Designing Organization Design: A Human-Centred Approach 0198867336, 9780198867333

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Designing Organization Design

OUP CORRECTED AUTOPAGE PROOFS – FINAL, 15/08/20, SPi

OUP CORRECTED AUTOPAGE PROOFS – FINAL, 15/08/20, SPi

Designing Organization Design A Human-Centred Approach Rodrigo Magalhães

1

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1 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Rodrigo Magalhães 2020 The moral rights of the author have been asserted First Edition published in 2020 Impression: 1 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2020935468 ISBN 978–0–19–886733–3 DOI: 10.1093/oso/9780198867333.001.0001 Printed and bound in Great Britain by Clays Ltd, Elcograf S.p.A.

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Preface Overcoming resistance to simplicity. Managers need simple integrated frameworks that enable them to link internal and external stakeholders and related business functions. If we continue to equate higher levels of conceptual disaggregation with more profound knowledge, we face the risk of remaining irrelevant to practitioners. (Schultz & Hatch, 2005: 339; italics added)

This book is the result of an academic challenge. In 2005‒6, I was approached by my friend José Tribolet of the University of Lisbon with a research project on organizational engineering. I had never heard of organizational engineer­ ing and it sounded almost like a contradiction in terms, but it was certainly a challenge, especially because of the opportunity to put to work some of the knowledge gained in my doctoral studies in the information systems discipline. In responding to José, I had to decide how I might contribute to the project and my almost immediate reaction was to say, from the point of view of the social sciences, ‘organization design seems to the be the right match for organizational engineering’! And so, the project ‘Organization Design and Engineering’ was created, later to be renamed ‘Organization Design and Enterprise Engineering’. As the project got under way, I become increasingly (and alarmedly) aware of the limitations of organization design as a topic represented in most text­ books of management or organization. First, in spite of its name, there is hardly any design in organization design. While for engineers, the word ‘design’ is part of a process of building something, for us in management and organization, organization design was the same as establishing the macro structure of the organization, wholly silent about the micro level. Second, while engineers are very interested in the modelling of organizational pro­ cesses, for us in management organization processes are not part of the con­ cerns of organization design at all. Organization design seemed to be reserved only for discussions about vertical workflows, but never horizontal ones. Third, most engineers expect organization design theory to have some­ thing to say about behaviour, however in management and organization textbooks, organization design is mostly portrayed as an activity character­ ized by ‘cold cognitive scripts and rules’ rather than ‘hot emotional attitudes and beliefs’ (Elsbach, 2002: 52).

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vi Preface

Thus, I had to concede that organization design was not only underspecified as a field of study but was also not very useful as practical management tool. Meanwhile, the research literature had been spawning several very interest­ ing pieces containing new ideas and alternative directions for organization design; however, with no attempts at bringing the pieces together. Beyond contingency theory, no common thread could be discerned to keep or­gan­ iza­tion design together as a coherent body of knowledge. Yet, among the emerging trends, there was one that showed particular promise—design, with particular reference to human-centered design. Design principles seemed to apply naturally to the design of organizations or, at least, to the design of a new conception of organizations. Both are / should be: • Systemic • Interactive and network-based • Service-oriented • Normative/ethics-oriented • Desiderata/innovation-oriented • Meaning-oriented. Hence, if design and organization design share fundamental principles, the design discipline might conceivably be a key source and a uniting thread for organization design’s themes and concerns. This is the working hypothesis of this book and the result of the academic challenge set in 2005‒6. In approaching the task, I have paid heed to the advice from Schultz & Hatch (cited in the epigraph above) and in trying to overcome resistance to sim­ plicity, I hope that the outcome is still interesting to the academic world, while remaining attractive and relevant to the practitioner community. December 2019

Rodrigo Magalhães

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Endorsements This book argues that organization studies need a paradigm shift towards design. Design and organization were always related. However, the current ‘design thinking’ hype is not the answer, since it does not address the essen­ tial issues. In a broader perspective this book presents a carefully reasoned and passionately formulated plea for the urgently needed change from a market society to a society with markets, and it provides useful ‘organization design logics’ on how to do this. Wolfgang Jonas, Professor at the Institute for Design Research, Braunschweig University of Art This book addresses the urgent need to shift from thinking about or­gan­iza­ tions purely in terms of structures and systems, offering an alternative approach based on more humane and situated forms. The principles of design thinking and their implications are discussed in depth, and a wide range of literature is drawn on to address the history, current developments, and future possibilities for organization design. Each logic is discussed in detail, taking the reader carefully through its main elements, and key ideas are illustrated and integrated through helpful figures. Ann L. Cunliffe, Professor of Organization Studies, FGV-EAESP, Brazil Rodrigo Magalhães invites us on an exciting adventure to consider the mean­ ing of design and its relevancy to the urgent challenges and opportunities in organization design. As we progress from the industrial era fixed templates of organization design to the vibrant and dynamic world of digitally enabled designs and designing as an ongoing accomplishment, Magalhaes‘ book will be essential reading for all who want to understand this new era. Kalle Lyytinen, Distinguished University Professor and Iris S. Wolstein Department Chair, The Weatherhead School of Management, Case Western Reserve University This is a very timely book. There are now more design-school trained Organization Design (OD) professionals working in global corporations than people trained in classical OD from business schools. And yet, the OD prescriptions around structure and process are about the same now as they were in the 1970s when the field first developed, and for the most part they

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viii Endorsements

are deeply outmoded and irrelevant in today’s world. They are predicated on machine-based assumptions of organizations and presume levels of stability and continuity that simply don’t exist anymore. Meanwhile, the world of pro­ fessional design—with its human centeredness, fluid processes, and holistic embrace of science, art, technology, and craft—has made great inroads into OD and other strategic functions. All the major corporations I know have incorporated this new form of OD into their C-Suites, as have many govern­ ments, and the entire practice of OD is dramatically changing. Yet hardly any of this is reflected in the academic literature. Until now. Rodrigo Magalhães has done a remarkable job of integrating both classical OD and contemporary design, and design interested readers from academia, education, and industry will all find a lot to like and refer to. For my money, this is the best book on Organization Design available today. Daved Barry, Elmer Gates ‘50 Professor of Innovative Business Culture, Clarkson University Rodrigo Magalhães has crafted in this book a path-breaking and exciting exploration into the field of human-centered design that should be required reading for all managers and scholars interested in design as a discursive and practice-based process. His contribution delves into such innovative terri­ tory as design-as-practice, as meaning, and as knowledge-qua-design. By focusing on practice, we see a design shift from its historical entitative base to processes, allowing designers to move from a reliance on pure managerial intervention to changes inspired by human interactions. We then see how design can create new meaning as practices evolve rather than surface as a stable object. This makes way for emergent structuration processes that allow us to focus on designs-to-be rather than the familiar design-as-is. Finally, Magalhães is not concerned with designers as controllers of people, material, and symbols, but rather as colleagues who invite a critical consciousness that can construct the most apt design culture for a leaderful organization. In a word, this is a book about design with a heart! Joe Raelin, Professor Emeritus, Management and Organizational Development, Northeastern University

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Acknowledgements I would like to acknowledge all the colleagues, friends, and family who sup­ ported me in a variety of ways during the crafting of this book. Without your support and friendship, this would not have been possible. With special ref­ erence to José Tribolet, Marielba Zacarias, Miguel Pina e Cunha, Khalid Al Begain, Sonar Al Hajj, Sulekha Uthaman, Wolfgang Jonas, Kalle Lyytinen, Ann Cunliffe, Daved Barry, Joe Raelin. And a very special thanks to Rita.

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Contents List of Figures and Tables

Introduction—Organization Design in Need of a New Paradigm

xiii

1

1. From the Design of Structures to the Designing of Organizations: Past Trends and Future Directions

19

2. A Design-Driven Epistemology for Organization Design: Design-as-Meaning and Design-as-Practice

47

3. The Ontological Bases: Intended, Emergent, and Perceived Organizational Knowledge-qua-Design72 4. Bridging between Organization Design as a Noun and as a Verb: Formative Affectual Contexts and Design Trace

102

5. Deriving Five Human-Centred Logics of Organization Design

123

6. The Logic of Identity and the Normative Logic

161

7. The Service Logic and the Logic of Effectual Reasoning

186

8. The Logic of Interactive Structure

221

9. Leaderful Organization Design: Moving Organizations Closer to a Human-Centric Paradigm

252

Conclusion—A New (Design) Discourse for Organization Design References Index

274 283 305

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List of Figures and Tables Figures I.1: The logics and processes of organizational design

12

2.1: The evolution of design: from unidimensional to multidimensional definitions of meaning

55

2.2: The hierarchy of HCD

59

2.3: Three broad categories of organizational meaning-making

68

3.1: Ontogenesis of organizational design as the outcome of three evolutionary categories of organizational knowledge-qua-design80 3.2: Defining organization design in accordance with a social-actor perspective on organization

83

3.3: Recapping the journey so far

100

4.1: Integrating organizational design through formative affectual contexts and design trace

104

5.1: Devising a set of human-centred organization design logics: the research process

124

5.2: Matching between human-centric design axioms and design principles

138

5.3: Five new human-centred logics of organization design

150

5.4: The systemics of organization design: integrating the five logics through three interfaces with multiple environments

159

6.1: Components and processes of organization identity

166

6.2: Identity orientation and organization design change

169

7.1: The service system

194

7.2: Dimensions of product innovation

200

7.3: Service innovation and new market creation: the story of Nintendo Wii

201

7.4: Two opposing views on home to approach the market

203

7.5: Organization design as the outcome of the logics of service and effectual reasoning

209

7.6: The shift in the centre of gravity of organization designing from a mind-set of market adaptation to a mind-set of market transformation

216

8.1: A sociomaterial perspective of Giddens’ structurational model adapted to design-oriented terminology

228

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xiv  List of Figures and Tables 8.2: The evolution and revolution of interactive structure

238

8.3: Shifting between formal and informal organization (two examples from the literature)

243

8.4: Interacting types and design challenged in organizations

248

8.5: Bringing together the elements of interactive structure

249

C.1: The intertwining of organization designing, managing, and strategizing

276

C.2: Designing organization design: the key components

280

Tables 1.1: Assumptions behind organizational design according to Weick (2001)

31

1.2: Summary of three groups of perspectives on organization design

38

1.3: Categories of design thinking

39

2.1: Sequence of steps in managerial decision-making, according to Simon (1960)

56

5.1: Comparison of four traditional logics of organization design

131

7.1: Summary of differences between prediction and effectuation

207

8.1: The distinction between interactivity and generativity

234

8.2: A brief summary of ERP expected outcomes

244

8.3: Some features of enterprise social media

245

C.1: What the managers-as-designers need to be aware of (as part of a new discourse for organization design)

281

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Introduction Organization Design in Need of a New Paradigm

Challenges for Organizations and their Design On 23 September 2019, the teenage climate change activist Greta Thunberg made the following challenge to the ‘adult population’ in an emotional speech at the United Nations in New York: We are in the middle of a climate breakdown and all they can talk about is money and fairytales of eternal economic growth. How dare you?

The world is changing in radical ways, and organizations, which are created, designed, and maintained by the adult population, are at the roots and at the receiving end of such changes. The late organizational scholar James March (2007) has suggested that the field of organization studies is entering a new era of development, characterized by the earth’s declining tolerance for the human species, with the plethora of changes that this implies. Greta Thunberg hits the nail on the head, when she highlights the ‘fairytales of eternal economic growth’ as the almighty driver and the source of the situ­ation the world finds itself in, regarding its (i.e. our) social, economic, and en­vir­on­mental ills. Organizations, whether they are public or private, service or manufacturing, for-profit or not-for-profits are at the centre of all this. Design scholar Buchanan (2015) highlights the fact that although management theories and practices have been applied with varying degrees of success and brought many benefits to the for-profit and not-for-profit organizations that surround us, there is a feeling of widespread dissatisfaction with organizations and what they do to affect the thought and behavior of human beings, as if the designs are flawed in one way or another (…) We do not yet understand the full effect of organizations on our lives but, increasingly, we are aware of negative effects on human experience. (Buchanan, 2015: 8; italics added) Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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2  Designing Organization Design

The same has been restated in many different ways by a great many authors writing about organization and management. For example, Pfeffer (2016) claims that despite years of advice from academia for jobs and policies to be designed in a humane and motivating fashion and for leaders to be modest, honest, and authentic, there are frequent reports, some from the best-known companies, of management practices that create economic insecurity, workfamily conflict, stress, and inequality. This, according to Pfeffer, is due to a societal readiness to accept financial success as a justification for wholly unethical practices rampant in some of the flagship companies. Thus, when it comes to tackling ‘toxic workplaces’, determining economic costs has become much more important than dealing with the ‘human toll’ (Pfeffer, 2016: 5). This is part of a lowering of moral standards in the or­gan­iza­tion­al world, fuelled in part by the example from the world’s leading politicians and business moguls. The influence of organizations has grown steadily over the last couple of centuries, especially in the most developed regions of the world and the every­ day lives of most of us are dominated by organizations. Quoting Herbert Simon (1991), Moran & Goshal (1999: 390) suggest that or­gan­iza­ tions have become so ubiquitous in our socioeconomic landscape that they should define our economy. Thus, rather than ‘market economy’ as the term to describe the structure of our economic interactions, these authors suggest that we should be talking of ‘organizational economy’ instead. Indeed, the two expressions—market economy and organizational economy—are closely intertwined and usually organizational success is taken to mean the same as economic success. In other words, the efficiency and effectiveness of market interactions have practically become the only yardsticks for success of or­gan­ iza­tions and their design. Despite many calls for research in organization design that will improve not only organizational efficacy, but also the quality of organizational life (see, e.g., Dunbar & Starbuck,  2006), the situation remains unchanged. In other words, organization design continues to be viewed as something instrumental, amoral, and remote from the problems or aspirations of ­people. Such a split between traditional organization design thinking and the ‘soft’ aspects of organization development is very aptly captured by Bate et al. (2000) when these authors suggest that ‘organization design without or­gan­ iza­tion development may be likened to an empty temple and organization development without organization design to a tent blown away in the wind’ (Bate et al., 2000: 200). Nevertheless, awareness is mounting about the fact that something has to be done about the paradigm that currently rules the design of organizations. It is not only the design flaws that need to be fixed but it is also, and perhaps

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Introduction  3

more importantly, the discourse of those in charge of creating, designing, and maintaining organizations that needs to be changed.

Some Emerging Alternative Views The need for a paradigm change in organization design is linked to a number of related trends. Management scholars, such as C. K. Prahalad have, for a number of years, highlighted the need for the world of business to think of a more inclusive, gentler, and more empathic forms of capitalism as an economic inevitability. This important shift is represented in the literature on stakeholder capitalism, as well as in the services and marketing literatures. In the latter, there are important moves towards a different understanding of business, brought together in a movement broadly known as ‘co-creation’ of service, value, and innovation, which take on board the stakeholder-related concerns. Ramaswamy & Ozcan (2014) define such a new paradigm as shifting attention away from a firm-centric view of utilitarian value creation to a new sensitivity towards the joint creation of service, where stake-holding individuals consider not only wealth but also welfare and well-being as the basis of joint aspirations. The themes of cooperation, collaboration, sustainability, and social responsibility have all surfaced in the literatures on stakeholder theory and effectual thinking, a school of thought in entrepreneurship that will surely place major challenges to the way that organizations are perceived and designed in the future. To sum up. The problem, as we see it, is that unlike other design areas such as buildings, bridges, creating software programmes, performing brain surgery, or staging Formula 1 events, there are no standards for designing organizations. Apart from the advice that organizations should follow a hierarchical model accompanied by SOP (Standard Operating Procedures), that when structuring the organization one should pay heed to the turbulence of the environment and that employees should abide by the code of conduct, there are no universally accepted principles for designing organizations. Thus, the proposal put forward in this book is that the human-made world of organizations should pay much closer attention to the human-centric in­ter­ pret­ation of design, design principles, and design culture.

So, What Is Organization Design? As a field of study, organization design has traditionally been dominated by a (social) scientific approach that focuses on the testing of hypothesis and is

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4  Designing Organization Design

aimed at revealing causal relationships between structural variables and environmental conditions (Donaldson, 1987). The final goal of this approach is (was) the establishment of a universal theory that would enable business leaders to hit the ideal organizational structure or configuration every time, thereby achieving maximum efficiency in the use of the invested dollars. This line of research, known as contingency theory, considers organization design as the result of external forces, with little concern for the internal workings of the structure-in-practice, the role of agency, or the properties of human interaction. Given the emphasis on formal structure, organization design has trad­ition­ al­ly been understood to be the same as organizational configuration, following a pre-set typology, with neat lines of communication and distribution of responsibilities. However, what can be said to constitute or­ gan­ iza­ tion­ al structure in this first half of the 21st century? The extraordinary growth of digital communications, the decreasing relevance of hierarchical bureaucracies, and the general demise of command-and-control have all but decimated the traditional notion of organizational structure. On the other hand, the media and especially social media is forcing the inclusion of intangibles, such as the brand, the relationships with customers, the work en­vir­on­ment, or the behaviour of company officials in the discourse of organization design. For some authors contingency theory represents the past of organization design (Barry, 2016), but for many others contingency is still the prevailing paradigm (see, e.g., Van de Ven et al., 2013). Nevertheless, despite more than half a century of contributions for and against the dominant paradigm, according to several scholars organization design research has reached an impasse (Dunbar & Starbuck,  2006; Snow et al.,  2006; Gulati et al.,  2012). The current situation in the academic debate about organization design is very aptly described in the following excerpt by Weick (2003: 93) Scholars of organizational design are moving in an odd direction (...) we have become a discipline of critics who lower confidence rather than a discipline of designers who raise confidence. When our predictions fail, we typically add more variables to our frameworks, but we don’t drop any. Nor do we take seriously the possibility that greater reliance on something other than the language of variables is called for. If you look closely at definitions of organizational design, you begin to see the problem.

One reason for this state of affairs is the obsession of the social sciences with the objectivity and ideological neutrality of the scientific method in the search of generalizable theories about the social world. However, as argued

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Introduction  5

by social constructionists, all propositions about the functioning of the world depend on language and language cannot be neutral or objective (Sugiman et al.,  2008). Hence, it must be recognized that through interaction and ­dialogue, the design of organizations can and does take unexpected turns. Founded upon the theoretical scaffolding provided by contingency theory, a number of approaches on ‘how to design organizations’ has emerged among the management consulting community (Stanford, 2018; Worren, 2018). One of the earliest contributions to this genre is based on Galbraith’s ­so-called Star Model (Kates & Galbraith, 2007), a five-point stra­tegic planning framework that relies entirely on managerial decision-making for its inputs. It proposes that organizations are designed sequentially, starting from the goals defined by the strategy and from here deciding on stra­tegic capabilities, structure, processes, and people. We call this intended design. Although very intuitive and easy to apply, this type of approach leaves out significant portions of what one might call ‘the’ organization’s design. For example, it leaves out all the decisions taken locally outside the plans approved and endorsed by the organization’s authorities. We call this emergent design. It also leaves out the perceptions by internal and external stakeholders of what the organization is and does. We call this perceived design. All three types of design must be taken into account when considering the outcomes of the organization as an entity that was created to fulfil a purpose. Over the past decades mainstream research and teaching in management, strategy, and parts of organization studies have predominantly been aligned with the quest for scientific truth in its theorizing about organization design. The outcomes, in terms of improvements in organizational effectiveness and efficiency, have been good and sometimes excellent, however in what concerns the quality of organizational life, the results are clearly poor. Meanwhile, the pressure is mounting for these communities to accept that the world is changing, and that humanity will be better served by a different view about what organizations are. Thus, instead of a view of organizations as productivity and competitivity-driven institutional automata, these communities are now warming up to the idea that organizations are discursive phenomena that might adequately be defined as ‘purposefully designed engagement structures for human interaction’ (Ramaswamy & Ozcan, 2014: 181).

The Move towards Design There is no such thing as a unified theory of design. Since its articulation by Herbert Simon as the sciences of the artificial (1996), design has evolved

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6  Designing Organization Design

with different approaches being created in different areas of knowledge in a non-centralized fashion. Unlike the scientific disciplines, which grow out of a common concern and with a commonly accepted stock of knowledge, design knowledge emerges as required and with no pre-established framework. Cross (2001) talks about a discipline which he defines as being about the development of ‘domain-independent approaches to theory and research’, based on the assumptions that ‘there are forms of knowledge special to the awareness and ability of a designer, independent of the different professional domains of design practice’ (p. 54). But, what about organization design? Simon (1996: 113) asserts the following: ‘We are faced with a problem of devising a professional school that could attain two objectives sim­ul­tan­ eous­ly: education in both artificial and natural science at a high intellectual level. This too is a problem of design—organizational design’. Despite trad­ ition­al organizational design not embracing Simon’s enthusiasm about a design-oriented professional school of organizational design, there is a climate of change in favour of a shift in the emphasis on the traditional social science methodologies, away from a positivist paradigm and towards interpretivist or pragmatic approaches. As part of this shift, there is a move towards the design sciences or the design discipline as our preferred designation (Cross, 2001). The design discipline is focused on the creation of systems that do not yet exist or on the improvement of performance of existing systems which, in the case of social systems, is achieved by means of the creation of new social practices or changes in existing ones. Propositions from the design discipline are tested not on the basis of hypotheses manipulation but through processes of pragmatic validation. According to Van Aken (2004), academic management research has a ‘serious utilization problem’ (p. 119) created by a ‘scientization’ of the field, which has also ‘greatly diminished the academic respectability of prescriptions’ (p. 121) produced by researchers. Van Aken & Romme (2009) offer design science as an ‘addition to the repertoire’ of management and or­gan­ iza­tion studies. While concurring with the significance of the offer, in this book we put forward that design should not only be seen as an add-on to the existing paradigm, but as an opportunity to question and change the approach to organization design. Having said this, we hasten to clarify that our intention is not to abandon social-science-oriented research, but to give it an ancillary role, with social science methodologies being well-placed to analyse many aspects of the organizational phenomenon. Thus, the change that is required in organization design is primarily a change in managerial discourse, which depends to a large extent on the paradigm

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Introduction  7

ruling over business and management education and research. Indeed, there are signs that a budding turn is taking shape with a new discourse significantly influenced by design culture. The turn, which has been labelled design thinking, has been gaining speed mainly in the so-called popular management literature (Brown,  2008,  2009, Martin,  2009, to mention only a few). However, this trend is largely absent from the organization studies literature. The gist of the contributions has been mostly on the application of the skills of designers to the management of companies, focusing on the shift from the design of tangible products to the design of intangible services (Cooper et al.,  2009). Sadly, despite design thinking being all about organizational change, none of this literature explicitly refers to organization design as a topic in its own right. Design thinking has been an important step forward in the improvement of management practice and it has been at the centre of a great many intervention programmes. It has even been adopted as an elective course in business schools around the world; however, questions have been raised at the overall efficacy of the programmes and in our view the design thinking movement will not achieve the paradigm change that the organizational world requires, at least not on its own. The reasons for this are twofold: first, design thinking programmes are focused on the ‘small picture’, that is, the way that some managerial practices are planned or executed, not on the broader context of organization design; second, the emphasis has been on consultancy-type programmes or projects, not on long-term organizational change. In other words, design thinking does not tackle the foundational issues underlying the way organizations are designed.

Outlining the New Approach As it has been emphasized above, organization design does not follow the precepts of the design discipline. Organization design has traditionally been part of management and organization studies, and consequently has been interpreted according to epistemological approaches that befit the aims and assumptions of those disciplines. As is still the case in most leading management textbooks, the expression ‘organization design’ is used as a metaphor for organizational structure. In a tradition that harks back to the writings of Max Weber (1947), the key notion is that designing organizations is the same as designing the command-and-control structures that allow managers to steer companies through mostly expected environmental changes. However, with the rapid

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8  Designing Organization Design

and ever-accelerating pace of global change and the demise of traditional command and control (Gergen, 2016), it makes less and less sense to reduce the scope of organization design to organizational configuration. On the other hand, Buchanan (2016) reminds us that our civilization, as we know it, is dominated by organizations of all kinds, and that whether we like it or not organizations have to be designed. He says: It is arguable that the most important design products of the 20th Century are neither products of graphic design nor of industrial design but products of man­ agement, i.e. the design of organizations, without which no other design dis­cip­ line could have any impact on society and the lives of human beings.  (p. 19)

Indeed, the level of discourse in Buchanan’s passage places the design of organizations at a superordinate level, over and above the usual measures of assessment or quality applied to organizational performance. Nelson and Stolterman (2014: 192) help to further articulate this idea by saying that ‘quality is not robust enough as a scale of measurement against which to judge “good” design’. They state that designing should thus be seen as the ‘ability to imagine that-which-does-not-yet-exist, to make it appear in concrete form as a new, purposeful addition to the real world’ (Nelson & Stolterman,  2014: 12). This type of (design) discourse is, in our view, what is missing from the traditional theorizing into organization design.

Organization Design as Design We posit that what is now required is a paradigm, where for purposes of its design, the organization is considered to be a social actor, with meaningmaking and meaning-taking capabilities, which allow it to create important social and economic change. In organization studies, there are several works that exemplify this approach, although not specifically focusing on or­gan­iza­ tion design. A case in point is The Expressive Organization (Hatch & Larsen, 2000), in which it is asserted that organizations are paying increasing attention to their ability to express ‘who they are and what they stand for’ and that employees are expected, like never before, to go beyond their job description and ‘feel the message they are sending’ (p. 1). In the present book, we further this approach but suggest that it ought to go beyond isolated concerns, such identity, ethics, marketing or innovation, and embrace the entirety of the organization, including all its in­tern­al and external roles. Based on the epistemological assumption of or­gan­iza­tion

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Introduction  9

as a social actor (King et al., 2010), the new paradigm proposes that design offers a credible alternative foundation for a theory of or­gan­iza­tion design, instead of the contingency approach. As an artefact, the organization needs to be designed according to prin­ ciples and values that apply to the creation of all artefacts, that is, the prin­ ciples and values of the design discipline. The following are three instances of principles and values of design applied to organization design. 1. Organizations are designed for purposes of serving others and the economic motive is secondary. The emphases on effectiveness, efficiency, and competitiveness has often conflated the goals of organization design with those of business design and for this reason, the economic motive has often been placed above all else. To be sure, while not rejecting the profit motive, design does not consider it as the prime motive. The prime motive for designing organizations is the provision of a service and the profit may or may not follow. 2. Organizations are co-created in networks of stakeholders and for this reason they have a normative dimension vis-à-vis the social communities that they affect. Although business ethics has made enormous progress in relation to previous generations of business practices, the normative dimension of organization design is downplayed, if not wholly ignored. This trend has taken a turn to the worse in the last few years when societal role models are hesitant when it comes to upholding ethical standards (e.g. pronouncements of the American president in late 2018 about the ethical posture of his government vis-à-vis the Khashoggi affair) 3. Organization designs are holistic and systemic in nature. Despite the distinctive systemic tendency of many schools of managerial thought, the implications of such intellectual posture have not been adequately represented in models or approaches to organization design. This, along with the two preceding points need to be re-emphasized in managerial discourse and especially in business education programmes. In addition to principles and values of design, there are two other foundational aspects of the new approach that should also be considered. Given that organization are made up of people and their interactions, the two key aspects to consider are: the practices that people engage in and the meanings that people associate with their practical activity. Thus, if it is agreed that organizational practices constitute the fabric of organization design, practice theory should have a key role to play and if meanings are also considered

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10  Designing Organization Design

foundational, the human-centred approach to design (Krippendorff, 2006) must be considered a very appropriate trend for the theorizing of or­gan­iza­ tion design.

Organization Design as Meaning The expression ‘human-centred design’ (HCD) has become fashionable in the last twenty years, not only through the work of Krippendorff (1989, 2006,  2011) and others, but also through the research from the computer/ information science community on human-machine or human-computer interaction (Boy,  2011). This has expanded to the field of product design, where HCD was adopted as a set of methods and principles aimed at supporting the design of useful, pleasurable, and meaningful products or services for people. The main focus of these methods is on describing how human beings interact with their environments, initially with a strong en­gin­ eer­ing slant as reflected, for example, in the term ‘usability engineering’. More recently, HCD methods have shifted from an emphasis on physical characteristics of products to a focus on the interaction between people and products and on the cognitive characteristics of users, with an emphasis on emotional needs, aspirations, and pleasurable experiences (Van der BijlBrouwer & Dorst, 2017). However, our understanding of HCD is considerably broader than in product and interaction marketing. We stay close to Krippendorff ’s epis­tem­ ol­ogy of design as creation of meaning and apply it to every aspect of the organization’s design. In this book, we adopt HCD as the key epistemological position and posit that in designing organizations, the meanings associated with the artefacts created or co-created by/with management, other or­gan­ iza­tion­al members, and external stakeholders are crucial in establishing the network of conversations which define the organization as a discursive artefact with ‘a life of its own’ (Goffman, 1972: 113). We have also been influenced by the thinking of Roberto Verganti (2008, 2009, 2016) on design-driven innovation but do not restrict HCD to interactions between people and products. For Verganti, design deals with the meanings that people ascribe to products and with the messages or product languages that designers can devise to convey such meanings. In other words, in addition to the functionality of a product, the customer’s affective and cultural needs are also ‘tickled’ by the product’s emotional and symbolic value (i.e. its meaning). In this book we apply this line of thought to every aspect of organization design. In other words, the notion of organization

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Introduction  11

design as meaning can be considered as an extension of Verganti’s thinking to the organization as a whole.

Organization Design as Practice We propose that modern management thinking is clearly moving away from the notion of organization design-as-structure and embracing the idea of organization design-as-practice. According to one of the latest compilations on practice theory, there is increasing agreement among sociologists about the fact that a ‘practice’ is something central to social life. Reckwitz (2002) defines practice as a ‘routinized type of behavior’ consisting of several interconnected elements: ‘forms of bodily activities, forms of mental activities, “things” and their use, a background knowledge in the form of understanding, know-how, states of emotion and motivational knowledge’ (p. 249). Thus, organization design can be paralleled to a large social practice, where organized sets of actions link practices to other practices, to form wider complexes or constellations (Hui et al., 2016). In the design discipline, Kimbell (2012) explores this body of knowledge and proposes the notions of ‘design-as-practice’ and ‘designing-as-practicing’, drawing attention to the sociomaterial nature of practices and to the way that designs are structured by objects and materials. According to Schatzki (2001: 11), while practices are social constructions, single individuals act as ‘carriers’ of certain practices and the formation of meaning is dependent upon specific material practices. Thus, while design-as-practice is an appropriate motto, we also need to talk of design-as-meaning, in order to maintain a distinction between the two. We find that it is crucial to distinguish between the meaning that emerges from the natural development of practices in the workplace, from the leaderful management of meaning which is a requirement of the processes of organizational designing. In other words, while meaning is always present as part of work-related practices, certain types of meaning intended by the designer may or may not be present. To be sure, we submit that although underpinning perfectly organization design, practice theory needs to be explicitly coupled with a thorough ana­ lysis of meaning in organizational settings, including meanings associated with managerial intent, meanings emerging from local (and informal) design activities, meanings associated with products or services, and meanings emerging from perceptions of external stakeholders about the organization’s stance on relevant issues. We say ‘explicitly’ because implicitly meanings are already considered in the definition of social practice. In other words, none

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of the two epistemological perspectives on organization design, that is, organization design as practice and organization design as meaning, can subsume the other. Instead, the two perspective need to be articulated.

A Model of Logics and Processes of Organization Design Figure  I.1 summarizes our approach in terms of logics and processes of organization design.

The Logics Whenever an organization, for-profit or not-for-profit, is designed or re­designed, there is an unquestioned set of logics or assumptions always at play. For example, it is always assumed that an organization must have a hierarchical structure, with job descriptions and a pay scale. If the or­gan­iza­tion is for-profit there is an assumption that profit-maximizing is one of the key goals and that the investors have more rights over the organization’s business than any other stakeholder. These assumptions, beliefs, or logics coming from external bodies, such as management consultants, other or­gan­iza­tions, especially the larger and more successful ones and the academic community, constitute a powerful layer of influence on organization designers. In any given institutional field, there is a prevailing logic or received wisdom which is absorbed in a semi-conscious fashion by the practitioners of that LOGICS The identity logic The normative logic The service logic The logic of effectual reasoning The logic of interactive structure

ORGANIZATION DESIGN-AS-IS Perceived Organization Design influence

influence

PROCESSES Integration devices: Formative affectual contexts Design Trace LEADERFUL DESIGNING

Fig. I.1:  The logics and processes of organizational design

ORGANIZATION DESIGN-TO-BE Intended Design and Emergent Designing

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Introduction  13

field. Organization design has also developed its own ‘logic’ which has changed over the years but which has never been guided by what we may call an HCD perspective. Organization design logics affect all organizations in the same field of activity through forces of isomorphism and conformity. In guiding organization designers about the way organization should be designed, organization design logics set the tone of managerial discourse and obviously constitute a major facilitator or obstacle for any attempt at changing the status quo. Although the notion is influenced by the well-known concept of institutional logics, our conceptualization of organizational design logics is different from institutional logics. Organizational design logics are principles, guidelines, or beliefs that originate from both academic research and management consulting and serve as reference points for the creation and change of organizations’ processes, structures, and systems in given sectors of the economy. Sometimes also referred to as ‘best practice’, organization design logics can have a very enduring existence (such as in the case of certain types of organizational structure), but they can also be subject to rapid change (such as the inevitability of systems-enforced business processes). So, although they are the result of institutional forces, they do not have any properties, apart from the influence they exert. And while over the years there have been a variety of logics or ways of thinking about organization design, there have not been as many theories that can explain organization design in an integrated way. In this book, we suggest that the design discipline can provide a comprehensive theory or at least an epistemological half-glue that can coherently bind together many of the existing contributions from both management/organization studies and design. In pursuing this line of thought, the book proposes five organization design logics, which are derived from a matching of design principles, trad­ition­al organization design logics and a few selected themes from management/organization studies expressing current and future trends and concerns. The five new organization design logics are: 1. The logic of identity and identification. Inspired by the notion of design as superordinate meaning and ambition, this logic is informed by the literatures on the economics and sociology of identity and its starting point is the semantic relationship between the concepts of ‘design’, ‘meaning’, and ‘identity’. Thus, if ‘to design’ means ‘to create meaning’ and if identity is defined as the ‘meanings perceived and shared by a collective’, then ‘to design an organization’ means, primarily, ‘to create an identity’

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14  Designing Organization Design

2. The normative logic. Supported by the ethical principles of design and in line with stakeholder theory, the normative logic holds that (i) enterprises have a moral duty to ensure the welfare of all their stakeholders, not only that of stockholders; (ii) by acting in a socially responsible manner toward all their stakeholders, firms can enhance their performance and gain business advantage through more mo­tiv­ ated employees, loyal customers, innovative products and processes, improved reputation, as well as supportive communities (Harrison et al., 2019) 3. The logic of service. Although service is one of the key tenets of design, in the traditional logics of organization design, service is not con­sidered as a dimension. Traditional wisdom advises, instead, that or­gan­iza­tion design should be guided by a logic of markets and price mechanisms. However, according to the new service-dominant view, service precedes the market as the foundation of economic exchange and all businesses are service businesses (Vargo & Lusch,  2004;  2008). Thus, without neglecting the role of the market, it is posited that service comes before considerations of demand and supply and therefore service should be considered as one of the logics of organization design 4. The logic of effectual reasoning. In design theory, the design process starts with the expression of desiderata, to mean a hope, a wish, an ambition, an aspiration, a call, or a will towards something. In management lingo, this is equivalent to effectuation, an alternative to the paradigm of causation or business planning (Sarasvathi, 2001). Thus, unlike conventional wisdom in organization studies, in designing or­gan­iza­ tions with an effectual logic, goals and objectives are not in place when the design process begins, making action become fundamentally exploratory in nature, rather than exploitative 5. The logic of interactive structure. One of the consequences of the exponential rise in interactivity in organizations is that the traditional hierarchy is beginning to look more and more like a heterarchy. It can be said that hierarchy represents the formal side of the organization, while heterarchy refers partly to the informal organization and partly to the formal structure. While heterarchy creates more room for improvization and creativity, hierarchy will continue to play a role in maintain a degree of stability in rules and procedures. Thus, the logic of inter­active structure deals with ensuring an appropriate balance between connect-and-communicate (heterarchy) and command-andcontrol (hierarchy).

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Introduction  15

The Processes Organization design logics influence, through the actions of the or­gan­iza­ tion’s staff, including its management, the processes behind the production of all organizational artefacts. Once created, organizational artefacts join the organization’s historical legacy of artefacts which determine most of what the organization accomplishes in terms of its results. In parallel, new artefacts and modified existing artefacts are always in the process of being developed. The first group constitutes organization design as a noun, and the latter organization design as a verb. Organization design as a noun forms the basis of the so-called organization as social actor, an intellectual position that attributes intentionality and self-governance to organizations (King et al., 2010). So, there is constant interplay between the two meanings of organization design—noun and verb—and the concept of organization as social actor (noun) might be metaphorically explained as a snapshot of the designing process (verb) as perceived by internal and external stakeholders, as and when they come into contact with the organization and form judgements about what they see and hear. By external stakeholders we mean anybody interested in the workings of the organization, including media reporters, government officials, or organizational researchers collecting data for a case study. Organization designing, on the other hand, denotes the processes behind the organization’s growth and development. Hence, the crux of the problem of managing the organization’s design is in the bridging between the two modes: organization design as historical legacy (design-as-is) and or­gan­iza­tion design as dynamic change (design-to-be). In Chapter 4 we propose two bridging methods: formative affectual contexts originally proposed by Ciborra & Lanzara (1990) and the design trace. Ciborra (1996) explains that a formative context is a construct made up of pre-existing institutional arrangements and cognitive frames that actors routinely bring and enact in situations of action. It sets up the background conditions for action, shaping the way people perceive, understand, perform, and get organized in situations bounded in space and time. However, we argue, formative contexts are more than purely sense-making cognitive frames, in the traditional sense. Supported by enactive cognition theory (Colombetti, 2017; Di Paolo & Thompson, 2014), formative contexts are also affectual. The notion of design trace is detailed in Chapter 8 (interactive structure) as the bridging mechanism also operating between formal and informal organization, which are roughly equivalent concepts to the notions of

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16  Designing Organization Design

intended and emergent design. Interactional design traces are defined as ‘the results of previous interactions that reside outside the interaction situation, for example as changes in the states of participants or the organizational environment’ (Soderstrom & Weber, 2019: 11).

Leaderful Organization Design The affectual dimension of formative contexts has important consequences for a human-centred understanding of organization design. Going back to our earlier statement about the neglect of the issue of organizational change in the design thinking movement, it is our belief that this gap needs to be filled by a more serious consideration of the role of leadership in or­gan­iza­ tion designing. In the field of leadership there is increasing recognition that middle and lower level employees also engage in leadership practices and that such practices are distributed far and wide in the organization. Among academics there is growing interest in the notion of ‘leadership-as-practice’ and in capturing the way practice is evoked ‘everyday’ and ‘in the moment’ by practitioners (Carroll et al., 2008: 367). Raelin (2011) further argues that leadership-as-practice should not take an agnostic or value-free approach but should instead embrace a stance committed to democratic values. We concur that it is not possible to talk about a practice ontology without privileging values or principles and find that democratic values are wholly in line with the design principles espoused by many design scholars. Thus, we have coined the expression leaderful organization design to characterize the leadership action that is required, if any significant change is to come about. Leaderful organization design is consistent with democratic leadership, conforms to the principles of leadership-as-practice and is enacted through formative affectual contexts.

The Rest of the Book In Chapter 1, we present an overview (but not a review) of the literature on organization design, running though the major themes of the topic, such as contingency and configuration, the Simonian tradition in or­ gan­ iza­ tion design, institutional organization design, cognitive, situated, and generative approaches, as well as systemic approaches from business economics. The chapter ends with a section dedicated to the future, where it is argued that organizations owe their existence, primarily, to the work of entrepreneurs

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Introduction  17

and  managers and that throughout their life they depend, in one way or another, on entrepreneurial and/or managerial choice and action. Thus, it is proposed that organization design should be taken back to basics in terms of the centrality of managerial action, but with a new twist. In line with a human-centric view of design, it is posited that in the processes of making and taking meaning, designing must be seen as a managerial responsibility, distinct from managing or strategizing. In Chapter 2 we discuss two epistemological positions—design-as-meaning and design-as-practice—as being broadly supportive of a design-oriented approach to organization design. Assuming that the postulates of practice theory are predicated on the intersubjective understanding between interacting agents, in this chapter we submit Davidson’s (2001) triangular theory of meaning as a connecting framework between the two positions. Furthermore, we propose that Davidson’s three categories of meaning—objective, subjective, and intersubjective—can be metaphorically adapted and be made to fit three levels of meaning-making in organizations: man­ageri­al­ly generated, organizationally generated, and stakeholder-generated, to include internal and external stakeholders. Chapter 3 deals with ontology. The suggestion is that the ontology of organization design can be traced to processes of knowledge-qua-design development in the natural evolution and growth of the organization. The expression knowledge-qua-design is used to mean that once design is defined as the creation of meaning, many of the models and theories of organizational knowledge and learning apply to organization design, given that knowledge and learning in organizations are also heavily dependent on meaning and meaning formation. Three key intermeshed categories of designing or knowledge-qua-design development are put forward—intended, emergent, and perceived—each contributing to the overall design of the organization. Chapter 4 deals with the problem of the bridging between the two modes of organization design, that is, organization design as historical legacy and organization design as dynamic change. The key contribution, as described above, is in the articulation of formative affectual contexts as the bridging mechanism. Chapter 5 describes the research process that leads to the identification of a new articulation of organization design logics, accommodating principles of design and especially principles of HCD. On the other hand, the new organization design logics are also consistent with contemporary concerns of entrepreneurs and managers, as reflected in the relevant literature. The outcome is a set of five logics which are already having an influence on the way that organizations are designed and governed. The new logics constitute

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18  Designing Organization Design

one of the original contributions of this book, with the suggestion that in the future they will form the basis for a shift in our thinking about organization design. Chapters 6 to 8 deal with the logics of organization design, as succinctly described above and Chapter 9 explores the notion of leaderful organization design. The book ends with a Conclusion, where concrete proposals are put forward for the education of management professionals regarding the adoption of a new design-inspired discourse for organization design.

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1 From the Design of Structures to the Designing of Organizations Past Trends and Future Directions

Introduction The history of organization design has been long and winding, only matched by the history of the concept of organization itself. Modern interest in or­gan­iza­tion design can be traced to the writings of Max Weber (1947), and the emergence of the bureaucratic form of organization, in providing a merit-based system for society as an essential component of modern democracy. This was followed up in the corporate world by the work of Sloan (1963) at General Motors, who introduced the notion of the divisional structure, as well as the management processes required by such a structural model, including how performance should be measured, and how managers could be rewarded for improving performance. Sloan used a logic of ‘form follows function’, to mean that the structure of an organization (i.e. its command and control) should follow its functions (i.e. its aims and objectives). Organizations whose structures are well-suited to their functioning are those that have the best fit between their design and the contingencies that surround them. Although ‘form follows function’ is a 19th-century design principle and the original writings of Weber date back to the beginning of the 20th century, organization design is still umbilically tied to those beginnings and has not moved onto the internet age. Also, perhaps due to its proximity to economics, organization design has always been perceived as a macro-level issue, defined by means of macro-level concepts such as ‘goal’, ‘social’, or ‘system’. For example, March & Simon (1958) define organizations as systems of coordinated action, while for Katz & Kahn (1978) organizations are social systems consisting of patterned activities. For Scott (2003), organizations are highly formalized social structures and for Daft (2009) organizations

Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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20  Designing Organization Design

are goal-directed social entities. Although highly instrumental in theory building, the macro-level approach has created a paradigm which treats organizations as abstract entities wholly detached from the lower level of interactions, practices, and emotions among people. However, since the early years there has been a persistent message of dissatisfaction with the prevailing organizational paradigm. As early as the 1970s, Pondy & Mitroff (1979) highlighted their concern about the low regard for the role of humans in organizational research. They state: Organization theories seem to have forgotten that they are dealing with human organizations, not merely disembodied structures in which individuals play either the role of ‘in-place metering devices’ ( . . . ) designed to register various abstract organizational properties (e.g., complexity, formalization, etc.), or the role of “passive carriers” of cultural values and skills.  (p. 17)

These authors vehemently urge organizational researchers to take into account the capacity that people have for self-awareness, for the use of language, and for learning from their experience. But, despite many other similar calls over the last forty years, the discipline has still not succeeded in flouting the prevailing model and making organization theory more human-centred. In the design discipline, Krippendorff (2006) makes a very similar argument. He contends that his discipline has been hijacked by the rationalist epistemology of problem-solving, and that design as a process cannot be conceived of while leaving out the meaning-making capabilities of the human beings affected by the designs or designing activities. The evolution of organization design as a field of organization theory, which we trace in this chapter, shows precisely the same tensions between positivist and human-centred sensitivities. With no ambition of being exhaustive or comprehensive, we suggest an evolutionary path which starts with the all-powerful contingency theory, explores a variety of other schools of thought, some complementary some opposed to contingency and ends up with a proposal for the future of the discipline. Given that within its traditional domain, that is, organization theory, organization design does not seem to be flourishing, we propose it should change its alliance and go back to its roots, both in terms of etymology and in terms of content. Organizations are designed by the people who inhabit them, with a special role for the managers and/or the entrepreneurs.

