1993                                                               Miller                                                             125

 

 

existing goals, strategies, and structures, which, in turn, reinforce the power of the dominant coalition.

In successful organizations, the strong get stronger and the weak get weaker because power is self-perpetuating. Powerful managers have ad­vantages in any political struggle that allow them to gain more resources, hire or promote like-minded individuals, and buy oft resistors (Mintzberg, 1983). They may even set standards of performance that ensure that they will look good (Starbuck, 1985). Moreover, powerful managers surround themselves with the daunting trappings of position and achievement, especially when they have been successful. This aura makes their au­thority ever tougher to challenge because it has become institutionalized (Pfeffer, 1981; Zucker, 1987).

The concentration of power focuses strategy ever more tightly on the values and interests of the dominant coalition (Pettigrew, 1973). If, for example, marketers dominate, the core strategy will come to center on marketing. Conversely, successful strategies bring respect and influence to the parties who developed them. Hence, managers have an incentive to concentrate only on the strategies that reward them, to reinforce only the goals that they believe in, and to refine only the structures that consoli­date their power (Milliken & Lant, 1991).

These arguments suggest the need to modify the contingency theory of power put forth by Hickson, Hinings, Lee, Schneck, and Pennings (1971). Certainly, it is reasonable that the organization should empower the departments and individuals that are best able to handle the contin­gencies most critical for its survival. It is also clear that if the environment changes to make a less critical department more important, it may indeed be sensible to accord more discretion to that department. Unfortunately. as we have argued, power begets power. and those at the top might be unmotivated to give up their authority. Given the narrowness of existing routines and world views, top managers may not even recognize that the environment has changed, especially if the firm continues to perform adequately, or if it has an admirable track record. Only in the long run, after the problems created by simplicity and stagnation have shown up very clearly and persistently, will an organization consider reallocating power according to the tenets of the strategic contingency theorists (Pfef­fer, 1981; Netter & Salancik, 1978). Even then, such a change will most likely occur after a new CEO has been hired (Miller, 1991; Miller & Frie­sen. 1984; Tushman, Virany. & Romanelli, 1989).

 

 

PROCESS FACTORS

 

Central organizational processes include information gathering and analysis. decision making, and managing relationships with the environ­ment. Each of these is in many ways a function of the managerial, cul­tural, and structural factors we have already discussed. But each of these processes also can contribute in its own right to organizational simplicity.

 

Skewed Learning and Information Systems

 

Organizational information systems reinforce the uniformity of per­ceptions and the complacency that feed cultural and strategic simplicity. With their selective reporting and implicit standards, organizational in­telligence systems increasingly mirror only established perspectives. goals, and values. And by filtering what managers attend to and con­cealing external change, they help to channel and constrain these very goals and perspectives (Huber, 1991; March, 1991; Meyer & Starbuck, 1991). Marketing differentiators, for example, pay ever more attention to market share and sales growth figures, and cost leaders to budgets and expense reports. An avid marketer may therefore become less and less aware of declines in quality or efficiency; a cost leader may begin to ignore customer dissatisfaction.

As Starbuck (1985: 353) argued:

 

Data tend to confirm what the programs assume to be true: the gathered data may show mainly good results even when poor results prevail, because people are gathering few data where poor results show up. For instance, people do not monitor events that they believe to be tangential or phenomena that they assume to be stable.

 

Feldman and March (1981: 186) claimed that information in organiza­tions is subject to “strategic misinterpretation.”

 

It is collected and used in a context that makes the innocence of information problematic.... Often information is produced in order to persuade someone to do something. It is obvious that information can be an instrument of power.

 

The propensity for quantitative data of most information systems also introduces biases. Many longstanding cost leaders pay lots of attention to cost figures but fail to notice whether cost cutting erodes customer satis­faction—a qualitative notion not tracked by their intelligence systems (Ashton, 1976). Even when systems gather the right information, the p0-litical agendas of managers may induce concealment or deliberate mis­interpretation of information (Hardy, 1990; Pettigrew, 1973). Finally, many intelligence systems are used to gather information concerning the re­turns made from an organization’s exploiting its existing technologies, products. and markets; these systems are rarely used to assess the po­tential rewards that could be gained from experimenting with new tech­nologies, products, or markets (March, 1991).

