cornerstone is letting heads of business
  units determine where and when to collaborate. If
  corporate managers take the lead, they often do
  not understand the nuances of the business. They
  naively see synergies that arent there. They
  tend to overestimate the benefits of
  collaboration and underestimate its costs.
  Eisenhardt and Galunic (2000)

16
Problems with divisionalisation

• Centralisation of power
• Bureaucratisation
• Reliance on MIS
• Outside private sector artificial performance
  standards
• Pure divisionalisation may be a weaker
  alternative than full split
• remember no environment of its own
• Controlled diversity more profitable than
  conglomerate
• by-product or related-product forms the more
  interesting

17
No environment of its own
Professional bureaucracy
Adhocracy
Simple structure
Machine bureaucracy
18
The adhocracy (ch 12)

• Characteristics
• prime coordinating mechanism mutual adjustment
• key part support staff (together with the
  operating core in the operating adhocracy)
• main design parameters liaison devices, organic
  structure, selective decentralisation, horizontal
  job specialisation, training, functional and
  market grouping concurrently
• situational factors complex, dynamic (sometimes
  disparate) environment young (especially
  operating adhocracy) sophisticated and often
  automated technical system (in the administrative
  adhocracy) fashionable

19
Design

• Focus on innovation, cannot rely on
  standardisation
• Goes away from the principle of unity of command
• Gives power to experts, but cannot rely on their
  standardised skills to achieve coordination
• Mutual adjustment in and between project teams
• project coordinators, meetings, etc
• Matrix structure common
• experts formally in functional units
• project teams based on (market) needs

20
The operating adhocracy

• Solves problems on behalf of its clients
• think-tanks
• applied RD institutes
• creative advertising companies
• manufacturer of prototypes
• experimenting theatre company
• May easily turn into a professional bureaucracy
  if more focused and with standardised methods
• e.g. from NR to Accenture

21
The administrative adhocracy

• Solves problems, runs projects, on behalf of
  itself
• Typically a company where the operating core is
  truncated
• done in a separate organisation
• contracted out (outsourcing)
• by full automation (c.f. discussion of machine
  bureaucracy)
• Tricky issue of combining efficient production
  with high degree of innovation
• machine bureaucracy with a venture team is not an
  adhocracy

22
Administration and support

• A lot of coordination needed
• Managers participate in project teams
• Ensuring proper management and anchoring of
  projects often demanding
• Need to monitor and redirect projects
• Distinction between line and staff becomes unclear

23
Strategy in adhocracies

• Hard to split strategy formulation and strategy
  implementation
• Strategy tends to evolve
• formed implicitly by decisions made
• strategy formation, emergent strategy,
  strategising

24
Conditions

• Dynamic and complex environment
• Interdependencies that need to be handled
• Frequent product changes
• Often young (esp. operating adhocracies)
• Sophisticated and sometimes automated technical
  system
• An element of fashion
• all the right words dynamic, expertise,
  projects, etc.

25
Some issues

• Ambiguities
• Unclear, multiple and changing lines of authority
• The most politicised configuration
• Not very efficient
• Danger of inappropriate transition

26
Summary

• Five main configurations (ch 7-12)
• Five parts of organisation (ch 1)
• Five kinds of coordinating mechanisms (ch 1)
• Five types of decentralisation (ch 5)
• Nine design parameters (ch 2-5)
• Four groups of situational or contingency factors
  (ch 6)
• environment especially important
• Above all. An extended configuration hypothesis
  Effective structuring requires a consistency
  among the design parameters and contingency
  factors