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Past Trends and Future Directions  21

The chapter ends with the proposal for the future. Organizations owe their existence, primarily, to the work of managers and entrepreneurs and throughout their life they depend, in one way or another, on managerial choice and managerial action. In many ways, this proposal takes organization design back to basics and highlights the teachings of pi­on­eers such Barnard and Selznick, in terms of the centrality of managerial action, but with a new twist. In line with a human-centric view of design, we posit that organizations are designed by means of a permanent effort to create and shape the meanings of everything that goes in and everything that comes out. But our proposal also invites a turn in organization design thinking, from one of agnosticism to one of commitment and involvement in societal change.

Contingency and Configuration Contingencies are facts of organizational life, that is, they are events or circumstances that organizations have to deal with, and which managers cannot avoid. The key contingencies of organization design have been the organization’s environment, its technology, and its size. The intellectual stance underpinning the research into design contingencies is positivist in nature, meaning that the research projects are aimed at finding cause-andeffect relationships between contingencies and various aspects of or­gan­iza­ tion­al performance (Clegg et al.,  2005). The final aspiration would be to establish general testable theories about the behaviour and the structure of organizations which would enhance the firm’s chances of survival and maximize its performance. At the roots of the contingency movement, there is the pioneering work from a group of British researchers, with Burns & Stalker (1961) as the front runners. These authors offered an important contribution, through the sem­inal distinction between mechanistic versus organic structural modes, the contingency argument being, as in most cases, environmental and task uncertainty. The mechanistic organization performs well under conditions of certainty, while the organic is better when the organization is faced by high levels of uncertainty. Woodward (1965) established a positive cor­rel­ ation between types of production technology and organizational structure, while the Aston researchers Pugh & Hickson (1976) concluded that or­gan­ iza­tion­al size was the key independent variable in organization design.

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22  Designing Organization Design

Researchers from the Aston group put forward that organization structure varies according to five dimensions drawn from Weber’s initial list of fifteen (Clegg et al., 2005): • Specialization: the extent to which an organizational structure contains highly specialized job descriptions and designs • Standardization: the extent to which an organizational structure depends on procedures and manuals • Formalization: the extent to which an organizational structure is supported by formal agreements and contracts • Centralization: the extent to which decision-making depends on the apex of the organization • Configuration: the shape of authority as a system of roles and relationships. According to the contingency approach, organization design is essentially the result of the organization’s response to its environments, in terms of its structure (Lawrence & Lorsch, 1967; Thompson, 1967). Contingency theory offers a conceptual framework on which to hang the analysis of or­gan­iza­ tion­al forms. The key hypothesis is that organizations featuring forms that fit their environmental contexts will perform better than organizations whose form fit their environment less adequately. Lawrence & Lorsch (1967) argued that organizational forms needed to accommodate both the requirements for differentiation across organizational units and for integration among the same units. The finding of their research was that the greater the en­vir­on­ men­tal uncertainty in markets and technologies, the greater the extent of internal differentiation. Greater differentiation, in turn, requires more integration. Thompson’s (1967) work became known for its analysis of or­gan­iza­tion design strategies, also under conditions of environmental uncertainty and heterogeneity. Thus, contingency and configuration are two sides of the same coin. As explained by Snow et al. (2006): on one hand, the organization is conceptualized as a system or configuration of key internal components, but on the other hand, the ‘right’ configuration dependents on the quality of the in­tern­al alignment of the organization’s components as well as the external fit between the organization and its environment (i.e. strategy-structure-environment fit or congruence). The literature of configuration or organizational forms has its origins in the seminal paper by Mintzberg (1980) ‘Structure in 5’s’, where it is argued that five natural configurations fit the different situations and the variety of tasks that organizations have to face, that is: (1) the simple

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Past Trends and Future Directions  23

structure; (2) the machine bureaucracy; (3) the professional bureaucracy; (4) the divisionalized form; and (5) the adhocracy. Following from this work, the main focus of the literature on or­gan­iza­ tion­al forms has been the typology and the taxonomy of organizations, in some cases influenced by evolutionary theory. Organizational form refers to the features of an organization which ‘identify it as a distinct entity and at the same time classify it as a member of a group of similar organizations’ (Romanelli, 1991: 82). Some of the features which have been singled out as being behind the key configurations are strategy, structure, and the en­vir­on­ ment, interacting to form common gestalts or archetypes (Miller, 1987). Another type of categorization of organizational configuration is the U, M, and I organization forms (Miles et al., 2009). The U-form (standing for ‘unitary’) is associated with the vertically integrated, centrally planned or­gan­iza­ tions that flourished in period of the late 1800s and early 1900s. Industries, such as railroads and steel, created business models based on the large-scale production of standard goods, the best example of which is the Ford Model T. The M-form (standing for ‘multi’-division) is representative of the economic era, mainly in the US, where companies tried to move beyond simple market penetration with standard products to more sophisticated market segmentation aimed at satisfying the needs of specific groups of customers. Companies were organized in semi-autonomous divisions using common pools of resources for financial, human resources, or research and development (R&D) management. Finally, there is the so-called I-form (standing for ‘innovation’), where the need for agile organizations to respond to fast changing business environments has become the dominant force. Hierarchy starts to give way to knowledge sharing, trust-based relationships and collaborative skills and the role of management changes from command-andcontrol to facilitation and support. Such evolutionary views of organizational form tend to be deterministic in the sense that they mostly ignore the role of social agency and managerial choice. In response to this criticism, Miller (1996) suggests a different approach to configuration, whereby organization form is viewed as a quality or property that establishes differences among organizations. One type of property which does differentiate organizations in terms of their con­fig­ur­ation is the internal knowledge gained by the firm from interacting with its environments. Reasoning along these lines, Van de Ven & Garud (1989) put forward an interpretation of organization form as the result of the cumulative interaction of entrepreneurial action and of organizational outcomes in the pursuit of new business opportunities. This type of social constructionist approach indicates that rather than being imposed by environmental forces or by

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24  Designing Organization Design

genetic characteristics, as suggested by the evolutionary school of thought, organizational forms emerge from socially constructed op­por­tun­ities which, in turn, are the cause for new environmental niches to emerge and develop. Another paper contributing to a turn in the configuration movement from the disembodied notions of contingency and structure to the recognition that organization design is fundamentally about people and relationships, is the one authored by Fjeldstad et al. (2012). In this article, the authors liken organization design to an architecture of collaboration and claim that such an architecture is an actor-oriented scheme. The article explains that the actor-oriented scheme represents a change from expressing organization configuration as a set of organizational structures to expressing it as a set of ‘principles by which actors engage in organizational relationships’ (2012: 745). Drawing on well-established principles of object-oriented computer systems, but providing scant details about other intellectual foundations of such a scheme, the paper does succeed in shifting the discussion away from structures and opening up to the way for organization design to be understood as something reliant on interactions. Although the configurational approach is still found in mainstream journals and books, the field has experienced a small amount of development since the 1980s (Snow et al., 2006). One of the reasons for this state of affairs is the neglect of the informal side of the organization and the misguided belief that managing the formal organization is the same as managing the organization’s design. McEvily et al. (2014) provide the following insights: The well-established research tradition on fit tends to overlook how the informal elements of organizations and the emergent organizational responses affect the ability of firms to adapt quickly to external and internal contingencies. As a result, studies on organizational configurations—that is, mechanist vs. organic, highly differentiated (functional) or highly integrated (team based)—and their fit with internal and external contingencies, provide a partial and potentially spurious account of organizational outcomes ( . . . ) neglecting the role of emergent patters of interactions in the design of organizations is a consequence of the reductionist logic of some organizational theories, particularly structural contingency theory. (pp. 309‒10)

Another reasons for the poor performance of the contingency-con­fig­ur­ational approach to organization design is the ambiguity and the poor understanding of the concept of ‘design’ in the organization studies literature. Although the concept can be used as a noun and a verb, the emphasis has been on the former,

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with the elusive and fruitless chase after the magic bullet, in the form of the right fit or the ideal configuration. Furthermore, for many authors, especially those subscribing to the rationality of the design method inspired on Simon’s (1996) writings, the word design implies ‘mastery of cause and effect’, ‘sharp edges’, and an image of feedback and control, where buttons can be pushed, and precise outcomes can be expected (Kimberly, 1984). However, ‘the mere imposition of certain imagery on a set of phenomena is no guarantee that the result will be illuminating. Inappropriate imagery can confuse rather than clarify’ (Kimberly,  1984: 118). In response, the point has often made that designing is a much more accurate depiction of the activities akin to the formation, development, or fine-tuning of organizations, expected from organization design (Weick, 1995). In spite of the criticism, contingency theory persists and still commands considerable influence in the field. In one of the latest comprehensive reviews, Van de Ven et al. (2013) urge scholars to return to that research frontier of ‘scientific enquiry’ (p. 396), however taking more caution in applying ‘reductionist research methods’ (p. 396) than in the past, while keeping in mind that ‘organization design entails a normative strategy, although a positive approach is often needed to assess the effectiveness of this strategy’ (p. 398).

The Simonian Influences in Organization Design Simon (1996) proposed the introduction of a new field of study distinct from the natural sciences and the social sciences, a field applicable to professional schools of thought, such as medicine, engineering, or management. He called it ‘science of design’, a ‘body of intellectually tough, analytic, partly formalizable, partly empirical, teachable doctrine about the design process’ (p. 113). As the cornerstone of this new theory of design, Simon advocated the solution of ‘design problems’. A solution is given in the form of a com­bin­ation of values qualifying a set of key variables, representing the artefact under study in its own environment. The design method amounted to finding a solution to a given constraint, sometimes including the maximization of an ‘objective function’. Although very popular among the engineering and management science communities, Simon’s decision-making model now begins to be questioned as a method for approaching problems in the real world of people and or­gan­ iza­tions. The underlying assumption that a design problem can be specified with a high degree of completeness prior to the ‘search for solutions’ seems

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far-fetched to many people, who believe that design problem and design solution necessarily ‘co-evolve’. Thus, in spite of the benefits that formal methods offer in specialized contexts (e.g. layout and routing of integrated circuits), many a researcher express the view that Simon’s idea of a new general ‘science of design’ along the lines explained above, is ‘a dead end’ (Galle, 2011: 84). Notwithstanding the criticism about that particular formulation of the design method, Simon’s other work offers some important contribution to organization design. In The Sciences of the Artificial, Simon (1996) talks about the managerial task of ‘configuring organizations’ (p. 154), as well as the issue of designing without final goals. The issue of designing without final goals arises in the design of all social organizations, where the design process is very restricted by the inability of the designers to represent the design problem or to predict the future. In such cases, it is asserted that ‘the success of planning of such a scale may call for modesty and restraint in setting the design objectives and drastic simplification of the real-world situation in representing it for purposes of the design process’ (p. 141). This leads Simon to conclude that in designing social organizations, the representation of the design problem often has to rely on qualitative descriptions that allow good functional reasoning, but it has to be recognized that the design process is carried out without final goals, a foundation diametrically opposed to the aims of the strategic planning paradigm.

The ‘Design’ School of Strategic Thought and the Critique of Strategic Planning Most management writers consider that the book Strategy and Structure: Chapters in the History of the American Enterprise by Alfred Chandler’s (1962) marks the birth of strategy as a field of management studies. In this work, Chandler explains that the planning and implementation of the growth ambitions of enterprises are part of the concerns of strategy, while the or­gan­ iza­tion required to administer such enlarged activities and resources makes up the structure. He claimed that structure ‘can be defined as the design of organization through which the enterprise is administered’ and went on to enunciate the principle of ‘structure follows strategy’ (p. 13). With this principle, which has remained one of the axioms of mainstream management thinking to the present day, Chandler placed strategy at the pinnacle of managerial decision-making, leaving the organization and its design (i.e. the structure) to fulfil a secondary role as the follower of strategy.

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Chandler’s work was followed up by Ansoff ’s (1965) Corporate Strategy and with the support of Harvard Business School, the strategic planning school of thought was launched. Although not specifically geared towards organizational design, strategic planning has been a major influence in managerial thinking. However, not without controversy. Throughout the 1980s and 1990s, Mintzberg was the scholar who provided the best and liveliest opposition to the strategic planning school. He started off by providing the insightful notions of emerging strategy (Mintzberg et al., 1985) and crafting strategy (Mintzberg, 1987), followed by an all-out critique with the notion of the ‘design’ school of strategic thought (Mintzberg, 1990). Inspired by Simon’s conception of the design method, Mintzberg suggests that the process of strategy formulation pioneered by Harvard is something akin to a problemsolving exercise comprising three steps. The first step is the evalu­ation of the company’s external threats and opportunities, as well as its in­tern­al strengths and weaknesses; the second step is the formulation of strategy alternatives; and the third is the choice of the company’s strategy. The critique revolves around two central themes: first, the idea that thought can be developed independent of action, represented in the notions of strategy formulation and strategy implementation as two independent steps. This separation is futile, and can be compared, says Mintzberg, with learning how to walk by teaching the right leg first, and then the left. On the other hand, this separation assumes that it is possible to have a good grasp of the environments throughout the entire implementation period, which is clearly a fanciful idea. Second, the detached assessment of strengths and weaknesses done internally by the company itself is always bound up with aspirations, biases, and hopes, of internal stakeholders, making it an unreliable method. The critique gave rise to a response by Ansoff (1991) and a counterresponse by Mintzberg (1991). The debate was later put to rest by Mintzberg’s Harvard Business Review article ‘The Fall and Rise of Strategic Planning’ (1994a), with the assertions that ‘strategic planning’ has been misnamed and that the expression is indeed an oxymoron (1994b). Mintzberg argued that the purpose of plans is to set organizations on a course of action and in doing so, they promote inflexibility. While plans commit organizations, they do not engender human commitment and no amount of elaboration will ever create novel strategies or motivate detached managers. Thus, strategy cannot be planned because planning is about analysis and strategy is about synthesis. Plans not only provide no strategies, but they do not exist without strategies. Mintzberg’s critique continues to be influential and although not directly related to organization design theory, it has been instrumental in raising

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awareness about the fact that any type of planning in organizations can very quickly become detached from the reality on the ground. This has been ­echoed by the work of sociologist Lucy Suchman (1987), where a strong case has been made for the situated nature of organizing vis-à vis the static quality of planning.

Organization Design as Information Processing Simon’s (1947) decision-making theory has also behind the so-called the information processing school of thought in organization design, where the organization is modelled as an information processing machine. This school of thought also has roots in Chandler’s (1962) definition of organization design as the lines of authority and communication between different departments as well as the data that flows through such lines. Following such leads, Galbraith (1973) championed this approach based on the premise that most work in organizations involves information processing. Individuals talk, read, write, calculate, analyse, and synthesize information in fulfilling their assigned tasks. The design of the organization also contains a variety of artefacts such as pens, calculators, and computers but also hierarchical structures, rules, and procedures used to facilitate these information processing activities. Therefore, the choice, the configuration, and the situated trans­form­ation of all these artefacts and work tasks constitute the design of the organization. Galbraith’s (1973) formulation of information processing theory stands on the principle that each organization should ‘adopt a strategy to either reduce the information necessary to coordinate its activities or increase its capacity to process more information’ (p. 14). Thus, the dichotomy uncertainty versus information forms the intellectual backdrop of the theory, that is, the greater the task uncertainty the greater the amount of information needed to be processed. Several authors, such as Nadler & Tushman (1997) or Simons (2005), have developed Galbraith’s model, where organization design is defined as the final result of the adoption and implementation of a series of management control policies, systems, and procedures. However, we find a few problems with the formulation of organization design, according to the information processing school of thought. First, we do not share the view that the totality of the organization’s design can be  explained by one variable and a single causal factor (i.e. information). Second, we are of the opinion that the flows of information in the or­gan­iza­ tion cannot be singled out as the independent variable, given such flows are

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simultaneously the cause and the consequence of the organization’s design. Third, the notion of information handling (which includes information processing) has changed dramatically in the last few years, after social media has invaded all corners of organizational life, affecting not only internal information flows but also many of the flows between the organization and its en­vir­on­ment. Therefore, in view of the extreme volatility of information, information flows can no longer be predicted with any accuracy, either in relation to contents or in relation to intensity or other quantitative measures. The other contribution originating from Galbraith’s model is the so-called Star Model (Kates & Galbraith, 2007), a five-point framework aimed at guiding organization design in practice and widely used by the management consulting community. The model is founded upon theoretical propositions such as contingency, complementarity and complexity, and relies on inputs from the organization’s decision-making process, as is explained in the following excerpt: Thinking of organization design choices as complementary systems also has implications for the organization design process. While each point on the star in the model represents many choices, they are not as unlimited, and thus not as overwhelming, as they first seem. Once the strategy is set, there are then sets of complementary options available to support that strategy.  (2007: 4)

Thus, the main driver of the Star Model is the organization’s strategy, that is, the organization’s ‘formula for success’, to use Galbraith’s own expression. This presents, in our view, a major limitation of the framework. The heavy reliance on an input that typically comes the organization’s dominant coalition and is often enslaved by habit and traditional frames of reference seems a highly risky choice. If there are problems with the strategy, then the entire model will be flawed. Although not often cited in the research literature, this framework provides an important contribution in drawing attention to the systemic nature of organization design and the interconnected quality of its component parts.

Institutional Organization Design The institutional school of organization design emerges as a reaction against the tenets of the contingency approach. It proposes that rather than being determined by business environments, organizational structures are strongly

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influenced by institutional environments. Meyer & Rowan (1977: 343) assert that organizations face ‘powerful institutional rules’ that define appropriate or ‘legitimate’ forms of organizing and force organizations to adopt very similar structural arrangements. The common theme of institutional theory is that organizations operate within institutional contexts, whose norms, beliefs, and expectations are adopted, perhaps subconsciously, by managers and entrepreneurs. This leads organizations to ‘imitate’ each other, often with little or no focus on efficiency. DiMaggio & Powell (1983) observed that organization in the same field of activity exhibit ‘startling homogeneity’ in terms of their design and defined the notion of organizational field as ‘those organizations that, in the aggregate, constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products’ (p. 148). These authors specified isomorphic processes that lead to homogeneity among organizations as the organizational field evolves. One of the key concepts created by institutional theory is the concept of ‘institutional logics’ defined as ‘the socially constructed, historical patterns of material practices, assumptions, values, beliefs, and rules by which in­di­vid­ uals produce and reproduce their material subsistence, organize time and space, and provide meaning to their social reality’ (Thornton & Ocasio, 1999, quoted in Thornton & Ocasio, 2008: 101). Although not used in traditional organization design research, the concept of institutional logics fits a more holistic perspective on organization design and is an adequate tool for tackling questions such as why particular organizations are designed in certain ways.

Cognitive, Situated, and Generative Approaches Johnston & Brennan (1996) have suggested a distinction between planning and situated models of management. In the planning model, organization design means planning first and implementing next, whereas in the situated model organizations are never finally designed but are always in a continuous process of being designed. The key distinctions between these two views of management lie in the conception of the agent who carries out activities in the organization. In the planning model, the agent is devised as an abstract entity not dealing directly with situations presented to the organization by the environment, but with symbolic representations of it. In the situated

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model the agent is a real person, fully embedded in the world, engaging directly with the surrounding environment. The situated model has served as the basis for a school of thought that features a strong cognitive bias and clearly distances itself from the contingency movement. This school of thought emphasizes the interpretive side of organizations and strongly reinforces the point that the organization’s response to the environment is crucially mediated by the interpretations made about the environment by managers and other organizational members (Kiesler & Sproull,  1982; Bartunek,  1984; Daft & Weick,  1984; Lowstedt, 1985; Barley, 1986). The cognitive tendency is evident in Weick & Roberts’ (1993) research based on flight operations in aircraft carriers, where the notion of organization design as a collective mind is put forward: Collective mind exists potentially as a kind of capacity in an ongoing activity stream and emerges in the style with which activities are interrelated ( . . . ) There is nothing mystical about all this. Collective mind is manifest when individuals construct mutually shared fields. The collective mind that emerges during the interrelating of an activity system is more developed and more capable of intelligent action the more heedfully that interrelating is done ( . . . ) We portray col­lect­ ive mind in terms of method rather than content, structuring rather than structure, connecting rather than connections. Interrelations are not given but are constructed and reconstructed continually by individuals.  (p. 365)

Indeed, the idea that organization design is as much a process of designing, as a set of structures, has been around for many years (Kilman et al., 1976), but it was really the work of Weick (1995, 2001) that synthesizes the notion of situated organization as an entity with cognitive properties. Table  1.1 shows the assumptions that lie behind this work. Table 1.1:  Assumptions behind organizational design according to Weick (2001) Planning-Type Assumptions

Situated-Type Assumptions

A design is a blueprint

A design is a recipe

A design is constructed at a single point in time

Designing is continuously reconstructed

Designs produce order through intention

Designs produce order through attention

Design creates planned change

Design codifies unplanned change after the fact

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Generative Organization Design The cognitive school of thought has evolved and in the last three decades it has partially merged with a new wave of research that we have labelled ‘generative organization design’. The label brings together a number of characteristics about organization design, which can be summed up as follows: • Organization design is a holistic (Rindova & Kotha,  2001, Yoo et al., 2006); and virtual process (Ciborra, 1996) • Organization design is a never-ending (Boland et al., 2008, Dunbar et al., 2008, Garud et al.,  2008); and circular (Romme & Endenburg,  2006) process of designing • Organization design is driven by not only technical-structural rules but also generative ones (Garud et al., 2006; Parrish, 2010) • Organization designs possess the ability to shape and even create new environments, rather than being determined by the environment (Sarasvathy et al., 2008). The holistic character of organization design was pointed out by Rindova & Kotha (2001) in suggesting that good designs exhibit dynamic capabilities, allowing the organization to adapt or to morph in line with continuous environmental change. This is complementary to the notion of platform organization, put forward by Ciborra (1996) as a virtual model capable of generating new structures. Based on his study of strategy development at Olivetti, one of the pioneering companies of the computer industry, Ciborra asserts that none of the well-known organizational configuration is ideal for bringing about effectiveness, efficiency, or competitiveness in today’s rapidly changing business environment. The platform is a shapeless model capable of generating new forms and structures through frequent recombination: The platform is far from being a specific organizational structure, where one can recognize a new configuration of authority and communication lines. Rather it is a virtual organizing scheme, collectively shared and reproduced in action.  (1996: 115) It is a model that turns upside down our beliefs about what is structural and permanent as well as what is subjective, informal and ephemeral  (1996: 104)

Furthermore, Ciborra (1996) classifies the platform as a meta-organization, explaining this as a ‘formative context’ rather than a structure. By treating the platform organization as a ‘meta’ issue, the implicit suggestion is that

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organization design theorizing should be carried out at a level different from the traditional notion of physical configuration. A similar idea has also been suggested by Yoo et al. (2006) under the designation of design gestalt. A design gestalt is explained as a virtual ‘generative, form-giving capacity that combines ideas, values, resources, tools and people into ensembles that can create and project remarkable artifacts’ (2006: 228). These authors suggest that instead of thinking of organization design as the causal antecedent for the success of the firm, we should consider organization design as the result of the success of the firm (or a project within the firm). Garud et al. (2008) discuss the notion of ‘pragmatic [organization] design’ as a tool to fuse together the two modes of design – design as a process and design as an outcome. The notion is circular in nature, presenting or­gan­iza­ tion design as a continuous loop of planned decisions which need to be permanently adjusted and adapted to the emergent micro-designs cropping up at the local level. The bridging mechanism between the two design modes is inspired by the ‘design trace’, integral to the design of both Linux and Wikipedia. These authors explain: ‘the design trace both chronicles and initiates generative engagement with an article ( . . . ) it serves as a locus of co­ord­ in­ation as well as a point of departure, allowing an article to remain in a state of perpetual change’ (Garud et al.,  2008: 361). The challenge, of course, is how to convert the technology-enabled trace from Wikipedia to a workable trace applicable to human organizations. Romme (1999) and Romme & Endenburg (2006) have put forward the notion of circular organization design as an extension of the concept of self-determination and based on the case of the Dutch company Endenburg Elektrotechniek. Circularity is defined as the co-existence and integration of hierarchical and self-organizing modes of control as well as the ability to switch in a timely and efficient manner (Romme,  1999). Circular design builds on the notion that any particular organization design arises from the implementation of design rules and construction principles. This approach contains important contributions of a theoretical nature which might be summed up in the following points: • The need to think of organization design in a circular fashion rather than in terms of linear cause-and-effect relations • The importance of an organization design theory which places emphases on a recursive view of action and feedback • The relationship between organization design circularity and or­gan­iza­ tion­al creativity and innovation • The permanence of hierarchy as a key organizing principle.

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Rules and principles are part of the planning imperative which starts off the managerial process of organizational designing, however, when the rules laid down by managerial choice are implemented on the ground, they are subject to individual interpretations and intentions of organizational members. Design intentions are the ways in which ‘actors interpret and represent information and how they select appropriate behaviours and routines for coordinating actions’ (McEvily et al.,  2003: 92). Sarasvathy (2004) asserts that enterprise design is a creative process, mixing novelty with heuristic rules, and that it is heuristic rules, not technical ones, that create possibilities for realizing design intentions. Garud et al. (2006) describe the evolution of the organization’s design at Infosys Technologies in Bangalore, India, and explain that as a result of the application of a number of design rules a new organization design emerged in the form of an organizational platform of resources, capabilities, and strategic/managerial options at Infosys Technologies. The company draws on this emergent platform to perform in real time even as it transforms itself to adapt to changing environments. Similarly, Parrish (2010) claims that generative rules provide a more adaptable basis for reasoning through a variety of context-specific design problems, rather than prescriptive technical-rational design rules. Generative or heuristic rules of action provide a means of codifying the practical and mostly intuitive expertise of successful entrepreneurs, according to that author.

Systemic Approaches from Business Economics A number of approaches, distancing themselves from the contingency trad­ition and sharing the belief that there is no overriding contingency factor determining organizational design, have emerged mainly in the field of organizational economics. McGrath (2006) has identified four post-contingency strands, all sharing a systemic view of the organization. They are: equifinality, complementarity, networks, and co-evolution. Equifinality is a concept coming from systems theory to describe how open systems can proceed from different initial conditions to arrive at a similar end state. Research carried out by Gresov & Drazin (1997) suggests that environmental contingencies strongly influence the function(s) which the organization must possess but do not determine its specific structure. A function can be achieved by several different types of structural arrangement. For example, an or­gan­iza­tion faced with decreasing productivity might respond in a number of different ways, such as expanding to alternative markets, cutting down on staffing levels, or investing in new technology. The key insight of equifinality for organization

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design is that theory should focus not on inputs (such as structural arrangements) but on outputs which reflect the design’s effectiveness at producing the ‘required functionality’ (McGrath, 2006: 584). The idea of complementarity, also consistent with basic notions of systems theory, builds on earlier statements in organization design indicating that organizational configurations should be treated as wholes rather than collections of parts. The key proposals come from the research by Milgrom & Roberts (1995) which showed that economically it makes sense for design to leverage interdependencies between organizational elements, rather than to deal with individual elements separately. The main practical lesson from this school of thought is that when reconfiguring the organization’s design, tin­ker­ing with only parts of the structure is usually a serious mistake. Restructuring must embrace not only the vertical organization but also the horizontal structure and the flow of work. As with the cases of complementarity and equifinality, research into networks has a clear systemic flavour. Writers such as Garud & Kumaraswamy (1993) or Uzzi (1996) have shown that firms tackle environmental contingencies not by changing internal structures but by creating networks of links outside the firm. The key insight of this school of thought is that if com­pan­ ies are resorting to networks of alliances or joint ventures to face competitive challenges, it becomes very difficult to talk of design contingencies. However, the key trend of network research comes from the work of Granovetter (1985, 1992) on social networks and social embeddedness. Granovetter (1992) states that social embeddedness, in the form of networks of interpersonal relationships, runs through all economic exchange—‘economic action and outcomes, like all social action and outcomes, are affected by actors’ (pair wise) relations and ‘by the structure of the overall network of relations’ (p. 33). The ubiquity of such embeddedness explains much of the economic order (or lack of it) that emerges in both markets and firms. Nahapiet & Ghoshal (1998) revisited Granovetter’s work and suggested two different types of embeddedness: structural and relational. Structural embeddedness is defined as ‘the impersonal configuration of linkages between people or units’ (p. 244), to include structural features such as connectivity, centrality, and hierarchy. In contrast with the ‘impersonal’ nature of structural embeddedness, relational embeddedness is defined as the ‘personal relationships people have developed with each other through a history of interactions’ (p. 244). Key facets of relational embeddedness include interpersonal trust and trustworthiness, overlapping identities, and feelings of closeness or interpersonal solidarity. Finally, co-evolution research asserts the notion that it is not only the environment that shapes organizational design, but it is also the

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or­ gan­ iza­ tion’s functioning that shapes its own environment (Lewin & Volberda, 1999; Lewin et al., 1999). This research has concluded that rather than being concerned with how best to change organization design, firms should concentrate on changing the context in which they compete. Co-evolution presupposes the unplanned emergence of new structures and, once again, this brings into question the contingency hypothesis. If causality no longer holds, the utility of design based on a particular contingency is lost or becomes doubtful, at best. Synthesizing much of this research, and with roots in organizational economics, Grandori has been one of the most active authors in the post-contingency era of organization design. Grandori & Soda (2006) propose a relational approach, where the relational adjective refers to relations between organizational components—resources, activities, and actors—in a ‘quasi-continuous space of possibilities’. Relying heavily on the notion of complementarity (Milgrom & Roberts, 1995), Grandori & Furnari (2008) propose a ‘chemistry of or­gan­iza­tion’, where, like in the science of chemistry, elements are, purportedly, combined to produce ideal compounds or configurations. Complementarity builds on the notion that in designing organizations interdependencies between organizational elements ought to be leveraged, rather than dealt with as individual elements separately. Furthermore, Grandori & Furnari suggest a set of combinatory laws based on the notion that organizational systems are assumed to behave like natural systems insofar as both need the right combination of elements to function at a satisfactory level of per­form­ance. For example, just as natural systems need some basic levels of iron and carbon to function, an organizational system would need a combination of incentives, formal rules, and material resources in order to deliver an acceptable outcome. The organization design elements are as follows: • Communitarian, including knowledge creation, as well as a common culture, infusing identity, cohesion, and homogenization of judgements and interests • Bureaucratic, comprising formal rules and plans, as well as specialized division of labour, infusing predictability, transparency, and accountability • Market-like, comprising price-like and other market-led devices, infusing incentives for action, as well as coordination capacity with minimal communication • Democratic, include diffusion of ownership elements, as well as decision and representation rights, infusing notions of fairness, and the right to voice opinions.

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Although moving away from the idea of cause-and-effect between en­vir­ on­men­tal contingencies and ideal organizational forms, Grandori and colleagues are still looking for ‘superior’ configurations, through combinations of elements or components. Moreover, the suggestion that ‘organizational solutions’ are obtained from combinations of elements, following technical rules similar to those used to obtain chemical compounds, is rather farfetched. However, in highlighting the aim of organization design as one of  ‘fine-tuning of organizational arrangements to specific combinations of resources and activities’ Grandori & Soda (2006: 168) seems to be ac­know­ ledg­ing that the ‘optimum’ design is an elusive objective. Indeed, the research by Grandori and colleagues does provide some important contributions to the literature, namely the suggestion that organization design might be parsed into a number of elements, linked together in complementary ways (Grandori & Furnari,  2008). The notion of organizational design elements has been further defined as ‘bundles of discrete practices that are linked to each other in terms of relations of, more or less, binding complementarity’ (Foss, 2014: 17). In a nutshell, the systemic approaches from business economics cannot be said to be a unified school of thought or to present a common front, as regards organization design. However, it is a distinct approach, sharing some features with the contingency and information processing views, on one hand, and the situated and generative perspectives, on the other hand. Table 1.2 shows a summary of the main schools of thought discussed so far, with a caveat about the comprehensiveness of its coverage. The purpose of the table is to provide an impressionistic, rather than a detailed, view of the trends. In terms of ontological focus, situated and generative approaches diverge profoundly from the contingency orthodoxy. For the former, organization designs are imposed by environmental constraints, whereas for the latter, to organization design being changed from within, through the actual behaviour of organizational members. Systemic and complementarity perspectives, on the other hand, favour the perspective of internal organic growth, but eschew the role of human being, considering only the complementarity of ‘elements’ or ‘dimensions’. The situated and generative approaches place a great deal of emphasis on the meaning-making capabilities of members; however, organization design is not only a consequence of member behaviour but is also about the intentional processes of applying the change intentions to the organization as a whole. In organizations, the primary source of intentional change is managerial action, either in the form of formal policies enacted to pursue given projects

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38  Designing Organization Design Table 1.2:  Summary of three groups of perspectives on organization design  

Contingency & Information Processing Views

Situated & Generative Perspectives

Systemic & Complementarity Perspectives

Ontological focus

Environmental conditions

Internal development and organic growth

Complementarity of elements

Scope of design

Organizational structure

Organizational interactions, relationships

Whole organization

Nature of organization

Machine-like

Change and flux

System, relational

Nature of structural rules

Static, technical, rational

Dynamic, generative, heuristic

Technical, rational

Role of humans

No role. Disembodied

Knowledgeable agents

Contributors to complementarity

Research focus

Discrete contingency variables

Interpretation, meaning

Complementarity, co-evolution

or strategies, or in the form of leadership action, resulting from symbolic or direct action by the manager. Managerial action is a powerful driver of organization design, which unfortunately has not been recognized as such in traditional research or practice. However, a human-centric perspective on organization design has the potential to radically change this state of affairs. In the next section, we trace the development of managerial agency as a source of organization design and suggest how it could become the basis of a new design-based approach to organization design.

Towards the Future In this final section, we highlight a number of trends, upon which, we believe, the future of organization design will rest.

Design Thinking In reflecting about the challenges afoot for the way that organizations are designed, Buchanan (2015) observes that design needs to become a regular part of organizational life, through a reform of organizational culture in which ‘design thinking is central’ (p. 17). In the last decade or so, design thinking has become a popular trend in the business management literature, offered

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as a set of methods for introducing more innovation-prone management styles (Martin, 2009). Brown (2008: 84) asserts that ‘thinking like a designer can transform the way you develop products, services, processes and even strategy’ and though it has not been classified as such, design thinking is an organization design tool. However, according to the way it has been presented so far, design thinking is more about the application of the designer’s toolkit to business strategy and to the solution of operational problems. Hassi & Laakso (2011) propose that the concept of design thinking in management discourse consists of three elements: (1) a set of practices, (2) cognitive approaches, and (3) mindsets. These are detailed in Table 1.3. Table 1.3:  Categories of design thinking PRACTICES

COGNITIVE APPROACHES

MIND-SETS

Human-Centred

People-based, user-centred, empathizing, ethnography, observation

Thinking by Doing

Early and fast prototyping, fast learning, rapid iterative development cycles

Visualizing

Visual approach, visualizing intangibles, visual thinking

Combination of Divergent-Convergent Approaches

Ideation, pattern finding, creating multiple alternatives

Collaborative Work Style

Multidisciplinary collaboration, involving many stakeholders, interdisciplinary teams

Abductive Reasoning

The logic of ‘what could be ’, finding new opportunities, urge to create something new, challenge the norm

Reflective Reframing

Rephrasing the problem, going beyond what is obvious to see what lies behind the problem, challenge the given problem

Holistic View

Systems thinking, 360-degree view on the issue

Integrative Thinking

Harmonious balance, creative resolution of tension, finding balance between validity and reliability

Experimental & Explorative

License to explore possibilities, risking failure, failing fast

Ambiguity Tolerant

Allowing for ambiguity, tolerance for ambiguity, comfortable with ambiguity, liquid and open process

Optimistic

Viewing constraints as positive, optimistic attitude, enjoying problem-solving

Future-oriented

Orientation towards the future, vision versus status quo, intuition as a driving force

Source: Adapted from Hassi & Laakso (2011).

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In the academic literature, Johansson-Sköldberg et al. (2013) are of the view that there is no sustained development of the concept of design thinking and indeed, when looking through the most recent academic literature on design thinking the emphasis continues to be on attempts to classify the techniques. For example, Carlgren et al. (2016) propose five categories: (1) user focus, (2) problem framing, (3) vizualization, (4) experimentation, and (5) diversity; while Garbuio et al. (2018) suggest four types of cognitive processes: (1) framing, (2) analogical reasoning, (3) abductive reasoning, and (4) mental simulation. In fact, the literature on design thinking has had difficulty in coming to grips with its epistemological foundations. Garbuio & Lovallo (2015) explain that design thinking is about ‘the cognition, processes, and tools designers use to imagine a desired future’ (quoted in Garbuio et al., 2018: 46), while in Elsbach & Stigliani (2018) design thinking is defined as ‘the use and application of specific design tools rather than the underlying cognitive processes of designers’ (p. 28). However, in one of most recent reviews of the field, Micheli et al. (2019) recognize that organizational design is a ‘necessary condition for successful design thinking, insofar as it necessitates a change in an organization’s culture, structure, and policies’ (p. 145). Kolko (2018: 34) goes to the historic roots of design thinking and takes stock of the views in favour and against the movement. In summing up the current backlash against design thinking by designers and design or­gan­iza­ tions, that author delivers the following verdict: • [Design thinking] takes a thoughtful, complex, iterative, and often messy process and dramatically oversimplifies it in order to make it easily understandable • It trivializes the role of craft and making things, which is fundamental to the process of design • It promotes ‘empathy lite’—as if an empathetic and meaningful connection with people could be forged in hours or even days • It has become a tool of consultancies to sell work, not to drive real impact. Despite a rich and meaningful history and the potential to become a tool for change, design thinking has found itself being labelled as ‘superficial’, ‘failed experiment’, or ‘vapid and empty’. The key argument is that there has been too much emphasis of the “thinking” and not enough emphasis on the “doing” in design thinking (Kolko, 2018). In the language of organization design, what this means is that while design thinking does provide answers to the question of ‘what’ (content), it is not helpful in questions related to questions of ‘how’

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(process). In the field of strategy-as-practice, Whittington (1996: 732) poses a similar question, asking, ‘how managers actually “do” strategy’? Despite the criticism, there are some very positive take-aways from this design-led undertaking. First, as an epistemological proposition, design thinking has important consequences that need to be pursued, however there is a need for more careful research and thoughtful development of theory (Buchanan (2015: 20). Second, design thinking has given a major contribution to the development of a design discourse in organizations and has validated the design profession as ‘real and valuable’ (Kolko,  2018: 34). Last, design thinking has found its way into many schools of business and management, where it is now taught as a course. Together, these points mark an important development and open up the possibility for design to start influencing organization design discourse in a significant manner.

The Manager as the Organizational Designer Among the early criticism of the contingency approach, there is a school of thought that states that contingency neglects the role of managerial agency, as well as the political processes in which key power players engage when making strategic choices about the firm’s design. According to the main proponent of this school of thought (Child, 1972, 1997), contingency factors cannot be considered independent and exogenous, but must be seen as factors very much under the influence of management, which includes the firm’s dominant coalition. Thus, managers are in a position to configure the organization’s structure in response to strategic needs and it is the or­gan­iza­tion’s dominant coalition, who decides about the organization’s long-term goals and structural preferences. Indeed, strategic choice marks a departure in relation to contingency theory and counts as a more powerful influence on the organization’s design, since management can decide, to a large extent, the environmental conditions under which they wish to operate. Strategic choice is part of a wider trend of management writing in­aug­ur­ ated by Chester Barnard (1938), which places the manager at the centre of organization design. Barnard starts off by emphasizing that the purpose of an organization is not to make a profit but to provide goods and services in society. He says: The possibility of profits and their realization in some degree are necessary in some economies as conditions under which a continuing supply of [financial]

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42  Designing Organization Design incentive is possible, but the objective purpose of no organization is profit, but services.  (p. 154, footnote)

Importantly, Barnard highlights the role of the manager in creating effective cooperation systems as the basis of any organization. He defines formal organization as the ‘kind of cooperation among men that is conscious, deliberate, and purposeful’ (1938: 4) and explains that the ‘vitality’ of the or­gan­ iza­tion depends upon the willingness of individuals to contribute their ‘forces’ to the cooperative system. In order to get individuals to cooperate, the organization’s purpose must be translated into inducements or motivating factors and these, in turn, act as incentives for organizational members to find satisfaction for their personal needs, while helping the organization achieve its own aims. A key mechanism offered by Barnard as a means of bridging the gap between organizational purpose and individual motive is communication, which is not just about the spoken word. He stresses the fact that perhaps the most important part of communication is unspoken and is dependent upon mutual understanding or mutual acceptance. Barnard talks about an ‘observational feeling’, which he describes as ‘the ability to understand without words, not merely the situation or conditions but the intention’ (1938: 90). Barnard’s conception of the organization is clearly situated and humancentric. As a metaphor, he compares the organization to an electromagnetic field, and says that people are to the organization the same as electromagnetic forces are to the electromagnetic field. Thus, just as the electromagnetic field can only be identified when an electromagnetic force is applied to it, an organization only exists when people are present are contributing. The notion of the organization as a cooperative system was later taken up by Selznick (1948, 1957), whose central idea is that organizations are the result of the interplay between technical and institutional forces from society. He states: All formal organizations are molded by forces tangential to their rationally ordered structures and stated goals ( . . . ) As a result, the organization may be significantly viewed as an adaptive structure, facing problems which arise because it exists as an organization in an institutional environment.  (1948: 251)

Although for many authors Selznick is one of the founders of the institutional school of thought, he is perhaps best known for his work on leadership, which he describes as being something akin to ‘poetry and plumbing’. Through this analogy, he intends to convey the message that leaders need to

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keep a balance between the integrity of the organization as a value-laden institution and the organization as a technical instrument. Here, he defines the leader as someone who gives purpose to the social structure, through a clear set of roles, that is:

• Defining organizational values and purpose • Maintaining institutional integrity • Infusing meaning into organizational life • ‘Playing the part’ through his or her own personal conduct.

For Selznick, a leader’s actions are interpreted by others, both within and beyond the boundaries of the organization, as indicative of the organization’s fundamental values and purpose, therefore leaders must recognize they are playing a social role that has both a technical and a symbolic content. The writings of Barnard and Selznick have not much impact in the traditional literature on organization design, however some authors in strategic management have understood the depth and relevance of their message and have explored it in their research. One example is the work by the duo Ghoshal and Bartlett (Bartlett & Ghoshal,  1993; Ghoshal & Bartlett,  1994) and its contributions towards a managerial theory of the firm. These authors highlight that the key to successful organization designs are not organizational structures and formal roles, but managerial processes and values-based organizational contexts, conducive to innovation-oriented knowledge development. Also, following in Selznick’s footsteps, they hone in on the im­port­ ance of ‘quality management’, as a key variable that is often ignored.

The Turn towards Language and Meaning as the Focus of Managerial Action In the 1980s, there was a significant turn in organizational thinking, which affected the notions of language and meaning as tools of managerial action. The turn starts with the emergence of social constructionist theories and interpretivist research methods that view organizations as social constructions, emerging from the dynamics of social interaction and negotiation (Burrell & Morgan, 1979; Salaman, 1980; Putnam, 1983). According to these theories, internal organizational structures, such as goals rules and roles are more than tools for specifying and reinforcing desired patterns of social interaction. Instead, internal structures are themselves interpreted as the result of social interaction, in the ongoing process of organizing. Social

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constructionism suggests that the definition of a particular organization’s reality is the outcome of symbolic interaction among the participants, which, in turn, results in the generation of meaning. Thus, meaning becomes a central issue for managerial action and therefore for organization design. Without specifically addressing the topic of organization design, Smircich & Morgan (1982) provide a major contribution to the notion of managerial action in organization designing. In bringing social constructionist thought to managerial leadership and in highlighting the role that the symbolic action of managers plays in the social construction of organizational reality these authors establish a definition of human-centric organization design. Given that one of the key conveyers of symbolic content is language, special significance has been given to the role of language in defining organizations and organizational work, including managerial action. For example, Krippendorff (2008) defines organizations as ‘reconstitutable networks of conversations’ which link together the ‘conversational practices’ that enable the organizational whole to exist as a ‘joint accomplishment’ (p. 156). The role of language in managerial action pervades much of the literature on organizational knowledge and learning. Nonaka & Takeuchi (1995) assert that the knowledge creation processes in organizations are entirely ­dependent on language. They suggest a number of techniques for the management of meaning in the organization: (1) the use of metaphor and analogy, that is, figurative language to help in the articulation of tacit knowledge; (2) the use of dialogue and discussion to maximize the sharing of personal knowledge, thereby helping in its conversion into organizational knowledge; and (3) the use of ambiguity and redundancy to help create new and common ways of thinking among organizational members. Such scholarly views are a recognition not only that each organization has its unique set of concepts which are translatable into words, but also that managers need to have the ability to analyse discourse and to manipulate language. The other key contribution comes from the work of Mary Jo Hatch (2011, 2018) and the overriding suggestion that organization theory should be seen as an interpretive science. By interpretive science, it is meant the study or research of meaning and meaning-making, which can take place at the level of events, artefacts or setting, written documents, or interviews (Hatch & Yanow, 2003). The works by Hatch & Schultz (2000, 2008) on organizational identity, image, and reputation are indeed among the best examples of bridging research between the disciplines of design and or­gan­iza­tion. Later in the book we will return to these topics, under the label of ‘perceived organization design’.