Many organizations develop special vocabularies, which act as in­formation systems in that they emphasize some parts of reality and ob­scure others (Perrow, 1986). For example, standards of quality may be expressed as strength or hardness coefficients—which, when they be­come irrelevant to what customers really need, give managers the false sense that they are producing superior merchandise. The vocabulary par­ticularizes the activities or standards that it is meant t~ describe, and so these standards become narrow and confining.

 

Preprogrammed Decision Making

 

The proponents of “synoptic” or comprehensively analytic decision making view managers as monitors of the environment who compare a firm’s achievements to its goals in order to identify problems. Such prob­lems are then resolved when managers choose an appropriate solution from a thoroughly researched and elaborated set of sensible alternatives (Ansoff, 1984; Steiner, 1979). In that way, strategies can be renewed and kept up-to-date. The fact is, however, that in successful organizations most activities do not take place in response to problems, but rather because policies, strategies, and programs automatically generate par­ticular actions (March, 1981). As Starbuck and Hedberg (1977: 254) ex­plained:

 

An organization ordinarily generates potential actions with­out the stimulus of specific problems, just because an organi­zation is designed to generate actions. Generated actions be­come potential solutions on the ground that they appear to be good actions—they are consistent with past behaviors, they resemble what other organizations are doing.. . they are fun.

 

 

Managers engage in retrospective sensemaking, employing yester­day’s categories to interpret and explain today’s perceptions. According to Weick (1979), decision processes are abbreviated, reflection is unusual, and interpretations based on habit and reflex dominate.

As we have argued, routines, job definitions, and information sys­tems create the premises for decision making. They direct managers expectations, and thereby their perceptions, to produce predictable deci­sions. In fact, the organization controls both information and the premises for action (March & Simon, 1958). And this makes it increasingly likely that strategies will respond more to stable internal concerns than to fluctuat­ing external ones (Steinbruner, 1974). Simplicity begets simplicity. For example, quality leaders are quick to identify problems with quality—an important goal and a central aspect of strategy. There are explicit quality standards, as well as programs, special departments, and information systems for monitoring quality. In fact, actions are gen­erated to continue to improve quality—simply on the basis of programs— rather than in response to market needs. However, such firms often fail to notice that their product lines are aimed at shrinking markets. There are no explicit goals or programs that are called into play by the declining market, no information systems to tell managers exactly what is going on, no standards against which to measure things, and no departments spe­cifically charged with tackling the problem (Starbuck, 1985).

 

The Enacted Environment

 

It could be argued that strategic simplicity might be counteracted in firms that try diligently to adapt to the variations in their environments.

Unfortunately, most organizations spend much of their time “superimposing a variety of meanings on the world” (Weick, 1979: 175). Managers implicitly choose which aspects of their environments to attend to, and (their world views, interests, and biases shape these choices. The “environment,” then, is at least in part an artifact—a product of a manager’s mind set. And the organization is molded, managed, and changed via this mental construction. According to Karl Weick (1979: 28):

 

Organizations create and constitute the environment to which they react; the environment is put there by the actors within the organization and by no one else. This reasserts the argu­ment that the environment is a phenomenon tied to processes of attention, and that unless something is attended to, it doesn’t exist.

 

Biologists Humberto Maturana and Francisco Varela (1980) pursued this theme even further; they argued that all living systems do not adapt or respond to an objective environment as much as they define that environment via their peculiar interests and capacities. Such systems are autopoietic; they are

 

self-referential because (they) cannot enter into interactions that are not specified in the pattern of relations that define (their] organization. Thus a system’s interaction with its “en­vironment” is really a reflection to part of its own organiza­tion. It interacts with its environment in a way that facilitates its own self-production, and in this sense we can see that the environment is really part of itself. (Morgan, 1988: 238)

 

Similarly, formal organizations “are always attempting to achieve a form of self-referential closure in relation to their environment, enacting their environment as projections of their own identity or self image” (Mor­gan, 1986: 240).

Thus, marketing-dominated firms see customers as key aspects of the environment; quality leaders see various technological developments and cost factors as crucial; and entrepreneurs view interest rates and the legal climate for mergers and acquisitions as all-important. By fine tun­ing strategies and structures to cope with these external forces, organi­zations are not so much adapting as honing, refining, and focusing them­selves according to their interests and world views.

