15 December 2008

EMD II: How Does an Organization Scale?

If you have arrived at this post directly, and are not familiar with my research, you may want to also visit some of the posts under the Valence Theory and Thesis labels, as well as reading the very quick primer.

There are two ways to scale an organization, depending on whether one wants to scale the objectives, goals, outcomes and purpose, or the effects of that organization.

In the former case, the organization adds resources under the control of legitimated leadership that augment the functional ability of the organization to accomplish its purpose. This can be accomplished either by internally growing resources – adding people, raising capital, increasing production capacity and ability – or by acquiring an already existing organization that has an appropriate suite of resources, ideally with a minimal amount of redundancy. (As an aside, reducing redundancy requires an expenditure of resources that does not directly contribute to the purpose or objectives, and thus is counter-productive to the BAH organization. It is akin to externalizing waste products. A Valence Theory reading of the notion of “reducing redundancy” might provide BAH-managers with more productive options, but that’s for another post.) In either case of internal growth or external acquisition, there is a necessity to control the deployment of those resources to ensure the successful accomplishment and growth of the organization’s objectives, goals, outcomes and purpose.

To scale the effects of the organization in a relational context, that is, a Valence Theory conception of scaling, one can internally or externally add resources, bearing in mind the wider choice of integration options available in a Valence Theory paradigm. Alternatively, the organization can create the appropriate relationships with other organizations that can enable, create, or both enable and create the desired effects in the respective local contexts in which the relationships of the organizations in question are constructed. This alternative necessarily requires all participants to cede overall control while simultaneously requiring all to participate in strengthening the mutual ba-space that they jointly occupy.

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Anonymous said...

Quoting this post:

As an aside, reducing redundancy requires an expenditure of resources that does not directly contribute to the purpose or objectives, and thus is counter-productive to the BAH organization.....

Please, expand - I need to read that post! It might help me understand or form an effective strategy for change.

Best wishes,

Mark Federman said...

Admittedly, Joanna, I have not yet worked out a detailed argument that offers an appropriate alternative - that's yet to come from the research. However, the first part of the argument - that reducing redundancy is an act of externalizing expense based on a preconceived functional decomposition - is fairly straight-forward.

In a BAH organization, the purpose or objectives are predetermined according to conditions at the time and place when and where the organization is called into being. The requisite tasks, workflow and resulting hierarchical structure are decided, and the best people are hired to fill those legitimated offices. Expansion via acquisition means that there will be multiple people filling what is legitimately one office, and considerable effort (read: expense, cutthroat internal competition, and manipulative game-playing; one of my participants called it a "feeding frenzy") must be made to determine which of the supposedly redundant people to shuck off. That effort and expense does not directly go to fulfilling the purpose or objective of the BAH organization; rather it is a non-productive but deemed necessary expenditure that transfers the expense of soon-to-be-former employees to other organizations (e.g., the state via unemployment insurance payments, one's family via digging into savings, etc.).

A Valence Theory analysis of this situation suggests that this need not be the case. Scaling by extending effects may not necessitate acquisition of another organization and cold, calculated divestiture of suddenly dehumanized people. Since purpose and objectives in a more-UCaPP organization are emergent from the relationship connections, the new (combined) organization may want to either discover new objectives, or facilitate a spin-off organization as part of its new (emergent) obligations that come from the ba-aspects of the various valence relationships.

What this means is two things, I think. First, all the valence relationships need to be carefully considered and given equal priority in any merger or acquisition. In my experience, this is never, ever the case: economic considerations based on the nominal purpose always take priority with any other emergent considerations or opportunities taking second, or third, or tenth priority. Second, (re)developing ba rarely, if ever, is among the priorities of the merged organization. Fungible aspects of the various relationships are almost exclusively emphasized, creating a mercantile atmosphere among people who are, at the very least, psychologically and emotionally displaced. Such a mentality may encourage the "feeding frenzy" and survival-of-the-most-ruthless mentality, but, in the long run, does not make for a great or sustainable organization.