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Last, a defining contribution to the position of the manager as the or­gan­ iza­tion­al designer comes from the work of Verganti (2009,  2016).Verganti (2008) proposes a new approach to product innovation which has been labelled as design driven innovation. This approach considers the competitive market not as a given to be discovered, but the result of a fluid process of co-creation, involving the firm and its various stakeholders. The approach is unique in the sense that it contains a novel definition of radical innovation, where radical changes in meaning play a role as important as radical technological innovation. One notable example of meaning-driven innovation is Starbucks, where the breakthrough is the result of a radical change in the social meaning of drinking coffee, with no significant role being attributed to technology. Other researchers, mainly from marketing, have taken up the meaningdriven approach (Green & Cluley,  2014; Bellini et al.,  2017; Gasparin & Green,  2018), but in addressing the very practical point of how to bring about this type of approach to the organization, the overwhelming assertion is that it is the responsibility of the organization’s top management to bring about the required organization-wide change (; Morillo et al., 2015; Verganti & Shani, 2016; Altuna et al., 2017). In other words, meaning-driven in­nov­ ation is an organization design problem.

Conclusion The historical outline of perspectives on organization design presented in this chapter is not meant to be a review of the literature. The aim of the chapter is to give the reader a map of the territory of organization design, so that he or she can understand not only where we currently stand but also where we came from. Regarding the future, it is our belief that there is a convergence of factors leading towards a shift in the way that organization design is perceived, in both theory and practice. A part of this convergence concerns the dissatisfaction with the negative ways in which organizations are affecting societies—a problem for the discipline of organization studies. The other part concerns the paradigm change happening in the design dis­cip­line, from an emphasis on rationalist, engineering-oriented problem-solving to a humanistic approach displaying ethical and democratic concerns. Building on this, we suggest a new approach that identifies or­gan­iza­tional designing as an activity distinct from managing or strategizing, but still very much part of the responsibilities of management. Such a suggestion is based on the following premise:

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46  Designing Organization Design If designing is defined as ‘to create meaning’ and if the symbolic action of managers plays a central role in the social construction of organizational reality, then meaning becomes a central concern for organization designing. In other words, in the processes of making choices and taking decisions that influence the organization’s future, managers are the primary meaning makers.

In this book, however, the end product of the organization’s design also depends upon a myriad emergent forces, including the local designing carried out by non-managerial participants and the perceptions of external stakeholders. We consider organization design(ing) to be concerned with (a) interactivity between people inside and outside the organization, (b) the organization’s identity, image, and reputation, (c) an organizational mind-set focused on service and innovation and (d) an unshakable commitment towards all those who are affected by the organization’s design, that is, the stakeholders. But organization design(ing) cannot be just a wish list of good intentions. It needs to be actionable and accountable, and therefore it is important to name the designers in charge, that is, the entrepreneur or the managers. They are responsible for ensuring that through an ethos of democratic leadership, principles of humanistic design are put into practice throughout the or­gan­ iza­tion. This can only be achieved through a radical shift in managerial discourse from organization design as a one-off event to organization design as something that needs to be done continually, and from organization design as something conceptual and abstract to organization design as something very concrete that affects the lives of people.

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2 A Design-Driven Epistemology for Organization Design Design-as-Meaning and Design-as-Practice

Introduction This chapter lays the foundations for the new approach on organizational design proposed in this book, but before delving into the detail it will be useful for the reader to know about some of our starting assumptions. We start off by declaring that our key motivation for proposing an organization design theory based on principles of design is the hope that the final product—organizations—can become artefacts that are not only functional but are also socially and ethically harmonious, in terms of both their aims and outcomes. Our understanding of organizations is that they are complex social artefacts where the rules for the artificial intermingle with the rules for the natural sciences (McKelvey, 1997). Hence, we believe that a suitable framework for theorizing about organization design must combine principles from the sciences of the artificial (i.e. design) with principles from the social sciences. We find that a human-centred design (HCD) epistemology based on the capacity of human beings to create and perceive meaning (Krippendorff, 2006) is an appropriate foundation from the sciences of the artificial. As regards the foundations from the social sciences, given that organizations are indeed social artefacts, we find the latest thinking about practices as the foundation of social life (Nicolini, 2012) also to be quite apposite. Let us try to unpack this rather dense paragraph. In expounding upon the realm of the sciences of the artificial Krippendorff (1989) claims that design is primarily about ‘making sense of things’. Compared with Simon’s (1996) stance on design science, Krippendorff ’s (2006) HCD reverses the relation between the design object and its intention. For Simon the artefact is at the core, while

Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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for Krippendorff meaning is the core of the design process and the artefact becomes a medium for communicating the meanings intended by the designer and perceived by the user. Thus, in this chapter, we submit that if organizations are considered to be systems of communication and meaning (Daft & Weick, 1984), HCD can appropriately be considered as one of the epis­temo­logic­al foundations of organization design. Hence, ‘design-as-meaning’. Having made such a submission, the question that emerges is ‘how does one deal with the ethereal nature of meaning’ in the context of or­gan­iza­tions? While dealing with meaning is certainly possible in the design of physical products or reasonably well-defined services, in the case of an intangible, network-based, socially constructed entities such as or­gan­iza­tions, how can meaning constitute a foundation for the processes of design? We posit that it can if one considers the practices through which and with which meanings intervene. In other words, we suggest that meanings are foundational insofar as they shape all the observable practices that or­gan­iza­tion­al members engage in on a permanent basis, and which rest at the bottom of the sociomaterial architecture of any organization. Practice, as a theoretical body of knowledge, has grown enormous in the last couple of decades and is making an impact on a variety of disciplines, including management and organization theory (Nicolini, 2012). However, despite the fact that practice is ‘the stuff ’ of design, the practice-based approach has yet to make an impact on the design literature. One of the few exceptions is Kimbell (2012), who draws attention to the sociomaterial nature of practices and to the way that all designs are structured by objects and materials. In proposing the notions of ‘design-as-practice’ and ‘designingas-practicing’, she asserts that design ‘cannot be conceived of without the practices within which designing, and designs are constituted’ (p. 143). Taking this as our lead, and fully concurring with the position that practices are the fabric of organization, we adopt the notion of organization design-as-practice. Thus, we have a dual epistemological base for organization design: design-as-meaning and design-as-practice. In this chapter we discuss each, making links to the literature on organization design whenever applicable. This is followed by a discussion on the philosophy of intersubjectivity of Donald Davidson (2001) and his triangular theory of meaning, offered as a bridging framework between design-as-meaning and design-as-practice. We submit, first, that practice theory rests upon an assumption of intersubjective understanding between interacting agents; second, we propose that the three cat­egor­ies from Davidson’s theory of meaning—objective,

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subjective, and intersubjective—can be metaphorically adapted and be made to fit three ­levels of meaning-making in organizations: managerial, organizational, and beneficiaries-related. The beneficiaries are the organization’s stakeholders.

Design as the First Tradition The identification of design as a concern in human evolution, separate from science and scientific discovery, is one of the achievements of Herbert Simon (1969). He states: Engineering, medicine, business, architecture and painting are concerned not with the necessary but with the contingent—not with how things are but with how they might be—in short with design.  (Simon, 1996: xii)

Design is thus defined as being about the ‘sciences of the artificial’, encompassing a type of activity much older than the natural sciences, but providing the human species with crucial advances, such as the invention of the wheel, midwifery, or the printing press. Indeed, it must be acknowledged that fire was not a discovery but was an act of design and creativity in response to a human problem, perhaps the need to keep wild beasts at bay. Nelson & Stolterman (2014) call design the first tradition in the sense that design as a form of inquiry and action appeared before other forms of inquiry, such as art, religion, or science. Hephaistos, the lame Greek god who had to create things because he was not perfect, is highlighted as the champion of design. Like Hephaistos, we are also not perfect and for this reason we have to fend for ourselves and bring things into existence to overcome our imperfections. Rather than a hybrid between art and science, design should be understood as a third culture, different from both art and science, with its own postulates and its own approach to learning and research. As the ‘third way’, design is an alternative form of enquiry that combines rational thinking (e.g. systematics or the scientific method itself) with imagination, intuition, feeling, and emotion. Although unlike other intellectual traditions, design does not have a wellestablished scholarly history, it is a unique way of thinking about the world and acting on the world. As such, design has its own unique set of characteristics, and is systemic, as well as normative (Nelson & Stolterman, 2014).

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Design-as-Meaning Design encompasses a vast number of professional activities, such as medicine, engineering, urban planning, or management. Cross (2001) asserts that design should be seen as a discipline founded upon the reflective practice of design, featuring the ‘artificial world’, that is, the human-made world of artefacts, as the field of speciality of designers. The designer’s knowledge, skills, and values lie in the techniques of the artificial, particularly in the adding to or changing the artificial world. Johansson-Sköldberg et al. (2013) have identified the following five approaches to the design discipline: 1 . Design as the creation of artefacts (Simon, 1969) 2. Design as a reflexive practice (Schön, 1983) 3. Design as ‘wicked problem-solving’ (Rittel & Webber, 1973; Buchanan, 1992) 4. Design as a way of reasoning/making sense of things (Lawson, 2006; Cross, 2006) 5. Design as creation of meaning (Krippendorff, 2006). From these five trends, three have been classified as ‘foundational’, in the sense that they are the ones that go to the knowledge roots of design (Galle, 2011), that is, Simon’s, Schön’s, and Krippendorff ’s. From the three, Simon’s (1996) approach is by far the best known. In his approach, Simon defines design simply defined as ‘courses of action aimed at changing existing situations into preferred ones’ (p. 111), and claims that such a formulation is what distinguishes the professions, such as engineering, architecture business, education, law, and medicine, from the sciences. However, in developing this formulation, Simon has narrowed down the scope of design to finding solutions to solve design problems, sometimes narrowed down even further into optimization problems. Such a problem-solving orientation, which has greatly contributed to a popularizing of design among the engineering community, has also been widely adopted in the literatures of organization and management. However, the rational-instrumental development of the problem-solving approach has not served as a basis for advancing our understanding of how organizations might be designed. The reason is that the decision-making methodology works well in problems that are well-defined and where the solution space is finite, the so-called ‘tame’ problems (Rittel & Webber, 1973). The other type of problems, which involve people as informed agents, such as in or­gan­iza­tion

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design, have been labelled as ‘wicked’. Contrary to the design of tame problems, wicked problems require a bottom-up approach, involving the participation of the problem’s stakeholders. Such criticism of the Simonion conception of design is behind the launching of the notion of designas-meaning: As soon as we move beyond the engineering of functional products, we need to be concerned with what the artefacts of design could possibly mean to users and interested parties, with the multiple rationalities that people can bring to bear on them.  (Krippendorff, 2011: 413)

Thus, according to Krippendorff, meaning is at the core of the design process and all decisions related to the production, use, appreciation, purchase, or exchange of artefacts are influenced by meanings. This position reinforces the school of thought that considers the ‘hermeneutic circle’ to be a better metaphor for designing than the dominant metaphor of problem-solving: A hermeneutical metaphor is one which is broad and flexible enough to give an account of the design process both as a whole and as a complex of interacting parts. For example, the metaphor of the hermeneutical circle, which sees the design process as a dialogical exchange between the designer and the design situation, has enough conceptual tolerance to preserve the wholeness of what it models, even as it describes the functioning of the parts. The hermeneutical circle does not break designing into fragments; destroy the complexity, subtlety, and uniqueness of the design situation; or privilege or preclude aspects of the process, but rather respects their interdependence and interaction. Such a metaphor is hermeneutically rich; like the process it models, it leads to limitless in­ter­pret­ ations applicable in unique and unprecedented situations. (Snodgrass & Coyne, 1992: 72)

We call this position design-as-meaning, an epistemological stance that is highly applicable to the design of organizations. Indeed, as a metaphor for the design process, the hermeneutic circle resonates with Donald Schön’s concept of the ‘reflective practitioner’ and his contribution about the framing and reframing the design problem as a process of trial-and-error. Jahnke (2012: 40; italics added) expresses the view that Schön’s writings contain a ‘strong case for understanding design as a practice where new meaning, as  well as new ingenious practical solutions, can emerge through a process of  interpretation’. The position of design-as-meaning helps to emphasize

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or­gan­iza­tion design not only as contingent, situation oriented, and reflective, but also as discursive in nature.

Social Constructionism at the Roots of Design-as-Meaning Constructionism is an envelope expression that brings together a number of approaches which have in common the notion of social construction of knowledge, in processes deeply embedded in social practices, both in terms of scientific enquiry and of everyday life. In The Semantic Turn, Krippendorff (2006) does not explicitly refer to social constructionism, despite his assertion that ‘construction and design are synonymous’ (p. 42). In his work, Krippendorff ’s treatment of meaning is mostly devoted to the intended meaning of material artefacts, with no attempt to delve into the problem of the construction of meaning in conceptual artefacts, such as organizations. However, the problem of meaning in the design of organizations is clearly a special one, given that in organizations meaning can be considered as intended or as emergent, and very often with components of both. Emergent meanings is one of the bulwarks of social constructionism, a movement that heralded the social turn to the study of human behaviour (Gergen, 1985). It marks a shift away from the individual basis of the discipline of psychology to a social basis, viewing discourse about the world not as a representation, but as an artefact of communal interchange. The explanatory locus of human action shifts from the interior region of the mind to the processes and structure of persons in relationship (Gergen, 1985). Nowadays, social constructionism is an ongoing meta-theoretical trend, that is, ‘a converging domain of continuing deliberation’ (Sugiman et al., 2008: 3). Social constructionism, like Krippendorff ’s semantic turn, is strongly influenced by Wittgenstein’s (1963) views on language, and the notion that human mental qualities should not be studied in relation to pre-established categories of mental events but in terms of the social practices in which they appear. Constructionism is also an enacted epistemology in the sense that knowledge is not seen as something people possess somewhere in their heads, but something that results from the outcome of the interactions between people. From the point of view of this epistemology, the process of understanding nature is not fundamentally dependent on empirical validity of the phenomenon in question, as per the traditional scientific method. Rather, the process of understanding nature is deemed the be the result of a cooperative enterprise of persons in relationship and the prevalent form of understanding arising from a myriad social micro-processes, that is, communication,

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negotiation, conflict, or rhetoric, in the process of scientific enquiry. Maines (2000: 577) sums up the constructionist agenda in the following way: ‘the attempt to show that no matter how sedimented social conditions may appear or actually be, those conditions nonetheless are produced, maintained, and changed through interpretive processes’. Cunliff (2008: 131) puts forward a relationally responsive orientation to social constructionism with crucial implications for an understanding of the intersubjective and dialogical nature of organizational life and the emergence of meaning in organizations. First, she claims, organizations ought to be conceived as ‘emerging relational and dialogic language communities’, where organizational features are not entities as such, but ‘shared meanings’ and ‘shared ways of talking’. Second, the activity of managing change radically from the traditional top-down mode and begins to be seen as a relational and dialogic process, where managers do not act in isolation, but are always a ‘self-in-relation-to-others’. Thus, social constructionism offers an alternative definition of organizational action, placing social process and relationships at the origin of meaningful action. According to social constructionists, organizational life is in constant negotiation, with its multiple micro-political and power maneuverings (Gergen, 1995; Hosking, 2011).

Design(-as-Meaning) Applied to Organization Design In his work on the sciences of the artificial, Simon (1996) highlights ‘configuring organizations’ as one of society’s most important design tasks, and by design he means ‘courses of action aimed at changing existing situations into preferred ones’ (p. 111). Other than this, Simon does not offer much advice about how to go about the task of design or configuring organizations. Given this knowledge gap, we take a situated perspective and postulate that if design is understood, first and foremost, as a purposeful set of activities aimed at creating or improving artefacts in the world, then organization design must simply be the set of activities aimed at creating or improving organizational artefacts, of every type and at every level. In organizations, such a responsibility rests upon the shoulders of man­agers or entrepreneurs. Everything starts with someone having to take decisions about what the organization is going to do, how it is going to operate, and what resources will be needed. As aptly explained by Weick (1995: 31): ‘when managers enact strategies and policies, they take undefined space, time, and action and draw lines, establish categories and coin labels that create new

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features of the environment that did not exist before’. According to Weick’s constructionist approach, in exerting their choices in terms of strat­egies, decisions, policies, procedures, and systems, and in imposing such choices upon partners, collaborators, suppliers, or customers, managers or entrepreneurs start processes of [organization] design. These processes are, as we have seen in the preceding sections, processes of construction of meaning and change. Thus, through a social constructionist perspective, Krippendorff ’s conception of design as meaning is perfectly aligned with a view of organization design as construction of meaning. Such alignment can also be inferred from the contributions of the following three writers: Buchanan (1992,  1998), Boland (2004), and Giacomin (2014). We will look at each in turn.

Buchanan’s Orders as a Move towards Design as Multidimensional Meanings In proposing a broad overview of the discipline, Buchanan (1992,  1998) suggests that design has gone through four stages of development or orders of design. The first order is about using communication, that is, symbols, words, and images to attract people’s attention and to connect them to each other. The second order focuses on problems of constructing tangible products that serve human beings in their various activities, that is, the engineering, architecture, and mass production of artefacts. The third order of design, emerging in the middle of the 20th century, is about how to design human action and support the interactions that form activities, processes, and services. Finally, Buchanan talks of a fourth order of design, comprising the design of the environments and systems within which all the other orders of design exist. This order deals with the core ideas and values that hold such systems together and focuses particularly on the transformation and change of the systemic whole. Figure  2.1 contains a summary of Buchanan’s model, where the fourth design order is depicted as the cumulative outcome of the evolutionary process. Although the emphasis is on ‘types’ of design activity, the process can also be seen as an evolution of the role of meaning in the concerns of designers. It can be asserted that the problems of both third and fourth order design are people problems, considering people either as individuals or as collectives in processes of transformation or change. Thus, in stating that ‘the problems of transition are not problems of action but of reaching a new understanding

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Design-as-Meaning and Design-as-Practice  55 DESIGN ORDERS

Designer Capabilities: INVENTING

1. Communication (Signs and Words)

2. Construction (Things)

3. Planning (Action)

4. Systemic Integration (Thought)

Signs, Symbols and Images

JUDGING

DECIDING

EVALUATING

Physical Objects Activities, Services and Processes Systems, Environments, Ideas, Values, Change

Fig. 2.1:  The evolution of design: from unidimensional to multidimensional definitions of meaning Adapted from Buchanan (1998)

of purpose and ends’ (1998: 16), Buchanan acknowledges that the problems of systemic integration and change depend greatly on meaning and meaningmaking capabilities. This shift in focus from design as action to design as thought is complemented by the work of Kazmierczak (2003) on design as a cognitive interface. Kazmierczak also challenges the position that design is something restricted to aesthetic and practical consideration of finite, fixed objects and proposes that design ought to be seen as something of a more universal nature, which enable the construction or reconstruction of meaning by receivers. Design is thus defined as the creation of ‘semiotic interfaces’. She explains: The content of a design is no longer sought in the artifact itself. It becomes a receiver’s thought, which is constructed through the receiver’s contact with a design. As such, it is created and owned by the receiver. Without the receiver’s inferring the meaning, there would be no content, nor a design.  (p. 48)

In emphasizing the shift away from the objects themselves, from the point of view of attractiveness and usability and focusing attention on the conceptual characteristics embodied by such objects and perceived as part of the communication process between the designer and the receiver, Kazmierczak provides a contribution to Buchanan’s orders of design. Thus, from the first order focusing on symbols, words and images used to attract people’s attention to the third and fourth orders, where attention is placed on how to

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design human action and interaction within the context of changing systemic wholes, there is a clear evolution on how meaning is defined. Whereas in the lower orders, meaning was understood as the meaning of the designer and in the third order meaning was recognized as being the outcome of social construction, in the fourth order, the notion of systemic integration supports a multidimensional view, where emergent meaning has to co-exist with intended and perceived meanings. Indeed, such a view of design is highly applicable to the design of or­gan­ iza­tion­al environments, where the systemic integration of different types of meanings is uppermost. However, Buchanan (2008) warns that the new and expanded forms of design practice should not abandon the traditional concerns of form-giving and -making that have defined design in the past. He says: ‘without the integrity of form-giving and -making that lies at the core of design, what can the designer do that is not already within the sphere of other disciplines?’ (p. 9). Thus, in line with the paradigm shift from the design of things to the design of thoughts, it may be asserted that the design of organizations is something that happens through the creation, modification, or emergence of meanings.

Boland’s Notion of Design Punctuation and the Role of Meaning in Managerial Action Boland (2004) offers a further contribution to an understanding of meaning as a foundation of organization design. He suggests that design is embedded in organizational life through a process of ‘punctuation’. Inspired by Simon’s (1960) teachings about the steps of decision-making, Boland explains that much of managerial action is punctuated by each of the three steps: (1) intelligence, (2) design, (3) choice, as described in Table  2.1. In the course of Table 2.1:  Sequence of steps in managerial decision-making, according to Simon (1960) 1. Intelligence

The activity that alerts us to the need for an intervention in order to change the current state of affairs. The process of sensing and predicting conditions that require action or indicates that change is required

2. Design

Formulation of possible courses of action that can respond to the current situation in such a way that the desired human needs are met, and goals are achieved

3. Choice

The process of selecting the best design alternative for achieving our goals

Source: Boland (2004: 108).

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managerial decision-making, each activity is experienced as a separate mode of action, such that when one is placed on the foreground, the other two are relegated to the background. Intelligence includes an informed view of current design and of previous choices. Design encompasses intelligence about current products or processes. Choice includes a knowledge of current design constraints, as well as intelligence about the alternatives in place. The sequence intelligence-design-choice is the classical view of goal-seeking behaviour and forms the basis of Simon’s rational decision-making model. Boland argues, however, that although the underlying rationale of using intelligence and prediction to guide organizational action is intuitive and feasible in the solution of a great many simple problems, when it comes to more complex problems the situation is different. In solving complex organizational problems, it is widely recognized that the rationality of human decisions is ‘bounded’, meaning that in the solving of such problems, decisions are often made on a ‘satisficing’ mode, rather than on an optimizing one. The amount of information required is so great and so complex that it would not be cost-effective to strive towards the optimum solution. The other problem with this sequencing of activities is that the placing of intelligence at the outset assumes a pre-understanding of the problem, which is often not the case. Assuming good prior understanding can cause a very distorted representation of the problem, resulting in misguided analyses and solutions. Starting from a different definition of design, Boland suggests an alternative formulation of Simon’s model. Inspired by Weick’s (1969) sense-making theory, Boland draws attention to the fact that in human cognition meaning comes before action and that decision-making is often carried out in inter­ action with others. Thus, confronted with a world of complex problems, the first task of managers is not to gather intelligence, but to make sense of the situation. In this, managers have the benefit of pre-existing intelligence and are naturally assisted by the construction of alternative realities through interactions with the staff around them. In other words, in organizational settings there is an understanding that even if the problem is well-known, its constituent parts are not static and the next time the problem is analysed, new understandings are created. This means that the intelligence punc­tu­ation is informed by previous choices which guide the decision-maker about how ‘meaningful, aesthetically pleasing and morally acceptable’ (Boland,  2004: 111) the choices might be. Boland concludes that starting the sequence with design rather than intelligence, would place the decision-making model closer to the phe­nom­en­ ology of human sense-making and more in tune with what actually happens

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in the course managerial activity. The scenario of design punctuation as processes of sense-making rather than the outcome of a process of rational selection of well-defined choices places the former very close to the idea of designing as a ‘hermeneutical enterprise’ (Snodgrass & Coyne,  1997) and provides support to our hypothesis of organization design-as-meaning. Snodgrass & Coyne explain that: designing, being a hermeneutical enterprise, does not employ inductive logic. It does not build generalizations from particulars in a linear and incremental manner, but predicts a generalization, the whole, and then works back and forth between that projected generalization and the particulars. In contrast to the deductive-nomological and inductive methods of explanation, which proceed by way of conclusions logically drawn from premises, the design process has no premises or conclusions.  (1997: 28)

Thus, the useful notion of ‘punctuation’ can be used to describe not only how design intermingles with other activities but also the movement ‘back and forth between that projected generalization and the particulars’ (Snodgrass & Coyne, 1997: 28). Indeed, organization design might also be labelled as a hermeneutical enterprise, where design (i.e. meaning-making and meaningtaking) happens in the punctuation of the various activities which constitute the steering of the organization. Here, we take a different approach from Boland’s in what concerns the level of analysis. Rather than considering design as one of the components of decision-making, we consider design as an activity in its own right which happens randomly (i.e. non-sequentially) in the flow of organizational action and whenever design (i.e. change) is required. Furthermore, we posit that organizational designing should not be limited to managerial action. Designing frequently involves non-managerial staff and happens in an informal or ‘silent’ fashion (Gorb & Dumas, 1987).

Giacomin’s Hierarchy of Human-Centred Design Highlighting Meanings as Shapers of the Entire Organizational System Another approach highlighting design-as-meaning that can usefully be applied to organization design is Giacomin’s (2014) interpretation of HCD. That author defines HCD as a ‘language which is absorbed and exchanged between people, providing the basic units of meaning’ (p. 607), and suggests a model based on a hierarchy of human-centred design factors (see Figure 2.2).

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Design-as-Meaning and Design-as-Practice  59 The hierarchy of HCD

Applying HCD to a meaning-driven view of the organization’s design Managerial Meanings

Meaning (Why?)

Intended meanings behind the organization’s values, beliefs, sense of mission, modus operandi, as conveyed by managerial actions or pronouncements

Semiotics, Communication, Discourse (How?)

Internally and externally perceived meanings attributed to the organization’s outputs, i.e. products, services, brand, image, identity, reputation, legitimacy, etc

Perception of Organizational Outputs

Horizontal Processes Interactivity

Interactivity (When?) Activities, Tasks, Functions (What?)

Intended and emergent meanings resulting from the interactional activity over the organization’s horizontal processes, involving internal and external stakeholders

Vertical Structure Intended and emergent meanings exchanged through the organization’s traditional hierarchical lines, involving mostly internal stakeholders

Agential Contribution

Human Factors (Who?)

Meanings emerging at the local level driven by the participation and cooperation of individual members

Fig. 2.2:  The hierarchy of HCD Adapted from Giacomin (2014)

The suggestion behind the model is that meaning ‘whether pre-existing or still to be created through contact, is considered to be the key to social acceptance, commercial success, brand identity or business identity’ (2014: 612). The model contains a series of questions which focus attention on the different levels of the involvement of people with artefacts. As one moves further up the hierarchy, the answers to the questions provide not only a deeper understanding of the artefact, but also offer a wider range of affordances that people may expect to get from the artefact. On the right-hand side of the figure, a proposal to convert Giacomin’s ­levels into an application of HCD thinking to organization design is put forward. Such proposal is motivated, inter alia, by Buchanan’s (2015) assertion that design ought to become part of regular organizational life gradually, beginning with the tactical problems of designing products and services, then turning inward toward organizational problems of operations. Buchanan adds that design ought to be ‘elevated to address the problems of vision and strategy that are at the guiding core of organizations, relating the organization to the external world’ (p. 16; italics added). In applying the model to organization design, a distinction between ordinate and super­ordin­ate levels of meaning must be made. Ordinate meanings are those that occupy a relative position in the hierarchy of meanings, while superordinate meanings are those situated over and above ordinate meanings and exerting considerable influence over these.

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The factor at the top of the pyramid—meaning—responds to the question ‘why’, thus highlighting the ambitions, desires, or wishes of the people using the products, systems, or services. Translating to organization design, this corresponds to the level of superordinate meanings, shaping and being shaped by all the levels below. For the purposes of organization design, the best exemplar of superordinate meaning is the notion of organizational identity which includes both internally generated and externally generated meanings (image and reputation). Identity sums up the meanings of the entire organizational system at the highest level. The meaning contained within this layer derives primarily from managerial intent and embodies primarily intended meanings. However, in percolating all the other layers of the pyramid, shaping and being shaped by all other messages generated by the organization’s activity, identity represents the organization’s beliefs, preferences and sense of mission, which characterize the organization’s modus operandi. In the second layer, the model features the organization’s outputs as the communicational outcome of the organization’s products, services, brand, and managerial discourse. Such outputs are, we submit, a powerful ‘window’ of the organization’s design, in the sense that it is through them that the organization and its characteristics become known to the world. For ex­ample, the meaning contained within the organization’s brand is likely to be the first point of contact between a potential customer and the organization’s design. Even before I bought my iPhone device, through its brand I already knew quite a lot about the maker of iPhone, that is, Apple. I knew that it was a highly innovative company with a certain management style from its founder Steve Jobs, but I also knew about the company (and some aspects of its design) through the many pronouncements of its managerial team. The third and fourth layers represent the organization’s design through the meanings conveyed by ‘when’ and ‘what’ questions. In these interrelated ­layers, meaning is generated and communicated through the organization’s horizontal processes and its hierarchical structure. Horizontally, the sharing of meanings defines organizational design through the interactional activity required by the successful coordination of intra- and inter-organizational processes. Vertically, design is defined by the meaning is provided through the traditional hierarchical lines in the smooth running of daily tasks and activities. The bottom layer contains the individual agents who ultimately turn the organization’s objectives into performance. In such a transition, meanings are crucial for driving the identification and participation of operating agents, whether the interactions take place within the organization or between internal and external stakeholders.

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Design-as-Practice As in other disciplines of social theory, in organization studies there has been a turn towards practice, where the micro-level and ‘the internal life of process, the practices by which work is actually done’ (Brown & Duguid, 2000: 95) is the focus of attention. This ‘logic of practice’, as ori­gin­al­ly coined by Bourdieu (1990), opposes a world view characterized by ‘intellectualocentrism’ (p. 29), a position that imposes an academic logic of causality, intentionality or instrumentality on practical issues of life and behaviour. According to Schatzki (2001) practices are the chief and immediate context of social action, with the capability of establishing social order. That author defines practices as ‘embodied, materially mediated arrays of human activity centrally organized around shared practical understanding’ or alternatively as ‘sets of doings and sayings organized by a pool of understandings, a set of rules, and a teleoaffective structure’ (p. 11). For Reckwitz (2002: 249) a practice is a ‘routinized type of behavior’, consisting of several interconnected elements, that is, ‘forms of bodily activities, forms of mental activities, “things” and their use, a background knowledge in the form of understanding, know-how, states of emotion and motivational knowledge’. Importantly, Reckwitz highlights the structural properties of practice and the fact that routinization is the nature of social structure. In other words, social practices can be seen as routinized structures interconnected in a practice, that is, routines of moving the body, of understanding and wanting, of using things. Seen in this manner, practices can also be instrumental in revealing regularities, linkages, and causal connections within organizational life. Micro-practices exist within larger social contexts and researching them requires a constant ‘zooming in’ and a ‘zooming out’ to and from the micro-level. Zooming in refers to investigating the accomplishments of practices and zooming out is related to a detachment of the practices’ relationships in space and time (Nicolini, 2012). Practices guide the practitioners’ actions by helping them to make sense and determine which arrangements people bring about in their daily lives. Such arrangements are also guided by practices both in terms of finality and affectivity. Nicolini & Monteiro (2017: 110) put forward that practice theory denotes a ‘family of orientations that take orderly materially mediated doing and sayings (“practices”) and their aggregations as central for the understanding of organizational and social phenomena’. In suggesting that social order, knowledge, institutions, identity, power, inequalities, or change ought to be studied through practices and their aggregations, these authors provide

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an important contribution to an understanding of the foundations of or­gan­ iza­tion design. Thus, it is posited that organization design can be seen as a construct that results from an aggregation of myriad organizational practices. Unlike HCD, practice theory does not consider the agent as the focal point, but considers instead agents as the bodies and minds that carry out social practices, with the emphasis on the materiality of the activity. Practice approaches privilege practice over actor, however, in classifying practices as ‘source of meaning and normativity’, ‘pools of understandings’, or ‘states of emotion and motivational knowledge’ (Schatzki,  2001: 12), this theoretical paradigm does acknowledge the human centredness of practice. Indeed, in saying that practices are ‘social sites in which events, entities and meaning help compose one another’ Schatzki (2005: 480) is acknowledging the complementarity of meanings and practices. The literatures on organization studies and on design theory contain multiple examples of such complementarity. Considering Feldman & Orlikowski’s (2011: 18) definition of practice theory as ‘a set of principles that can explain and guide action’, Krippendorff ’s (2006: 56) assertion that ‘meanings are always embodied in their beholder’ and Weick et al.’s (2005: 419) affirmation that normally ‘we act our way into belated understandings’, it can safely be assumed that meanings and practices not only co-exist but are mutually constituted. In other words, any analysis of practices only makes sense if carried out through their related meanings.

Activity Theory Laying Down the Linkages between Practice and Meaning Activity theory and artefact mediation is one of the approaches that helps to link practice and meaning as foundations of organizational design. Originally put forward by Vygotsky (1978), activity theory complements the socio­logic­al theories of practice by supplying a non-individualist theory of human learning based on the concept of mediated action. According to the theory, the interactions between human agents and the world are mediated by tools and signs as basic cultural means. The use of signs constitutes the foundation for higher psychological functions in human beings, with the theory explaining that during socialization individuals internalize the more sophisticated means of culture, such as language, norms, or technical artefacts by participating in common activities with other humans (Miettinen et al., 2009).

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As in social constructionism, in Vygotsky’s approach, consciousness is not situated inside the heads of people but develops from the interaction between the individual and the objective forms of culture or artefacts created by ­people. More importantly, in supporting the proposed integration between design-as-meaning and design-as-practice, Vygotsky formulated a ‘genetic law of cultural development’ which holds great significance beyond child development and language learning. It is a formulation of ‘the basic mech­an­ ism through which the forms of material culture and their meanings are internalized by an individual through participation in collective material activities’ (1978: 1317). Activity theory throws light on the process of organization design by positing that in organizations, meanings are acquired through the mediation of material artefacts in two ways or on two planes (Vygotsky 1978: 163, cited in Miettinen et al.,  2009: 1318). First, meanings are acquired through the inter­action between members; and, second, they are acquired by means of the internalization of meanings through the use of artefacts by each individual during his or her participation in collective activities. Also, in their interacting, human beings ‘reify’ their actions and cognition into cultural artefacts, that is, concepts, instruments, methods, and rules, which, in turn, serve as the means for further practice. From this brief exposition about Vygotsky’s approach, it can be concluded that both practice and activity theory hinge on a requirement of meaning, or intersubjective understanding between interacting agents. Thus, it will be useful to explore another powerful epistemological tool—Davidson’s (2001) theory of meaning—which places intersubjectivity at its centre and which reinforces the bridging between the notions of design-as-practice and design-as-meaning. However, before doing so there is a caveat from practice theory that should be highlighted.

A Caveat from Practice Theory Practice theorists agree that practices are central to social life and that phenomena like interaction, language, signifying systems, institutions, structures, or systems can only be understood via the study of practices. In applying activity theory and artefact mediation to an investigation of how new information technologies mediate between the reshaping of work practices and the organizational knowledge-qua-design system of criminal courts, Lanzara (2009: 1386) argues that

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64  Designing Organization Design The institutionalization of a knowledge system involves the material constitution of an interlocking network of tasks, tools, routines, agents, meanings and practices so that a complex system of functional activities can be performed. Practical knowledge becomes institutionalized through the stabilization of self-sustaining routines and self-referential representations which ‘dwell’ in the medium and, with the passage of time, tend to become medium-specific.

Thus, we can say that the institutionalized knowledge system, which allows the complex system of functional activities to be performed in an or­gan­iza­tion, is the organization’s design. Other examples of practices which contribute to an institutionalized view of organization design include supervising staff, conducting a meeting, preparing a budget, recruiting staff, responding to an online enquiry, or undertaking a market survey. Indeed, organizational life (and design) stems from and ‘transpires through the real-time accomplishments of ordinary activities’ (Nicolini & Monteiro, 2017). In addition to offering a very credible account of the genesis of or­gan­iza­ tion and of its artefacts, theorists of social practice suggest that the meaningmaking capability of practices play a major role in the formation and reformation of an organizationally dominant discourse (Nicolini,  2016). Moreover, they draw attention to the temptation of using macro-level constructs, such as culture, climate, or institution to account for concrete ac­tiv­ities occurring at the micro-level. Rather than establishing cause-and-effect, they do favour looking at those abstract entities as ‘explanatory summaries’, provided ‘their capacity to produce effects is related to their assumed cor­res­ pond­ence to what they summarize’ (2016: 113). Heeding such warnings, we hasten to clarify that while not claiming the existence of causal relations between the micro-level of organizational practices and the macro-level constructs used throughout the book, such as ‘intended design’, ‘emergent design’, ‘design culture’, or ‘organization design logics’, it is our belief that all such constructs provide very useful summaries for the theorizing of organization design.

Davidson’s Theory of Meaning as the basis of the organization’s institutionalized knowledge system While human-centred design boasts of a semantic turn, the philosophy of Davidson (2001) heralds intersubjectivity as a new turn in the study of knowledge. Intersubjectivity is an epistemological standpoint mediating

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between objective and subjective knowledge and emphasizing the interchange of knowledge between cognitive systems that may or may not be human. Indeed, intersubjectivity plays a major role in the formation of meaning and in our understanding of interacting bodies in the design of social artefacts. According to Davidson, intersubjectivity is one of three var­ieties of knowledge, alongside subjectivity and objectivity. While the classification of the three types of knowledge might be commonplace, Davidson’s contribution provides not only an integrated view of the three modes of knowing, but also offers a  reasoned argument about their relations to one another. Moreover, that author believes that there are compelling reasons for stating that none of the three forms of knowledge is reducible to one or both of the others. Objective knowledge is about what we know about the world around us, the locations, the shapes and sizes, as well as many of the causal properties of the objects in the world. Subjective knowledge is about our own knowledge of our sensations, our thoughts, desires, and intentions. Intersubjective knowledge is about our knowledge about other people’s knowledge. Each of these three kinds of empirical knowledge, Davidson asserts, has its dis­tinct­ ive characteristics. Objective knowledge exists without appeal to evidence or investigation. Subjective knowledge depends on the functioning of our sense organs, and this causal dependency creates a degree of uncertainty, in view of the fact that our senses are not always reliable and certainly differ from person to person, in terms of accuracy. As regards intersubjective know­ ledge, it depends on how well we can have access, capture, and process other people’s knowledge, clearly a problematic task. However, the intersubjective mode is essential because no amount of knowledge about the contents of our own mind can guarantee truth about facts and events in the external world, and likewise no amount of knowledge about the external world can ensure the truth about the workings of our mind. Davidson asserts that the source of the notion of objective truth is interpersonal communication and defends such as assertion using two lines of argumentation. First, he contends that thought depends on communication, and inspired by the philosophy of Wittgenstein, he affirms that language is  essential for thought to exist. On the other hand, he concurs with Wittgenstein in that there cannot be a private language, and the reason why this is so is that any language has to be constantly validated by its users as being correct or incorrect, and for that purpose languages have to be shared. Thus, if only communication can provide a means of validating the correct use of words, only communication can afford a ‘standard of objectivity’ (1963: 210) in all other domains.

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For the second line of argument, Davidson places the following question: ‘even if it is the case that communication assumes an objective standard of truth, why should this be the only way such a standard can be established?’ (2001: 212). In answering this question, he uses the following reasoning. The presence of knowledge, in any living creature, is manifested by its capacity to make distinctions and to classify stimuli as belonging or not to a given cat­egory. The criterion for the correctness of distinctions is similarity of response. In other words, the criterion for stating that a living creature is treating stimuli as belonging to the same distinction is the similarity of responses in relation to those stimuli. Such responses form patterns of behaviour which evolve over time, but what is the criterion of similarity of responses that can be said to constitute a behaviour pattern? This criterion goes beyond the individual subject and can only come from a third party, that is, an observer. Indeed ‘it is only when an observer consciously cor­rel­ates the responses of another creature with objects and events of the observer’s world that there is any basis for saying the creature is responding to those objects or events rather than any other objects or events’ (2001: 212). Thus, the three varieties of knowledge—subjective, objective, and intersubjective—form a triangular relationship, summarized in the following manner: The basic situation is one that involves two or more creatures simultaneously in interaction with each other and with the world they share; it is what I call triangulation. It is the result of a threefold interaction, an interaction which is twofold from the point of view of each of the two agents: each is interacting sim­ul­tan­eous­ly with the world and with the other agent. To put this in a slightly different way, each creature learns to correlate the reactions of other creatures with changes or objects in the world to which it also reacts. One sees this in its simplest form in a school of fish, where each fish reacts almost instantaneously to the motions of the others. This is apparently a reaction that is wired in.  (Davidson, 2001: 128)

To conclude, Davidson’s philosophy underpins and complements the notions of cognition as a result of the mutual constitution of an inner world and an outer world (Maturana & Varela, 1980) and of participatory sense-making as the result of interactivity (De Jaegher & Di Paolo, 2008). These concepts will be developed further in Chapter 4, in the section on Enactive Cognition and Participatory Sense-Making. Davidson’s work also solidifies the idea that the design of social groups, such as organizations, depend not only collective sense-making, but also on social interactions.

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Adapting Davidson’s Triangular Theory to Organizational Meaning-Making Having established that the worlds of practice and meaning are closely linked, it would be useful to extend this knowledge to the theory and practice of organization design. This can be done by splitting the organization into broad categories of practice which would then correspond to different ­categories of meaning-making. Starting from the assumption that any or­gan­iza­tion exists to provide a service, it can be said that service provision can be seen from the point of view of three broad groups of participants: • Those who provide the service • Those who benefit from the service • Those who manage the service provision. These three levels of practice, which correspond to three levels of or­gan­ iza­tion­al meaning-making, represent the organization and its activities in the widest possible sense. The first level includes all those who are involved in the service provision, but do not have managerial responsibilities. Let us call it the ‘organizational’ level. The second group includes all those who are affected by the service provision, which includes not only customers or users of the service, but also suppliers and shareholders who stand to gain from the service provision. The last level of practice is made up by those who have the responsibility of managing the service provision and receiving the feedback from those being affected by the service; this group is made up by the managerial staff. Next, when placing these three levels of organizational meaning-making side by side with Davidson’s three types of knowledge—subjective, objective, and intersubjective—some interesting similarities emerge. The managerial level has some characteristics of the objective type of knowledge, the or­gan­ iza­tion­al level shares some characteristics with the subjective type of know­ ledge, and the level of the beneficiaries seems to fit, in a way, the description of the intersubjective type. Figure  2.3 shows the proposed overlaying of Davidson’s theory of meaning to three levels of meaning-making in or­gan­ iza­tions. However, before moving any further a word must be said about the nature of such an adaptation. While it is clearly not possible to carry out a clear-cut transfer of concepts from the realm of the philosophy of cognition at the individual level to the realm of social cognition inside and outside the organization, there is some

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68  Designing Organization Design Intended Manageriallygenerated meanings

Emergent Organizationallygenerated meanings

Perceived Beneficiariesgenerated meanings

Fig. 2.3:  Three broad categories of organizational meaning-making

educational value in using Davidson’s theory of meaning not only as an ana­ logy but also as a metaphor. The use of analogies and metaphors as an education method is explained by Duit (1991: 651) in the following way: Both analogies and metaphors express comparisons and highlight similarities, but they do this in different ways. An analogy explicitly compares the structures of two domains; it indicates identity of parts of structures. A metaphor compares implicitly, highlighting features or relational qualities that do not coincide in two domains.