Of course, managers do not just simplify their models of the environ­ment; often they actively try to simplify the environment itself. They may do this by catering only to customers they can serve best, by shaping and homogenizing the needs of these customers via mass communications, and by co-opting or buying off powerful parties who might insist on variation (Hrebiniak & Joyce, 1985; Perrow, 1986; Pfeffer & Salancik, 1978). For example, in order to maintain simplicity, quality leaders may pursue customers who value quality and steer clear of those who want state-of-the-art equipment. Such policies can focus an organization in two ways:

They limit the range and variety of action that is required, and they reduce the occasion for second-order learning.

The arguments of the prior two sections suggest

Proposition 5: In successful organizations, systems, structures, and processes will become tailored to a nar­rower set of tasks; for example, routines will become more specialized, information systems will be honed to monitor a smaller set of concerns, and the power distri­bution will become more skewed. Departments and ex­ecutives that are credited with past success will become more powerful and influential. Other departments will lose power and influence.

 

CONFIGURATIONS

 

As yet, we have only dealt individually with the factors that contrib­ute to simplicity. However, these factors interact to produce increasingly integrated and thematic “configurations.” Over time, the alignment among many aspects of culture, strategy, and structure becomes tighter and more consistent. Eventually, much variety vanishes from the system, which starts to conform more and more to one central theme (Miller, 1990a, b; Miller & Friesen, 1980a; Tushman, Newman, & Romanelli, 1986).

Strategies, structures, and cultures embody the purposes and goals and reflect the values and commitments of a dominant group of manag­ers. As a result, many aspects of an organization are orchestrated by a core theme into a unified gestalt or configuration (Hinings & Greenwood, 1988; Miller & Friesén, 1984).

Many innovative firms, for example, are dominated by the themes of invention and pioneering. These are the primary goals of their missionary leaders, who center their strategies around product novelty and techno­logical sophistication. Cultures reward invention and empower inven­tors, rendering the skill base of the organization R&D, not marketing or production. Structures also are made flexible to facilitate the develop­ment and implementation of new product ideas. Collectively, these qual­ities establish central strengths and weaknesses of an organization and give it a direction of evolution (Miller, 1987, 1990b).

Organizational configurations are highly thematic. Eventually, all aspects of an organization reflect the core set of values, goals, and inter­ests. Strategy, for example, becomes mirrored by the culture and struc­ture and vice versa. Try to reduce the level of innovation in an innovative firm and the culture will regenerate it. Try to bureaucratize, and the R&D strategy will demand the dismantling of confining routines. There is, in

effect, so much redundancy in the configuration that the theme of inno­vation is reinforced by many aspects of culture, structure, strategy, and process (Miller, 1990cx).

Organizational configurations are by no means static. They can be likened to dynamic systems whose initial themes establish a character­istic momentum—a path of development that harmonizes and extends corporate ideologies, strategies~ and infrastructures. Indeed, configura­tions seem to act as vortexlike force fields that progressively specialize and align values and behavior (Miller, 1987, 1990b).

Previously we said that organizations keep recreating themselves in their own images. They determine their futures according to the world views and programs of their pasts. We also noted that they are driven by a central theme that orchestrates strategy, structure, and culture. Finally, we saw how goals, strategy, structure, and culture reinforce each other. The result: over time, many successful companies fixate only on their core practices and propensities. They become largely autonomous closed sys­tems that move inexorably toward narrowness, conformity, and excess.

These arguments suggest:

Proposition 6: Simplicity in managerial world views, goals, culture, strategy, skills, and the power structure will be mutually reinforcing and, therefore, highly cor­related.

 

Proposition 7: Simplicity in managerial world views, goals, culture, strategy, and skills will promote the use of more inertial routines, systems, and processes. But the latter aspects will, in turn, reinforce simplicity in the former.

 

THE ICARUS PARADOX

 

One of the most seductive traps that face outstanding companies is that the focus and simplicity that ultimately get them into trouble may once have been responsible for their initial successes. The brave Icarus of Greek mythology was given a pair of wax wings by his father Daedalus. Legend has it that Icarus flew so high, so close to the sun, that his wings melted and he plunged to his death in the Aegean Sea. Icarus’s wings did indeed contribute to his downfall, but they also allowed him to soar to unprecedented heights. And therein lay their danger. Paradoxically, the ultimate cause of failure had once been the source of success.