While establishing similarities and differences between Davidson’s three types of knowledge—objective, subjective, and intersubjective—and the three level of organizational meaning-making—managerial, organizational, and stakeholder-generated, it must be emphasized that Davidson’s three types of knowledge are always at work at every level of organizational meaning-making. In other words, in reality it is not possible to unpack the triangle of knowledge and it ought to be recognized that any attempt to adapt concepts such as objective or subjective knowledge from the individual level to the group level, especially when the groups are so poorly defined, has limitations and can only hold analogical or metaphorical value. Likewise, it must be understood that the three dimensions of knowledge stand as archetypes of the three categories of organizational meaning-making. Thus, while objective know­ledge might stand as the archetype of intended managerial meanings, sub­ject­ive knowledge might be recognized as the archetype of the meanings emerging from the organizational activity undertaken at the local level. Intersubjective knowledge, on the other hand, might be made to represent the perceived meanings by the organization’s stakeholders, in the sense that it mediates between the intended managerial meanings and  the meanings emerging during the actual provision of the services

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(e.g.  through the actions of the sales staff), thereby helping the perceiver to achieve a balanced grasp of the situation. (1)  Managerially Generated Intended Meanings (Objective Meanings) The first category of meaning-making in organizations is the managerial cat­egory. We believe that an interesting similarity can be established between this category and objective meaning from Davidson’s triangle, in the sense that the meaning-making that is to be expected from managerial staff is based on facts and therefore believed to be ‘objective’. A key component of managerial responsibilities entails finding reliable and trustworthy information about the world around the company, as well as about many of the causal connections between the organization’s business and the objects and events in the world. Such information is meant to be as objective as possible. As part of their jobs, managers need to issue instructions derived from the uncovered information and make decisions, in the best interests of the organization. In this sense, the type of meaning generated at the managerial level can also be labelled as intended. (2)  Organizationally Generated Emergent Meanings (Subjective Meanings) The second general category of organizational meanings are those generated in a bottom-up manner by members of the organization while going about their daily activities. In order to better explain this category, we resort to the metaphor of ‘silent design’ proposed by Gorb & Dumas (1987). They say: The individual undertaking the work, oblivious of its design content, may well be operating effectively. The ‘design’ part of this work will, in his terms, be classified differently and his motivation and approach towards the task is likely to be entirely different from that of the professional designer.  (p. 152)

The myriad local micro-initiatives taken by subordinates often deviating from the original intention are the outcome of meanings that emerge as and when participants come into contact with their tasks and with the or­gan­iza­ tion­al artefacts made available to them. Such meanings are part of subjective knowledge, in the sense that while taking decisions at the local level, or­gan­ iza­tion­al members are often not fully aware of all the information about constraints or opportunities that management has at its disposal. Thus, in acting on the basis of first impressions and personal preferences, participants make use of subjective knowledge, that is, the knowledge that is based on one’s sensations, thoughts, desires, or intentions.

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(3)  Beneficiaries Generated Perceived Meanings (Intersubjective Meanings) The third category originates from the inside and the outside of the or­gan­ iza­tion, to include the meanings generated by the large group of stakeholders who can be called the ‘beneficiaries’ of the service the organization provides. They concern the meanings that emerge from the interactions among in­tern­al stakeholders, but also from the interactions of customers, users, and other external stakeholders with the organization and its outcomes, such as products or services. The label intersubjective is metaphorically relevant in view of the importance of the ‘knowledge of others’ to the successful op­er­ ation of any organization, while recognizing the challenges inherent in any attempt to access, capture, and process other people’s knowledge.

Conclusion In this chapter, we have argued for the building up the foundations of a design-oriented approach to organization design upon a dual theoretical base: design-as-practice and design-as-meaning. The two approaches are clearly complementary and although practice theory provides explanations about the emergence and the role of meaning, we find it useful not to merge them but treat them as separate concerns. The justification for such preference is in two parts. First, it must be recognized that organization design, although not exclusively, is largely a managerial concern. What we mean to say is that a large part of the design occurring in any organization stems directly from managerial steering of both intended and emergent meanings. Second, while asserting that practice provides an ontological foundation for the artefacts which constitute the organization’s design, practice theory does not contain the mechanisms of intentionality and direction required by managerial action. Meanings, as an instrument of intentionality, must be part of the equation, so that the meanings contained in the vision, mission, strategic, and operational statements created by management can exert influence in the shaping of the organization’s practices. In order to open up the epistemological discussion in this chapter to more practical considerations, an application of Davidson’s (2001) theory of meaning to the universe of organization design has been put forward. It has been suggested that Davidson’s three types of knowledge—subjective, objective, and intersubjective—might be broadly interpreted in terms of three broad groups of meanings found in all organizations: managerially generated

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intended meanings, organizationally generated emergent meanings, and perceived meanings generated by the stakeholders. This, indeed, amounts to saying that if organizations are shaped by meanings, the entire edifice of organization design is dependent upon these three broad types. We will return to this assumption in Chapter 3.

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3 The Ontological Bases Intended, Emergent, and Perceived Organizational Knowledge-qua-Design

Introduction In our attempt to set in motion a new design-driven discourse for or­gan­iza­tion design, the first step is to identify the entity to be designed. As a non-tangible entity, an organization presents very different challenges from other design targets, such as, for example, a bridge, a drug, or a software program. A bridge is designed to last hundreds of years, with a type of usage that will not change much from year to year. A drug is designed to be used on a particular medical condition, the knowledge about which may evolve and render the design obsolete or even harmful. A software program may be designed for needs that are poorly understood at first but may evolve to become the central piece of a company’s business model. An organization is designed, primarily, to fulfil the aims of its founder or founders but as the organization grows its aims and objectives multiply, becoming increasingly difficult to identify or to keep track of. Over time, the original designs change and evolve, with organiz­ ations developing their own internal power games and different generations of managers instilling different leadership cultures. Thus, trying to get to grips with the ontology of organization design is fraught with difficulties. The book Images of Organization by Gareth Morgan (1997) provides an excellent illustration of this. Each of the eight metaphors presented in the book could conceivably form the basis for an approach to organization design. By ontology we mean the building blocks of the multifaced manifestations of what we call organization design, that is, the structures, the procedures, the capabilities, the routines, the relationships inside the organization, and the relationships outside the organization, which include the manifold perceptions held by external stakeholders about the organizations, its products, and its services. Ontological thinking follows the current trends in organization theory, where macro-phenomena such as organization design are traced back to their micro-foundations (Felin et al., 2015). Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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Accordingly, we posit that the micro-foundations of organization design can be found in the creation and perception about the social actor called ‘organization’ and in the processes that govern the development and change of such actor throughout its lifetime. Such processes are sociomaterial in nature, made up of practices and meanings, involving the creation, development, and ongoing knowledge of organizational artefacts. To be sure, our view of the micro-foundations of organization design starts from considering the organization as a social actor, made up of individual and collective practices, knowledge, and meanings. Thus, we must also address the processes of formation of meaning of the social actor itself and this is where we metaphorically turn to Davidson’s three processes of meaning, as discussed in Chapter 2. The chapter starts with a section about our current understanding of organizations as social actors, which we equate with the notion of or­gan­iza­ tion design as a noun. Seen from this point of view, organization design is the ensemble of characteristics that organizational stakeholders perceive and select as being relevant to them, as ‘the organization’. To an internal stakeholder, it could be the organization’s policies on global warming, but to the external stakeholder, it could be a particular aspect of the organization’s after-sales service. The organization as social actor can be thought of as an instant snapshot of the processes of organization designing, as a series of  processes of organizational development and growth. The creation and growth of organizations or firms is the next topic in the chapter, approached in a very brief and synthetic manner. The words ‘brief ’ and ‘synthetic’ are emphasized in order to acknowledge the fact that the referenced materials brought to bear represents but a micro-slice of a huge area of scholarship in organizational economics, strategy, and organization studies. Two of the most influential schools of thought on the creation and growth of firms are brought to bear: Schumpeter’s entrepreneurial approach to economic development and Penrose’s teachings about resources as the base of the growth and development of organizations. This joint approach, which integrates an economics and a management perspective, leads the discussion to the so-called resource-based approach and the knowledge-based view of the organization. From these, three literatures trends will be used to support the discussion: (1) organizational learning as the result of reflection-in-action and reflection-on-action (Schon, 1983; Argyris & Schon, 1996); (2) creation of organizational knowledge as the outcome of the conversion of individual and organizational knowledge, from the tacit to the explicit state and viceversa (Nonaka &Takeuchi, 1995); (3) social learning originating from basic processes of learning-by-doing, participation and identity development at

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the level of communities of practice (Lave & Wenger, 1991; Wenger, 1998; Wenger-Trayner et al., 2015). Against this background, the chapter argues a view of the organization as a body of individual and collective knowledge and meanings, resulting from a myriad ongoing and recurrent processes of design and management. Importantly, it also asserts that the genesis of organization design can be traced back to processes of knowledge-qua-design development in the natural evolution and growth of the organization. The expression knowledge-quadesign is used to convey the idea that once design is defined as the creation of meaning, many of the models and theories of organizational knowledge and learning also apply to organization design. Going back to the three broad categories of organizational meanings put ­forward in Chapter 2, in this chapter we suggest that the ontogenesis of the organization’s design can be construed as the joint effect of the three categories of meanings renamed as development processes of organizational knowledge-qua-design—intended, emergent, and perceived processes.

The Birth of Organization Design: Entrepreneurial and Resource-Based Geneses of the Firm The act of designing an organization starts from the moment someone decides to create a new activity that can in any way affect the community or the wider society, and this is done by combining new resources or recombining existing ones. Schumpeter (1934: 74) explained that an enterprise can be defined as the activity of ‘carrying out of new combinations’ and that the individuals whose job is to carry out such new combinations, are called ‘entrepreneurs’. That author goes on to assert that: We call entrepreneurs not only those ‘independent’ businessmen in an exchange economy who are usually so designated, but all who actually fulfil the function by which we define the concept, even if they are, as is becoming the rule, ‘dependent’ employees of a company, like managers, members of boards of directors, and so forth.  (p. 74)

Thus, a key achievement of Schumpeter was to highlight that although personal profit is the key motive behind entrepreneurial initiatives, such initiatives also benefit social wealth. Indeed, while pursuing selfish ends, entrepreneurs play a major role in creating social wealth by creating new markets, new industries, new technologies, net increases in productivity, new jobs, and

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new organizational designs. Accordingly, it is suggested that firm development can usefully be described as ‘an iterative process of creating and realizing value through resource combinations and exchanges’ (Moran & Ghoshal, 1999: 1999) which depends on the way resources are accessed and used. Combinations and exchanges are both widely ac­know­ledged by economists as essential mechanisms of economic development, and therefore of organizational growth. Penrose (1959) also places the entrepreneur at the centre of her theory of firm growth, as a resource on whose experience all other resources depend. She states: It is shown not only that the resources with which a particular firm is accustomed to working will shape the productive services its management is capable of rendering ( . . . ) but also that the experience of management will affect the productive services that all its other resources are capable of rendering.

As an alternative to the dominant view at the time, considering the price mechanismas the limiting factor to the growth of the firm, Penrose put forward that the only limiting factor were the resources that the firm was able to muster and use. Resources were defined not only as the physical things a firm can buy or rent and the things it produces for its own use, but also the people it hires to transform the resources, along with their working and hiring conditions. She makes an interesting distinction between resources and services, where a service is the contribution the firm’s resources can make to its productive operations. In her own words: ‘a resource, then, can be viewed as a bundle of possible services’ (1959: 67). The other interesting distinction made by Penrose concerns her phenomenological view of the firm, that is, ‘not an observable object physically sep­ar­able from other objects, and ( . . . ) difficult to define except with reference to what it does or what is done within it’ (Penrose, 1959: 10). This kind of perspective is the source of inspiration for the view that organizations can indeed by seen as knowledge systems (Nonaka &Takeuchi,  1995; Tsoukas, 1996; Brown & Duguid, 2001b). In their book Organizational Epistemology, Von Krogh and Roos (1995: 98) go further and explain that ‘the organization has no substance except for being a self-similar, autopoietic system of knowledge and distinctions’. The knowledge-based approach (KBA) is an extension of the resourcebased view (RBV) of the firm which states that firms should be understood as unique bundles of idiosyncratic resources and capabilities that become the only source of sustainable organizational advantage (Barney,  1991;

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Conner, 1991; Rumelt, 2011). Peteraf & Barney (2003) argue that in contrast with other approaches focusing on market structure, institutional factors, or strategic interactions, the RBV concentrates on internal or enterpriselevel factors to explain sustained performance differences among firms. This internal, enterprise-wide level of analysis makes the RBV an appropriate underpinning for organization design. Rather than supporting a view of organizations as systems for processing information (Galbraith, 1973), this school of thought underpins a view of organizations as knowledge ­creating systems. The RBV also stands in opposition to the transactional costs perspective whereby firms are understood as authority-based entities (hierarchies) whose existence depends upon a comparison with contract-based entities (markets) on the basis of the cost-efficiency of transactions in either model (Williamson, 1979). While in hierarchical bureaucracies, the rules and pol­icies which make up the structure are vehicles for the exercise of authority, in the knowledgebased firm the aim of the structure is markedly different. In the KBA, the role of the structure is to facilitate the creation of new know­ledge, as well as to enable the integration of existing knowledge. The chan­ging role of the structure is especially true when we make the distinction between tacit and explicit knowledge and recognize that the former is resident in many individuals throughout the organization. Hierarchical co­ord­in­ation, which is an efficient mechanism for the coordination of complex systems made up of many specialized units, is unfit to integrate knowledge, especially that of a tacit kind (Grant, 1996).

Organizational Knowledge-qua-Design behind the Evolution of the Organization’s Design As part of the knowledge-based approach to strategy, Nonaka et al. (2008) suggest that organization design should be considered as an asset, contributing to the organization’s knowledge capital alongside other assets that also contribute to the generation of corporate value. This is part of a comprehensive theory about the creation and development of organizational knowledge put forward by Nonaka & Takeushi (1995), an important contribution by Japanese academics belonging to an epistemological turn in the study of organizational knowledge in the 1990s and 2000s. Further to such a turn, there is a move away from a position where knowledge is regarded as something wholly objective inscribed in our thoughts or brains, which can be captured and stored, to a new perspective of knowledge as a dynamic phenomenon,

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tightly linked to bodily movements and manifesting itself in the very act of knowing something (Von Krogh & Roos, 1995). Nonaka & Takeuchi (1995: 59) define organizational knowledge creation as ‘the process that organizationally amplifies the knowledge created by individuals and crystallizes it as part of the knowledge network of the or­gan­iza­tion’. The process considers four different levels—individual, group, organization, inter-organization—and four modes of knowledge creation—socialization, externalization, combination, and internalization (SECI). The four modes and the four levels interact in multiple ways, thus allowing knowledge to be developed through a series of conversions from tacit to explicit, from individual to organizational and so forth. Each stage and each step of the SECI framework requires organizational mechanisms or tools to help people interpret and make sense of the information and the data that exists and circulates in the organization. For example, in the step of externalization (the conversion from tacit to explicit knowledge) metaphors and analogies that can help to reconcile discrepancies in meaning are required. Thus, Nonaka & Takeuchi’s framework might be considered as complex system for the management of meanings. Another approach to organizational learning where meaning plays a central role can be found in the work of Argyris & Schon (1978) and Schon (1983), an approach where the fields of design and management have an opportunity to meet. The work of Schon (1983)—already mentioned in Chapter 2— establishes a definition of design as the ongoing processes of reflection-inaction and reflection-on-action. This is reminiscent of the two-step approach to organizational learning put forward earlier by Argyris & Schon (1978), that is, single-loop and double-loop learning. Single-loop leaning suggests that reflection in/on the results of action tells us about the immediate strategy behind the action, while double-loop learning suggests that reflection on action should go further and uncover the underlying assumptions of any action strategy. In other words, only knowing about the immediate triggers for action is insufficient, and effective organizational learning requires one to dig deeper. People in organizations are very often pressured into saying and doing not what they think is right (their espoused theory), but what is right for the company (their theory in use). With time, this process becomes internalized and, on the surface, organizational members are often unaware that they do not use the theories they espouse, and few are aware of the theories they actually use. Such positioning of organizational members, as well as the ensuing power games are tightly linked to the meanings held—consciously or not—by individuals.

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The epistemological turn towards knowledge as action was also a response to the approaches from traditional cognitive science claiming that ‘learning’ is an accumulation of symbolic representations, which could be replicated using artificial intelligence. Instead, the situated school of thought made the point that knowledge acquisition is not the result of abstract and mechanical processes, but that context and participation are crucial components of the process. In other words, knowledge development requires ‘situated learning’ (Suchman, 1987). Lave & Wenger (1991) describe learning as an ‘integral and inseparable aspect of social practice involving the construction of identity through changing forms of participation in communities of practice’ (1991: 53). The situated approach rejects any notion of knowledge transfer, in which knowledge is isolated from practice. Indeed, Brown & Duguid (2001a: 204) argue that it is through practice that the value of knowledge becomes apparent, metaphorically explaining that knowledge is something that ‘runs on rails laid by practice’. Similarly, Orlikowski (2002: 251) coined the expression ‘knowing-in-practice’ to signify ‘the mutual constitution of knowing and practice’.

Organizational Knowledge as Organizational Design According to the approaches above outlined, it starts to become clear that meaning and practice are central to many of the existing approaches to learning or knowledge development in organizations. So, if organization design can be described as a combination of meaning and practice, then a relationship between organization design and organization learning can be hy­pothe­sized. Although this relationship is, in our view, foundational for a new conception of organization design, it has not been the focus of much research or writing, unfortunately. One notable exception is an empirical study, reported by Parrish (2010), investigating the design principles behind the success of sustainabilitydriven entrepreneurs in the competitive market. In the study, organization design requirements are set against the values and beliefs that are behind an ethical stance taken by the entrepreneurs, where the choice is between ‘perpetual’ versus ‘exploitative’ use of resources. The entrepreneurs opted for the ‘perpetual’ stance, based on the premise that human and natural resources are not meant to be ‘exploited’ but to be ‘treated in a way that is mutually restorative, supportive and enriching’ (2010: 7). The design requirements were: purpose (justifying existence), efficiency (achieving synergies), tradeoffs (balancing competing objectives), criteria (prioritizing decision choices),

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and inducements (allocating benefits). In applying their ethical stance to such requirements, the entrepreneurs created a guiding heuristic for the behaviours and routines they needed in order to coordinate actions and provide services. This heuristic expressed itself as a set of five action principles: resource perpetuation, benefit stacking, strategic satisficing, qualitative management, and worthy contribution. To be noted that this interesting study was on the effects of organizational knowledge on principles of organization design, but the same study could have been carried out in the opposite direction, that is, a study looking into the effects of organization design on organizational knowledge. The type of concepts used—generative rules, design principles, and design constants—and the suggestion of heuristics rather than rationality as a model for decisionmaking, constitute a new type of discourse in organization analysis, a discourse that might be labelled ‘designerly’ (Johansson-Sköldberg & Woodilla, 2009). Reasoning along these lines, it is proposed that, onto­logic­al­ly, organization learning, interpreted as organization knowledge development and organization design are both ‘hermeneutical enterprises’, and that both share with the design discipline the domain of ‘dialogic question and answer’ (Snodgrass & Coyne, 1997: 27 and 34). Thus, our working hypothesis is that the concepts of organization design and organizational knowledge are linked at the core, and represent two sides of the same phenomenon, that is, the organization. Both represent the overt and the invisible features of what we call ‘organization’ and any change in one implies a change in the other. Therefore, any action that might be labelled organization designing will entail a corresponding activity in organizational learning or knowledge development, and vice-versa. This explains our use of the expression organizational knowledge-qua-design, that is, a means of conveying the idea that ontologically the organization’s knowledge and its overall design share the same roots, develop in tandem and can be considered as mutual surrogates.

The Ontological Model Recovering the suggestion made in Chapter  2 concerning the three broad categories of organizational meanings—(i) managerially generated intended meanings; (ii) organizationally generated emergent meanings; and (iii) beneficiaries-generated perceived meanings—in this chapter we put forward that each category of meaning is behind one of three processes of organization designing or knowledge-qua-design development, that is:

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• Processes of intended design, fuelled by managerially driven know­ledge and values • Processes of emergent design, made up by organizationally generated capabilities • Processes of perceived design, created by internal and external stakeholder observations and interpretations. The knowledge-qua-design contained in each of the processes is crucial for the organization’s survival and growth, and the three processes, which are totally interdependent, constitute this chapter’s ontological framework (see Figure 3.1). Processes of intended design are usually the starting point for most or­gan­iza­ tion­al initiatives, with managerial knowledge and meanings being put forward in the form of choices, instructions, or decisions. Intended meanings exert important influence on organization design, for example, through the implementation of management/information systems. These have a strong influence on the rest of the organization, but not all managerial decisions are executed in accordance with managerial intent; some decisions are modified before execution and many new decisions are taken at the local level despite managerial intent. Indeed, the bottom-up formation of practice-based organizational capabilities is a crucial part of the creation of the or­gan­iza­tion­al knowledge, which means that the overall design of the organization also

Intended Design

Perceived Design Defined by the epistemology of organization as social actor. Awareness, recognition and knowledge of features, manifestation or characteristics of all the organization’s outputs (inc. its products and services) by internal and external stakeholders.

Knowledge and intent behind and embedded in managerially inspired artefacts (i.e. policies, procedures and performance management systems) deployed top-down in the organization

Emergent Design Knowledge formed bottom-up (inc. all the locally formed, practice-based competences and capabilities) contributing to and ultimately embedded in organizational artefacts

Fig. 3.1:  Ontogenesis of organizational design as the outcome of three evolutionary categories of organizational knowledge-qua-design

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depends on such emergent capabilities. Artefacts are enacted and modified by local practices. The artefacts that begin to emerge as a consequence of intended design (e.g. an internal memo) are perceived first by internal stakeholders, who often have to follow up, communicate, detail, or execute. External stake­ holders may also come into contact with internal artefacts originating from managerial intent (e.g. a leaked internal memo) or from a modified version of a managerial instruction (e.g. an after-sales service interpretation of a guarantee procedure). Based on this, external stakeholders form their opinions about the organization or its services. However, most of the contacts between external stakeholders and the organization happen through its products or services which are important carriers of features of the or­gan­ iza­tion’s design. Perceived organization design includes not only perceptions by internal and external stakeholders about the organization’s functioning, including attitudes and utterances by the organization’s management, but also the perceptions by the organization’s customers of features of the organization’s products or services, including all after-sales relationships. Thus, perceived design is the result of a combination of the joint outcome of intended plus emergent designs. In other words, perceived design is the combined outcome of all of the organization’s competences and capabilities. The lower level competences include the learning that emerges from individuals’ participation in their local communities of practice, as well as the new skills and meanings that such participation implies. The higher level capabilities include the organization’s capability to coordinate activities at all levels, essential for the achievement of efficiency, effectiveness, legitimacy, reputation, as well as high levels of organizational well-being. Organizations are designed to provide a service and such provision determines, to a large extent, the features of the organization’s design. Thus, perceptions of design, whether they emanate from products or services, internal views about the organization’s functioning, or external perceptions about the organization’s posture on social issues, all contribute to perceived design. Such perceptions are at the root of an ongoing evaluation by all stakeholders which includes decisions about the continuation of support to products services or the organization as a whole. This evaluation is usually closely monitored by the organization so as to form the basis of subsequent managerial decision-making, related not only to the specific products or services but to all parts of the organization’s design. Thus, perceived design is a key source of feedback from stakeholders, and a key input into both intended and emergent design.

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Having provided a coarse description of the ontological model, we now turn to a more detailed discussion of each of its components.

Perceived Design: Organization as Social Actor Buchanan (2015) suggests that design needs to become a regular part of organizational life, through a reform of organizational culture, in a way that is ‘grounded in the quality of experience for all of those served by the or­gan­ iza­tion’ (p. 17; italics added), to include the customers, who purchase and use the organization’s products and services, as well as all other stakeholders, directly or indirectly affected by the internal and external operations of the organization. The notion of stakeholder includes parts of society that are ultimately affected by the organization’s vision and strategies. Taking up this suggestion, we put forward that organization design theory needs to encompass ways of evaluating the experience of those served by the organization, so that improvement and change can be brought about. Against this background, we suggest that perceptions of design constitute a key component of the process of organization design. These, which can be further sub-divided into internal and external perceptions, cover all outward manifestations of organization design, for example: identity, image, reputation, or legitimacy as attributes of the organization as a social actor. The paragraphs that follow are almost entirely based on the excellent characterization of the organization as a social actor by King et al. (2009). These authors argue that organizations are social actors, alongside other actors and entities that make up the organizational ecosystem. Figure 3.2 shows a classification scheme of three types of actors—individual, organization, and state—and two types of entities—communities and markets. The figure also shows a line establishing the boundaries of an imaginary organization, setting it apart from the other actors and entities. This demarcation helps to emphasize the view that organization are artefacts and that organization designs can be seen as a set of interfaces. Simon (1996: 6) explains: An artefact can be thought of as a meeting point—an ‘interface’ in today’s terms— between an ‘inner’ environment, the substance and organization of the artefact itself, and an ‘outer’ environment, the surroundings in which it operates. If the inner environment is appropriate to the outer environment, or vice versa, the artefact will serve its intended purposes.

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ORGANIZATION

Communities

Markets

SOCIAL ENTITIES

State

The organization design interface Individual SOCIAL ACTORS

Fig. 3.2:  Defining organization design in accordance with a social-actor perspective on organization King et al. (2009)

Thus, the three types of the social actors—individuals, organizations, and the state—interact on a daily basis and depend on one another for their daily business. Individuals lend their work capabilities to organization through contracts, while organizations do business with other organizations also through contracts. Through regulations, the state oversees the activity of both individuals and organizations and both these actors, in turn, shape the regulatory powers of the state, through representative institutions. Regarding communities or markets, while sharing some features in common with organizations, they are not considered as actors. Organizations are unique in the sense that they are assumed to be sovereign, responsible, and intentional. Organizations and markets have many characteristics in common and, in their entrepreneurial phase, organizations are difficult to differentiate from markets, given that most of the organization’s functions are outsourced. Markets inherently lack a centralized source of sovereign control or authority as organizations do; however, organizations are never completely separate from markets. On the other hand, communities and organizations also share some similarities. Organizations form the foundation for the work of communities, serving as ‘portals through which community members communicate their interests and accomplish collective ends’ (King et al., 2009: 8). Communities have identities and like organizations, they exhibit solidarity and create en­vir­on­ments of participation, where their members can fulfil their emotional and social needs. However, communities also show some significant

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differences in relation to organizations. Unlike organizations, communities consist of interdependent individuals who are not constrained by strict structural control rules, and their identities are also markedly different from the identities of organizations. To a large extent, communities derive their identity from the collective identity of their members, whereas organizations inscribe their identities on members. Both communities and markets begin to look like actors from the moment they develop organizational properties. Once constituted as such, organizations are actors that can change the lives of individuals, shape communities, transform markets, and exert influence on the state. Thus, considering the organization as a social actor implies an acceptance that organizations are ‘bona fide mechanisms for societal change’ (King et al., 2009: 2) that behave in a purposeful, intentional manner. The assertion that organizations are social actors also implies that or­gan­iza­ tions are more than just an aggregation of individuals who bring the social collective into existence through intersubjective and shared experience, and whose interactions are partly shaped by environmental factors. This means that stakeholders and its general audience form impressions or perceptions about what the organization is, what it does, how it behaves, or how it is expected to behave. There are many examples of commonly used expressions which provide evidence for the fact that organizations are indeed perceived as social actors with distinctive characteristics. For example: ‘the LSE has an excellent reputation’, ‘Nokia has transformed itself very quickly’, ‘next month General Motors will lay off 5,000 employees’, ‘Apple signed a contract with Samsung’, or ‘BP acted irresponsibly in the 2010 Deepwater Horizon oil spill’. Thus, according to King et al. (2009), the assertion that organizations are social actors implies that organizations are assumed to: 1. Be attributed as capable of acting by other actors, especially their stakeholders 2. Have some form of intentionality that underlies behaviour and expected behaviour. King et al. (2009) argue that there is a disconnect, especially amongst scholars who are concerned with the anthropomorphism of organizations, regarding the belief that on the one hand ‘organizations need to be held responsible’, while on the other hand our theoretical assumptions ‘do not allow organizations agentic capabilities but rather emphasize the causal role of the environment’ (p. 5). Here, King et al. provide a powerful argument in favour, not only of organization as social actor but also of the hypothesis of

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endogenous organization design, that is, organization design as dependent upon the internal workings of the organizations. Indeed, in the citations above these authors shun the long-held belief that the organization’s design is essentially the dependent variable in an equation where the independent variables are environmental conditions. In defence of the position that organization is a social actor King et al. (2009) touch on the issue of organization design and highlight the benefits of adopting this position for the theorizing of organization design. First, in citing Tollefsen’s (2002) argument about the intentionality of organizations, they point out that organizations are ‘designed to carry out a particular point of view’ (2009: 5) and explain that organizations’ structures are oriented in accordance with particular points of view. Once organizational members are able to make sense and explain their organizations’ points of view, they will be able to make decisions and act in ways that are predictable and not completely motivated by their own individual self-interest. Also, the ability of members to understand their organizations’ intentionality allows them to be ‘forward-thinking and act in a way that they perceive benefits the purposes of the collective actor’ (2009: 5). The perspective of organizations as social actors can be explained further if broken down into the following interlinked attributes: • Sovereignty, responsibility, and goals • Identity, image, reputation • Legitimacy. Organizational sovereignty refers to the rights of the organization to contract services, to decide who can be part of its membership, what actions its members can take, etc. Also, sovereignty entitles organizations to act on behalf of their members. Corporate social responsibility refers to the responsibility of the organization, outside of the legal realm, for the consequences of its actions. Goals, which may be official and public or known only inside the organization, provide an accountability mechanism for outside parties, but more importantly they may serve as a guide for the behaviours of stake­ holders, including employees. Sovereignty, responsibility, and goals are both causes and consequences of the remaining attributes—identity, image, reputation and legitimacy. For example, if an organization is seen as misusing its sovereignty or being negligent about its responsibilities, these realities will somehow be reflected in the organization’s identity, image or legitimacy. Organizational identity is explained as a system of shared meanings arising from the members’ awareness of belonging to the organization

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(Cornelissen et al., 2007). Organizational identity reflects organization design as perceived internally, that is, design made up of the meanings emerging from internal practices shaping the perceptions and motivations of internal stakeholders. Externally perceived organization design, variously labelled as image, reputation, or brand concerns the meanings formed by external stakeholders in the process of engaging with the enterprise as customers, suppliers, or investors. External perceptions of organization design are ­constituted by the intended image or corporate identity (i.e. what does the organization want others to think about the organization?), the construed image (what does the or­gan­iza­tion believe others think of the organization?), and the reputation (what do stakeholders actually think of the organization?). Identity evolves with the growth of the organization and while in the entrepreneurial stages, identity is closely tied to the preferences and choices of the founder(s), but as values ‘infuse’ the organization over time, identity becomes increasingly institutionalized (Selznick  1957: 17). Explicitly and implicitly, identity works as a reference point for each organizational member and creates expectations about appropriate behaviour in the or­gan­iza­tion. It forms a basis for intentionality, motivation, and competence building within the organization, as will see further along. Organizational legitimacy is defined as a ‘generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions’ (Suchman, 1995: 574). Heugens & Lander (2009) report that or­gan­iza­ tion­al legitimacy is established through the adoption of well-established and frequently encountered structures or ‘blueprints’ for organizing. Regarding internal legitimacy, there are numberless outputs or surrogates of organization design which help to make sense of the organization and define its design. Successive corporate scandals (one recent example is the Volkswagen emissions cheating scandal), economic crises, environmental mismanagement are causing companies to be scrutinized like never before and have an important bearing on the organization’s internal and external perceptions of legitimacy. This has been exacerbated by the new transparency afforded by social media, enabling the instant broadcasting of the slightest inkling of an incident.

Manifestations of Perceived Organization Design The work of Elsbach and colleagues looking at the identification and management of organizational perceptions in the eyes of internal and external stakeholders (Elsbach & Sutton, 1992; Elsbach, 2003; Elsbach, 2006; Elsbach &

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Breitsohl, 2016) is a stream of research that contains useful contributions for this aspect of organization design. While also emphasizing the organization as a holistic entity, Elsbach (2003) discusses the management of organizational perceptions. She highlights the need for organizations to protect and manage positive images, identities, or reputations against the threats of illegitimacy associated with corporate scandals. The perceptions and actions (leading to perceptions) listed in Elsbach’s research include:

• • • • • • • •

Primary business activities Treatment of employees Affiliation with other groups Inclusive or exclusive categorization/labels Verbal accounts Permanent buildings/artefacts Office décor and layout Logos, signs, or letterheads.

Thus, when we talk of perceptions of organization design, we are talking about perceptions from the point of view of internal or external stake­holders, when they tacitly or explicitly take note and evaluate some aspect of the functioning of the organization. Clients have many opportunities to carry out such evaluations, when they are impacted (positively or negatively) by any aspect of the organization’s policies, procedures, or systems. Likewise, employees often reflect upon characteristics of the organization’s design as such characteristics impact their own work, performance, or well-being. Such evaluations have important consequences, in terms of the functioning, the growth and sometimes even the survival of the organization itself. In a study on the impact of organizational design on changes in service strategy in manufacturing firms, Gebauer et al. (2010) suggest a number of ‘elements’ of organization design as independent variables. These constitute perceptions, working at either individual or collective level and defining how stakeholders evaluate, feel, and act in relation to the organization’s design. They are:

• • • • • •

Employee behaviour Personnel recruitment Personnel training Personnel assessment or compensation Organizational distinctiveness in terms of products or services Proximity of the service organization to customers

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• Formality of the service development process • Customer involvement in the service development process. To conclude, given that organizations are perceived as social actors and that all features of organizations are a product of design, it can be stated that the design of organizations depends, to a large degree, on perceptions by the organization’s stakeholders and audience in general. This, in turn, reinforces the notion that organization design’s governing processes are processes of cognition, working either at individual or social level. Referring to the model shown in Figure  3.1, perceptions of design are influenced by processes of meaning coming from two directions: from man­ ager­ial intended meanings and from the meanings emerging from bottomup development of organizational capabilities. Policies directly affecting employees, such as leave entitlements or promotion criteria, are examples of intended design. A successful brand, on the other hand, is an example of the mixed influences of product characteristics, service quality, and company image and reputation. Finally, the perception of educational excellence from an institution of higher education is an example of the successful development of organizational capabilities, rather than policies or systems set up by managerial intent.

Intended Design: Top-Down Deployment of Managerially Inspired Artefacts In two books published by Harvard University Press—Levers of Control (1994) and Levers of Organization Design (2005), Robert Simons sets out the basics of the top-down approach to organization design. In the first book, Simons proposed the levers of control (LOC) framework as a tool for the implementation and control of business strategies, an ‘action-oriented theory of control’ (1994: ix). Based on a ten-year examination of control systems in over fifty US businesses, this book establishes a bridge between the dis­cip­lines of strategy and control accounting. In it, Simons identifies four new control systems, which act as enablers of strategic change: (1) belief systems that communicate core values and provide inspiration and direction, (2) boundary systems that frame the strategic domain and control the risks to be avoided, (3) diagnostic control system, whose function is to monitor, assess and reward achievement on key areas of performance, control critical per­form­ ance variables, and (4) interactive systems that provide flexibility in adapting

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to competitive environments and encourage organizational learning control strategic uncertainties. Simons argues that a successful implementation of strategy requires companies to use all the four levers in an appropriate combination. In the second book, Simons takes the logic of the first—LOC—and applies it to the design of organizations. Adopting a useful design stance, he begins by stating: factors that influence a firm’s success like strategy, technology or leadership get significant managerial attention, yet organization design of the accountability system that defines roles, rights, and responsibilities throughout the firm is often left to evolve naturally without conscious planning or oversight. (book’s front flap)

Indeed, the detail of the ‘accountability system’, which defines the design of the entire organization from the point of view of the organization’s per­form­ ance management mechanisms, is often taken for granted. Performance management, as an area of research and study, has emerged as an evolution of the influential framework developed by Anthony (1965) and known as ‘management planning and control systems’. Under such a framework ‘management control’ was kept apart from ‘strategic planning’ and ‘operational control’ because the latter two were believed to be of a different nature from the former. It relied overwhelmingly on accounting as a common language capable of including all organizational activities and for this reason management control became largely synonymous with management accounting. This and the deliberate split of the management level from the operational and the strategic levels caused Anthony’s approach to be largely unsuccessful (Otley, 1999). As a more advanced follow-up to Simons’ approach, performance management systems (PMSs) represent the intended, top-down approach to organization design. Otley (1999) put forward a framework that takes into account the major trends of organizational control, that is, the techniques of budgeting, the notion of economic value added and the balanced scorecard methodology. The framework is founded upon a set of five questions (1999: 365‒6): 1. What are the key objectives that are central to the organization’s overall future success, and how does it go about evaluating its achievement for each of these objectives?

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2. What strategies and plans has the organization adopted and what are the processes and activities that it has decided will be required for it to successfully implement these? How does it assess and measure the per­form­ance of these activities? 3. What level of performance does the organization need to achieve in each of the areas defined in the above two questions, and how does it go about setting appropriate performance targets for them? 4. What rewards will managers and other employees gain by achieving these performance targets or, conversely, what penalties will they suffer by failing to achieve them? 5. What are the information flows—feedback and feed-forward loops— that are necessary to enable the organization to learn from its experience, and to adapt its current behaviour in the light of that experience? Otley’s study has subsequently been reinforced by another seminal paper (Ferreira & Otley,  2009), where the notion of PMS is made more comprehensive and moved closer to the realm of organization design through the inclusion, for example, of the organizational structure and its impact on the design and use of the PMS, or the changes made to the PMS to accommodate the dynamic changes of the organization and its environment. In a recent book, Adler (2018: 1) defines performance management as an interdisciplinary field of study, which is broadly about ‘how organizations design their organizational structures, systems, and cultures’, aimed at creating the right conditions for the implementation of the organizations’ strategies. Thus, in terms of its relevance for organization design, the concept of per­ form­ance management provides two key contributions: first, in attempting to be comprehensive in the coverage of the organization, it becomes also a blueprint for intended organization design; second, its foundational premise that organizational performance is dependent upon the articulation of a set of ‘means-ends’ relationships between (intentional) design decisions and organizational outputs is also foundational for organization design. The latter point is explained as follows: The formal performance measurement system is seen as a major mechanism that can be used to make explicit the set of means-end relationships that the or­gan­iza­ tion has developed as the methods it will use to implement its strategic intent. (Otley, 1999: 367)

Thus, the ‘means-ends’ foundation of PMSs and the notion of information flows as part of the model, must also be applied to the ontological model of

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organization design. In other words, the actions taken by designers as part of intended design (e.g. in designing and implementing PMSs) create a reaction on the part of users, customers, or other stakeholders once they meet the designed artefact(s). Such reaction produces feedback information which, if handled adequately, will bring about changes to the premises behind the originally intended design. In our ontological model, perceived design represents the source of feedback (as well as feedforward) information that the model needs, in terms of its learning, adaptation, and growth. Therefore, the viability of the organization’s design can be said to depend, to a large degree, on perceived design. It should also be said that PMSs do not account for the entire universe of intended design, given that there many design decisions which pre-date the creation of the PMS. Indeed, there is a host of managerial actions that trigger the creation of organizational artefacts which are taken before any PMS exists in the organization, for example, the original creation of an or­gan­iza­ tion­al structure. However, as organizations grow and become more complex, at some point PMSs need to be introduced and when that happens many of the original design decisions have to be reviewed and are often changed in line with the new PMS policies. Hence, PMSs can be said to be the archetypal drivers of intended organization design. In the next section, we continue the exploration of our ontological model with the third category of organization design: emergent design. Although recognized as a reality, emergent organization design presents some difficult challenges as a theoretical proposition. Given its emergent character, it is invisible, hard to capture, and largely impossible to predict. However, its consequences can be analysed and in conjunction with the other design categories—perceived and intended—a great deal can be subsumed about emergent design.

Emergent Design: Bottom-Up, Routine-Based Formation of Organizational Knowledge, Competence and Capabilities The emergent part of the organization’s design is what differentiates the organization from other organizations. Much of intended design can be replicated, in the form of policies, procedures, or systems. What cannot be copied are the myriad practices and competencies developed bottom-up and over time by the organization’s members and stakeholders. In other words, if it is recognized that the strategic capabilities of organizations can be traced

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back to the micro-practices in its many areas of activity, the case for emergent organization design has been made. The building blocks of emergent design are routines and practices. Practices have traditionally been explored by sociologists, while routines have been a research domain of the economics community, however there is a great deal of overlap between the two. According to the sociology of Giddens, routines are practices that require a low regime of reflexive monitoring, that is, low levels of awareness on part of the actor in accounting for the reason(s) of his or her conduct (Nicolini, 2012). Routines allow us to pursue our daily activities with social acceptance and minimum disruption to personal intent. Thus, as a mechanism of social life, which requires individuals to conduct themselves in accordance with mores and traditions, routines allow individual action to unfold with cognitive economy and low levels of anxiety. In economics, the notion of routine gained currency through the work of Nelson & Winter (1982) on evolutionary economics, developed on the basis of Winter’s (1964: 263) original definition of routine as a ‘pattern of behavior that is followed repeatedly but is subject to change if conditions change’ A great deal has been written on routines, however Becker (2004) provides a particularly useful summary in the following passage: Routines allow organizations to do four things. First and foremost, routines en­able coordination. The capability of routines to enable coordination builds on the basis of a balance between the interests of the participants in the routine (the so-called ‘truce’). Triggers play an important role in bringing about coordination. Second, routines provide some degree of stability of behavior ( . . . ) The stability of behavior has the implication that expectations about the behavior of others can be formed. Third, when tasks are routinized, these tasks can often be executed in the realm of the sub-conscious, thereby economizing on limited cognitive resources. Fourth, routines bind knowledge, including tacit knowledge ( . . . ) For this reason, routines are also considered as the building blocks of organizational capabilities. (Becker, 2004: 662)

A study of the characteristics of practices as routines opens up new pos­si­bil­ ities for an exploration of the notion of emergent organizational knowledgequa-design, as routines evolve into organizational capabilities. In the passage above, we find two characteristics of routines—stability of behaviour and economizing on cognitive resources—which are common to the characteristics highlighted by the sociologist Nicolini (2012) above. But there are two other characteristics—binding of knowledge and facilitating organizational

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­coordination—which complement the first two and help to describe how routines and practices contribute to the emergence of organization knowledge-qua-design.

Routines as Generative Systems At this juncture it is relevant to mention the work of Pentland & Feldman (2008), starting with their definition of routines as ‘generative systems that produce repetitive, recognizable patterns of inter-dependent action carried out by multiple participants’ (p. 236, italics added). These authors make a couple of important distinctions about routines. First, they distinguish between two different dimensions of human-enacted routines: the performative and the ostensive dimension. The ‘performative’ aspect consists of the observable performances of routines at specific times, in specific places, and by specific individuals. In explaining the ‘ostensive’ dimension, they refer to the ‘abstract regularities and expectations’ (2008: 241) that enable participants to refer to a routine and explain its visible manifestations. They also refer to this aspect as ‘the understandings (embodied as well as cognitive) of the participants’ (p. 241), thus highlighting the social and the semantic foundation of the ostensive mode. Secondly, they emphasize that the ostensive dimension should not be confused with written rules or procedures which are part of the artefact that may or may not be associated with the routine. Importantly, Pentland & Feldman remind us that while artefacts are designed, routines are not designed. Artefacts, such as policies, procedures or information systems, originate from managerial decision-making, therefore they are part of intended designed. Routines, however, are emergent in the sense that are the product of the interactions of humans with the artefacts. The two dimensions are mutually constitutive and without one of them, the generative system that produces performances will not be set in motion and the recognizable patterns of action that characterize the routine will not be produced. Thus, when we talk of designing the organization, we are talking about the mutual constitution of designing and using artefacts. When artefacts are deployed and begin to be explored or used inside or outside the organization, the interactions of the participants with the artefacts or around the artefact cause routines to emerge. After a while, the emergent routines begin to reshape the artefact and the end result is an ever-changing sociomaterial assemblage of artefacts and routines. This is what happens when the

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artefacts created by managerial intent descends to the lower levels of the organization and meet the people who are actually going to execute or implement them.

Communities of Practice Contributing to the Binding of Organizational Knowledge In exploring the concept of community of practice, Wenger (1998) proposes a framework which places practices and routines at the centre of a theory of organizational learning and helps to explain how the binding of knowledge (-qua-design) occurs. The framework is anchored on the definition of community of practice as ‘a community with a joint enterprise, shared repertoire, and mutual engagement’ (p. 73). The learning that emerges from such engagement involves a process of creation of meaning, which is generated not only by the interplay of two sides of the duality ostensivity-performativity, but also by participation. Participation reflects the fact that in order to exist in the social world one needs to engage directly in a variety of forms of personal participation, such as in team work, daily conversations or the simple attendance of organizational events. On the other hand, in order to participate one needs to produce or reproduce artefacts—words, tools, methods, stories, documents, or diagrams. This is part of performativity or the turning of ostensivity into material things. Wenger (2010) explains that artefacts organize our participation and that participation is crucial for meaningful learning to occur. He states: ‘artefacts without participation do not carry their own meaning and participation without artefacts is fleeting, unanchored, and uncoordinated’ (p. 180). Participation in practices contribute to the negotiation of meaning and forms the basis of organizational learning. Thus, the learning that takes place within communities of practice is always the result of a personal effort to understand one’s surroundings and one’s role in whatever activity one is involved in. In the context of organization design, participation highlights the need for jobs to be designed in such a way that members have op­por­tun­ ities to participate. But participation also contributes to the emergence of the personal notions of competence and identity. Over time, communities develop regimes of competence which reflect their own history of social learning of that particular community. This means that in order to participate in a community, members need to have a certain level of competence. Such level or regime of competence is tacitly established by the community

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during its regular activity and it becomes an important source of identification of new learners. The process of identity formation, which is tightly linked to the notion of binding of (organizational) knowledge, concerns the way in which the learner negotiates his or her identity as a participant in the community, that is, how the learner expresses his or her competence and how others recognize the learner as a member. Thus, identity refers to a process of becoming a certain person, with a certain level of competence, who has a role and a certain level of responsibility for the development of a particular community of practice (Farnsworth et al., 2016).

Identity and Learning as the Invisible Hands of Coordinated Activity In their work on organizational knowledge, Kogut & Zander’s (1992) assert that knowledge is not only held by individuals, but is also expressed in the ‘regularities by which members cooperate in a social community (i.e. group, organization, or network)’ (p. 383). They are, therefore, highlighting the need to consider organizational knowledge in the form of routines, while reaffirming that capabilities stem from social interaction with roots in the ‘wiring of human cognition to acquire tacit procedural knowledge as the basis of interaction with other individuals’ (Kogut & Zander, 1996: 515). The work of Kogut & Zander (1996) is particularly relevant not only due to its focus on the role of coordination in the development of capabilities but also because it reinforces identity and learning as concurrent phenomena. These authors explain that firms provide the ‘normative territory’ (p. 506) which serves as an identification anchor for members and a ‘sense of community by which discourse, coordination, and learning are structured by identity’ (p. 503). This is clearly reminiscent of the theory of social learning in communities of practice put forward by Lave & Wenger (1991) and Wenger (1998) and discussed above. Recalling the points made by these authors, they emphasize the interplay between participation and artefacts in the formation of identity, a process in which the learner negotiates his or her identity and competence as a participant in the community. Kogut & Zander (1996) complement this idea by saying that identification defines the rules by which individuals co­ord­in­ate their behaviour and that coordination-related learning develops ‘through the formation of values and convergent expectations’ (p. 506). Kogut & Zander argue that a shared identity not only lower the costs of

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communication, but it also establishes explicit and tacit rules of coordination. Furthermore, they assert that coordination is facilitated and improved across individuals and groups of diverse specialized competence, through identification. Dosi et al. (2008) also focus their attention on coordination as a central mechanism in the formation of organizational capabilities. They explain that it is the organization’s formal and informal structures that generate the social relations and the organizing principles which in turn influence the ability of the organization to produce new capabilities. They explain further, with the following comparative insight: Just as the market system accomplishes remarkable feats of coordination without the aid of a central plan, organizational learning produces the coordinated ­per­form­ances of organizational capabilities without the aid of a recipe or, alternatively, without the aid of a comprehensive plan, optimized or not. According to the mainstream tradition in economics, economic actors do not have to understand the price system for it to work. Similarly, an organization produces coordinated activity without anyone knowing how it works.  (2008: 1178; italics added)

Indeed, these authors highlight coordination as the invisible hand of or­gan­ iza­tion­al knowledge, that is, something that blends and binds the knowledge held by individuals to the properties of material artefacts. This occurs at the level of communities of practice, which may be placed internally within the organization or externally, linking the organization to its stakeholders.

Studies of Strategy-as-Practice as Exemplars of Emergent Design A school of thought that draws attention to practice as an emergent mode of organization knowledge-qua-design is strategy-as-practice (Golsorkhi et al., 2015). In a recent paper, Whittington (2018) makes a compelling argument for the importance of local rather than universal forms of rationality and for the organizational value of informal ‘communities of practice’, where pockets of expertise are to be found. That author proposes a set of five prin­ciples, which lay behind a new managerial discourse supportive of a bottom-up approach to strategy, where strategic capabilities are the result of a building up of ordinary practices. The principles are: value the ordinary, see past markets, embrace diversity, allow for the bottom up, and accept different forms of greatness (p. 343).

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Many of the reported studies in this field are carried out within specific organizational communities and are framed by the characteristics of such communities (e.g. accountants). Fauré & Rouleau (2011), for example, investigate the practical knowledge of strategy of accountants and middle man­ agers when drawing up a budget. The study was aimed at better understanding how accountants and middle managers collaborate in order to produce accounts that conform to accounting norms and also provide a fair assessment of strategy realization. Based on the technique of conversations ana­ lysis, the study identifies three micro-practices which make up the strategic competence the accountants’ and middle managers: (1) invoking the usefulness of numbers to activate local projects, (2) constructing the acceptability of numbers to be reported to external partners, and (3) authorizing the plausi­bil­ity of numbers in order to achieve a balance between local contingencies and global coherence. Another example is the study by Rouleau (2005) which examines middle managers’ routines and conversations related to the implementation of a strategic change in a top-of-the-line clothing company. The paper discusses how middle managers draw on their tacit knowledge to contribute towards renewing links with stakeholders, in particular the customers. Rouleau ends by suggesting the necessity of looking at middle managers’ role as interpreters and sellers of strategic change at the micro-level, for a better understanding of their contribution in sustaining competitive advantage through their everyday activities. Most of the studies on strategy-as-practice rely on the ana­lysis of language and meanings, a point strongly emphasized by Jalonen et al. (2018: 2822), who argue that strategic language is not something abstract that resides in discourses, narratives, or rhetoric, but on concepts that are created, negotiated, or abandoned as part of the organization’s ‘strategic sensemaking’.

Higher Level Routines: Dynamic Capabilities and the Emergence of Organizational Design Teece (Teece et al., 1997; Teece, 2007; Teece, 2009), one of the most prolific writers on organizational knowledge, argues that the rep­lic­able nature of knowledge is critical to business strategy and good management in the global economy. He says: ‘the new economic challenges require new organizational forms and the astute exercise of dynamic capabilities’ (2009: 194). Dynamic capabilities are explained as high-level capabilities that ‘govern other organizational activities’ (Teece,  2014: 329) and enable the enterprise to direct its

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ordinary activities toward ‘high-payoff endeavours’ (p. 328). The role of dynamic capabilities is explained in the following manner: ‘Just as there are better and worse ways to hit a golf ball or ski a mogul field, there are more and less effective ways to execute particular dynamic cap­abil­ities such as alliancing, strategic decision making, and knowledge brokering’ (Eisenhardt & Martin, 2000: 1108). Dynamic capabilities have properties that are distinct from routines they emerge from, which include also the effects of agency embedded in man­ager­ial and entrepreneurial behaviours (Teece, 2012). They can also be explained as ‘meta-competences’ held by the organization as a whole and manifest in achievements, such a successful merger or a winning product. There are three major types of dynamic capabilities—‘sensing’, ‘seizing’, and ‘transforming/ reconfiguring’—all playing a part in building and maintaining the organization’s competitive advantage, if and when suitably ‘choreographed’ (Teece, 2007: 1341). The choreography of dynamic capabilities is achieved by means of the invisible hand of organizational coordination operating at lower levels of routines, as suggested above. More recently, Teece has adopted a systems approach to dynamic cap­ abil­ities (Kay et al., 2018; Teece,  2018), which supports the emergent approach to knowledge-qua-design proposed in this chapter. It is suggested that dynamic capabilities are not necessarily bound by the conventional borders of the enterprise but that instead they are an emergent phenomenon incorporating interdependencies and complementarities between organizations, teams, individuals, and customers. The firm is conceptualized as a living ecosystem co-evolving amid other ecosystems, instead of a view of the firm reacting to static environments. Interestingly, in addressing opportunities for further research, Kay et al. (2018) suggest the following questions related to or­gan­iza­tion design: ‘How closely does emergence of capabilities through the l­evels correspond to the layers laid down by organization design? Do emergent concepts within organizations track organization design, or does or­gan­iza­tion design track emergent concepts, or do they co-evolve?’ (p. 17). Although still reflecting the current wisdom about organization design, that is, organization design as something made up of hierarchical levels or ‘layers’, these questions raise interesting points about the issue of emergence. As to the question of whether emergent concepts are the cause or the consequence of organization design, our answer is that dynamic capabilities and organization design co-evolve. If, indeed, organization design is defined as the design of the whole organization where ‘capabilities, resources, and strategy constitute a system of interdependent elements that collectively determine

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the competitiveness of a firm’ (Teece (2018: 365), then the answer can only be co-evolution. To sum up, it is suggested that organizational communities (of practice) constitute the early nexus between organization knowledge and organization design. In other words, the entire bottom-up development of organization knowledge-qua-design starts at the level of communities in the organization, with members engaging with each other and negotiating what needs to be done, how, and by whom. As members interact across the organization, this lower level of organizational routines evolves into a more complex level of (dynamic) organizational capabilities. Thus, a legacy of organizational practices builds up over time emerging from a rock-bottom mix of material and social practices and evolving from an individual level of competence to an organizational level of capability. Newcomers join a community of practice and begin adding their individual knowledge and meanings by means of participation and through a display of their individual competence. They need to be accepted by the community, and progressively the process of socialization of the newcomer unfolds. Participation goes on playing a key role because it is through participation that the ostensive dimension of practices can be created or modified. While participating, members carry out the more visible aspects of the practice— the performative dimension—but they work simultaneously on the less visible aspects, through a constant revision of their own understandings of the practice—the ostensive dimension. This facilitates the sharing of meanings, including the values and the convergent expectations which allow members to coordinate their activities without too many problems. In parallel, the sharing of meanings fosters the development of a sense of identity and of an emotional attachment of the newcomer to the group.

Remembering Contexts as the Crucial Enabler Before ending the discussion on emergent design, it is important to mention organizational contexts as the often ignored factor behind the formation of organizational capabilities. Collis (1994: 145) explains that capabilities are embedded in ‘socially complex routines that determine the efficiency with which firms physically transform inputs into outputs’. That author emphasizes that while capabilities are visible manifestations of organizational structures and processes, they also ‘reside in the corporate culture and in the network of employee relations”. On the same vein, Nonaka et al. (2001) affirm that organizational capabilities can only flourish in the presence

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of an enabling context, known as Ba. Ba is a Japanese word which denotes ‘a context that harbours meaning’ and ‘not only a physical space but a specific time and space, including the space of interpersonal relations’ (2001: 19). An important part of organizational knowledge-qua-design, therefore, depends on cultural factors which exert an indirect but powerful influence on the behavioural disposition of individual members. We will return to this im­port­ant topic in the next chapter.

Conclusion As a process, organization design does not stray far from any other design process, where meanings and practices can be said to constitute hermeneutic structures. In the words of Snodgrass & Coyne (1997): If the design process belongs to the domain of social actions and interactions, is firmly embedded in a human situation, and is a focal nexus within a network of intersubjective relationships, then it is more appropriately studied in terms of hermeneutic structures than of the natural sciences.  (p. 95)

Following this line of reasoning, Figure  3.3 helps to draw the conclusions, not only of this chapter but also of Chapter 2. It presents an ontological process model of organization design, founded upon the notion that practices and meanings emerge as people interact in organizational settings as they go about their daily activity. Next, based on the suggestion that there is another type of organizational hermeneutic structure, also hinging on notions of practice and meaning—organizational knowledge—the model considers two different perspectives of the organization as a social actor. The first

The organization as a body of knowledge and learning The organization made up of perceptions, which form a social actor

Fig. 3.3:  Recapping the journey so far

Ontological Building Blocks INTENDED KNOWLEDGE-QUADESIGN EMERGENT KNOWLEDGE-QUADESIGN PERCEIVED KNOWLEDGE-QUADESIGN

THE ORGANIZATION DESIGN GESTALT

Practices and Meanings Emerging from the Interactions of Human and NonHuman Actors in Organizational Settings

Organization as Social Actor

ORGANIZATIONAL KNOWLEDG-QUA-DESIGN

Epistemological Roots

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perspective assumes that the organization can be seen as a body of collective know­ledge and learning which enables it to exist and perform. The second perspective posits that organizations are construed by people’s perceptions and judgements about different aspects of the organization’s role in society. This assumes that the concepts of organization design and organizational knowledge are linked at the core, representing two sides of the organization as an entity. Thus, the expression organizational knowledge-qua-design is forwarded to convey the idea that, ontologically, the organization’s knowledge and the organization’s overall design share the same roots and develop in tandem. Subsequently, three key knowledge-qua-design development processes have been suggested—intended, emergent, and perceived—each contributing with a different category of organizational meaning and a different type of organizational learning as follows. Intended design processes contribute with the meanings and interpretations from managers from every managerial level about their own reading of the course of the organization’s development. Emergent processes contribute with the skills, competencies, and knowledge generated at the local level and emerging from the interplay between every-day practices and the creation or re-creation of artefacts. Perceived design processes contribute through the feedback provided by the stakeholders about the organization’s outcomes, their meanings, and their consequences. Perceived design includes feedback from all organizational stakeholders, that is, internal members, with their perceptions of fairness, identity, image, legitimacy, etc., and external stakeholders, with their views on the organization’s products and services, as well as the organization itself. The three designing processes interact continually in the course of or­gan­iza­tion­al action and jointly create the gestalt that we call organization design. The historical practices and past learnings constitute the organization’s design legacy, a gestalt that influences all those who manage, operate, and interact with the organization in every possible way, including all internal and external stakeholders. New decisions and new emergent practices, many arising from perceived design are the sources of change. They are applied back and forth to and from the organization’s design legacy until some of the historical practices and past learning are modified and some others remain unchanged. Such processes of change are dealt with in Chapter 4, where we will explore the challenges associated with organization design implementation.

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4 Bridging between Organization Design as a Noun and as a Verb Formative Affectual Contexts and Design Trace

Introduction In Chapter 3, we have suggested that the genesis of organization design can be traced to processes of knowledge-qua-design development in the natural evolution and growth of the organization. The expression knowledge-quadesign is used to mean that once design is defined as the creation of meaning, many of the models and theories of organizational knowledge and learning apply to organization design, insofar as knowledge and learning in organizations are also heavily dependent on meaning and meaning ­formation. Three key categories of organization design are put forward— intended, emergent, and perceived—each contributing to the overall design of the organization. As we had explained then, processes of intended design are the starting point for most organizational initiatives, with managerial knowledge and meanings being put forward in the form of choices, instructions, or decisions. Intended meanings exert important influence on organization design, for example, through the implementation of management/information systems. These have a strong influence on the rest of the organization, however not all managerial decisions are executed in accordance with managerial intent; some decisions are modified before execution and many new decisions are taken at the local level despite managerial intent. This is part of emergent design. Perceived organization design includes not only perceptions by in­tern­al and external stakeholders about the organization’s functioning, including attitudes and utterances by the organization’s management, but also the perceptions by the organization’s customers of features of the organization’s products or services, including all after-sales relationships.

Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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Thus, perceived design is the result of a combination of the joint outcome of intended plus emergent designs. In other words, perceived design is the combined outcome of all of the organization’s policies, procedures, ­competences and capabilities. The category of perceived design/meaning relates to the conception of organization design as a noun, that is, organization design ‘as-is’ or or­gan­iza­ tion design as historical legacy. The other two categories relate to the notion of organization design as a verb, that is, organization design as ‘to-be’ or organization design as dynamic change. The three categories create a systemic whole, where perceived design becomes an essential source of feedback for the other categories. Thus, the two conceptions of organization design—simultaneously historical legacy and dynamic change—create a major conundrum, identified by Simon’s (1996) as an important challenge to the design of social organizations. The solution, according to Simon, is to design without final goals, however no advice is provided about how this might be achieved. In other words, how does the systemic model of intendedemergent-perceived organization design sustain itself and what can be done in terms of steering (i.e. changing) the model? The literature on organization studies is mostly silent about these issues, however the design discipline may have a contribution to give. We posit that if, as suggested by Krippendorff (2006), design is to be defined as a humancentred issue, then the integration of all aspects of organization design must rely on meaning and on the consequences of meaning as the driver of human understanding. In other words, we suggest that the integration of or­gan­iza­ tion design as a noun (perceived design) and organization design as a verb (intended and emergent design) requires, above all, gestalt design thinking. Gestalt design thinking means thinking in terms of contextual meanings, and contexts of meaning might be understood as ‘fields of intelligibility that inform participants about what makes sense for them to do next’ (Nicolini, 2012: 172). The notion of formative contexts is thus proposed as a systematic and wellfounded way of approaching gestalt organization design thinking (Ciborra and Lanzara,  1989,  1990,  1994). They are sociomaterial environments that shape the behaviours of participants through communication and meaning, but can also be interpreted as ‘collective minds’ (Weick & Roberts, 1993) that give life to the notion of organization design as a process, reinforcing the fact that it is people’s actions and behaviour that creates the design. The notion of

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Organization design as historical legacy (as-is)

Perceived Organization Design (THE PAST AND THE PRESENT)

Formative affectual contexts Design Trace • Interaction trace

Organization design as dynamic change (to-be)

Intended and Emergent Organization Designing (THE FUTURE)

Fig. 4.1:  Integrating organizational design through formative affectual contexts and design trace

formative context is expanded through the contemporary writings on cognition and affectual cognition (Di Paolo & Thompson, 2014; Colombetti, 2017), leading to the proposal of an enhanced version of the notion—formative affectual contexts. The other important bridging mechanism between the past and the future of the organization’s design which will be discussed in this chapter is the design trace. The notion of design trace is an important reminder of the fact that organization design is heavily dependent upon legacy (Junginger, 2015) made up of practices taken on from previous generations. If the trace of past activity can reliably be collected and analysed, the design trace can become an important designing tool. Figure 4.1 summarizes the chapter’s proposals regarding the bridging process.

Formative Contexts The ‘formative context’ is a concept developed by Ciborra and colleagues in a number of studies on the consequences of information technology in or­gan­iza­tions (Ciborra & Lanzara, 1989, 1990, 1994). It underlies the ‘platform organization’, a model of organization design conceived as an attempt to break away from the established paradigm which tends to reduce the study of organization design to a pre-defined set of organizational configurations (see Mintzberg, 1980, as an example). Ciborra (1996) explains organizational design as a virtual platform that embeds three types of interlinked components: sociomaterial, cognitive, and cultural. The cultural component which brings

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together all three components is the ‘for­ma­tive context’, an all-embracing meta-organization that constitutes the soul of organizational design. Each of the component is dealt with in turn below, introduced by an illustrative citation from Ciborra (1996) (original citations omitted, and italics added).

The Sociomaterial Component The platform is supported by a composite bedrock of practices that consists of pasted-up routines, transactions and other organizational arrangements.  (p. 115)

Although this component is not overly detailed in Ciborra’s work, it cannot be disputed that the formative contexts that underpin the ‘platform or­gan­ iza­tion’ are supported by a sociomaterial entity. Indeed, Ciborra’s idea of a ‘composite bedrock of practices’ is akin to the notion of ‘rhizomatic assemblage’, a relational concept coming from practice theory under the broader notion of ‘connected situationalism’ (Nicolini, 2016). Connected situationalism is an approach put forward to describe the formation of large systems of practices. It is explained as the study of how such ‘large rhizomatic assemblages of situated activities’ form, reproduce, and change, and how they ‘are made available and become relevant and consequential in other situated activities and their assemblages by virtue of being turned into summaries and/or representations’ (2016: 102). This view of organization design-as-practice creates a perfect image of organizational networks expanding and growing as ‘a living connection of performances’ (p. 102), conquering new territory as more and more practices are associated to the assemblage. As a noun, the network can be seen as a system of interconnected people or things, usually represented as a framework of intersecting horizontal and vertical lines. However, as a verb, network signifies interaction, which means that the bedrock of practices that underpins the notion of formative context is also the basis of the or­gan­iza­tion’s structure, understood as a network of connections and communications linking up human and non-human actors.

The Cognitive Component [The platform] is a virtual and collective cognitive scheme which governs actions of recombination.  (p. 115)

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When discussing the platform organization under the ‘cognitive’ label, Ciborra’s work moves away from the material world and highlights the merely perceptual side of organization design. Also, in attempting to describe organization design as a ‘collective cognitive scheme’, Ciborra’s work is corroborated by the research undertaken by Yoo et al. (2006) with the claim that successful architectural projects follow a common organizing pattern, described as the project’s ‘design gestalt’. Yoo and colleagues define the design gestalt as ‘a virtual capability that combines ideas, values, resources, tools and people into ensembles that can create and project remarkable artifacts’ (2006: 228). Establishing a parallel with organization design, these authors argue that whereas an organization structure is a closed, well-defined target against which activity can be measured (i.e., how good is the fit between the structure and the environment), a design gestalt enables a process that is open, teleological and phenomenological (…) The search for organizational form is closed down if we expect a choice among known alternatives. In contrast, a design gestalt has a ­generative, form-giving capacity that opens more options.  (p. 227)

Hence, Yoo et al. (2006) make a distinction between the organization’s structure and the organization’s design, suggesting that the latter should come under a cognitive epistemology, that is, a gestalt. The study of gestalts, which falls under the broader topic of ‘organization of perceptual forms’, offers an important contribution to the idea that the organization’s design can (and should) be conceived as an organized whole that is perceived as more than the sum of its parts. Wertheimer, one of the founders of the gestalt movement, explained that there are perceptual wholes that are not determined by the p ­ erception of their individual elements, but where the partprocesses are themselves determined by the intrinsic nature of the whole (Wagemans, 2018). As discussed in Chapter 3, attributes such as identity, image, or legitimacy, which are usually perceived holistically and in terms of broad brushstrokes, are part of the organization’s design gestalt. Therefore, it can be stated that all the perceptions of the organization by internal and external stakeholders, including the all-important first impressions and the impressions about the organization’s product and services, contribute to the overall organization’s design gestalt, however they are only one part of the organization’s design. The bedrock of practices contributes the material part and the formative context contributes the cultural part.

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The Cultural Component A platform is a metaorganization, a formative context that molds structures and routines.  (p. 103)

‘Context’ is a cultural concept. Culture has been defined as ‘the whole complex of traditional behaviour which has been developed by the human race and is successively learned by each generation’ (Mead, 2017: 17). Like culture, formative contexts are also the result of established work-related practices, learned by and taught to successive generations. Taking the lead from Unger (1987), Ciborra explains that a formative context is a construct made up of pre-existing institutional arrangements and cognitive frames that actors routinely bring and enact in situations of action. It sets up the background conditions for action, shaping the way people perceive, understand, perform, and get organized in situations bounded in space and time. However, Ciborra and colleagues distance themselves from the schools of thought of organizational culture that favour purely cognitive constructs, such as frames or schemata, arguing that such schools of thought are excessively mentalistic and do not allow for the fact that many important human skills and organizational abilities need not be associated with a capacity for symbolic expression. In other words, often people can do things which they cannot express in words or otherwise. Thus, in highlighting the organization platform model as a ‘formative context’, Ciborra (1996) opens up the way for processes of meaning to be part of the definition of organization designing. The notion of formative context is fully aligned with the discussion thus far about meaning and practice, as it can be inferred from the following excerpt: When enacted in a situation of action formative contexts are expression of a social cognition that transcends the individual. Such cognition may well be embodied in material or symbolic artefacts, organizational structures, procedures and most crucially in the relationships or ‘couplings’ binding actors. (Ciborra & Lanzara, 1990: 152)

First, like practices, formative contexts also constitute ‘fields of intelligibility’ which allow participants to make sense of their surroundings and to take appropriate action (Nicolini,  2012: 172). Second, formative contexts are made up by a world of material artefacts that link individuals and collectives to cognitions and meanings, of which ‘that world is the embodied vehicle’

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(p.  151). Third, formative contexts provide a lens of ‘relational ontology’ (Cunliffe & Eriksen, 2011: 1431), which reinforces the idea that organization designs should not be understood as the result of the actions of particular individuals (i.e. the managers) but as the outcome of the interactions of communities of participants engaged in discursive interaction. The relational lens highlights the origin of our experience as intersubjective rather than individual and pave the way for a relational and ‘broadly hermeneutic’ ­ontology (2011: 1432).

Formative Context as Collective Minds The notion of formative context has much in common with the concept of collective mind put forward by Weick & Roberts (1993). Given their conceptual proximity, we posit that the two notions should be used in conjunction. Their joint use is clearly a step forward in achieving a better understanding of the governance mechanisms of organizational design. Ciborra & Lanzara (1990) make the point that the notion of formative context captures both the institutionally embedded quality of social cognition and the cognitive dimensions of organizational arrangements, which leads us to suggest that such organizational arrangements and the cognitive dimensions behind them can also be described as collective minds. A collective mind might be defined as a taken for granted disposition acquired from the dynamics of the group that affects the behaviour of individual organizational members when going about their daily tasks. Weick & Roberts (1993) explain: the collective mind that emerges during the interrelating of an activity system is more developed and more capable of intelligent action the more heedfully that interrelating is done (…) as heedful interrelating and mindful comprehension increase, organizational errors decrease.  (p. 357)

The concept of collective mind highlights interrelating as a quality of social groups with important consequences in terms of organizational per­form­ ance. Weick & Roberts define groups performatively, that is, they define the group as the outcome of interrelated activity, based on Asch’s (1952) four defining properties of group performance. They are as follows: 1. When acting in groups, each individual creates the social forces of group life that link the individuals together as a group

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2. When people act in the belief that social forces are in place, they construct their actions by contributing, assisting, and supplementing each other, and subordinate themselves to the requirements of joint action, only while they feel that each of the group members has the same representation of the joint situation 3. The joint action creates a social system which does not reside in the individuals taken separately nor outside them, but is present only in the interrelations between the individuals 4. The effects produced by a pattern of interrelated activities vary as a function of the style as well as the strength with which the activities are tied together, for example the degree of trust or heedfulness within the group. Such a description of a group as social interrelating is applicable to the concept of formative concept and is quite helpful in explaining how a ‘­context’ is formed. However, Weick & Roberts do not stop here and when discussing the interrelating process, they assert that interrelating needs to be associated with heed because heedful actions (e.g. to be mindful of, to ­consider, to follow, to adhere to, or to abide by) constitute interrelating. According the definition of group performance suggested above, heedful actions are a social force that forms a distinct pattern external to any given individual. When heed declines, performance is said to be careless, thoughtless, unconcerned, or indifferent. This, in turn, leads to interrelating breaking down, with individuals representing others in a careless manner, with contributions being shaped less and less by anticipated responses. In this scenario there is a greater chance that small lapses will grow into major disasters. On the other hand, according to Weick & Roberts, an increase in heedful interrelating can help to prevent failures in a number of ways. For example, workflows with frequent handovers become smoother and error-free; past experience is consistently used in illuminating current practices and costly mistakes are not repeated; newcomers can benefit more from the know-how of veterans, with faster and more effective induction periods. Thus, a col­lect­ ive mind signifies a disposition or propensity to act in a certain manner or style by the group, thereby defining the boundaries of a ‘context’, to use Ciborra & Lanzara’s terminology. Formative contexts are also interactional in nature, insofar as they are ‘directly related to the manner in which individual and collective experience is organized’ (Ciborra & Lanzara, 1990: 151). Weick & Roberts (1993: 365) complement this assertion in suggesting that the collective mind is

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‘located’ in the process of interrelating becoming manifest whenever ­individuals construct ‘mutually shared fields’. Mutually shared fields in organizations ori­gin­ate from all that is perceived by organizational members as having ‘institutional valency’ (1993: 152), regarding the manifold institutionally embedded manifestations of social cognition. One crucial example of the valency of such embedded manifestations is the level of heed that exists in the organization’s interactions; however, many other examples exist in the organization. For example, the level of trust or the ethical quality of decision-making, all linked to the values fostered and conveyed through managerial action. Some foundational examples of valency will be discussed from Chapter 6 onwards, when the discussion turns to the logics of organization design. Regarding the emphases on organization design, the two approaches are different. The formative context approach is more explicit. The word ‘for­ ma­tive’ signifies moulding or shaping while ‘context’ attempts to encompass the cognitions of individual and collective participants and their links ‘to an established world of objects and relations’ (1993: 151). Collective mind, on the other hand, approaches organization design more implicitly. It focuses on the interrelating quality of the context and singles out heed as an emotional state that plays a crucial role in the construction of effective designs. Weick & Roberts (1993) highlight the design change implications in saying that if heedful interrelating is visible, rewarded, modeled, discussed, and preserved in vivid stories, there is a good chance that newcomers will learn this style of responding, will incorporate it into their definition of who they are in the system. (p. 367; italics added)

Renewed Foundations of Formative Affectual Contexts Whereas the concept of collective mind allows some room for a component of affect (heed), Ciborra’s notion of formative contexts lacks such a component. In this chapter, we propose to remedy such a shortcoming, with the aim of making formative contexts a more useful conceptual tool. In order to achieve this, we need to go back to basics and spend some time on the important concept of (organizational) sense-making. Sense-making, simply defined by Weick (1995: 4) as ‘the making of sense’, is an all-encompassing epistemological position inspired on social

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constructionism. It underpins both formative contexts and collective mind, however, sensemaking is not only a social science theory but is part of a much broader approach utilized in the cognitive sciences to explain the workings of the mind, starting from the development of biological organisms. Given its relevance for a fuller understanding of the processes of integration of organization design, this section is dedicated to a brief exposition about sensemaking theory.

Weick’s Organizational Sense-Making In organization studies, the concept of sense-making became known through the work of Karl Weick (1969, 1995). Sense-making is about the structuring of unknown contexts or actions and assigning them with meaning. The expression organizational sense-making is based on Weick’s (1969: 40‒2) original argument that people organize to make sense of equivocal inputs and enact this sense back into the world to make that world more orderly. Weick et al. (2005) argue that organization emerges through sense-making and that sense-making and organization are mutually constituted. There is no mention of organization design in the relationship between sense-making and organization, however Weick (2001) asserts that sense-making is affected by organizational designs, with some designs hindering and others en­han­cing the quality of sense-making. This reflects the traditional conception of organizational design as something divorced from organizational sensemaking and related solely to rules and structure. We argue, however, that organizational sense-making should be understood as the same set of human cognitive properties that shape both designing and organizing. In other words, in talking about organizational sense-making, we are also talking about a broadly hermeneutic approach to organization design (Snodgrass & Coyne, 1992; Snodgrass & Coyne, 1997; Jahnke, 2012). Another important topic, which sadly has not been amongst the concerns of sense-making theory in organization studies, is the topic of emotions and emotionality. Indeed, this has contributed to the situation described by Elsbach (2002), where organization designs are regarded as ‘cold cognitive scripts built around rules’ rather than ‘hot emotional attitudes built around values’ (quoted in Weick et al.,  2005: 419). Such a state of affairs has been subject to reformation attempts by a variety of behaviourally minded ­scholars, but the results have been scant. In the next section, we look at a different perspective on sense-making—the perspective of enactive

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cognition—hoping to shed new light on the embodied and affective character of the processes behind formative contexts.

Enactive Cognition and Participatory Sense-Making In explaining the process of design, Jonas (2007) makes an analogy with the process of transformation of living systems as the result of internally generated change, rather than from attempts of systems to adapt to their en­vir­on­ments. Inspired by autopoiesis theory (Maturana & Varela,  1980), Jonas asserts that just as biological organisms need to learn in order to survive, design is an essential need that humans have ‘to explore and create the new’, an evolutionary activity that ‘makes primates into humans’ (Jonas, 2007: 1362). Jonas concludes by saying that just as cognition is the result of an ongoing interpretation that emerges from our ability to make sense of our world, design can be understood as a circular phenomenon between the designer and the designed, fuelled by communication and discourse, that is, the ‘eternal essence’ of design (p. 1362). After Jonas’ reflections on the ontology of design, we propose that just as biological organisms find their ability to learn from the self-generation of meaning, an organization’s design sustains itself through a self-generating combination of meanings and material practices. Such a combination happens through mechanisms of social cognition which can be broadly labelled as formative contexts. These mechanisms have the same roots as those behind the development of living organisms, either as single individuals or social entities, in accordance with the propositions of enactive cognition theory (Varela (1997). The theory proposes that cognition, including social cognition, is the result of our actions in the world through a continuous p ­ rocess of enactment, to mean interpreting or bringing forth meaning from a background of understanding. The accounts of the transformation of living systems as the result of in­tern­ al­ly generated change put forward by enactive cognition follow a number of principles, including the principle of adaptivity. Adaptivity refers to the capacity of certain autonomous systems to regulate themselves with respect to environmental conditions which can be classified as improving or de­teri­ or­at­ing, viable or unviable (Di Paolo,  2005). Such regulation implies an evalu­ation of the system’s surroundings in the sense that, as the living system regulates its conditions of viability, its surroundings acquire meaning for it. In other words, in pursuing their normal activity, biological systems do not

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passively receive information from their environment but engage with the environment in whatever is important to them. In order to adapt, organisms cast a ‘web of significance’ on their world and the process of evaluation that ensues is what enactivists call sense-making (Colombetti, 2017). Among the various developments of the enaction school of thought, there is the so-called Hypothesis of Extended Cognition (Clark & Chalmers, 1998), according to which living beings are not necessarily bounded by the organism’s skin (or other material boundary) but they can be ontologically ‘extended’ as in the case of composite systems made of organic and nonorganic processes. Hence, a case of ‘extended sense-making’ resulting from the coupling of one or more sense-making systems, can also be considered. This level of sense-making has been named as participatory sense-making and is described as ‘the coordination of intentional activity in interaction, whereby individual sensemaking processes are affected and new domains of social-making can be generated that were not available to each individual on her own’ (De Jaegher and Di Paolo, 2007: 497). These authors observe that social interactions are not abstract or disembodied events but, on the contrary, they are ‘the contextual problem-space where a socially-capable individual solves the problems of social performance’ (2007: 36). They also provide example of participatory sense-making found in everyday life, that is, the situation where two human beings become engaged in tacit communication as they attempt to walk past each other in a narrow corridor. While adapting their respective bodily posture they give rise to a system of ­sense-making that has its own adaptive autonomous organization, which is also an example of an extended cognitive system.

Sense-Making and the Role of Affect The example above configures not only a cognitive system but an affectivecognitive system. While negotiating how to walk past each other in the narrow corridor, the two participants in the negotiation very likely form emotional states as well (e.g. irritation because time is being wasted or apprehension because of uncertainty about who should go first). Ward & Stapleton (2012) argue that ‘affect comprehensively permeates our perceptual openness to the world, a transparent background that constrains and informs the features of the environment which show up for a perceiver’ (2012: 100). Thus, given that any movements of an organism’s body are tools and expressions of sensemaking, cognition is not only embodied and embedded, but is also affective.

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Colombetti (2017) explains that an enactive view implies that affectivity does not stop at the boundaries of the organism , given that it includes, as constitutive parts, non-organic environmental processes. Affectivity can be broadly defined as a state of the organism that includes emotions, moods (such as being bored, feeling depressed, being elated, or feeling cranky), and motivational states (such as fatigue, pain, hunger, or desires). She also explains that enactivism allows moods to be characterized dynamically as ‘global self-organizing patterns of the organism, with a specific topology of attractors, each of which corresponds to a specific emotional state’ (2017: 453). This means that when a person is in a certain mood, the person’s organism is in a global state which makes it more likely for the organism to assume the characteristics of that emotional state rather than that of some other state. The profile characteristics of emotional states might be neural, physiological, or expressive. For example, if I am feeling elated, it is likely that my organism will assume the characteristics normally associated with elatedness. Affectual contexts, examples of which are the heedful organizational en­vir­on­ments reported in the work by Weick & Roberts (1993), are part of for­ma­tive contexts and they are crucial in the enablement of change to the organization’s design legacy. Heedful environments act as a ‘transparent background’ (Ward & Stapleton, 2012: 100) that linger in time and transcend different generations of organizational participants. Such cognitive backgrounds exert constant influence in the appraisal action by participants and ultimately provoke specific emotional states, for example to appraise ­something as being offensive elicits feelings of anger or detachment. Thus, in the process of filtering the relevant organizational environments, affectual sense-making provide clues to participants about the quality of cohesion and mutual acceptance within the group. The mark of such environments or contexts are the emotions or emotional states that participants experience and remember. Maturana (1988), one the founders of the enactive school of thought ­supports this position and makes a compelling case for the role of affect in the shaping of human social groups. He argues that emotions form the background for the embodiment of all our knowledge and thus cannot be sep­ar­ ated from logical thought in everyday action. Emotions are the ingredient, he asserts, that makes all social phenomena possible, through mutual acceptance. Thus, social membership means accepting the unwritten rules of a group and thereby being accepted by the group. Without mutual acceptance of some kind, cooperation and social action are not possible. Social

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bound­ar­ies, social norms, and emerging social practices transcend the individual and remain even after individuals have departed.

Affect from the Viewpoint of Practice Theory Practice theory, which has already been broached in Chapter  2, offers a fresh perspective on sociological debate. The key suggestion from this body of knowledge is that the social is to be found not in individual rationality nor in social structures, but in practices, understood as routinized bodily per­ form­ ances brought together by implicit collective knowledge. This means that social groups and bodily performances are necessarily ­connected with certain types of know-how, including particular ways of evaluating and interpreting the behaviour of the other players, within certain levels of emotional states. Reckwitz (2016) asserts that the new millennium has seen a rise in interest in emotions and affects amongst social and cultural theorists, a movement that some are calling the ‘affect turn’. Affects are both cultural and material in nature. As states of bodily excitation, affects are a persistent part of a material social reality, but as memory traces they are also cultural and historical. And although affects and practices share all the key characteristics, the key practice theorists have been mostly silent on the issue of affect, sharing the common notion that modern society is mostly characterized by formal rationality and affect neutrality. Reckwitz (2016: 118) does not share this view and asserts that: A practice theory perspective on affects is concerned neither to denigrate nor to celebrate the affects. The presence of affects in society cannot be simply ignored. Whether they are menacing or benign, they are a constitutive part of social life, which incessantly produces them. The diagnosis of modernity as affect neutral is therefore false.

In organization studies too, affect is assumed away in all the mainstream frameworks for organizational design, business economics, or strategic ana­ ­ lysis. In the practice of management, generally speaking, emotions are considered inappropriate, especially concerning emotional states that are considered illogical, disruptive, or biased. Emotions are often seen as a ­deviation from the rational and sensible behaviour that should characterize organizational life (Putnam & Mumby,  1993). However, such a mantle of

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rationality that has dominated management and organization studies is slowly being swept away by the wave of affect-laden thinking that is invading post-modern society. In the preceding section, we saw how affect is an integral part of the process of sense-making, and how it is ever-present in  all organizational interactions, whether or not management choose to  consider it. In this section, we will see how affect can leave crucial ­sociomaterial traces which link the past and the future of the organization’s design. Going back to Ciborra’s (1996: 115) notion of ‘composite bedrock of practices’ as one of the components of the platform organization, and to Nicolini’s (2016) contribution of ‘rhizomatic assemblages’ of large systems of practices, we propose that a crucial relationship exists between practice, affect, and organization design. If the organization’s design is made of practices and if practices as embodied know-how contain an important component of affects, then it can be reasonably assumed that the practices within the rhizomatic assemblage leave behind a significant affectual trace. Affect operates as a ‘shadow organizing’ force (Gherardi et al., 2017) and acts as a ‘conveyor belt’, in terms of activity and movements within a situated practice, keeping all its elements together. Affect works within and in-between bodies, however it does not only refer to human, individual bodies but also to any other living and non-living bodies (Seyfert, 2012). We will pursue this topic in the section on design trace below.

The Design Trace The notion of trace as an integration mechanism is not new to organizations. Traditionally, the notion has existed in the form of feedback data, mostly under the banner of management control and with labels such as per­form­ ance indicators. However, in the field of organization design it is a new concept, to be associated primarily with the fact that the organization’s design is path dependent and heavily dependent upon legacy (Junginger (2015). Indeed, organization design is not only about artefacts but also about practices, often taken on from previous generations, which sometimes tend to ossify and become pernicious filters of organizational communication. Thus, changing the legacies and linking them to future improvement plans becomes a key organization design issue. In their work on architectural projects by the firm Gehry Partners, Yoo et al. (2006) touch on this issue and draw important conclusions, that is:

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Affectual Formative Contexts and Design Trace  117 Organization designing emphasizes the existential moment of action where the past and the future meet. The manager as a designer sees the organization and its environments by both looking back to appreciate lessons of the past and looking forward to a future world (…) organization design then becomes a continuous shaping of the organization for its betterment (projecting to the future) in light of the concrete trace of its past (its here and now), drawing on its design gestalt. (p. 228; italics added)

These authors articulate it superbly when they define organization designing as ‘the existential moment of action where the past and the future meet’. The challenge for organization design is similar to the one highlighted by McEvily et al. (2014) regarding the disconnect between formal and informal or­gan­ iza­tion. These authors assert that vision alone is not sufficient to bridge the divide and that ‘we now need to construct the conceptual and analytical architecture that can link the two elemental features of organizations’ (p. 335). Thus, it is suggested that a relevant method for bridging the divide between organization design as a noun (i.e. the legacy of formal or­gan­iza­tion) and organization design as a verb (i.e. the ongoing outcome of informal organizing) is the method of trace. The work of Gherardi et al. (2018) on the sociomaterial traces of affect provides new pathways for a better understanding of the conditions for change of organization designs. Rather than studying affect as a content, the authors investigate affectual traces in communication, through ‘the choice of words, the pitch of the voices, the crescendo in the verbal interactions, the mimicking of other (absent) voices, the broken language and the rhetorical figures of speech’ (2018: n.a.), as well as the traces kept in the researchers’s own memories, and in annotations made in logbooks. One of the key contributions of this work is the notion of affective resonance, based on the physical phenomenon that occurs when a given system vibrates with a given amplitude and frequency driven by another vibrating system or external force. The authors explain that a sociomaterial trace of affect is enacted when affective resonance emerges within bodies that meet. The metaphor of affective resonance in the context of social practices conveys the image of the transmission of a type of affect between individuals. The transmitted affect is social because, as explained by De Jaegher & Di Paolo (2007), while engaged in participation, sense-making processes of individual participants are affected and new domains of social-making may be generated. This means that during interaction processes, affective res­on­ ance is re-enacted between participants making old contexts to re-emerge or

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modified ones to emerge. A second type of sociomaterial trace of affect uncovered by the empirical work of Gherardi et al. (2018) rests upon memory, with memory being defined as something that resides not in the folds of individual brains, but in the enfoldings of space, time, and matter. In other words, affect is made visible, through memories that are the way in which past relations keep materializing themselves to participants. In organizations, design is expressed in terms of artefacts and practices, but when practices are enacted in the course of daily work, communication is much more than what is expressed in words or gestures. When people interact, much is evoked and transmitted beyond the visible and other ­sensory perceptions, jointly referred to as affect. The outcomes of affect are situated in the senses, in the ‘intercorporeality and intersubjectivity of inter-acting and intra-acting bodies, that is, in the kinesthesia of movements and rhythms’ (Gherardi et al., 2018: n.a.). These authors explain the sociomaterial trace of affect as something that rests upon peoples’ memories, defined as the way in which past relations keep materializing themselves to participants. Such a viewpoint is not dissimilar to that of Soderstrom & Weber’s (2019) in their proposal of interaction traces, in the context of the emergence of organizational structures. These authors explain trace as ‘the mechanisms that transform interaction activity into structure’ and defined as the ‘results of previous interactions that reside outside the interaction situation, for example as changes in the states of participants or the organizational environment’ (p. 11). Indeed, if the notion of ‘interaction’ is accepted as one of the defining features of organization (as it will be further argued in Chapter  8), then the interaction trace as defined by Soderstrom & Weber becomes the overriding definition of trace in an organizational context. An additional perspective on design trace comes from the work of Garud et al. (2008). According to these authors, design trace can be sub­div­ ided into two broad types or logics: a causal logic and a narrative logic. After the distinction created by Bruner (1986), the authors propose that the causal logic follows the model of the natural sciences, where a finite set of variables and relationships is presented as the cause or the effect of a finite set of outcomes. This logic, which assumes that all the variables that define the functioning of the artefact to be designed are fully specified, is associated with a scientific approach to design. The other type of logic—narrative—is associated with human-centred approaches and operates on the basis of the in­tern­al and external coherence of a narrative with the listener’s existing knowledge. Interestingly, Garud et al. assert that the design trace allows these two different logics to operate simultaneously. Although they talk of design

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trace, it will be considered that such an expression is subsumed by the notion of interaction trace, in view of the interactional constitution of organizations as was argued above. In their study of two software-based companies as examples of or­gan­iza­ tions whose designs need to be in a permanent state of flux—Linux and Wikipedia—Garud et al. focus on the causal trace. In the case of these two companies, the design trace is a software-based record of the changes introduced in the content of Wikipedia and in the software code of Linux which serves not only as a locus of coordination but also as the link between or­gan­ iza­tion design as a noun and organization design as a process. The authors explain that the challenge for preserving the value propositions that the designs of Linux and Wikipedia offer to customers is to devise a governance system that does not stifle innovation but at the same time provides some stability. The required system needs to be semi-structured and possess min­ imum critical specifications, so as to enable designs to be in a state that is ‘neither too fluid nor too crystallized’ (Garud et al., 2008: 367). Another area of expertise, where the notion of causal design trace has been discussed and researched is ‘enterprise engineering’. Instead of the tags from Linux or Wikipedia containing information about past versions or specifications, enterprise information systems contain enormous quantities of stored transaction logs, online documents, and process data which are all part of the organization’s causal trace. Based on such a capacity for the organization to know itself, the concept of ‘organizational self-awareness’ (OSA) was put forward by Tribolet (2005) and was further developed by Magalhaes et al. (2007); Zacarias et al. (2007); and Aveiro (2010). The OSA concept gave rise to the notion of ‘enterprise cartography’ (Tribolet et al., 2014), a project aimed at facilitating the communication and analysis of enterprise artefacts by means of constantly updated model-based views of the enterprise’s digital architecture. The enterprise’s digital architecture provides the technological infrastructure for the organization’s designing activities, which means that increasingly organizations will rely on technology-based traces. However, organizations will continue to greatly depend on people, people’s memories, and people’s relationships, which leads us to suggest that the future of the linkage between organization design ‘as-is’ and organization design ‘to-be’ will depend on a blend of technology-based tools and narrative-based tools. Moreover, if we consider design trace as a continuum, the affectual trace and other forms of narrative trace would stand at one end of the continuum, whereas the rational-technical types of causal trace would stand at the other end. We will return to this idea in Chapter 8.