The same paradox resides within the nature of competitive advan­tage. We maintained at the outset that simplicity is dangerous because it can blind managers and tether their organizations to a confining set of skills, concerns, and environmental states. Organizational variety then fails to keep up with the variety demanded by the environment. But writ­ers such as Peters and Waterman (1982) and Porter (1980) have argued that organizations must develop a distinctive competence. They also have

maintained that different competencies such as cost leadership and dif­ferentiation are usually mutually exclusive and that’ firms must “stick to their knitting” and avoid the trap of being “stuck in the middle.” Their message is that outstanding performance often demands dedicated, even passionate, single-mindedness. In short, simplicity initially may have given an organization a competitive advantage, so that what now seems to be the problem may once have been the solution.

The same duality is true for many of the other sources of organiza­tional simplicity. Organizational learning, galvanized cultures, efficient routines, and orchestrated configurations contribute greatly to corporate success. Learning narrows managers focus but sharpens their skills. Monolithic cultures are parochial, but they consolidate efforts around central goals. Routines constrain, but they dramatically improve effi­ciency and coordination. And configurations reduce flexibility, but they orchestrate strategy, structure, and culture to promote brilliant achieve­ment.

Unfortunately, the difference between the simplicity required for suc­cess and the simplicity that leads to failure is often subtle. What appears to be narrowness to outsiders seems to the managers of outstanding firms to be “operating from strength,” creative passion, or efficient concentra­tion. How managers define excess will depend on their world views, standards, and history. And when these managers have excelled by con­centration, a little more focus seems to be just the thing. To summarize:

 

Proposition 8: At first, increases in all varieties of sim­plicity will lead to an increase in organizational perfor­mance.

Proposition 9: Simplicity over long periods of time will eventually lead to lower organizational performance, especially in competitive and changing environments.

 

KEY CONTINGENCIES

 

Certainly, encroaching simplicity will not occur everywhere. As we have argued, it will be more common among organizations that have performed well for a long time than among those facing difficulties. Pain is the physician that most managers heed; it often serves as the primary incentive for healthy skepticism and questioning (Miller & Friesen, 1980a). -Significant changes in the environment such as a severe reces­sion, a major new competitor, or a wholesale technological change also may broaden managers’ horizons (Levitt & March, 1988; Tushman & Anderson, 1986). And dominant firms that can ignore their competitors will be more likely to become simple than weaker companies that must do battle with dangerous and unpredictable rivals (Halberstam, 1986). Sim­ilarly, firms that lack slack resources will have to be more open to ac­commodating and thus reflecting external complexity than those that are rich and fat (Hrebiniak & Joyce, 1985). Finally, companies operating within mature industries that have institutionalized modes of operation will be much more prone to fixing upon a narrow “recipe” than companies functioning in industries in which the ground rules have yet to be estab­lished (Meyer & Zucker, 1989; Zucker, 1987).

Various internal factors also may help preserve complexity. Gener­alist organizations are less likely to become simplified than specialists. The former face a greater and more variable range of customers and, hence, must preserve a wider and more flexible array of skills (Stinch­combe, 1959). A flatter, more decentralized structure, a broader set of values and stakeholders, and a respect for dissidents and nay-sayers may similarly serve as constructive sources of complexity (Lawrence & Lorsch, 1967; Quinn, 1980; Thompson, 1961). Participative management techniques such as liaison devices, task forces, committees, and spin-off units also can nurture different perspectives (Likert, 1961; Peters & Wa­terman, 1982).

The composition of the top-management team may be important as well. Promoting outsiders to positions of significant authority, although potentially disruptive, can help to negate encroaching simplicity (Allen, Panian, & Lotz, 1979; Hambrick & Fukutomi, 1990; Helmich, 1978). The succession of a CEO will encourage new managerial perspectives and suppress the political factors that promote narrowness (Carroll, 1984; Helmich, 1978; Tushman, Virany, & Romanelli, 1989). Complexity might even be preserved where the dominant coalition of the organization is composed of individuals from a variety of functional areas (Milliken & Lant, 1991).