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Conclusion In concluding this chapter, let us first remind ourselves of the nature of organization design through the following insightful statement: On the one hand design creates nothing. By itself, design is an empty vessel waiting to be filled with people, meanings, and actions (…) Yet on the other hand, it creates everything since the organizational design will have a fundamental framing effect on people’s expectations and perceptions, setting the context for the organizing activity—the social construction of roles and relationships through which structure is enacted.  (Bate et al., 2000: 200; italics added)

Through the use of words such as ‘perceptions’, ‘contexts’ and ‘expectations’, in this passage Bate and colleagues provide important support our approach to the problem of bridging organization design as a noun and organization design as a verb. We also use the term perception to explain that or­gan­iza­ tion design, meant as a noun, amounts to the way people perceive the myriad features of organization design, not only internally but also looking at the organization from the outside. Such perceptions, which constitute the ‘hereand-now’ of organization design, become legacies or sets of practices that people expect to find when interacting with or within the organization. The word legacy could be misleading, in the sense that legacies tend to be seen as monoliths. However, while some of the items in the legacy may be archaic or become obsolete, many are still alive, in terms of the spaces of intelligibility which they have instituted and through which they still function. This means that in order to change the legacies of practices it is necessary to change meanings, a task that, in organizations, happens mostly at the group level, and through active managerial participation. However, changing the meanings in groups involves changing the way people interact, which in turn necessitates changes in the way people think and feel about each other. In addition, changing legacies requires leaderful practices, meaning practices with distributed leadership qualities, sensitive not only to the emotional states of the participants involved but also in what concerns respect for demo­crat­ic values. In sum, changing organization design legacies requires cultural change. The cultural unit of analysis highlighted in this chapter is the context, another word used by Bate and colleagues in the quotation above. Contexts are social constructions generated by human groups, which links individuals

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together as well as the individuals to material objects. Also, context is to be found not in the individuals taken separately but in the interrelations between the individuals. Contexts have formative or behaviour-moulding properties. Such properties emerge from the fact that when people act in the belief that a joint action context is in place, they construct their actions by contributing, assisting, and supplementing each other, while subordinating themselves to the requirements of joint action. But, at the same time, contexts are also affectual because while interacting participants create an evaluative layer of sense-making that enables each participant to gauge and share emotional states within the group. An example of an emotional state is heed, which provides participants with clues about the quality of cohesion and mutual acceptance within the group. The notion of formative context offers a new way forward for organization design practice. Enhanced by embodied cognition theory, it provides a solid background for an understanding of the processes of organizational change which co-evolve with organization designing. Crucially, it provides a solution to the conundrum of the two perspectives highlighted by Yoo et al. (2006), in their elaborations about the concepts of organization design versus organization designing. The key to the process of the ‘continuous shaping of the organization for its betterment (projecting to the future) in light of the concrete trace of its past (its here and now)’ (p. 228) lies, we posit, in the affectual contexts that organizational members are able to bring to bear. According to enaction theory, participation implies the ‘coordination of intentional activity in interaction’ and the emergence of ‘new domains of social-making (…) that were not available [before] to each individual on her own’ (De Jaegher & Di Paolo,  2007: 497). What this means is that when ­people participate in organization designs, they need to coordinate their activities and, when participation and coordination come together, new domains of social understanding open up to the participants. Domains of social understanding (i.e. formative contexts) include affectual domains which provide the evaluative background for the tasks at hand. For example, if there is a work task to be completed by a group of people, along with the task-related knowledge that they need to bring to bear, participants will keep scouring the background (i.e. the context) for clues about mutual acceptance and readiness to cooperate. This is also the conclusion by Weick & Roberts (1993) regarding heedful interrelating in work settings. Values translate into daily activity by means of emotions and emotional states, such as heed. For example, the value of

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integrity finds translation into action as being truthful towards each other and avoiding political games. Thus, by managing values and expectations, or­gan­iza­tion­al members build formative affectual contexts that encourage group members to participate and coordinate their activities, so that practices that belong to the legacy can be obliterated or updated by new practices originating from intended and/or emergent design activities.

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5 Deriving Five Human-Centred Logics of Organization Design Introduction In this chapter, we put forward a proposal for a set of five new human-centred logics of organization design. For the past century or more, both ­scholars and managers have been taught to think of the design of or­gan­iza­tions in terms of a legacy of principles and rules left to us by pioneers such as Taylor (1911), Fayol (1949), and Weber (1947). Coupled with the Cartesian positivist intellectual environment of the day (remember ‘scientific’ management?) as well as a world dominated by a still prevalent economic imperative, such a legacy supressed the voices of other pioneers, with more human-oriented messages. Names such as Follet, Barnard, or Elton Mayo, although admired and often cited, have never made it to the compendia of organization design. So, or­gan­ iza­ tions continue to be designed with a logic of command-and-control, ­carrot-and-stick, and make-believe ethics which cause the organizational unease often reported in the academic and non-academic literatures. Our proposal for the new set of logics for organization design rests on an investigative process which starts from the realization that a number of contemporary literature trends on management and organization (including strategy, marketing, and entrepreneurship) reveal concerns that somehow coincide with human-centred design (HCD) principles or ideas (Junginger, 2005). In other words, there seems to be much in common between HCD principles and situations where novel solutions have been put forward by management academics or practitioners for the designing needs of or­gan­iza­ tions. For example, the ethics principles of HCD is represented in the need increasingly felt by companies to be ethical in the design of the governance of their resources, to be fair and equitable in the distribution of both costs and benefits among all stakeholders. Thus, the challenge is, on the one hand, to identify a new set of logics which accommodates principles of design and especially principles of

Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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124  Designing Organization Design Step 1 Establishing the Fundamentals Defining organization design logics based on: • The principle of design systemics • Institutional logics • Systems design logics

Step 2 Investigating Extant Logics of Organization Design Identifying the traditional logics influencing the design of organizations, based on the received wisdom from management and organization theory

Step 3 Identifying HCD-Inspired Design Principles and HCD-Sensitive Management Trends Establishing a consolidated list of design principles and identifying a set of new management literature trends that reflect humancentred design concerns

Step 4 Proposing five new HC Organization Design Logics Matching the traditional logics of organization design with the list of new management trends and articulating the new logics of human-centred organization design

Fig. 5.1:  Devising a set of human-centred organization design logics: the research process

HCD and, on the other hand, to be consistent with the key concerns of entrepreneurs and managers in the managements of their organizations. The research process encompasses the four steps shown in Figure 5.1. The aim is to ensure that the proposal is not only logically argued but is also ad­equate­ly supported in terms of the literature. As mentioned above, the selected literature is not only firmly connected to principles of HCD, but also contains an important distilment of ideas and concerns that have percolated years of management thought. In the research process, the traditional dimensions or elements of organization design were also taken into account. The outcome is a set of five logics, which, we submit, is already having an influence on the way that organizations are designed and governed. What is needed is that the conceptual maps that we use to theorize about organization design are kept much closer to the territories of organizational realities. Once they become institutionalized and a new managerial discourse is built around them, the new set of organization design logics will hopefully come to constitute the basis for a shift in our thinking about organizations and they should be designed.

What are ‘Organization Design Logics’? The notion of ‘organization design logics’ put forward in this book has several origins. Primarily, it was inspired by the concept of systemic design and the idea that systemics is the fundamental basis of what can be called the reasoning or the logic of design (Nelson & Stolterman, 2014). Systemics is a broad alliance of fields of study under the ‘systems’ banner, fields such as systems analysis, systems dynamics, or systems design, united around the idea that connections and relations between people, subjects, and things constitute the foci of attention, rather than the things themselves. The second

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source of inspiration comes from institutional theory and the concept of institutional isomorphism, and the third source comes from the logics of designing digital infrastructures and the need for a unified language or system of distinctions.

Systemic Design Nelson & Stolterman (2014) explain that the concept of systemic design is the fundamental basis of what can be called the reasoning or the logic of design. They state: Designing is by definition an interdependent activity that involves multiple inputs from the multidimensional realms of the real world (…) Designers need to be able to see relations and to identify and protect the essential connections found in real life, i.e. they need to be systemic thinkers (…) Every design is either an element of a system or a system itself and is part of ensuing causal entanglements.  (pp. 57‒8)

According to this line of thought, designing organizations can be classified as designing compositional assemblies, defined as acts of creation of real things, made up of unifying relationships and connections between elements in such a way that they have an ‘emergent presence or an appearance in the world’ (2014: 159). Thus, once an organization exists in its environment, it is not easy to untangle the basic components of its compositional assembly, and systems thinking becomes an essential tool for analysing the new complex whole. Hence, systemic design makes it possible to deal with the organization design holistically, by breaking the complex whole into a set of logics that underlie the overall design. Such design logics form an ‘archetypal schema’ (p. 58) that unifies the narrative of the organization. In this book we adopt this definition of design logics but augment it with a number of aspects relevant to organization design. Also, it should be clarified that our conceptualization of design logics does not follow the notions of ‘archetype’ or ‘gestalt’ popularized in the organization studies literature from the 1970s to the 1990s. Archetypes and gestalts were conceptualized in a roughly equivalent manner, as commonly occurring organizational configurations as units of analysis for the empirical investigation of potential effects of configurations on strategy-making (Miller & Friesen,  1978; Miller & Friesen,  1980; Miller, 1981). A later approach defined an archetype as a ‘set of [or­gan­iza­ tional] structures and [management] systems that reflects a single in­ter­pret­ ive scheme’ (Greenwood & Hinnigs, 1993: 1052).

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Institutional Isomorphism The second source of inspiration for organization design logics comes from institutional theory and the concept of institutional isomorphism, first identified by DiMaggio & Powell (1983). These authors start from the insightful observation that organizations in the same organizational field show a very high degree of homogeneity and go on to provide a novel ex­plan­ation of the isomorphic processes that lead to such homogeneity. The notion of or­gan­iza­ tional field is defined as ‘those organizations that, in the aggregate, constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies, and other or­gan­iza­tions that produce similar services or products’ (1983: 148). Indeed, when DiMaggio & Powell identify the effect of isomorphic processes in or­gan­iza­tions in the same field of activity, they are identifying design processes and any prin­ciples that underlie such processes. Another aspect of institutional theory which must also be mentioned is the notion from organizational sociology of ‘institutional logics’. Institutional logics focuses on generative or macro-level principles and has been defined as ‘the socially constructed, historical patterns of material practices, assumptions, values, beliefs, and rules by which individuals produce and reproduce their material subsistence, organize time and space, and provide meaning to their social reality’ (Thornton & Ocasio, 1999: 804, quoted in Thornton & Ocasio, 2008: 101). Institutional logics aims to provide a link between individual agency and cognition and socially constructed institutional practices and structures. DiMaggio (1997: 277) hails the notion of logics as ‘immensely appealing’, due to its capacity to cluster many, sometimes inconsistent, aspects of the organization’s fragmented competitive landscape, around a few limited categories. We concur with this observation in what concerns the notion of ‘logics’ tout court; however, we do not share the notion of institutional logics as it has been defined above. In other words, in creating the notion of organization design logics, we have been influenced by institutional theory and institutional isomorphism, and while adopting the term ‘logics’ we do not adopt the concept of institutional logics. The reason for this is that we side with practice-based scholar in their opposition of the concept of institutional logics. Authors such as Schatzki (2011) oppose the idea that to understand practices we need to search for the hidden forces that govern them, such as structural mech­an­isms, norms, or value systems. Practice theory refutes the notion that or­din­ary actions are the instantiation of something else, such as an institutional logic. On the contrary, it maintains that what is usually called ‘micro’ and ‘macro’ is made of the same stuff, and that this distinction should be reformulated

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as  one of ‘large’ and ‘small’ phenomena. In this book, we support the ­practice-based theorists argument regarding the need to ground any pro­posals about organization design on what is empirically observable, and tracing back the elements or arrangements of elements that produce the phenomena under investigation, rather than presupposing the existence of ‘abstract mechanisms with causal powers’ (Nicolini & Monteiro, 2017).

Systems Design Logics In a study about the design of digital infrastructures, Poirier (2017) uses the expression design logics, explaining that the word ‘logic’ refers to something that unifies distinct approaches to design. The study’s aim was to get at the underlying logics of digital infrastructure and to capture the complex interplay of assumptions, habits, and commitments of designers, how they have translated the design into material form, and how users used the system. More specifically, Poirer defines design logics as ‘critical directives, informed by a design community’s habits and assumptions about language, and by its philosophical commitments, which direct the architecture and arrangement of content in the systems they produce’ (p. 73). In sketching out the logics of organization design, we have realized that the case of designing or­gan­iza­ tions is not dissimilar to that of designing digital infrastructures. Indeed, the logics behind organization design also emerge from the assumptions, habits, and commitments of diverse disciplinary communities which take into account the trends and sensitivities from the market and from society in general. In doing so, the logics behind organization design also consider the isomorphic effects and the tendency of organizations to copy each other in terms of their structure and processes. This effect has been exacerbated in the last couple of decades by two kinds of phenomena: (1) the almost universal adoption of standardized software packages (the so-called enterprise resource planning (ERP)) to automate the entirety of the organization’s procedures and processes; (2) the widespread use of management consulting companies which also tend to copy each other in the SOP (standard operating procedure) manuals they provide to their clients. Also, it is worth noting that in the case of organization design logics, the issue of language is also relevant, given that managers do not like to be the ‘odd one out’ and always strive to reproduce the jargon coming from business schools or management consulting firms. Thus, discourse is an important tool in the production and reproduction of organizational design logics. While not following the linkage between the micro-level events and the macro-level structures proposed by institutional theory, we consider these as

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two stages in a systems design methodology, that is, design-before-use and design-in-use (Pipek & Wulf, 2009). Design-before-use is related to the classic notion of designing infrastructures, where there is a need to conceptualize, plan, and budget before the artefacts are actually used. Design-in-use, on the other hand, refers to situations after-design, where the design process needs to be managed and kept on track, taking into account the practices that keep being created and recreated at the local level. There may or may not be causeand-effect relations between the two stages, however that is not our focus of attention. Given that our aim is to explain the content and the processes of organization design, we posit that design logics form the conceptual umbrella under which design-before-use takes place, while the management of the design process provides the context for design-in-use. Hence, we are now able to offer a generic definition of organization design logics, that is: A set of beliefs shared by managers and entrepreneurs in given sectors of the economy about the way organizations should be designed. Such beliefs, which embed the key components of an organizational system, in terms of its values, strategy, architecture, and interrelationships, are shaped by forces of  iso­ morph­ ism and evolve with the prevailing trends in management education. The next step is to identify and discuss the traditional logics of organization design as they appear in the most often cited extant literature.

Extant Organization Design Logics, Dimensions or Elements The notion of logics, sometimes also referred to as dimensions or elements of organization design have a long history in organization theory. The bestknown example of organization design logics are the classical dimensions of organization structure, originally proposed by Weber (1947). Weber’s fifteen dimensions were subsequently reworked by Mintzberg (1980) who proposed nine design parameters and more recently revised by Clegg et al. (2005, citing the work by Pugh & Hickson, 1976), who reduced the number to five, that is, specialization, standardization, formalization, centralization, and configuration. Over the years, there have been many interpretations of the logics of organization design. Some authors use the term ‘dimension’ but others prefer ‘element’ of organizational design. Grandori & Furnari (2008), for example, suggest that ‘elements’ can be thought of as building blocks of organization

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design, while Foss (2014: 17) describes ‘elements’ as ‘bundles of discrete practices that are linked to each other in terms of relations of, more or less binding complementarity’. This section features a comparison of four approaches to organization design dimensions or elements published in reputable management or organization journals and spanning a period of almost forty years. The approaches are by Ouchi (1979), Nahapiet & Ghoshal (1998), Adler and Kwon (2002), and Grandori & Furnari (2008). As already discussed in Chapter  3, authors from management control, such as Simons (2005) assume that design is an outcome of control. In other words, if we know how organizations are controlled, then we know how they can be designed. This trend is influenced by the approach proposed by Ouchi (1979: 833) with the notion of control mechanisms, that is, ‘the mechanisms through which an organization can be managed so that it moves towards its objectives’. Ouchi’s control mechanisms are market, bureaucracy, and clan. With the rise of the knowledge-based approach in organizational economics (Barney,  1991) and the key role played by knowledge as an organizational resource, the notion of control mechanism shifted to knowledge management and from there to knowledge governance (Grandori, 2001). Knowledge governance mechanisms are organizational properties that influence knowledge processes, such as sharing, retaining, or creating know­ledge. One example of a knowledge governance mechanisms is identity, an attribute of every organization, and a powerful superordinate mechanism exerting influence on all knowledge processes (Kogut & Zander, 1996; Argote & Kane, 2009). The knowledge governance approach is clearly related to organization design, in the sense that the governance (or control) mech­an­isms become design tools or proxies for designing organizations. Anchored on these foundations and inspired by Ouchi’s mechanisms, Grandori & Furnari (2008) propose a classificatory system of governance mechanisms, relabelled as organization design elements, that is, market-like, bureaucratic, communitarian, and democratic. Grandori & Furnari (2008) explain that the organization design elements are ‘typically infused into organizational systems through the application of “practices” ’ (p. 466). Moreover, they define practices as ‘packages of techniques, typically including structure, routinized action and know-how’ (p. 462), and explain that this definition encompasses large sets of practices, such as teamwork, outsourcing, or flexible job assignment. The ensemble of such practices, created by the organization’s design, embody the or­gan­iza­ tion’s generative and relational capabilities, which allow the innovative valuecreating combinations of resources and activities. Indeed, the work by Grandori and colleagues reveals traces of a human-centred orientation, linking abstract elements to practices, which, in turn, instil certain types of meanings and behaviours in daily routines.

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Such a behavioural slant and the association with knowledge governance brings the theorizing of organization design closer to the notion of embeddedness of social relations in economic activity (Granovetter, 1992). Indeed, organization design can be thought of as a manifestation of the embeddedness of social relations, where the quantity and quality of social capital might be conceived as a performance measures of organization design. Nahapiet & Ghoshal (1998) talk about two types of embeddedness: structural and relational. Structural embeddedness is defined as ‘the impersonal configuration of linkages between people or units’ (p. 244), to include structural features such as connectivity, centrality, and hierarchy. In contrast with the ‘impersonal’ nature of structural embeddedness, relational embeddedness is defined as the ‘personal relationships people have developed with each other through a history of interactions’ (p. 244). Social capital was originally conceived as a construct to describe relational resources embedded in personal relationships that can be developed in mani­fold social settings. Studies in organizational environments have shown that, like physical and human capital, social capital is an important pro­duct­ive resource which can facilitate business interactions inside and outside the firm. Venkataraman (1997) claims that social capital is essential in the pursuit of a business venture, especially in the early stages of a new enterprise, and that it helps to reduce the adverse selection and moral hazard problems alluded to by economists. Nahapiet & Ghoshal (1998: 250) define social cap­ital as a property of social organizations that ‘resides in the pattern of linkages found in network relationships and relationships that are created through exchange’ and also, something that ‘is created through exchange and at the same time it facilitates exchange’. Given the social nature of organizations, and the increasing behavioural orientation of the economic sciences (Akerlof & Kranton, 2012), it is posited that the mechanisms that contribute to the organization’s social capital are also powerful shapers of organization design. For purposes of the present research, we have considered two well-known studies on social capital (Nahapiet & Ghoshal, 1998 and Adler & Kwon, 2002), and in both cases the authors chose to break down the construct into dimensions. In the case of Nahapiet & Ghoshal (1998) the dimensions are: structural, relational, and cognitive, while in the case of Adler & Kwon (2002), they are: market, hier­ arch­ic­al, and social. The organization-wide implications and their similarities with the sets of dimensions put forward by Ouchi (1979) and Grandori & Furnari (2008) place social capital dimensions on an equal footing with the dimensions of organizational control or knowledge governance. Thus, on the basis of the four articles mentioned earlier, a comparative table has been composed, where the dimensions or elements put forward by each author or set of authors are matched on the basis of their descriptions (see Table 5.1). It should be noted that the nature of the elements/dimensions

Table 5.1:  Comparison of four traditional logics of organization design Ouchi (1979)—Organizational Control Mechanisms

Nahapiet & Ghoshal (1998)—Dimensions of Social Capital

Adler & Kwon (2002)— Dimensions of Social Structure Underlying Social Capital

MARKET Dimension: Market-like Price-like and control-by-exit devices Attributes/Challenges: Highly powered incentives and coordination capacity with minimal communication STRUCTURAL Dimension: Bureaucratic Formal rules and plans; specialized division of labour Attributes/Challenges: Predictability, transparency, and accountability

Dimension: Communitarian Knowledge and value sharing, common culture Attributes/Challenges: Identity and cohesion, homogenizing judgements and interests

SOCIORELATIONAL

Continued 

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Dimension: Market Dimension arising from the selling, buying, or bartering of products or services Attributes/Challenges: How far does economic exchange and market-led thinking corrode social capital? Dimension: Hierarchical Dimension: Structural Dimension: Bureaucracies Dimension arising from The overall pattern of Type of social norm: Legitimate connections between actors, obedience to authority authority exchanged for material that is, who you reach and Attributes/Challenges: and spiritual security how you reach them Bureaucracies rely upon a Attributes/Challenges: mixture of close evaluation with a Attributes/Challenges: How does formal socialized acceptance of rules and Network ties, network hierarchy shape (i.e. configuration common objectives inhibit or enhance) informal social relations? Dimension: Social Dimension: Clan Dimension: Relational Dimension arising from Type of social norm: Tradition Personal relationships Attributes/Challenges: people have developed with the exchange of favours and gifts Shared values, beliefs each other through a Attributes/Challenges: history of interactions Opportunity, motivation, Attributes/Challenges: ability Trust, norms, obligations, identification Dimension: Market Type of social norm: Reciprocity Attributes/Challenges: Markets deal with the control problem through their ability to precisely measure and reward individual contribution, that is, price mechanism

Grandori & Furnari (2008)—Elements of Organization Design

Table 5.1:  Continued Nahapiet & Ghoshal (1998)—Dimensions of Social Capital

 

  Dimension: Cognitive Resources providing shared representations, interpretations, and systems of meaning among the parties Attributes/Challenges: Shared codes and language    

 

Adler & Kwon (2002)— Dimensions of Social Structure Underlying Social Capital

Grandori & Furnari (2008)—Elements of Organization Design

 

 

COGNITIVE

Dimension: Democratic Diffusion of ownership, decision and representation rights Attributes/Challenges: Infusing voice and fairness, integrating different judgements, and interests

DEMOCRATIC

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Ouchi (1979)—Organizational Control Mechanisms

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is not entirely uniform across the four articles. For example, Nahapiet & Ghoshal’s (1998) dimensions tend to have a more ontological flavour than the rest, whereas Ouchi’s (1979) are clearly instrumental. However, all in all, the dimensions or elements can be said to be comparable.

A Critical Comment about Table 5.1 A cursory look at the entries in Table 5.1, reveals the following: • The dimensions highlighted by the four sets of authors have been arranged into five logics or types of elements/dimensions and although the five types have different names and different epistemological orientations, there are enough similarities to enable five groups of logics to be identified. The structural dimension includes the types labelled as ‘bureaucratic’ and ‘hierarchical’. Sociorelational includes ‘clan’, social’, and parts of the ‘communitarian’ element; and market includes also the ‘market-like’ element. Cognitive includes parts of the ‘communitarian’ element (knowledge, values, identity) and democratic keeps its original designation • All four sets of authors highlight a structural dimension, variously called structural, hierarchical, or bureaucratic. Nahapiet & Ghoshal (1998) consider a network structure while the remaining authors refer to a hierarchical model • All the approaches converge on the existence of a relational dimension, although with differing emphases. While Nahapiet & Ghoshal (1998) emphasize the relationships themselves, the other authors focus on the outcome of the relationships, such as identity or shared value • All the approaches, with the exception of Nahapiet & Ghoshal’s (1998) recognize the presence of the market or relationships between the organization and the market as key boundaries of organization design • The three dimensions featured in Nahapiet & Ghoshal’s (1998) framework are porous, in the sense that they feed into the dimensions by the other authors, that is, the relational dimension feeds into the structural; and both the relational and cognitive dimensions feed into the democratic dimension • The framework by Grandori & Furnari (2008) is the only one featuring a normative attempt through the ‘democratic’ dimension, emphasizing ownership, decision, and representation rights.

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• None of the four entries consider the perceptions or concerns of external stakeholders on the formation of the organization’s design or social capital. • None of the four entries approach organization design from the point of  the view of the action that is required for design to materialize (i.e. designing). A more detailed summary of the five traditional logics or types of elements/ dimensions follows.

Market Markets are highlighted by Ouchi (1979) as a control mechanism, based on the notion that markets have a very precise way of measuring and rewarding individual economic contribution, through the price mechanism. Grandori & Furnari (2008) attempt a somewhat less abstract specification, by designating the dimension ‘market-like’ and including a number of mechanisms, such as pay for performance applied to individuals, teams or firms, out­sour­ cing or internal labour mobility. These authors explain that economic incentive is the driver behind the coordination between market actors, achieved with minimal communication. Adler & Kwon (2002) put forward a more helpful definition of the market dimension, by explaining it as something that emerges from the ‘selling, buying or bartering of products or services’. Indeed, this definition places an important question about the nature of organization design, that is, should one consider organization design to be the direct consequence of forces exogenous to the organization—the market or the price mechanism—or should we consider it to be the consequence of endogenous forces, which are caused by the market forces—for example, the organization’s service? We will return to this point further down.

Structure As regards the structural dimension, three of the approaches—Ouchi’s, Adler & Kwon’s, and Grandori & Furnari’s—share the view that the attributes of the bureaucratic model are the source of the legitimate authority that provides obedience to authority and enables the firm to go on. This dimension, according to Grandori & Furnari, infuse predictability, transparency, and arbitration into the organization, with minimal amounts of information sharing. Our view is that while this was true for the greater part of the 20th

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century, it is no longer accurate in the early part of the current century. Indeed, the spread of information technology (IT) applications, including the Internet and social media, and the increasing possibilities for informal communications, inside and outside the workplace, have completely subverted the bureaucratic model. Employees no longer abide by the bureaucratic rules of communication, and they coordinate their activity using whatever electronic communication means they have at their disposal. Hence, while not totally irrelevant, hierarchical bureaucracy has lost its centrality, and the defining characteristic of the structural has become not only ‘the overall pattern of connections between actors’ but also, the ‘personal relationships people have developed with each other through a history of inter­ actions’, as suggested by Nahapiet & Ghoshal.

Sociorelational Ouchi (1979) is inspired by the metaphor of the “Clan” as one of the organization’s control mechanism, where tradition is a key force behind social norms shaping the social group. Grandori & Furnari (2008) follow the same path and talk about “collective” and “communitarian” attributes, including peer group governance, knowledge, value sharing, and norms of reciprocity, as qualities that infuse identity and cohesion. Adler and Kwon (2002) take on a different tack and identify a social dimension, as being one that arises from “the exchange of favours and gifts”. In these three approaches, the dimension is described in terms of what it is or what it does, with no attempt at uncovering its ontology, i.e. where does this dimension come from? Nahapiet and Ghoshal (1998) provide a partial answer to this question, in saying that the relational dimension comes from the “history of interactions” between people, which result in personal relationships, which in turn elicit trust, norms or identification. Hence, we suggest that this dimension, which we have re-named sociorelational – needs to be underpinned by a more foundational force, such as the organization’s identity.

Cognitive Nahapiet & Ghoshal’s (1998) is the only approach that features a cognitive dimension. While the remaining three approaches assume meaning as something to be taken for granted, Nahapiet & Ghoshal consider semantics explicitly, that is, the way that meaning contributes to the formation of social capital. However, their description of the cognitive dimension—‘resources

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providing shared representations, interpretations and systems of meaning among the parties’ (p. 253)—incurs the risk of cognition being reduced to a discrete entity or resource, rather than an all-encompassing dimension with organization-wide implications. Our own interpretation of the cognitive dimension is somewhat different. That is, while clearly cognitive in nature, it also embraces the attributes of ‘identity and cohesion’ and ‘homogenizing judgements and interests’ from Grandori & Furnari’s (2008) communitarian dimension. Indeed, as it will be discussed below, in working towards know­ledge and value sharing and a common culture, identity becomes a super­ordin­ate dimension that actually defines the organization and therefore its design.

Democratic In a pioneering move, Grandori and Furnari (2008) put forward a dimension of organization design that embodies a societal value, i.e. democracy. Clearly, in a world so acutely aware of values and ethical issues, such a move can only deserve applause. However, the way that this dimension is spelled out, reminiscent of the Swedish writings on industrial democracy (Haug, 2004; Luhman & Cunliffe, 2012), is somewhat limiting. Some of the examples presented as applications of this element highlight job enrichment and empowerment, diffusion of ownership, decision and representation rights or diffusion of representation rights. While characterized as being about “infusing voice and fairness”, the examples provided are limiting, in so far as they do not consider the entire gamut of people that have a stake in the organization. The literature on stakeholder theory presents a much broader view of the concerns behind this element of organization design, including some compelling arguments about the need to consider not only internal stakeholders but also external stakeholders of the organization.

Establishing a Set of Design Priciples and Integrating Them with Krippendorff’s (2011) Human-Centred Design Axioms In this section, we start to draw up our proposal for the new logics of or­gan­ iza­tion design inspired by the human-centred school of design thought. The literature is filled with examples of design principles, selected in accordance with the concerns of specific areas of knowledge or activity, making it difficult to arrive at a comprehensive or definitive list of principles or fundamentals. With the caveat that a comprehensive review is beyond the scope of

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this chapter, we have opted for two sources which are both well-known and ‘generic’, in the sense that they deal with design as a discipline and not from the point of view of any area of design application. The sources are Krippendorff (2006) and Nelson and Stolterman (2014) and the principles in common with most of the design literature are as follows: • • • • • •

Meaning Super-ordinate ambition Desiderata Service Design systemics Ethics

Additionally, there is another important source, an article by Krippendorff from 2011, where the author provides a useful overview of the trajectory of design in the last forty years and puts forward a number of HCD principles. This ‘trajectory of artificiality’ evolves from the design of products to the design of communicative and social artefacts, the type of artefacts that organizations are mostly made of. Based on this evolution, Krippendorff (2011) proposes the following nine axioms, which are meant to govern contemporary design: 1 . 2. 3. 4. 5. 6. 7. 8. 9.

Meaning is the only reality that matters Interactivity replaces materiality Design is informed by explorations, not re-search Artefacts create and are created in networks of stakeholders Design must be delegated Artefacts survive or fail in language Technology thrives in heterarchy, not hierarchy A science for design must be a second order science Professional design advances with its design discourse.

In analysing this list, its applicability to organization design becomes evident. For example, ‘Technology thrives in hetrarchy not hierarchy’ is clearly relatable to organizations, in the sense that automation is the main cause behind the massive changes to bureaucratic hierarchies and their conversion into network structures or hetrarchies. Another example is ‘Design is informed by explorations, not re-search’, a principle wholly in line with the notions of exploration versus exploitation, as famously suggested by March (1991) in describing the two ends of a continuum of options open to the strategic positioning of companies.

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138  Designing Organization Design DESIGN FUNDAMENTALS

MEANING SUPER-ORDINATE QUALITY

DESIDERATA

HUMAN-CENTRIC DESIGN AXIOMS Meaning is the only reality that matters Design is informed by explorations, not re-search Artefacts create and are created in networks of stakeholders Artefacts survive or fail in language

SERVICE

Design must be delegated Interactivity replaces materiality

SYSTEMICS

ETHICS

Technology thrives in heterarchy, not hierarchy A science for design must be a second order science Professional design advances with its design discourse

Fig. 5.2:  Matching between human-centric design axioms and design principles

However, before embarking on that exercise, we need to attempt a match between these axioms and the design principles listed previously, while possibly merging some of the nine axioms in meaningful ways. The diagram in the Figure 5.2 shows the proposed matching. The discussion follows using the design fundamentals serving as headings and with a short illustrative quotation from Krippendorff ’s (2011) HCD ax­ioms opening the discussion under each heading. The aim is to arrive at a streamlined list of design principles, which includes the concerns contained within the HCD axioms, while reflecting the all-encompassing design fundamentals.

Design as Meanings (Ordinate and Superordinate) Meaning is the Only Reality that Matters as soon as we move beyond the engineering of functional products, we need to be concerned with what the artefacts of design could possibly mean to users and interested parties, with the multiple rationalities that people can bring to bear on them.  (Krippendorff, 2011: 413)

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A substantial part of the discussion in Chapter 2 makes the case for or­gan­ iza­tion design-as-meaning, including the views of some of the authors who consider meaning to be a central feature of design and whose writings might be applied to organization design. The present section builds on the previous discussion and is aimed at explaining the merger of Krippendorff ’s (2011) nine axioms and the more general principles of design. The principle of design as meanings is the key tenet of human-centered design. In applying it to organization design, two different perspectives must be considered: the first is the definition of design modelled after the metaphor of the hermeneutical circle, i.e. a perspective that considers the design process as a dialogical exchange between the designer and the design situ­ ation (Snodgrass & Coyne, 1992). The second is the distinction between the ordinate and superordinate levels of meaning. Ordinate meanings are those that occupy a relative position in a hierarchy of meanings. Various possible levels of ordinate meanings are exemplified in the frameworks by Buchanan (1992, 1998) and Giacomin (2014) (see Chapter  2) where there is an evolution of meanings from unidimensional to multidimensional or from the level of individually held meanings to the level of organizationally appropriated meanings. Superordinate meanings are those situated over and above ordinate meanings and exerting considerable influence over these. For purposes of or­gan­ iza­tion design, the best exemplar of superordinate meaning is the notion of organizational identity, which includes both internally generated and externally generated meanings (for example, image and reputation). Organizational identity depends on appraisals or evaluations of the or­gan­iza­tion’s design as a whole, a type of judgement that goes beyond the trad­ition­al measures of organizational quality, efficiency, or effectiveness. Nelson & Stolterman (2014) suggest that traditional measurements, such as quality, are not applicable to design in its widest interpretation. They explain that if the designer’s intention is to create artefacts that will have a long-lasting effect and designs that will ‘extend, augment and ennoble’ the designer’s achievements as a person, then functionality or efficiency are insufficient as the applicable measures. They state: Sometimes design becomes a conveyor of soul (…) Quality is not robust enough as a scale of measurement against which to judge ‘good’ design. At least, this holds if the ambition is to create designs that have a positive and lasting impact on our reality.  (p. 192)

The meanings embedded in a design must be valued and judged by their intrinsic value or the experiences they evoke, much as in the case of a

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well-performed surgery or an excellent marketing presentation. The intrinsic worth of a design is further recognized by ‘the unexpected presence the design exhibits on its own as it becomes an agent of influence and change, thus, in effect, recreating its creators’ (Nelson & Stolterman, 2014: 171; italics added). So, in designing organizations, the ultimate valuation of the design is established by its success in meeting the expectations of promoters (owners, entrepreneurs, or governments), users, clients, or customers, as well as the hopes and expectations of the communities affected by the design. Thus, in applying the principle of design as meaning to organization design, the ordinate and the subordinate levels of meanings can be said to be entirely interlinked. In other words, we posit that the messages contained at the subordinate level (organizational identity), percolate and influence the meanings in all areas of the organization’s activity. We also suggest that often the external messages contributing to the organization’s identity are more powerful than the internally generated messages. For example, in the case of the Volkswagen emissions scandal, a superordinate level of meaning was created by the media about the poor ethics (image) of the company’s management. This level of meaning is likely to have affected ordinates meaning inside the organization, more than meanings generated from internal sources, either formally or informally. To be sure, recalling the conclusions by Glavas & Goodwin (2013: 15), these authors assert that ‘employees’ perceptions of their company’s social responsibility behaviors are more im­port­ ant than organizational reality in determining organizational identification’.

Design as Desiderata Design Is Informed by Explorations, Not Re-search Re-search results cannot generate newness. Especially causal explanations of what continues to exist, trends for example, systematically and methodically fossilize creative deviations from observed history. Generating knowledge that could support design decisions means reversing the familiar process of re-search. Instead of examining the past for generalizations and constraints on what can be done, designers have to explore the present for what is variable, combinable into new artefacts, fusible into new technologies in order to reach desirable futures for targeted communities.  (Krippendorff, 2011: 416)

Unlike conventional wisdom in organization studies, in design theory and practice, goals and objectives are not in place when the design process begins. Moreover, in design theory and practice, action is not seen as a

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consequence of a planning process. Rather, the design process starts with the expression of desiderata, in the sense of a hope, a wish, an ambition, a quest, an aspiration, or a will towards something (Nelson & Stolterman, 2014). The logic of goals and objectives, which implies that needs are well-understood and easy to articulate, leads to approaches of design-as-problem-solving. A process of intentional change led by desiderata rather than need reflects the ‘innate human understanding that the world is not complete’ (2014: 117) and leads to open-ended innovation. Krippenddorff ’s distinction between ‘­re-search’ versus ‘exploration’ captures the principles of desiderata, as is clearly evidenced in the passage above.

Design as Service Artefacts Create and Are Created in Networks of Stakeholders Stakeholders have become far more aware of each other and organize themselves through various media (…) Stakeholder networks democratize design by distributing design decisions and responsibilities for success to all those willing to contribute their conceptual or material resources to the process.  (Krippendorff, 2011: 414)

Artefacts Survive or Fail in Language Virtually all design is accompanied by talk: all of what marketing researches, advertising does, and users end up doing occur in language. It is amazing that we seem to know as little of what we do in language as fish are said to know of water. (Krippendorff, 2011: 417)

Design Must Be Delegated Human-centered design means leaving artefacts underspecified, open, enabling interested others to be designers of their own worlds, in their own terms, and towards satisfying their own needs (…) Unlike medical doctors who manage to guard their profession by licensing, design cannot protect itself that way. Designing is a fundamentally human activity in everyday life. Professional designers can only be ahead of most others along a trajectory of artificiality they pursue. (Krippendorff, 2011: 413)

Nelson & Stolterman (2014: 41) argue that ‘design is by definition a service relationship’. Comparing design with science and art, they affirm that while science and art are self-serving cultures of enquiry, design is other-serving.

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Scientists are motivated by their own curiosity in the pursuit of new know­ ledge; and artists create art as a way of self-expression. Designers, on the other hand, exist to provide a service to someone, usually a client. Design is the interpretation by the designer of the needs or the ‘desiderata’ of a third party and the rendering of a service. Moreover, Nelson & Stolterman explain that design activity is kept alive through systemic relationships between those being served and those providing the service. Although this may not be obvious when observing the behaviour of typical designers, this position is absolutely germane to our discussion about the roots of organization design. First, the systemic relationships between those being served and those providing the service implies that the activity of creating artefacts is done in networks of stakeholders. Second, the entire activity of creating artefacts, as well as providing and receiving services is entirely dependent on language. This has important implications for the way that service and service provision is conceptualized. Third, Krippendorff reminds us is that ‘design means leaving artefacts underspecified, open, enabling interested others to be designers of their own worlds, in their own terms, and towards satisfying their own needs’ (2011: 413; cited above). Thus, the axiom Design Must Be Delegated complements perfectly the axiom Artefacts Create and Are Created in Networks of Stakeholders and for this reason both have been placed under the overall principle of design as service.

Design as Systemics Interactivity Replaces Materiality Technology resides less in the materiality of its artefacts than in its social utilization (…) The interactivity that makes projects succeed is largely due to compelling narratives that orient the participants toward a goal.  (Krippendorff, 2011: 414, 415)

Technology Thrives in Heterarchy, Not Hierarchy In information-rich environments, the projects that designers begin to tackle— sharewares, services, educational programs, or corporate design policies—are no longer centrally controllable, governable by a single authority or objective. Design tasks involving teams or stakeholders can no longer be organized hierarchically. Design needs to operate with heterarchical conceptions, embrace a great diversity of meanings, and negotiate its possible outcomes with many interested parties. (Krippendorff, 2011: 415)

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No design exists in a vacuum, that is, every design is either an element of a system or a system itself. Design enquiry is systemic in nature and designers need to be able to recognize and protect relations and connections found in real life. Systemics, according to Nelson & Stolterman (2014), is the fundamental basis of design reasoning, and systemic designing is described as an activity of composing and assembling. A compositional assembly is a unified whole made up of things and people standing together harmoniously, emer­ ging from pragmatic designing activity. Design’s method of composing and connecting on the basis of trial-and-error is the alternative to the limitations that human beings have in achieving wholly rational decision-making. This, in turn, means that ‘there are no universal, a priori compositional assemblies for generalized design applications’ (2014: 161), a point that is highly ap­plic­ able to organization design, in the sense that each design is non-imitable. Hence, an organization’s structure can usefully be viewed as a com­pos­ ition­al assembly of sociomaterial practices, where the activity of human agents gets ‘imbricated’ with the functionality of technology (Leonardi, 2013) or, in other words, where ‘technology resides less in the materiality of its artefacts than in its social utilization’ (Krippendorff,  2011: 414; cited above). On the other hand, the technology which enables the structure-ascom­pos­ition­al assembly to hold together is responsible for the demise of the model of command-and-control (Gergen,  2016), which has characterized or­gan­iza­tional structure for more than a century. The rules and regulations typical of the hierarchical model of structure are easily bypassed by the interactive capabilities of IT, and the hierarchy as the model of organizational structure is progressively being replaced by hetrarchy or the network model. Interactivity is defined as ‘the mutual relations between two or more people who perceive one another and try to orient their actions toward one another via communication’ (Quiring, 2017: 1). Thus, it might reasonably be assumed that interactivity is causal in relation to the ongoing transformation in organiz­ ational structures from the hierarchical mode to the hetrarchical mode.

Design as Ethics A Science for Design Must Be a Second-Order Science In human communication, messages are sent in the anticipation of their receiver’s understanding. Thus, information always bridges two kinds of understanding and creates a dynamic interweaving of these understandings (…) The understanding that designers need to have is an understanding of users’ or other stakeholders’

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144  Designing Organization Design understanding. This is an understanding of understanding, or second-order understanding for short.  (Krippendorff, 2011: 416‒17)

Professional Design Advances with its Design Discourse Design discourse enables the education of designers, the teaching of design prin­ ciples, the formulation of design methods, the public celebration of exemplars, as well as the construction of guiding futures.  (Krippendorff, 2011: 418)

As a knowledge discipline, design cannot avoid ethical questions, given the fact that designing artefacts is not just about solving practical problems, but is primarily an activity that affects people and the way people work or live together (Krippendorff,  2006). When designers devise courses of action aimed at changing existing situations into preferred ones, the resulting artefacts might not necessarily be good for everyone. An example comes from urban planning, where the design solutions found for one group of people might not be suitable for the rest of the community. Therefore, designers must acknowledge and take into account the needs and aspirations of the people who are affected by a design proposal and have a good grasp of which proposed changes constitute improvements for them. Having a good grasp implies ‘second-order understanding’, meaning that design methods must be concerned with an understanding about the users, and with social aspects of artefacts. This stands in stark contrast with design-as-engineering, which is mainly concerned with the functional aspect of technology. In stating that ‘it is a matter of ethics to acknowledge multiple stake­holders in design’ Krippendorff (2006: 322) begins to uncover design’s normative dimension. Design scholar Bonsiepe (2006: 30) supports this position un­equivo­cal­ly, in his assertion that design humanism is about ‘the exercise of design activities in order to interpret the needs of social groups, and to develop viable emancipative proposals in the form of material and semiotic artifacts’. And Buchanan (2001) also reinforces Krippendorff ’s position, in saying that ‘the quality of design is distinguished not merely by technical skill of execution or by aesthetic vision but by the moral and intellectual purpose toward which technical and artistic skill is directed’ (p. 37). Buchanan aptly summarizes the human-centred or humanistic view of design as being an affirmation of human dignity and an ongoing effort to improve the life conditions of people in their social, economic, political, and cultural circumstances. Having established the ethical dimension of design as a discipline, how is this dimension related to the two HCD axioms outlined above, that is, A Science for Design Must be a Second-Order Science and Professional Design

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Advances with its Design Discourse? As regards the first of the two, Krippendorff (2011) emphasizes in the citation above that ‘the understanding that designers need to have is an understanding of users’ or other stake­holders’ understanding’. What this means is that designing activity implies empathy with stakeholders. Without empathy there can be no understanding. Hence, the emerging suggestion is that the activity of designing or­gan­iza­tions inevitably encroaches upon the concerns and interests of stakeholders and this cannot be ignored by designers. Thus, in addition to having a very good grasp of the functional needs of the business, it is also crucial that organization designers have a thorough understanding of stake­holders’ own understanding of the tasks under consideration. This includes the perceptions of stakeholders about the organizational issues surrounding the functional task and about their own role in the tasks being designed. This level of designing activity is only possible if designers have an ethical concern about the stakeholders’ needs, interests, and preferences. As regards the second axiom—Professional Design Advances with its Design Discourse—it must be understood that the practice of organization design crucially depends on the professional discourse of organizational designers, that is, managers and decision-makers. Generally speaking, the discourse that has dominated business education has shown more concern with the profit motive than with considerations of an ethical nature. Given that educators are partly responsible for the ethical stance of the people who manage organizations, it is essential that educators not only understand this role, but also assume their responsibility in shaping their organizations in an ethical fashion.

Identifying New Trends in Management and Organization that Reflect the Concerns of Human-Centred Design In this section, we take the streamlined list of design principles informed by the concerns behind Krippendorff ’s HCD axioms, and identify five new trends from the literatures of management, organization, marketing, strategy, and entrepreneurship, which in one way or another reflect the concerns behind the design principles. All five trends have been quite influential among the research community in terms of frequency of citation, however they are still to make a mark in terms of influencing organization design. The trends are as follows: • Organizational identity and identification • Service-dominant (S-D) logic

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• Effectuation theory • Interactivity and organizational structure • Stakeholder theory and ethics.

Organizational Identity and Identification This trend rests upon two research traditions: (1) the tradition of behavioural economics that singles out identity and identification as key cognitive and motivational dimensions of social organizations; and (2) the tradition of organizational behaviour and the claim that identification is a crucial process in the formation of organizational meanings. In the literatures of industrial and behavioural economics, identity and its satellite concept of identification have increasingly been put forward as ‘superordinate’ mech­an­isms of governance and coordinating, influencing knowledge creation and transfer throughout the organization (Argote & Kane, 2009). Kogut & Zander (1996) state: ‘the knowledge of the firm has an economic value over market transactions when identity leads to social knowledge that supports coordination and communication’ (p. 502). Such perspectives on identity are indeed supported by a number of distinguished economists, namely Arrow (1974), Simon (1996), and Akerlof (Akerlof & Kranton, 2012), who concur in flagging identity and identification as major sources of motivation, commitment, and organizational effectiveness. In the management and organizational behaviour literatures, there has also been remarkable interest in the topics of identity and identification. Ashforth et al. (2008) explain organizational identity and identification as processes of formation of meaning, evolving iteratively between the col­lect­ ive processes of sense-breaking and sense-giving, and identity enactment at the individual level. In this manner, newcomers begin to learn the features of the organization’s identity in a recursive process that encompasses both the individual and the collective levels. It is important to highlight that perceptions and understandings about the organization’s identity are not limited to abstract verbal representations of feelings or beliefs, but they are also em­bodied perceptions. From an embodied perspective, the construal of or­gan­iza­tional identity is predicated on processing, examining, interpreting, and expressing emotional, visual, aural, bodily, or temporal information, which can be formal and informal, official and unofficial, symbolic and material (Harquail & King, 2010). Moreover, given that embodied cognition is closely associated with emotions and the ethical sense of individuals (Colombetti & Torrance, 2009; Ward & Stapleton, 2012) it can be asserted

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that identity also has an affectual/motivational component, crucial in the creation of bonds between participants and the organization.

Service-Dominant Logic Traditional economic science has been dominated by a manufacturingoriented view of the world, which places products at the centre of wealth cre­ ation and treats service as the value added to final output. However, a new perspective on markets and marketing known as the S-D Logic makes a strong argument in favour of the view that the exchange of service is at the root of all economic activity (Vargo & Lusch,  2004;  2008c). Service is put forward as preceding the market as the foundation of economic exchange. The S-D logic points out that all economic exchange is based on service rather than ‘goods’, and that the market is a system of service-for-service exchanges, made up of configurations of resources (including people, information, and technology) connected to other systems by value propositions (Vargo et al., 2008). In the S-D logic, service is created in processes of cocreation between the organization and various stakeholders. On the other hand, in Krippendorff ’s (2011: 417) citation above about one of his HCD axioms, he draws our attention to the fact that artefacts survive or fail in language. This dovetails with the view from the S-D logic that service systems are purely cognitive systems and that service should be seen through the phenomenological perspectives of customer experience and meaning, rather than as a set of physical characteristics (Akaka et al., 2015). Indeed, the principle of design as service is wholly in line with the S-D school of thought, representing not only a service-oriented view of the market but also a human-centred view of economic activity.

Effectuation Theory In traditional management studies, the dominant approaches to or­gan­iza­ tion design assume a predictive or causal logic, while in the entrepreneurship approach pioneered by Sarasvathy (2001) organization design assumes a logic of effectuation. The key assumption of this approach is that under conditions of true uncertainty it is impossible to predict and draw statistical inferences about the future. In such conditions, entrepreneurs and managers tend to make choices based on their beliefs rather than to follow rational processes of preference ordering in relation to expected consequences (i.e.

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procedural rationality). The two logics—a causal logic versus a logic of effectuation—are representative of the dichotomy between Krippenddorff ’s (2011) design principles of ‘re-search’ versus ‘exploration’. Although the aims behind the two poles should not be seen as mutually exclusive in the actual management of organizations, the notion of effectuation as a process of generating planning alternatives, rather than of choosing among known alternatives, brings an important new orientation to the process of organization design. The key proponents of effectuation theory agree that as a decisionmaking mode, effectuation will not replace causation and indeed suggest that managers and entrepreneurs transition between effectual and causal approaches.

Interactivity and Organizational Structure McEvily et al. (2014) point out that there are no organizations driven exclusively either by formally determined and prescribed behaviours or by informally emergent action driven by individual agency. Instead, they assert ‘formal and informal elements co-exist in a variety of combinations and affect each other in important ways’ (p. 4). Indeed, McEvily et al. go further and suggest that performance and behaviour in organizations are a function of the interactions among organizational actors, interactions which are themselves shaped by formal organization and informal social structure. They explain that both formal and informal organizational elements generate a ‘web of interactions connecting actors’ and that such interactions, ‘whether formally designed or informally emergent, are conduits through which organizational actors coordinate efforts, share goals, exchange information, and access resources’ (2014: 5; italics added). On the other, interactivity is also associated with the widespread use of IT, feeding directly into the systemic nature of design. Thus, it is suggested that interactivity has become the central focus of organizational structure, defining a new type of structure that includes both formal and informal or­gan­iza­ tional elements. Moreover, it is also proposed that the most effective way to approach the co-existence of formal and informal elements of organizational structure is through organizational improvisational, not just as a metaphor but as a way of designing organizations. Hatch’s (1999) excellent work on improvisational jazz as a metaphor for organizational structure, where formal, informal, and interactional co-exist, will be our main reference point. Thus, in dealing with the logic of interactive structure (in contrast with hier­arch­ ic­al structure), emphasis will be placed on the properties of improvisation in

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group activity, alongside some considerations about the role of the role of IT, not only in facilitating interaction but also in rigidifying processes.

Stakeholder Theory and Ethics The history of business management, including the theorizing on or­gan­iza­ tion design has been dominated by an emphasis on shareholder value and the notion that value is about profitability and economic returns. However, in the last thirty years or so, this position has been consistently challenged by stakeholder theory, an envelope approach, which includes sustainability and corporate social responsibility (CSR). Freeman’s (1984: 46) classical def­in­ ition of a stakeholder is ‘any group or individual who can affect or is affected by the achievement of the organization’s objectives’, while the notion of value creation by organizations has been radically reformulated. Thus, Harrison & Wicks (2013: 102) assert that a firm’s performance must be defined as the total value it creates, total value being ‘the utility created for each of a firm’s legitimate stakeholders’. According to the stakeholder view, enterprises are social entities that find themselves at the centre of a multitude of relationships with a diverse group of other entities, including employees, customers, creditors, competitors, communities, regulators, as well as stockholders. Supporters of the stakeholder view justify their position using two arguments: (1) enterprises have a moral duty to ensure the welfare of all their stakeholders, not only that of stockholders; (2) by acting in a socially responsible manner toward all their stakeholders, firms can enhance their performance through more motivated employees, loyal customers, innovative products and processes, improved reputation, as well as supportive communities (Barney & Hansen  1994; Donaldson & Preston  1995). Hence, it is in the firm’s own interest to act responsibly vis-à-vis the welfare of all its stakeholders. This, in turn, explains why organization designers must form an excellent second order understanding of the understandings held by the stakeholders. Whenever organizations interact with stakeholders, they are making calls based on notions of ethics (Colombetti and Torrance, 2009). Conventionally, ethics is taken to be the study of ‘the good’, which has been formalized into rules or codes. Unlike other disciplines such as medicine and law, in business and management organizations do not have explicit codes of ethics ap­plic­ able across the board. The social contract that exists between the business and society is ruled, on one hand, by society’s rules (i.e. the legal system), and on the other hand by an ongoing negotiation between the two parties

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regarding the expectations that one party has of the other. While the first part of the contract is relatively straightforward, the second part is riddled with difficulties given the diffuse nature of the shared understandings of the issue at play (Williams & Aitken, 2011). This is the main reason why organization design needs to be driven by a different discourse, a discourse which, among other things, treats stake­ holders on an equal footing as shareholders and include ethics as a tenet of business education. This, in turn, means that business and management programmes, at all levels, need to include ethics as a component of their teaching and learning about organization design.

Proposing Five New Organization Design Logics Based on the discussion from the previous sections, in this final section, we propose five new human-centred logics of organization design. In Figure 5.3, it is shown that the new logics follow principles of design and axioms of HCD and are derived, on one side, from the traditional logics of or­gan­iza­ tion design and on the other side from the relevant management and or­gan­ iza­tion literature trends. Our proposition is supported by the argument that the new logics represent an evolution, rather than a revolution in relation the traditional logics of organization design. This means that the new logics, inspired by principles of HCD, are not incompatible with the traditional logics influenced by the

TRADITIONAL LOGICS OF ORGANIZATION DESIGN

Cognitive Social, Communitarian

HCD-INSPIRED LOGICS INFORMING A NEW PARADIGM OF ORGANIZATION DESIGN

LITERATURE TRENDS ALIGNED WITH PRINCIPLES OF DESIGN

IDENTITY and IDENTIFICATION Design as Subordinate and Superordinate Meaning EFFECTUAL REASONING

Market or Market-like Structural, Hierarchical Relational Democratic

Design as Desiderata SERVICE Design as Service

Organizational Identity and Identification

Effectuation Theory

Service-Dominant Logic

INTERACTIVE STRUCTURE Design as Systemics

Interactivity and Organizational Structure

NORMATIVE Design as Ethics

Stakeholder Theory and Ethics

Fig. 5.3:  Five new human-centred logics of organization design

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social science research in management, economics, and organization theory, but they represent a different orientation. The two sets of logics rest on different foundations, therefore theoretically they are quite far apart, however in terms of the practice of organization design, the key difference between the two is mainly in emphasis. For example, the service logic does not ignore the market, it simply does not give it the pre-eminence it had before. Effectuation does not exclude causation but highlights the need to manage with a mind-set of innovation as a matter of course. For a fuller understanding of each of the five logics, the reader is invited to explore also Chapters 6, 7 and 8 of this book.

The Logic of Identity and Identification Krippendorff (1989) defines design as ‘making something, distinguishing it by a sign, giving it significance, designating its relation to other things, ­owners, users or gods’ (p. 10; italics added). Taking this as our starting point, we posit that if ‘to design’ means ‘to create meaning’, then ‘to design an or­gan­iza­tion’ means, primarily, ‘to create an identity’. In the most frequently cited paper on the topic, organizational identity has been defined as the shared perceptions of stakeholders about what is ‘central, distinctive, and continuous’ in their organization (Albert & Whetten, 1985), a definition that does not stray far from Krippendorff ’s (1989) etymological explanation of the word design. Looking closely at the two definitions, one finds that they are both underpinned by an intention to designate or to create meaning. Organizational identity, we submit, works as an aggregator of meaning with overarching consequences for the entire process of organization design. In highlighting identity as one of the design-inspired logics for or­gan­iza­ tion design, we adopt parts of some of the dimensions from traditional logics summarized in Table 5.1. In a sense, we adopt Ouchi’s (1979) notion of the ‘clan’ as a carrier of norms and traditions, however with a much a wider and dynamic remit. Nahapiet & Ghoshal’s (1998) ‘cognitive’ dimension also provides a contribution, in the sense that identity plays a role in capturing the meaning that feeds into the formation of social capital. Finally, Grandori & Furnari’s (2008) ‘communitarian’ dimension is also adopted as a force towards identity and cohesion in homogenizing judgements, interests, knowledge, and values. However, the unifying element behind or­gan­iza­tional identity and identification as a logic of organization design is the superordinate meaning that incorporates the organization’s ambition and purpose, shaping the formation of all organization artefacts.

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The Service Logic For the point of view of the traditional logics of organization design, service has not been considered as a dimension; instead, organization design has been guided by a logic of markets and price mechanisms. In the earlier discussion about the market dimension we have expressed doubts about such exogenous forces being considered direct causes of organization design. Rather, we see the market or the price mechanism as being indirect causes of many of the manifestations of organization design, for example, by means of the effect of prices on customers, suppliers or competitors. Conversely, we believe that the organization’s service has a direct and determining effect on the organization’s design and therefore share Adler & Kwon’s (2002) def­in­ ition of the market dimension as something that emerges from the ‘selling, buying or bartering of products or services’. Furthermore, we also share the view that service precedes the market as the foundation of economic exchange and for this reason, instead of labelling it ‘market’, the new logic has been labelled as ‘service’. Such a choice has been strongly influenced by the S-D logic, an intellectual development that is squarely behind the logic of service. Going back to the Industrial Revolution, there has been an underlying logic in the formation of organizations which creates a strict separation between the firm and the consumer. Such a logic enables the firm to focus on the mass production of homogeneous goods with large quantities of workers performing highly specialized tasks, leading, of course, to increased efficiency and lower costs. Given the speed of information and decision-making at the time, bureaucratic and hierarchical approaches to management were the best solutions for managing work within organizations. The economy was dominated by the production of goods, a goods-dominant (G-D)— economy, characterized by slow-moving business environments, specialized jobs, and a bureaucratic organization of work. Today, the Internet has changed everything. Workers, suppliers, customers, and other stakeholders are connected by the numberless networks that characterize contemporary society and business, and the focus is no longer on the production of goods but on the provision of services. However, trad­ ition­al macroeconomic classification systems are still biased towards a G-D logic and treat services as a residual group. Accordingly, the economy is grouped into three sectors: the primary sector, made up industries such as farming, fishing, forestry, mining, and other extractive industries; manufacturing industries makes up the secondary sector; and the tertiary sector— services—encompasses all other unspecified industries. This has created the

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notion that services are subsidiary or complementary, however the tertiary sector deals with sectors which are central to the concerns of the 21st century, such as healthcare, education, transportation, tourism, entertainment, and finance. Therefore, the S-D logic offers a ‘transcending perspective’, according to which all businesses are service businesses (Greer et al., 2016). In Chapter  7, this dimension of organization design will be expounded upon in greater dept. For now, we will just highlight three axioms from the S-D logic (Vargo & Lusch, 2014: 240) that accurately sum up the service logic: (1) the customer is always a co-creator of value (2) value is uniquely determined by the beneficiary, phenomenologically and experientially (3) value is meaning-laden to the actor.

The Logic of Effectual Reasoning The logic of effectual reasoning is a significant departure from the conventional logics governing organization design, in the sense that it conveys an action rather than a planning disposition. Unlike conventional wisdom in organization studies, in design theory, goals and objectives are not in place when the design process begins, therefore action is not seen as a consequence of a planning process. In design theory, the design process starts with the expression of desiderata, to mean a hope, a wish, an ambition, a quest, an aspiration, a call, or a will towards something. In management lingo, this is equivalent to effectual action, an alternative to the traditional paradigm of causation or business planning successfully put forward by Saras Sarasvathy (2001). Starting from the launch of a firm’s design, when the entrepreneur starts his or her business venture, he or she follows a clear logic of effectual reason­ ing in the sense that the path ahead is not set in stone and is certainly not based on planning. Rather than attempting to set a fixed course of action in the form of a business strategy, entrepreneurs attempt to control the en­vir­ on­men­tal factors, which are within their reach. Sarasvathy et al. (2008: 339) talk of an ‘effectual logic’ and explain it as something that is ‘neither “rational” in the traditional sense nor a “deviation” from rational behavior’. The new paradigm is one of heuristics rather than traditional rationality. Heuristics are the rules of thumb (or generative rules) that organizational actors have to learn in order to cope with uncertainty or with organizational rules that are no longer fit for purpose.

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Thus, effectual reasoning is a logic that takes organization design away from the era of rational decision-making and into the era of heuristics and rules of thumb, where environmental factors are seen as contingent on human action, and where a mind-set of exploration takes precedence over a mind-set of exploitation (March,  1991). The balance between effectuation and causation or between exploration and exploitation is one of the key challenges behind the logic of effectual reasoning. Sarasvathy et al. (2008) explain how business strategies change throughout the life of the company, sometimes with more emphasis on exploration and sometimes with more em­phasis on exploitation, however the dominant mind-set in the daily operation of a design-driven sociomaterial infrastructure should be one of ‘exploration’ rather than one of ‘re-search’ (Krippendorff, 2011).

The Logic of Interactive Structure Based on the notion of organization as a network of actors, Nahapiet & Ghoshal (1998) define structure as the ‘overall pattern of connections between actors’ and explain it plainly as ‘who you reach and how you reach them’. In the light of such assertions and the numberless reports from the literature about the fact that organizations can no longer rely on the ­command-and-control mode, the problem of organizational structure needs to be viewed in radically different ways. Although very successful in bringing about the control and coordination required by industrial age organizations, the bureaucratic model shows its many limitations in the age of the Internet. It is a well-known fact that hierarchies impose multiple filters on the inter­ actions among individuals, within organizational units and between the organization and its external partners. However, mostly due to the deployment of successive waves of IT-based artefacts, many traditional channels are being circumvented and outdated hierarchical rules are giving way to heterarchical ones. Heterarchy is a type of structure often defined as the opposite of hierarchy, usually represented by a diagram of connected nodes, which in the case of organizations, are inhabited by organizational actors. It can be said that hierarchy represents the formal side of the organization, while heterarchy refers mostly to the informal organization and both are heavily affected by the interactivity of electronic media applications. Social media facilitates the sharing of formal and informal information and contributes to the development of the heterarchical mode, while corporate-wide ERP systems help to keep, and sometimes reinforce, the hierarchical system of rules and procedures. While heterarchy creates a lot more room for

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improvisation and creativity, hierarchy will continue to play a role in maintain a degree of stability in rules and procedures. Hence, it can be asserted that heterarchy will not be replacing hierarchy as an institutional arrangement any time soon, however it is clear that the centre of gravity is changing from organizational structures typically characterized as hierarchical to structures denoted as being mostly interactive and heterarchical. Thus, the logic of interactive structure deals with the challenges of achieving workable balances between a model of connect-and-communicate (heterarchy) and a model of command-and-control (hierarchy).

The Normative Logic In their classification of organization design dimensions, Grandori & Furnari (2008) have chosen the word ‘democratic’ for one of their dimensions, highlighting the need to infuse ‘voice and fairness, integrating different judgements and interests’. This type of concern, frequently restated by several scholars from management and organization studies, signals the need to build a normative dimension into the epistemology of organizational design. On the other hand, Krippendorff (2004) suggests that the HCD approach is a direct consequence of a post-industrial culture enabled by IT and characterized by ‘widespread democratization’ (p. 69). Such democratization has also been spreading to business and organizations in general, in the form of an increased concern for the views and interests of stakeholders. Stakeholders are defined as all parties that have a stake in the organization. Moreover, the spread and popularization of social media have helped to turn ethics into the fastest growing concern for every type of organization, a concern that is shared not only by the stakeholders—both internal and external—but also by the educators, who are partly responsible for the ethical stance of people who work in organizations. Generally speaking, the discourse that has dominated business education has shown more concern with the profit motive than with considerations of an ethical nature, however public awareness about the internal life of organizations has never been so high and creates a powerful force for change. Many will argue that management discourse has already started to move into the new age of ethics, however in order for a normative logic to become the norm in the design of organizations, some drastic changes are required. When thinking about the causes of unethical behaviour in organizations, there are many powerful forces are at play and no one should be so naïve as to think that things will change simply through good intentions of well-meaning

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managers. However, much can be achieved through professional education. Much in the same way that deontology is continually emphasized in the education of surgeons or judges, ethics needs to become the motto in the education of managers. Thus, the multiplicative effect of education can be made to play a key role in the shaping of a new normative discourse for organizational design. This is the gist of Krippendorff ’s (2011) advice about how ‘Professional Design Advances with its Design Discourse’.

Conclusion In this chapter, we have taken an additional step towards the ‘construction of guiding futures’ (Krippendorff,  2011: 418) for a new design-inspired paradigm of organization design. Although the new logics are influenced by design principles in terms of epistemological orientation, they also reflect the concerns of contemporary research and writing in management and organization studies. In order to ensure that the new proposals were also rooted in the social sciences, the research process also took into account the “classic” dimensions or elements of organization design. In some cases, the new logics have kept several traces from past approaches, such as with the identity and normative logics, but in other cases there is a break with the past, as in the case of effectual reasoning. Looking at the five logics presented and discussed above, we see that they are tightly interconnected. For example, the logic of identity and identification is tightly linked to the normative logic, in the sense that the ethical values that should rule over the organization’s design will always be reflected in the organization’s identity, in one way or another. The logic of effectual reason­ing and the service logic are entirely complementary, given that the provision of service cannot be separated from the strategizing and the entrepreneurial options generated by the effectual mind-set built into the organization’s design. In other words, the management concerns with service development and profit growth need to be supported by design desiderata driven by explor­ ation rather than by exploitation. Finally, the logic of interactive structure acts as a conceptual linchpin, integrating all the or­gan­iza­tion’s functional areas and fulfilling its role as the force behind ‘connect-and-communicate’. Another conclusion that can be drawn is that the five logics form a systemic whole, thus conforming with the principle of design systemics. In the Epilogue that follows, an integrated model of the five logics is put forward, detailing how each of the logics is related the whole. The last concluding comment is a caveat regarding the fact that the five logics are not meant to be dogma, but just statements subject to interpretation. Therefore, their

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application in practice will be highly dependent on managerial values and leadership choices. For this reason, in succeeding chapters, an argument is made for the need to consider the implementation dimension of organization design.

Epilogue: Summarizing and Integrating the Five Logics Before moving into a more detailed discussion of each of the five logics of organization design, let us take stock, summarize, and propose an integrating framework. This brief summary will highlight only the relevant design principle and the key role of each logic: The Logic of Identity and Identification Design principle: Design as ordinate and superordinate meaning Role of the logic of Identity and Identification: To ensure that the or­gan­iza­ tion’s purpose, values and deeds are understood by internal and external stakeholders and work as centripetal forces (i.e. uniting, motivating, aggregating) for the organization The Normative Logic Design principle: Design as ethics Role of the Normative Logic: To ensure that the rights of all stakeholders are represented throughout the organization’s activities and properly respected. The Service Logic Design principle: Design as service Role of the Service Logic: To keep the organization focused on its main task, that is, providing a service anchored on collaboration with stakeholder networks and co-creation of value The Logic of Effectual Reasoning Design principle: Design as desiderata Role of the Logic of Effectual Reasoning: To endow the organization with a mind-set of ‘a better way’, rather than ‘more of the same’ ensuring that a spirit of exploration prevails over a spirit of exploitation. The Logic of Interactive Structure Design principle: Design as interaction Role the Logic of Interactive Structure: To support the key organizational functions by making the best possible use of interactivity, while dealing with the ongoing challenge of integration of the formal and the informal sides of organizational structure.

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Integrating the Five Logics Earlier in this chapter, we have defined organization design logics as a set of beliefs, which embed the key components of an organizational system, in terms of its values, strategy, architecture, and interrelationships. Since the logics embed components related to the architecture and the interrelationships expected to be found in organizational systems, it stands to reason that the ensemble of five logics also features an architectural set of interrelationships. Following this trend of thought, it must be acknowledged, firstly, that some of the logics are complementary and influence each other in a recursive manner. As mentioned before, relationships of complementarity can be found between the identity and the normative logics, as well as between the logics of service and effectual reasoning. Secondly, it can also be postulated that some of the logics and their recursive relationships form interfaces. According to Simon (1996) an artefact is defined as an interface: an interface between an ‘inner’ environment, the substance and the organization of the artefact itself and an ‘outer’ environment, the surrounding in which it operates. If the inner environment is appropriate to the outer environment or vice-versa, the artefact will serve its intended purpose.  (p. 6)

Simon also explained that any artefact has a function or a purpose and that from this point of view, three interrelated aspects should be considered: (1) the purpose itself, (2) the character of the artefact, and (3) the environment in which the artefact performs. For example, in order to fulfil its purpose as a cutting tool, a knife must be made of a material (inner environment) which is appropriate for the hardness of the substance (outer environment) it is supposed to cut. The organization is a man-made artefact and therefore it makes sense to also consider the organization’s design as an interface. Such an approach is not dissimilar to the classic contingency approach to organization design, where the artefact (i.e. the organization) is conceived as a simple interface consisting of an outer environment, made up of external environmental conditions, and an inner environment, made up of internal structural arrangements. The problem with this approach, however, is that it over-simplifies a complex issue and ignores the fact that a major part of the inner environment is made up of people and people-related components. Therefore, the organization’s design cannot simply be described by one interface, as does a knife or a clock. Given its complex constitution, we suggest that the or­gan­iza­tion’s design is better described as three overlapping interfaces with mul­tiple environments:

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an identity and values interface, an external interface, and an internal interface. Each of these interfaces has two outer environments and one inner environment (see Figure 5.4). 1.  The Identity and Values Interface Outer environments:  the organization’s internal and external stakeholders Inner environment:  the organization’s identity and its normative principles The identity and values interface is created by the embodiment of the values espoused and practised by the organization’s members and manifested through the manifold features of the organization’s identity. It is perceived by the organization’s internal and external stakeholders in very concrete ways, such as the manner in which employees are treated or the procedures for handling customer complaints. 2.  The External Interface Outer environments:  the market and the organization’s identity Inner environment:  the organization’s service and strategy-making mode

THE IDENTITY AND VALUES INTERFACE The Normative Logic

THE MARKET

THE EXTERNAL INTERFACE The Service Logic

The Logic of Effectual Reasoning

The Logic of Identity and Identification

THE INTERNAL INTERFACE The Logic of Interactive Structure

Fig. 5.4:  The systemics of organization design: integrating the five logics through three interfaces with multiple environments

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The external interface mediates between the organization and its external environment and represents the duality market-firm that characterizes the capitalist system. The firm is represented by its service(s), which includes its products and everything else related to the processes of buying and selling. The organization’s service is closely linked to the organization’s dominant strategy-making mode. A mode dominated by exploitation and market adaptation will generate a certain type of service development, whereas a mode dominated by exploration and market transformation will generate a different type of service development. A design-oriented approach advocates a logic of effectual reasoning as a way of ensuring that the organization’s strategy-making mode remains entrepreneurial, emphasizing trans­ form­ ation over adaptation. 3.  The Internal Interface Outer environments:  the organization’s service and the organization’s identity Inner environment:  interactive human and non-human agents The internal interface mediates between the human and non-human agents that make up the organization’s formal and informal structure, as well as the gamut of outward- and inward-facing elements that make service happen. The role of this interface is to support the organization’s relations with the external environmental, while factoring in the identity, values, and internal circumstances that condition such relations. The interface, made up of formal and informal rules and processes, may be perceived by internal stake­holders either as supportive or unhelpful in relation to their activity. The service provided by the organization depends very much upon such perceptions.

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6 The Logic of Identity and the Normative Logic Introduction In Chapter  5 it was asserted that the logic of identity is informed by the literatures on the economics and sociology of identity and is inspired by the design principles of superordinate meaning and ambition. Its starting point is the semantic relationship between the concepts of ‘design’, ‘meaning’, and ‘identity’. Thus, if ‘to design’ means ‘to create meaning’ and if identity is defined as the ‘meanings perceived and shared by a collective’, then ‘to design an organization’ means, primarily, ‘to create an identity’. However, or­gan­iza­ tion­al identity should not be understood as one monolithic whole, but as multiple images of identity, formed by tacit understandings sitting alongside overt forms of identity, for example the physical premises or the company’s products (Hatch & Schultz, 2000). Identity is partly designed by managerial choice and partly emergent. Regarding its creation as deliberate design, there are many actions that can be taken by managers and entrepreneurs, in order to shape the organization’s identity, while on the emergent side identity is created by the perceptions of internal and external stakeholders. Identity provides a ‘window’ to the inside of the organization as well as to the outside world about the internal work­ ings of the organization. This perceptual display constitutes a powerful governance mechanism, shaping perceptions of utility in the eyes of stake­ holders. Inside the organization, identity plays a crucial role in formatting the way knowledge (and, therefore, design) in created, transferred, shared, or integrated. In this chapter, we will not go into an in-depth analysis of the concept of identity but will focus our attention on identity as one of the functional dimensions of organization as social actor. In other words, we are mostly interested in the instrumental uses of identity, that is, how identity affects perceptions of organization design and how it can be instrumental in chan­ging

Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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organization designs. Reasoning along these lines, the chapter will highlight the concept of identity orientation, explained as ‘the nature of assumed rela­ tions between an organization and its stakeholders’ Brickson (2005: 577). In other words, identity orientation captures how relations with stakeholders are reflected in the organization’s identity, and how identity guides the rela­ tionships of individual members with external stakeholders. Identity orientation plays a crucial role since it creates the link between the identity logic and the normative logic. In many ways, identity is also nor­ mative because, once established, identity sets the standards of behaviour. Given the intimate relationship between the two logics, they are dealt with in the same chapter. The normative logic is inspired by the principle of ethics from design theory, but for purposes of organization design it finds translation in stakeholder theory, which holds that (1) enterprises have a moral duty to ensure the welfare of all their stakeholders, not only that of stockholders; (2) by acting in a socially responsible manner toward all their stake­holders, firms can enhance their performance and gain business advantage through more motivated employees, loyal customers, innovative products and pro­ cesses, improved reputation, as well as supportive communities (Harrison et al., 2019).

Some Relevant Features of Organizational Identity Identity as Internal and External Sense-Making Weick’s sense-making theory See (Chapter 4), is one of the early signposts about the relevance of identity for an understanding of the constitution of organization design. The theory rests upon seven basic principles: (i) grounded on identity construction; (ii) retrospective; (iii) enactive; (iv) social; (v) ongoing; (vi) focused on and by extracted cues; (vii) driven by plausibility rather than accuracy. In this chapter, we are particularly concerned with the first principle which highlights the role of identity in individual and collective sense-making. Sense-making begins with the sense-maker and the first step in making sense of the world around us is to establish our own identity (or manifold identities) while engaging in interactions with others. So, when we observe the behaviour of an individual in the organization, we are actually observing the manifestations of at least two identities: the identity of the individual him- or herself and the identity of the individual as representative of his or her unit, department, or the organization as a whole. This, in turn, means

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that perceptions of organization design, which rely on the perceptions of individual stakeholders, depend on manifold manifestations of identity. The following excerpt throws further light on the relationship between identity and organization design: From the perspective of sensemaking, who we think we are (identity) as or­gan­iza­ tion­al actors shapes what we enact and how we interpret, which affects what outsiders think we are (image) and how they treat us, which stabilizes or de­sta­bil­ izes our identity. Who we are lies importantly in the hands of others, which means our categories for sensemaking lie in their hands.  (Weick et al., 2005: 416)

From the citation above it can be concluded not only that identity is formed from both internal and external positions but also that the notion of ‘who are we’ clearly cannot be completely separated from the perceptions that others have of us and that we have of others (Hatch & Schultz, 2000). Moreover, the citation also suggests that identity plays an important role in the emotional states of individuals in the organization, insofar as identity may be stabilized or destabilized by certain events, including the opinions of others. Hence, it can be said that organizational identity is formed recursively by the emergent ‘identity understandings’ that organizational members themselves generate on one hand, and, on the other hand, by the identity claims made by the organization in projecting an identity to internal and external parties (Gioia et al., 2010). Thus, identity should be seen as a superordinate source of meanings in the organization which influences perceptions of organization design from several viewpoints, that is, the individual participant’s own identity, the identity of each participant as a member of a given department or unit, and the identity of the organization or parts of the organization in the eyes of internal stake­ holders, as well as external stakeholders.

Superordinate Organizational Identity: The Macro Level The term ‘superordinate’ has been utilized by Argote & Kate (2009) to explain that organizational identity acts as a governance and coordinating mech­an­ ism influencing knowledge creation and transfer in organizations. They define identity as a ‘higher order organizational aggregate’ that gives or­gan­ iza­tion­al stakeholders a sense of belonging and identification. This point of view is indeed supported by a number of distinguished economists, namely Arrow (1974), Simon (1996), and Akerlof (Akerlof & Kranton,  2012), in

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flagging the issues of identity and identification as major sources of mo­tiv­ ation, commitment, and organizational effectiveness. Arrow’s (1974: 55) suggestion is that identity acts as a ‘code’ that needs to be learned, understood, and shared by members, that is, something that ‘imposes a uniformity requirement on the behaviour of the participants’. Simon (1996) conceptualized identity as a cognitive and motivational force that drives people to pursue organizational goals ‘at the expense of their own interests’ (p. 41). For Simon, personal identification with the organization is ‘a principal reason for carrying out economic activities in organizations rather than markets’ (p. 44). Akerlof & Kranton (2012: 59) concur and boldly state that worker identification may be ‘the dominant factor in the success or failure of organizations’. Kogut & Zander (1996) assert that ‘the knowledge of the firm has an economic value over market transactions when identity leads to social knowledge that supports coordination and communication’ (p. 502), while Brickson (2007) suggests that identity processes rest at the heart of the purpose of firms, in determining how the organization relate to its stakeholders.

Identification: The Micro Level Thus, the superordinate status of organizational identity is linked to cogni­ tive and motivational processes which have been conceptualized by some scholars at higher levels of aggregation (i.e. macro level of analysis). However, in order to have an understanding of the full picture of the identity phenom­ enon, it is important to link the macro level of identity with the micro of individual behaviour, known as ‘identification’. In other words, identification is the ‘enactment’ of identity by individual organizational members. Ashforth et al. (2008) explain that identification grows out of recursive interactions between sense-making and identity enactment. Sense-making refers to the interpretation and understanding by individual members of the existing collective perception of identity, while identity enactment refers to the actions taken by individuals in performing their daily tasks, in harmony with such sense-making. These authors split up the concept of sense-making into sense-breaking and sense-giving (Gioia & Chittipeddi, 1991) and explain that while sense-making serves to reduce knowledge gaps, sense-breaking serve to accentuate them. In other words, sense-breaking is about question­ ing of who one is when faced with some new organizational reality that does not fit prior knowledge, while sense-giving is about guiding the sense-making of others according to the organization’s prevailing identity orientation.

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However, an individual’s perceptions and understandings of the or­gan­iza­ tion’s identity are not limited to abstract verbal representations, but they are also embodied perceptions (Harquail & King, 2010). Embodiment is related to the fact that whatever mechanisms allow us to perceive the world, they are constrained and shaped by the kind of bodily agents we are, and of the en­vir­ on­ments that we find ourselves in. On the other hand, given that embodied cognition is closely associated with emotions and the ethical sense of individ­ uals (Colombetti & Torrance,  2009), it can be asserted that identity also has an emotional or motivational component. Such a component and the emotional bonds that the individual creates with the organization are the result of the individual’s identification with the organization.

Identities as Intermediate Levels of Meaning Generation Hatch & Schultz (2000) assert that when we talk about identity in or­gan­iza­ tions we are talking about multiple images of identity, formed by tacit under­ standings sitting alongside overt forms of identity, for example the physical premises or the company’s products. Thus, when companies advertise, the campaigns target not only consumers, but also employees, community mem­ bers, suppliers, the media, as well as stockholders and investors. Campaigns to build brand identity or brand equity are often designed to develop the company’s corporate identity, either by building up the company’s image or by advocating support for the company’s policies and programmes. All such communication initiatives create specific manifestations of identity which depend on given cultural contexts. Thus, identities can be understood as visible manifestations or the instru­ mental use of emergent cultural symbols. In the words of Hatch & Schultz: identity is ‘a text that is read in relation to cultural context’ (2000: 27). The notion of identity as a bridging construct between observable individual behaviours and symbolic organizational culture is also proposed by Fiol (1991). Accordingly, identity is referred to as an ‘intermediate level of meaning generation’ (p. 201), explained as the people’s understanding of themselves in relation to the broader system of meaning.

A Process Model of Organizational Identity In order to describe the components and processes of organizational iden­ tity, we have borrowed from Seidl’s (2005) identity model, a modified version

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Identity Organizational Self/Descriptions Internal description of the organization

Image might be inferred from identity

Reputation plays a role in the shaping of Identity Identity-informed actions influence Reputation

Image can challenge identity

Reputation External description of the organization

Image Internal Image

External Image

Internal description of the “official” internal descriptions of the organization

Internal description of external descriptions of the organization

Corporate identity activities influence Reputation Reputation helps to shape image

Fig. 6.1:  Components and processes of organization identity Modified from Seidl (2005)

of which is shown in Figure 6.1. The model is based on a definition of or­gan­ iza­tion­al identity as organizational self-description (i.e. internal description of the organization) and encompasses two components: image (i.e. internal description of the external description of the organization) and reputation (i.e. external description of the organization). Seidl (2005) splits identity into three conceptual categories: substantive identity, reflective identities, and corporate identity. The first is made up of the shared rules, values, and world views, materialized as the organization’s structure. The second are the ‘claims’ or ‘narratives’ about the organization which have an indirect effect on the functioning of the organization. The third group is constituted by the presentations about the organization, made to external stakeholders. The three categories are merged and interrelated under the common notion of ‘self-descriptions’ which are the cognitive out­ comes of the organization’s operations. Seidl (2005) describes them as per­ ceptual ‘condensates’ or aggregates of several self-observations into one. The process of condensation is followed by a process of confirmation, where the perceptual aggregates are checked and used in new contexts, thereby adding new meaning to the self-descriptions. The model also borrows from the notions of sense-making and sensebreaking as put forward by Ashforth et al. (2008). Sense-making, or the ongoing effort of making sense of one’s environment with the purpose of reducing knowledge gaps, is complemented by the process of condensation, which means that, over time, the perceiver is able to build knowledge by

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aggregating streams of self-observations. On the other hand, sense-breaking and confirmation are also complementary steps, that is, while sense-breaking is about questioning new organizational reality, confirmation is about check­ ing and legitimizing it before the new meaning is added to prior knowledge. The notion of confirmation is a powerful one, insofar as it opens the possibil­ ity for the new information to be rejected, and therefore to be not integrated into existing knowledge.

Self-Descriptions Organizational self-descriptions are a useful operationalization of the con­ cept of organizational identity. They provide a map and serve as a tool for tracking the path of identity orientation, from the time managerial choices are made to the time that organizational relationships and interrelationships change, in practice. They exert two types of roles: integrative an operative. Under the integrative role, self-descriptions provide the organization with a sense of unity and prevents it from ‘losing itself ’ (Seidl,  2005:80), while under the ‘operative’ role, self-descriptions provide orientation and guidance, even in the absence of a hierarchy. However, self-descriptions may also be harmful and cause the organization to lose its competitiveness. An ex­ample of this was the Nokia company, where self-descriptions were the cause of the severe myopic vision that the company had of itself and its business environment. The organization’s self-description influences and is influenced by its external image, its internal image, and the organization’s reputation. For example, when companies advertise, campaigns target not only consumers, but also employees, community members, suppliers, the media, as well as stockholders and investors. In a similar fashion, campaigns to build brand identity or brand equity are often designed to develop the company’s cor­por­ ate identity, either by building up the company’s image or by advocating support for the company’s policies and programmes. All such communi­ cation practices are powerful contributors to the organization’s internal self-description.

Reputation Reputation refers to descriptions of the organization made by external stake­ holders. It can be based on observation of explicit identity manifestations

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from the organization or inferred from attitudes or stances taken by the organization. Reputation has an indirect influence on the organization’s self-observation as reputation-driven actions in the environment trigger responses from within the organization (Dutton & Dukerich, 1991; Dukerich et al., 2002).

Image Image refers to descriptions of the organization made by internal stake­ holders, and it may denote an internal orientation or an external orientation. Internal image refers to internal description of the ‘official’ description of the organization, while external image refers to internal descriptions of the external descriptions of the organization (Brown et al., 2006). The distinc­ tion between the two types of image is important because they elicit different kinds of responses from organizational members. Internal image is strongly influenced by managerial pronouncements inside the organization, not gen­ erally known in the outside, while external image is shaped by everything the organization does with an external impact. Both have important repercus­ sions in organizational identity, however internal image has a more direct and dramatic impact on the identification and motivation of individual members. It should be noted, however, that for a variety of reasons perceived external image may not be the same as perceived internal image (Glavas & Godwin, 2013).

Identity Orientation and Organization Design Change Given the complex and situated nature of organizations, change in their design cannot be conceived of as something which can be achieved through a blueprint, a plan, or a structure that will lead the organization to its final destination. The first consideration to be made is that if organization design is holistic, in the sense of referring to every aspect and every corner of the organization’s geography, then change in organization design must also be seen from a holistic or contextual stance. Hence, change in organization design is dependent on both individual action and organizational context and a useful way of understanding the contextual part of organization design change is through the notion of identity orientation. In this section, we expound on a proposal about the process of design change through identity orientation. The proposal is summarized in the

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Perceptions of organization design influence

(created and maintained by managerial choice)

Shapes

Organizational Legitimacy

Organization Design Meanings emerging from changed relationship are perceived as changes in

Influence each other Views from stakeholders and from society at large

Individual Identification with the Organization Brings about Changes in Organizational Relationships

Fig. 6.2:  Identity orientation and organization design change

framework shown in Figure 6.2, which borrows from many sources from the vast literature on organizational identity.

The Identity Orientation Construct Identity orientation can be described as a collective perception of a set of tacit and explicit guidelines existing in any organization which defines the organization’s relationships with its internal and external stakeholders. To be more precise, identity orientation refers to ‘the nature of assumed relations between an organization and its stakeholders’ Brickson (2005: 577). In other words, identity orientation captures how such relations with stakeholders are reflected in the organization’s identity, and how identity guides the relation­ ships of individual members with stakeholders. In proposing that different identity orientations create different types of relationships with stakeholders, a link between the organization’s identity and the organization’s practices (Nag et al., 2007) is established. The process of identity orientation starts from the point where, by means of managerial choice, a set of value-laden guidelines is disseminated through­ out the organization which may instil changes to the organization’s existing identity. Depending on the strength and the acceptance of the guidelines, subsequent actions on the part of individual stakeholders will be influenced by such orientation (Scott & Lane, 2000; Brickson, 2005). This process, which is part of the operative role of self-description, links perceptions of identity with the behaviour of individual members and is the same process that leads

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to the formation of identification with the organization, as described by Ashforth et al. (2008). The design content of identity orien­ta­tion is in the meanings contained in the overt behaviours by organizational members in their dealings with internal and external stakeholders. Three types of orien­ tation are put forward by Brickson (2005): an individualistic type, where the emphasis is on ‘maximizing the organization’s own welfare’; a relational type, where the focus is placed on ‘enhancing the welfare of particular others’ and a collectivist type, where the orientation is towards ‘maximizing the welfare of the larger group’ (p. 580).