Unfortunately, many of these remedies are themselves precluded or extinguished by the very forces of simplification that they are intended to combat. Also, they may well entail short-run collateral costs of confusion, conflict, and inefficiency. To recap:

 

Proposition 10: Simplicity will be less prevalent, even under conditions of success, where (a) new top manag­ers, especially outsiders, have just risen to power; (b) a generalist strategy is being pursued; (c) cultural and structural heterogeneity and participativeness are cher­ished; (d) the environment is turbulent; and (e) there are few institutional constraints.

 

 

RESEARCH IMPLICATIONS

 

In order to test our ten propositions, simplicity can be operationalized in a number of different ways—both objective and subjective. The grow­ing simplicity of a business strategy may be reflected by an increasingly skewed allocation of resources; for example, a constantly growing per­centage of resources going to the dominant activity, function, or tactic and a persistently declining proportion going to all others. Pioneer orga­nizations, for instance, might spend more and more on R&D and ever less on marketing and quality control. Simplicity in processes and systems may be assessed by the range of data collected or used. For example, plans, information systems, and reports may come to concentrate on fewer indicators. More reliance might be placed on highly formal, focused information systems, but there will be less broadly targeted, informal scanning. Cultural simplicity in the form of a narrowing array of values might be evidenced by major promotions coming from only a single de­partment, or by minutes of meetings or annual reports that focus on fewer and fewer issues, activities, and goals. Subjective cultural simplicity may be reflected by the increasing dominance of a single goal and by the growing consensus about various objectives, activities, and external events. Finally, simplicity in the power distribution may be reflected by the concentration of all authority, prestige, and legitimacy in one depart­ment or person.

Researchers can assess how smoothly and quickly different forms of simplicity evolve by measuring the above indicators at regular intervals. They might try to establish if and how much the evolution of simplicity is influenced by the duration and degree of past success; the prevalence of routines, processes, and slack resources; the distribution of power, orga­nizational differentiation, and institutional constraints; and industry un­certainty and competition. In searching for the determinants of simplicity, researchers must examine a good number of time periods to get a true picture of the leads and lags among changes in performance, simplicity, and the organizational and environmental context. It will also be useful to control for takeovers, succession events, and major shifts in the environ­ment because, as we have argued, these can counter or interrupt the forces that drive simplicity. Finally, because performance or context might have a rapid impact on strategic or tactical simplicity, but only a gradual influence on the more inertial aspects of culture or structure, researchers should take care to differentiate among the different types of simplicity.

The relationships between inertia and simplicity are worth investi­gating as well. Inertial routines and systems contribute to cognitive sim­plicity because they channel perceptions; this, in turn, fosters strategic simplicity. But cultural simplicity in the form of a single overriding goal, department, or value can promote the use of highly specialized routines and information systems that are themselves inertial. The latter can ob­scure developments in the environment that would indicate the need to change, resulting in further inertia—in this case, unresponsiveness. Re­searchers might want to determine whether changes in inertia precede or follow changes in the different varieties of simplicity and investigate if and under what conditions inertia influences performance more than does simplicity. They also may want to examine the environmental, or­ganizational, and performance correlates of each kind of simplicity.

Finally, the performance implications of simplicity s!iould be inves­tigated. Simplicity might be quite viable in stable environments, but it could lead to serious mismatches when external turbulence occasions the need for organizational reorientation.

 

CONCLUSION

 

The central tenet of the simplicity theory presented here is that over time most successful organizations become simpler, not more complex. The strategies of such companies, for example, turn into specialized rec­ipes. Cultures narrow to mirror the views and practices of a single group, and routines and systems become more focused. All of these trends in­teract to produce tight configurations—but, ultimately, these configura­tions become distended, exaggerated, and lacking in richness and sub­tlety.

Eventually, such companies will behave less like organisms and more like machines, so that surprise and randomness, the sources of much knowledge, are lost (Beer, 1966; Le Moigne, 1977). Activities become more thematic, more specialized, and more uniform. Before long, there is no more “noise” left in the system: no court jesters, no devil’s advocates, no iconoclasts with any say, no countervailing models of the world (Stein­bruner, 1974). This conformity, of course, decreases flexibility, engenders myopia, and blocks learning and adaptation.

Paradoxically, however, if the “machine” is beautifully tuned and aligned with its environment, it can beat everything in sight. And these stellar successes are impossible to forget; they tempt and tantalize man­agers to go just a little bit further.

 

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