Individual Identification with the Organization The issue of organization design change through identity orientation hinges on the crucial point of identification with the organization, defined as an individual’s willingness to commit to the organization and to contribute to this its goals in a positive and truthful manner. Individual identification grows with the number of self-observations, which confirm a certain type of phe­ nomenon or expectation. Situations of no confirmation of self-descriptions lead to diminished identification, which may hamper change or cause un­desir­ able changes to occur in behaviours and relationships in the or­gan­iza­tion. Identification is the outcome of processes of condensation and confirmation, and emerges from self-descriptions of the organization which may or may not be consistent with the expectations created in the individual or­gan­iza­tion­al member, through the organization’s communicative artefacts, managerial pronouncements and leadership examples. An approach that helps to understand the process of identification (or lack of it) is the well-known theory of organizational learning put forward by Argyris & Schon (1996). The theory is based on the postulate that organisa­ tions create constraints that prevent their individual members from learning, leading them to create defence mechanisms. People in organisations are very often pressured into saying and doing not what they think is right, but what they think is right for the organization. With time, this process becomes internalized, and organizational members are often unaware that they do not use the theories that they explicitly espouse, and few are aware of the theories they actually use. An espoused theory of action, in non-technical terms, means preaching one doctrine and acting in accordance with a very different doctrine. Applying to our argument, what this means is that in many organizations the espoused mode is prevalent, and expectations are created in or­gan­iza­tion­al

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members, in terms of internal image, that can never be fulfilled. This creates an environment of skepticism and negativity, where members identify less and less with their organization, and eventually stop identifying al­together. In economic terms, this has serious consequences, as it has often been pointed out by the economics community. Hence, it may be concluded that in the process of changing the organization’s design through identity orienta­ tion, it must be carefully considered whether the change expectations are espoused or in-practice. For real change to happen in organization design, the construction of identity, image and reputation are required, but not sufficient. Consistency and truthfulness on the part of management are also indispensable.

Changes in Organizational Relationships Leading to Changes in the Perception of Organization Design Identification with the organization is directly related to the commitment and motivation of organizational members, thus affecting the daily per­form­ ance of work practices. This has an impact on relationships among internal stakeholders and between internal and external stakeholders, which in turn are interpreted in terms of organizational meanings. For example, friendly and cooperative relationships between customers and staff in the customer complaints department are interpreted as a company that is serious about its customers’ rights. This, in turn, carries a message about the design of this company’s customer complaints department, and any changes in the quality of the relationships will be interpreted as changes in design. This observation is supported by Dukerich et al.’s (2002) empirical study, where positive correlation was found between the external image of a set of clinics and the physicians’ identification with the system, which in turn was positively related to cooperative behaviour. Thus, it might be asserted that changes in identification with the organization are likely to give rise to quali­ tative changes in relationships between and among stakeholders, which in turn will elicit changes in the perception of organization design. On the other hand, orientation-induced change happens not only top-down as the implementation of managerial choices, but also bottom-up as a result of the emergence of local routines and practices. In the top-down mode, identity orientation drives perceptual mechanisms in stakeholders about the inten­ tions of management, but in the bottom-up direction, identity orientation also promotes behavioural change. Changed work practices at the local level bring about modifications in the relationships among internal stakeholders,

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as well as between internal and external stakeholders. Meanwhile, changes in relationships are perceived by stakeholders as change in organization design.

Organizational Legitimacy The cycle of organization design change through identity orientation is com­ pleted at the point where internal and external perceptions of existing or­gan­ iza­tion design influence further managerial choices. But identity orientation is also influenced by perceptions of organizational legitimacy, with social media playing a crucial role in the process of scrutiny of the organization’s internal governance processes. Williams & Aitken,  2011: 452) go as far as suggesting that ‘People who have never been, and never will be, your cus­ tomers may be intensely interested in your actions, and willing to take coun­ ter action if they believe your actions to be unethical’. Thus far, we have seen how identity orientation is the result of circular pro­ cesses working at micro and macro level. At the micro level, it is the outcome of ongoing iterations between sense-making, sense-giving, and individual identity enactment (Ashford et al., 2008). At the macro level, identity orien­ ta­tion involves the organization’s stakeholders (Scott & Lane,  2000), in a recursion between the emergent ‘identity understandings’ that stakeholders generate, and the identity claims made by the organization in projecting an identity to internal and external parties. Identity orientation forms gradually through processes negotiated by organization members through their inter­ actions with each other and with external stakeholders, leading to a con­ sensual notion about the company’s legitimacy status (Gioia et al.,  2010). Organizations achieve legitimacy when their actions are tacitly perceived as ‘desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions’ (Suchman, 1995: 574). Organizational legitimacy has many consequences. For example, employees who are associated with a specific morality concern are likely to have stronger organizational identification if their organization’s identity orien­ta­tion is perceived as supporting similar concerns (Pratt,  1998; Barney & Stewart, 2000; Balmer et al., 2007). This, in turn, explains how stakeholder utility and stakeholder preferences actually exert influence on managerial decisionmaking. Perceptions of utility are greatly influenced by the image that stake­ holders, including customers and non-customers, have about the company. Hence, legitimacy is a social judgement ultimately rendered to the organization by its stakeholders, making it a major concern for management. In attempting to attract the support of stakeholders, managers pursue le­git­im­acy through a

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variety of substantive and symbolic practices, however such pursuit is often a double-edge sword. As pointed out by Ashforth & Gibbs (1990), if organiza­ tions try ‘too hard’ to establish legitimacy they run the risk of being perceived as manipulative, illegitimate, and even unethical. Hence, a relationship of causality between the organization’s identity orientation, its normative logic, and its business concerns can be assumed to exist. Processes of legitimation, identity, identification, organizational image, and reputation are all manifestations of perceived organization design, seen from the point of view of the organization as social actor. However, they are not usually taken into account in academic analyses of organization design and this needs to be remedied. Recalling what was said in Chapter 2 about organization design-as-practice and organization design-as-meaning, a large part of what we understand by organization design are perceptions of mani­ fold organizational practices and meanings. Hence, a more practical view on organization design and organization design change would suggest a focus on practices and meanings as the means to tackle the perceptual issues of organizational identity and ethics. Such a suggestion directly addresses the call by Scott & Lane (2000: 55) for a better ‘theory on organizational identity management’, that is, one that ‘must bridge the distinctions between le­git­im­ ation processes at the organizational level and identification processes at the individual level, and between organizational identity and organizational image’. Thus, a focus on organizational practices and meanings would help to turn the concept of identity orientation into a more actionable tool to be used by organizational designers. From the point of view of organization design, the most appropriate approach for capturing and examining the relationship between legitimation processes, identification processes, organizational identity, and or­gan­iza­ tion­al image is stakeholder theory.

The Normative Logic: Stakeholder Theory Capitalism and markets have also notoriously increased the divide between the rich and the poor, both within and across nations. In the pursuit of innovation, we have become blind to some of the harmful consequences of our actions on others, such as environmental deg­ rad­ation, dominance of less privileged groups, and the inequitable distribution of opportunities. The seeds of these deeply troubling issues are beginning to germinate. Global warming, global financial crises, and global terrorism threaten to destabilize our world. It is

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174  Designing Organization Design more imperative than ever to carefully study and understand the power of markets and capitalism.  (Freeman et al., 2007: 303)

The organization design literature is mostly silent about profit-making, profit-taking, or issues of ethics, the assumption being that these are not problems of organizational structure and therefore not a concern for or­gan­ iza­tion­al design. The conventional wisdom has been that in designing or­gan­ iza­tions, emphasis should be placed on profitability, economic returns, and the creation of value for shareholders (Rappaport,  1986). However, in the last thirty-odd years this position has been consistently countered by the defenders of stakeholder theory who claim that the firm’s performance must be defined as the total value created by the firm through its activities (Freeman,  1984). Total value is defined as ‘the utility created for each of a firm’s legitimate stakeholders’ (Harrison & Wicks,  2013: 102). A central premise of stakeholder theory is that taking stakeholders’ interests into account helps firm performance by creating value along a number of dimen­ sions, rather than just economic value. Problems of ethics occur when the interests of some stakeholders get trampled on in order to give priority to the interests of other stakeholders, usually the shareholders. The interests of stakeholders can be defined in terms of the perceived util­ ity stakeholders receive from their association with the firm. The term ‘util­ ity’ is meant as the value that a stakeholder receives when engaging in any firm-related activity. With value being determined by price, labour, exchange, or production, utility becomes the expression of the stakeholder’s prefer­ ences for a particular type of value. Harrison & Wicks (2013) suggest that in addition to the utility associated with goods and services, other types of util­ ity should be considered, such as (a) utility associated with organizational justice, (b) utility from affiliation with the firm, and (c) utility associated with perceived opportunity costs. Organizational justice says that it is im­port­ant to value creation because people value being treated fairly. For example, a supplier who is always paid within thirty days is likely to reciprocate by delivering the order in advance of what is contractually agreed. Moreover, the way a firm treats one stakeholder can influence the firm’s relationships with other stakeholders. Utility from affiliating refers to the utility stakeholders receive from being affiliated to a particular organization. Such utility occurs when the or­gan­iza­ tion embodies behaviours or values that are considered to be important for the individual stakeholder. For example, feelings of connectedness, esteem, and empowerment might be important for the employee of an organization.

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Utility from affiliation can also apply to membership in social networks and it may support cooperation and collective action that benefits all stake­holders involved. Utility associated with perceived opportunity costs refers to the utility that stakeholders perceive from dealing with one organization com­ pared with the utility that they might expect to receive through inter­actions with other organizations, for similar purposes. For example, members of an organization’s community are likely to compare that organization’s employment opportunities with those of other organizations of similar size and scope. The utility associated with perceived opportunity costs is really the consequence of the joint ‘utilities’ associated with goods and services, or­gan­iza­tion­al justice, and affiliation.

The Relational Character of Stakeholder Theory The theory, classed as a synthesis between ethics and economics (Jones, 1995), focuses on relationships, which can be contractual, between the firm and its stakeholders. It holds that trusting and cooperative relationships help to neutralize problems stemming from opportunism. Costs related to prevent­ ing or curbing opportunism (i.e. the opposite of trust and cooperation) are significant and avoiding such costs will only give companies that contract on the basis of trust and cooperation a cost advantage in relation to companies operating on the basis of different assumptions. Thus, ‘firms that place moral value on mutual trust and cooperation will have a competitive advantage over those that do not’ (Jones & Wicks, 1999: 219). In the recently published Cambridge Handbook of Stakeholder Theory (Harrison et al.,  2019) stake­ holder relationships are placed at the very centre of the definition of stake­ holder thinking: Business is a set of value-creating relationships among groups that have a le­git­im­ ate interest in the activities and outcomes of the firm and upon whom the firm depends to achieve its objectives. It is about how customers, suppliers, employ­ ees, financiers (stockholders, bondholders, banks, etc.), communities and man­ agement work cooperatively to create value. Understanding a business means understanding how these relationships work. The manager’s job is to shape and direct these relationships.  (2019: 3)

Although stakeholder theory is not presented as an organization design approach, its emphasis on relationships reinforces its contribution to the

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theme. If it is accepted that relationships between stakeholders are made up of practices and meanings, then the shaping of such relationships is a key organizational design concern.

The Theory’s Normative and Managerial Core Research into stakeholder theory is presented as encompassing three interrelated types of concerns: descriptive/empirical, instrumental, and nor­ mative. The first describe or explain how firms or their managers actually behave, while the instrumental type addresses the consequences of firms or their managers behaving in certain ways (Jones,  1995). According to the instrumental view, financial performance of organizations will be improved if stakeholder relationships are ‘governed by the norms of traditional ethics, for example fairness, trustworthiness, loyalty, care and respect’ (Jones et al., 2018: 317). The normative type is concerned with the moral quality of the actions of firms or their managers and according to Donaldson & Preston (1995) the central core of the stakeholder theory is normative. The descrip­ tive and instrumental accuracy of the theory need to rest upon an assumption of validity regarding its normative core. Thus, the recognition that stakehold­ ers’ interests have intrinsic value and that managers and other agents act on the basis of such a recognition gives stakeholder theory its fundamental normative base. The concept of ‘normative core’ can be understood in three ways: first, as a philosophical justification of stakeholder theory; second, as a theoretical base for the governing principles of a firm; and, third, as a set of managerial beliefs and values influencing the underlying narrative of business (Purnell & Freeman,  2012). The focus of the philosophical justification is a set of arguments justifying the use of a stakeholder mind-set as opposed to a shareholder or profit-motive mind-set. As regards the theoretical base, the em­phasis is mainly on the strategies for negotiating and balancing the com­ peting interests of a company’s stakeholders. But whether we look at the nor­ mative core from the point of view of philosophical justification or theoretical base, stakeholder thinking has to be put in practice through the values embedded in managerial action. Hence, the normative core is not only man­ agerial, but also narrative in the sense that it embraces the plurality of narra­ tives imbedded in the stories managers tell about doing business across time and place. Purnell & Freeman (2012) explain the managerial-narrative core of stake­ holder theory by recourse to sense-making theory and the notion that the

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stories told by managers determine the environments that they ultimately enact (Weick,  1995). In other words, the materialization of stakeholder thinking happens through managerial narratives, which in turn determine the potential for productive ethical conversations in the organization. Low ethical productivity happens due to the false distinction between business and morality, whereby some stakeholders take the view that consideration of morality should not interfere with business performance. The problem is not only one of open versus closed narratives that prevails in some organizations but also one of breakdown of meaningful communication between stake­ holders. Purnell & Freeman conclude by saying that ‘ethical considerations are less about casting value judgement about right/wrong and more about creating a process for meaningful conversation throughout an institution and its stakeholders’ (2012: 109, italics added).

Relational Leadership as the Implementation of the Normative and Managerial Core Cunliffe & Eriksen (2011) take this reasoning a step further by providing important details on how to go about putting into practice the normative and managerial core of stakeholder theory. These authors talk about rela­ tional leadership as a way of viewing the world as intersubjective and emer­ ging from relationships with others. Like Purnell & Freeman, they place special emphasis on the importance of dialogue and conversation, asserting that relational leaders understand the ‘polyphonic, un-finalizable and cre­ative nature of dialogue’ (2011: 1438). In other words, in their everyday interactions relational leaders are accountable to others in the sense that they have to recognize differences in points of view, spend time trying to understand how other feel, think about the issues at hand, and build an en­vir­on­ment where dialogue flows freely. They have to be both responsive to differences and responsible for acting on them. This makes leaders (i.e. managers) morally or ethically responsible vis-à-vis the organization’s stake­holders that they inter­ face with. Relational leadership reinforces the normative dimension of stakeholder thinking. The type of leadership that is highlighted is this conceptualization of managerial action is ‘leadership as character’. In this sense, character should not be interpreted not as personality traits or constructs but as some­ thing embedded and expressed in conversations and dialogue. Here, character is meant as a way of relating to others which carries a moral responsibility ‘to treat people as human beings, of having “a heart”, appreciating others, and

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encouraging them to grow and learn from each other’ (Cunliffe & Eriksen 2011: 1433). In conceptualizing relational leadership as an inherently moral and dialogical practice, Cunliffe & Eriksen make a strong point in emphasiz­ ing relationships not only as something that happens between agents but as something embedded in everyday practice. However, the focus is still on the leader and on the character, judgement, and personal values of leaders. While it is unquestionable that the example of the leader(s) is the key driver of leadership in the organization, it cannot be expected that the organization’s entire system of relationships will change as a consequence of the rever­ berations of examples from role models. The relational perspective on leadership implies that everybody in the organization is both a cause and a consequence of the dominant leadership style, which places the problem of leadership way beyond the leader and the leader’s capabilities. Thus, if everyone is required to play a part in the or­gan­ iza­tion’s leadership effort, this can only be achieved if leadership is seen as a part of the daily practices undertaken by all organizational members. This is what Carroll et al. (2008) call ‘leadership-as-practice’, a school of thought that focuses on the small details of the mundane and not-so-mundane actions of organizational participants, while engaged in their daily practices. Once imbued with the character, judgement, and values prevalent in the organization’s identity orientation, daily practices will lead the organization one way or another. Towards the end of the book we will come back to the topic of leadership-as-practice as part of our proposal for an implementation method of the organization’s normative and managerial core.

The Orthodoxy of Shareholder Capitalism . . . Shareholder capitalism is built on a mentality of competition, limited resources, and winner-takes-all (Freeman et al.,  2007; Strand & Freeman, 2015). This mind-set has its roots in a limited interpretation of the original tenets of market economics as the forces that invisibly regulate the function­ ing of markets, that is, self-interest and competition. Originally put forward by the father of capitalism Adam Smith (2018/1776), self-interest was con­ ceived of as a motive that drives economic actors to pursue their selfish interests but in an “enlightened” manner. This means that self-interest should be pursued, but simultaneously furthering the interests of others. For example, the baker does not make the bread because the baker loves his or her fellow villagers but because the baker has to earn a living and the vil­la­gers have to eat. Thus, in pursuing their own self-interest, both producers and consumers are also serving the needs of others in society. On the other hand, competition

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means that because there are many self-interested people selling in the marketplace, they all strive to gain the attention of buyers (i.e. the customers) and in doing so, create a rivalry among themselves. In a situation of rivalry and while jostling for the customers, sellers try to offer the best possible service, which, in turn, means that the self-interest of sellers is held in check by their own rivalry. While the term has possibly gained a negative connotation, self-interest just means seeking to achieve one’s goals. It does not necessarily imply greedy or immoral behaviour, however it may lead to a sense of amorality if the dominant management discourse promotes a separation between the con­ cerns of business and the concerns of ethics. Indeed, in much of economic science the notion of self-interest does not take into account the self-interests of others and the prevailing belief is that competition for limited resources is the dominant mode of prosperity (i.e. value as a zero-sum game). In this type of environment, people are led to believe that morality is separate from economic prosperity. Rather than acknowledging that every decision has a moral dimension, practitioners as well as academics have created a separate set of values, the values of shareholder capitalism, where competing and winning dictate the rules of the game (Freeman et al., 2007). In shareholder capitalism the manager’s main duty is to maximize profits for his or her shareholders. In order to achieve this, the manager takes the capital from the investor and combines it with other resources in such a way that the costs of those other resources will be minimized, thus maximizing the return on financial capital. Stakeholder thinking marks a radical departure from this mind-set, offering a new narrative of capitalism founded upon relationships of cooperation, morality, and ethics, acknowledging stakeholders as essential to value creation and competitivity. Moreover, the focus on competition rather than cooperation is misguided, mainly because it neglects the role of entrepreneurs. While entrepreneurs are said to be the lifeblood of capitalism and, in many instances, collaboration and co­oper­ation among entrepreneurs were the paths to success, the discourse of shareholder capital­ ism does not tell the story of mutually beneficial relationships in business. Consequently, not only cooperation but also ethics have also been left out from the story of (shareholder) capitalism.

. . . and the Innovation of Stakeholder Capitalism An argument in favour of stakeholder capitalism is not an argument against the foundations of capitalism, that is, private property, self-interest, competi­ tion, and free markets. Instead, stakeholder capitalism is an alternative vision

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of capitalism founded on libertarian and pragmatist lines. Freeman et al. (2007) define stakeholder capitalism as being based on individual freedom, stakeholder rights and responsibilities and value creation by “consent of positive obligations” (p. 311). They explain, firstly, that adults have freedom to make choices, including making voluntary agreements to collaborate and working together to create sustainable relationships, instead of competing over limited resources. Secondly, they posit that each stakeholder needs to be protected within their voluntary agreements and that the rights of one group cannot dominate the rights of any other group. Thirdly, they assert that through formal written contracts or social contracts individuals obligate themselves to others in fulfilling their voluntary agreements. Importantly, stakeholder capitalism restates the “enlightened” aspects of self-interest, emphasizing the social nature of value creation and the fact that business activity is explicitly social, using social cooperation to enhance the process of value creation. Such a formulation of the foundations of stakeholder capitalism is wholly in line with the paradigm of ‘co-creation’, an important trend coming from the realms of marketing and entrepreneurship and espoused in this book, as part of the new logics of organization design. In the Introduction, we made a reference to this new paradigm, which has been characterized as being about the creation of wealth, welfare, and well-being as the basis of joint as­pir­ations, as a joint venture between the firm and stakeholding individuals (Ramaswamy & Ozcan (2014). The new paradigm includes the approach to markets known as service-dominant (S-D) logic (Vargo & Lusch, 2004, 2008c) and the school of thought to entrepreneurial thinking branded as the effectuation logic (Sarasvathy, 2001). Stakeholder capitalism is part of this in­nova­tive paradigm. Vargo & Lusch (2014) assert that over the last two centuries the practice and theory of management was based on a Newtonian or mechanistic view of the market which might even be interpreted as being anti-entrepreneurial. The aim, as in shareholder capitalism, was profit maximization. The method was a focusing of managerial action on the building up of detailed plans and financial forecasts about predictable markets, which became the guiding frameworks for resource allocation, objective-setting, planning, marketing, and control. In a nutshell, business was seen as ‘a machine with levers to be pulled to produce results’ (2014: 243). Once this mind-set was established, it provided the foundation for a false sense of predictive ability. Predictions, plans, performance indicators, and control systems were established as closed systems based on past assumptions and known results, thus pro­du­cing very predictable outcomes. Such a machine-like culture was perpetuated by rewards handed out to the people who proved to serve the system appropriately. The

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result was not only a false notion of stability but also a systematic stifling of creativity and innovation. The S-D and the effectuation logics reverse this mind-set and in doing so reinforce the idea of a stakeholder capitalism. Rather than predicting the environment, effectuation emphasizes controlling the environment. The S-D logic, on the other hand, is committed to a view of co-creation of value, where all economic and social actors are resource integrators rather than competitors for limited resources. For the S-D logic, effectual processes must supersede predictive processes given that service starts as a set of non-causal process, with actors having to know who they are, what they know, and whom they know (Sarasvathy, 2003) before the service idea can be developed. Next, the entire process of value creation depends upon the identification and integration of resources from various collaborating actors and frequent exchanges to co-create value. Without a primary focus on effectual processes, long-term shareholder value will be compromised because managers’ mindsets are centred on ‘institutionalized solutions’ (Vargo & Lusch, 2014: 243), rather than on innovative ways of shaping the markets. Thus, stakeholder capitalism might be defined as an innovative contribution to socio-economic relationships akin to the co-creation paradigm and imbued with a normative ethos, whereby the manager’s job is to identify and inte­ grate the relevant resources, with the aim of co-creating value with and for all stakeholders.

Conclusion From different corners of social science research, there is a consistent mes­ sage about the relevance of identity for an understanding of the workings of organizations. Interestingly, organization studies and economics are brought closer together by the view of identity as a cognitive and motivational force that drives people to pursue organizational goals, even at the expense of their own interests. This view naturally leads to the issue of worker identification, explained as ‘the dominant factor in the success or failure of organizations’ (Akerlof & Kranton, 2012: 59) and ‘principal reason for carrying out eco­ nomic activities in organizations rather than markets’ (Simon, 1996: 44). If organizational identification is defined as the emotional bonds that link organizational members to their organization, then this topic falls squarely within the remit of organizational change. In this chapter, we have attempted to demonstrate that one of the important features of identity is that it can be a catalyst for organizational (design) change.

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The change-related theme we have brought to bear in this chapter is identity orientation, defined as ‘the nature of assumed relations between an organization and its stakeholders’ (Brickson, 2005: 577). Recalling what was said in Chapter 2 about organization design-as-practice, we suggest that any changes in organizational practices associated with changes in identity orien­ ta­tion will create different types of relationships with stakeholders and that this, in turn, will lead to perceived changes in the organization’s design. Moreover, it is suggested that the organization’s identity orientation helps define a ‘design language’ (Giacomin, 2014) that conveys certain or­gan­iza­ tion­al meanings (i.e. an orientation) which, in turn, shape the conduct of all organizational actors. Once this language is embedded in the firm’s business model and translated into day-to-day organizational practices, any changes made to the identity’s orientation will naturally evoke changes in (perceived) organization design. Thus, we propose that the construct of identity orientation works as a syn­ thesis of the manifestations of the organization’s identity. On the other hand, in capturing how relations with stakeholders are reflected in the or­gan­iza­ tion’s identity and how identity guides the relationships of individual mem­ bers with stakeholders, the concept of identity orientation falls squarely within the realm of stakeholder theory. Stakeholder theory emphasizes that value creation must be seen from a multidimensional perspective and explains how stakeholder utility (and preferences), exert important influence on value creation. The adoption of principles from stakeholder theory implies the embracing of an ethical orientation for the organization, which is something that needs to be designed with intent. An ethical orientation is designed in a number of ways, including the cre­ ation of explicit artefacts such as the code of conduct, wholly tacit mani­fest­ ations such as the example set by the company’s management, as well as the myriad explicit pronouncements by the company as an institution. All these are manifestation of organizational identity, and if it is considered that organizational identity plays a central role in shaping perceptions and behav­ iour, not only inside the organization but also from the outside in and from the inside out, it can only be concluded that the organization’s identity and its ethical orientation go hand-in-hand as shapers of organization design. Relationships with internal stakeholders affect the identification of or­gan­ iza­tion­al members with the organization, while relationships with external stakeholders affect the organization’s image and reputation. In all cases, the organization’s legitimacy is affected. As discussed, organizations achieve legit­ imacy when their actions are tacitly perceived as ‘desirable, proper, or appro­ priate within some socially constructed system of norms, values, beliefs, and

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definitions’ (Suchman,  1995: 574). Although legitimacy and the associated perceptions about a company’s status—identity, identification, image, reputation—have not traditionally been linked to organization design, in this chapter it is argued that they constitute a major interface, guiding mean­ ings and values at the organizational and institutional levels. Thus, legitimacy plays a key role as the linchpin between the logic of identity and the norma­ tive logic. Finally, we wish to end the conclusion to this chapter emphasizing what is at the core of any approach labelled human-centric. In the excerpt below, Pfeffer reminds us that people must be at the centre of any effort to design and manage organizations,. In 2015, Pope Francis published an encyclical on the environment in which he wrote, ‘Human beings too are creatures of this world, enjoying a right to life and happiness, and endowed with unique dignity’. The United Nations’ Universal Declaration of Human Rights, in Article 22 stipulates that ‘everyone. . . has the right to social security’ and in Article 23 notes that ‘Everyone has the right to work’ and to just remuneration. Human dignity, separate from seeing people as human cap­ital or a factor of production, suggests that well-being and life matter. Only when these sentiments are implemented in research and public policy will there be any hope of changing the harmful work practices that are all too frequent in contemporary life and the status we accord to both companies and leaders whose success comes literally at the cost of the lives of others.  (Pfeffer, 2016: 6)

Human dignity is a theme that is closely associated with design (Buchanan, 2001) but not with organization design. The key obstacle to affording people the dignity they deserve and curbing the current trend of reducing human beings to human capital or to factors of production, is the prevalence of ‘shareholder capitalism’ as the dominant paradigm. Accordingly, it is gener­ ally taken for granted that organizations have to be designed, primarily, for the benefit of shareholders. This position is also behind the notion of share­ holder capitalism which, according to Freeman (2007) is in the main respon­ sible for the growing divide between the rich and the poor, the dominance of less privileged groups, as well as the environmental degradation that ­threatens human life as we know it. The chapter makes a distinction between shareholder capitalism and stakeholder capitalism, with the latter offering a new narrative of the relation­ ships between socio-economic actors, founded upon cooperation, morality, and ethics, and acknowledging all stakeholders as essential to value creation

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and competitivity. The normative logic of organization design and the notion that designers must acknowledge the needs and aspirations of the people who are affected by the design proposal leans on the side of stakeholder thinking. This is inspired not only by design’s position on ethics but also by its ideals about democracy, thus making the normative logic the main vehicle towards a more humanist stance in organization design discourse.

Epilogue: Advancing the Organization’s Normative Logic with Organization Design Discourse Recalling Krippendorff ’s (2011) principle Professional Design Advances with its Design Discourse, he states ‘design discourse enables the education of design­ ers, the teaching of design principles, the formulation of design ­methods, the public celebration of exemplars, as well as the construction of guiding futures’ (p. 418). In the field of organization design, professional education falls mostly within the realm of schools of business and management. In the last couple of decades, there has been some very relevant writing on this topic, mostly advocating reform in the field of business education (Zell, 2001; Pfeffer & Fong, 2002, 2004; Grey, 2004; Mintzberg 2004; Starkey et al., 2004; Starkey & Tempest, 2005), and more recently placing emphasis on responsible management education (Dyllick, 2015; Nonet et al., 2016). An important contribution to this debate is the paper by Starkey & Tempest (2009) about the design challenges to business schools, brought about by the financial crisis of 2008/9, a ‘winter of discontent’ which lingers till today. Starkey & Tempest start by asserting that the design challenge for business schools is to develop a different way of knowing and shaping the world, founded upon a different language and a different narrative, at a time when ‘conventional wisdom has led to carnage on Wall Street and in all the world’s other major business centers’ (2009: 576). Thus, they conclude that we need to consider a broader definition of the role of the business school as a force for achieving the good of business and of society, the argument for which was a major justification for the establishment of schools such as Harvard Business School a century ago but which seems to have been relegated to the peripheries of what we now do and what we stand for.  (p. 577; italics added)

Starkey & Tempest argue that it is time to remake the case that management is as much an art as a science and that a more holistic view of management and management education can be achieved by greater engagement with

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the  arts and humanities. They assert that a design approach inspired by Krippendorff ’s (2006) human-centred approach offers a means of rethinking management education based on two key ideas. First, Starkey & Tempest defend the introduction of a new language in business school education, aimed at conjecturing a new business narrative, with habits of empathy and sympathetic responsiveness to the needs of ­others. The new business narrative should attempt to curb the growing dom­ in­ance of economics as the foundational discipline of business education and reverse the de-legitimation of the tradition of ‘narrative of purpose’, found in the early days of business education. Second, they recommend the cultiva­ tion of new skills in business school students, attuned to perceptiveness and creativity, rather than to conformity to rules. Intelligent improvisation rather than the automatic application of rules learned by rote should be the name of the game. This idea is developed further in Chapter 8, where jazz music is suggested as an appropriate metaphor for intelligent improvisation, with individuals taking turns in improvising, while listening heedfully and adapting their own playing to that of others. The model for management education based on the two premises above complements and supports the new discourse of organization design espoused in this book. On the one hand, the new language of business education advo­ cated by Starkey & Tempest concur with stakeholder thinking and the new type of relationship with stakeholders based on morality, cooperation, and mutual understanding. Emphasizing this in business school education would play a crucial role in establishing a new normative logic in organizations. On the other hand, improvisational jazz could not be a better metaphor for the badly need revamping of organizational structures. In the same way that jazz is a ‘repertoire of routines that draw upon the best of the past while creating the new’ (Starkey & Tempest, 2009: 584), or­gan­iza­tion design also needs to build upon legacies of organizational practices, while breathing new life into old standards. This can only be achieved by teaching students the skills of ego suppressing and team work, like jazz musicians working together and improvising on the basis of old routines. The new model, properly reinforced and supported by business school authorities, would gradually create a new discourse which would percolate through markets and governments and eventually become part of a culture that will rule over organization design.

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7 The Service Logic and the Logic of Effectual Reasoning Introduction Service is the reason why organizations exist. Organizations are designed so that a service can be provided to customers but with implications to many other stakeholders. Service is also at the centre of the definition of the or­gan­ iza­tion as an economic entity. So, a key aim of service is to enable economic exchanges that will benefit the parties involved, with such benefits being assessed by means of perceived utility. Our approach to the service logic bor­ rows heavily from the service-dominant (S-D) logic and the view that all social and economic actors are essentially doing the same thing, that is, searching for utility, for themselves and others, through reciprocal resource integration and service provision (Wieland et al., 2012). Traditional economic science has been dominated by a manufacturingoriented view which places goods at the centre of wealth creation and treats service as the value added to final output. This perspective ignores the knowledge and skills that need to be applied in the transformation of raw materials into useful products, as well as the actual utility as perceived by the consumer. The new S-D perspective on markets and marketing makes a strong argument in favour of the view that the exchange of service is at the root of all economic activity. It defines the market as a system of servicefor-service exchanges, made up of configurations of resources (including people, information, and technology) connected to other systems by value propositions (Vargo & Lusch,  2004,  2008c). Value is created collabora­ tively (i.e. co-created) in configurations of mutual exchange, happening not only through to the activities of dyads, but also by means of service systems, through an integration of resources that each of the systems has to offer. Chandler & Vargo (2011: 39) claim that service is ‘a process, situated beyond traditional firm boundaries that links actors together’, and explain that actors use language, symbols and social institutions (such as monetary Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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systems, law, etc.) to make sense and regulate the interfacing and exchange. This claim contains an important specification of a key organization design requirement, that is, the requirement of meaning and understanding for all the stakeholders involved in the service exchange. Meanings are created in the interactions among the multiple actors involved in service exchange, with language and other symbolic activity guiding actors in enacting prac­ tices that enable the co-creation of shared meanings, as well as the evaluation of value (Akaka et al., 2014). Verganti (2016: 27-28), on the other hand, argues that the world we live in has entered a phase of too much choice and an overcrowding of ideas, lead­ ing to a chronic struggle to reach ‘a stable idea of what is meaningful’. He states that people now are in constant search of meaning and that “this search for new meaning deeply affects how people interact with products, services and organizations. In this scenario, the notion of innovation is changing, and the new evidence points towards a form of competition based on meaning, with or without the use of technology. Taking Verganti’s (2008) notion of design/meaning-driven innovation as our lead, we propose that innovation is not only a limiting factor of service but is also a key shaper of markets. In other words, in order to have a better understanding of service as a logic of organization design, it is crucial to acknowledge that the service that shapes organizations is shaped itself by another organization design logic which mediates between the organization and the outside world. The other logic is the logic of effectual reasoning. Effectuation is an influential school of thought in management and or­gan­ iza­tion studies (Sarasvathy, 2003; Read & Sarasvathy, 2005; Sarasvathy et al., 2008; Dew et al., 2009; Read et al., 2009) that is consistent with a design logic of creation of the new and with the perspective of exploration over re-search as human-centric design principles (Krippendorff,  2011). One of the key assumptions of ‘effectuation’ is that under conditions of uncertainty, it is impossible to predict or infer about the future. There is no possible way to calculate the expected returns for a specific course of action, therefore in starting up a new business entrepreneurs tend to select alternatives based on their calculation of the loss they can endure. Then, entrepreneurs utilize their experience and their networks of cooperative relations with suppliers, customers, and competitors to try to exert some control over the future, while maintaining flexibility at all times. (Dew et. al 2009). The uncertainty entrepreneurs face when creating new ventures is a dis­ tinctive type of uncertainty that cannot be predicted through statistical inference or causal thinking. This is known as Knightian or true uncertainty, a type of uncertainty that involves factors that cannot possibly be predicted

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and variables that are unidentified. Accepting that one can predict the future through gathering enough relevant information, probably by means of mar­ ket research, creates a widespread view of certainty, where decisions are based upon conviction that the future can be predicted. This is the funda­ mental assumption of the causation logic which much of management the­ ory is based upon. Effectuation theory advocates that, rather than trying to predict the future, entrepreneurs actually concentrate on the controllable aspects of the new venture, and that the future is understood as having been created by means of the entrepreneur’s actions (Sarasvathy, 2001). Thus, in this chapter, we posit that if organizations are to be forward-looking and innovative, effectuation should be extended from its entrepreneurial ori­ gins to become one of the dominant logics of business education. Just as entrepreneurship preceded management as a professional endeavour, effec­ tuation should precede causation as a tool of organization design. In other words, managers should be taught to think primarily as entrepreneurs and only secondarily as planners and financial managers. Indeed, in the life of real companies, most decisions are taken outside of business plans and ­budgets. Having said this, it must be acknowledged that predictive manage­ ment needs to be part of the organization design toolkit.

The Service Logic The Service-Dominant Logic Traditional organization design theory was conceived at a time when goods were viewed as the primary focus of economic exchange, according to neo­ classical economics (Hunt, 2000). But the world has changed and virtually all economies are now producing and exchanging more services than goods, which means that the assumptions that have guided organization design research are outdated and in need of revision. The S-D logic presents an opportunity for such a revision and for a new logic of organization design, based on a radically new understanding of service and of its central role in economic exchange. Without any reference to goods, the S-D logic defines service as ‘a process of doing something for another party’ (Vargo & Lusch, 2008b: 255), a definition that is very close to the notion that ‘design is by definition a service relationship’ (Nelson & Stolterman, 2014: 41). In other words, given that organizations are also in the business of ‘doing something for another party’, organization design theory ought to pay heed to the new notion of service.

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The S-D logic is inspired, among other sources, by the writings of 19thcentury economist Bastiat (1860), who claimed that the exchange of service is at the root of all economic activity. This leads to a definition of value (and value creation) focused on the use that someone gives to something (value-inuse), as opposed to the worth that someone is willing to pay for something (exchange value). Expressed differently, value can also be defined as ‘the comparative appreciation of reciprocal skills or services that are exchanged to obtain utility’ (Vargo & Lusch, 2004: 7). In evolutionary terms, as or­gan­ iza­tions grew in size and complexity, the skills-for-skills nature of exchange became masked. As societies became increasingly monetized, money, goods, organizations, and marketing systems have become exchange vehicles for the basic exchange of specialized skills between people. Thus, service is a system of exchange of service-for-service defined as: (1) the application of competences (knowledge and skills) by one party for the benefit of another; and (2) a system of service-for-service exchange made up of a configuration of resources (including people, information, and tech­ nology) connected to other systems by value propositions (Vargo & Lusch, 2008a). The notion of a service ecosystem acknowledges how large-scale social structures evolve relative to the competitive market. Vargo & Lusch (2011: 185) define service ecosystem as a spontaneously sensing and responding spatial and temporal structure of largely loosely coupled, value-proposing social and economic actors interacting through institutions, technology, and language to (1) co-produce service offerings, (2) engage in mutual service provision, and (3) co-create value.

For the S-D perspective all economic exchange is based on service rather than ‘goods’ (tangible output embedded with value). Goods are sometimes involved in this process in their role as appliances for service provision, but whether the service is provided directly or through a good, it is the know­ ledge and skills (competencies) of the providers that represent the essential source of value creation, not the goods, which are just the conveyer of the service (Vargo & Lusch, 2004, 2008c). The following four axioms summarize the fundamentals of the S-D logic (Greer et al., 2016: 2‒3): • Axiom 1—Service is the fundamental basis of exchange. This flows from the S-D logic’s definition of service, that is, service is the application of resources (primarily knowledge and skills) for the benefit of another individual or organization

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• Axiom 2—The customer is always a co-creator of value. This axiom states that value is something that is always co-created through the inter­action of individuals or firms and that value is always dependent upon use and context. It may occur directly or indirectly through goods, and some­ times occurs both directly and indirectly • Axiom 3—All economic and social actors are resource integrators. A resource is anything, tangible or intangible, an individual or firm can draw upon for support. Three types of resources can be considered: (1) private resources including self, friends, and family; (2) market resources obtained through barter or economic exchange; and (3) public resources such as those obtained from communal and governmental sources • Axiom 4—Value is uniquely determined by the beneficiary, phe­nom­eno­ logic­al­ly and experientially. Given that value is uniquely assessed by the beneficiary, this implies that the organization cannot create value on its own. The organization proposes value, while service beneficiaries realize value through the evaluation of experience, which includes the integra­ tion and application the firm’s value proposition. This makes value ‘idio­syn­crat­ic, experiential, contextual, and meaning laden to the actor’ (Vargo & Lusch, 2014: 240). Let us look at each axiom in turn, starting with the second given that the first – service is the fundamental basis of exchange – has already been discussed above.

The Customer is Always a Co-Creator of Value The S-D logic literature explains that value is co-created through the inter­ action between an enterprise and a customer, to be determined through the evaluation of an experience during a specific exchange encounter or through repeated interaction with an exchange partner (Prahalad & Ramaswamy, 2004). This new lens offers a view of customer and customer value that is not limited by how things are currently done but is open to how things might be done if resources were integrated in different ways. Ramaswamy & Ozcan (2014) define such new paradigms as having the following characteristics: • Shifting away from a firm-centric view of utilitarian value creation • Interactions as the new locus of value creation • Joint creation and evolution of value with stakeholding individuals • Harnessing open and social resources of individuals, companies, and networks of private, public, and social enterprises

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• Innovation through engagement platforms as a means of connecting joint value creation with joint resources • Wealth, welfare, and well-being as the basis of joint aspirations. Value co-creation has become a central concept of marketing and or­gan­ iza­tion­al strategy, with a fundamental premise, that is, that the customer’s definition of value is changing continuously. In this context, all or­gan­iza­tion­al actors with responsibility for any part of customer-liaison or customerrelationship management must play a part in the process of knowledge creation about the customer’s changing definition of value. Such knowledge includes the symbols and meanings related to the customers’ definition of the problem they are trying to solve through their buying activity, as well as the nature of personal intra-customer relationships, related to either the household or the organization (Lusch & Webster, 2011). A powerful argument in favour of the notion of “co-creation” is put for­ ward by York et al. (2013) based on the concepts of “altruism” and “docility” proposed by Simon (1993) as key tenets of economic exchange. York and colleagues start by contrasting docility with ‘opportunism’, a concept from transaction cost economics (TCE), a school of thought spearheaded by Williamson (1979). TCE proposes that the self-interestedness of economic actors should be described as opportunistic. Opportunistic behaviour is defined as seeking self-interest with guile. However, as argued by York et al. (2013) the opportunistic mind-set undermines the ability of the organization to generate qualities such as trust or cooperation, important sources of strategic change. Simon put forward that societies are pervaded by loyalties to various groups, including ethnic, religious, and family groups, and that such loyalties provide a crucial basis for explaining the altruistic identification of employees with the organization. He explains that it is due to such loyalties that employees embrace organizational goals and work hard towards them, over and above purely economic rewards. Altruism, according to Simon, is a consequence of two fundamentally human conditions—bounded rationality and docility. Bounded rationality refers to limits of information processing power of individuals in terms of the number of possible action alternatives and the consequences of each alternative, before a decision can be taken. Docility refers to a characteristic trait of human beings, explained as ‘the tendency to depend on suggestions, recommendation, persuasion, and information obtained through social channels as a major basis of choice’ (Simon,  1993: 156). This trait is very prevalent even if the advice is coming from naive advisers. However, docility

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should not be interpreted as ‘passivity or meekness’, but in its sense of ‘teachability or educatability’ (York et al., 2013: 308). Such views support the participatory and dynamic perspectives of the S-D logic, as regards the notion of co-creation of service. Vargo & Lusch (2004: 12) state that ‘service provision is maximized through an iterative learning pro­ cess on the part of both the enterprise and the consumer’. Moreover, viewing the creation of artefacts through such a service-oriented lens has some important design implications. First, it fosters an orientation towards co­oper­ation rather than competition between and among stakeholders; sec­ ond, it promotes an awareness of the potential of combination rather than exclusiveness in the networking of resources; third, it highlights the everlasting quest for service improvement and innovation.

All Economic and Social Actors are Resource Integrators The other important influence on the literature on the S-D logic is the econo­ mist Edith Penrose (1959), and the notion that what makes a firm grow is the accumulated experience and knowledge from within (i.e. its resources), rather than external market influence or the price mechanism. According to Penrose, availability of resources is the only limit to the growth of the firm, The S-D literature considers two types of resources: operant and operand. The former are resources that can act on or in concert with other resources to provide benefit (i.e. to create value), whereas operand resources are those which require some form of action in order for benefits to be created (e.g. financial resources). Operant resources are the skills and the knowledge, including the sharing of knowledge, which lead to the creation of capabilities and competitive service (Vargo & Lusch, 2011). Given the primacy afforded to operant resources by the S-D logic, service ecosystems are seen as being composed of socioeconomic actors, rather than physical goods. Penrose (1959) describes resources as ‘bundles of potential service’ and suggests that successful firms are ‘those that yield more service outputs in the context and grow to dominate the context’ (cited in Chandler & Vargo, 2011: 39; italics added). Service contexts are complex and dynamic social and economic systems, composed of networks of actors and institutions (Akaka et al., 2013). When different actors connect with one another through their service-for-service exchanges, they create different contexts. Looking at such contextual value creation from a systemic perspective, it can be asserted that the permanent adjustment and adaptation to different contexts marks the tendency of service ecosystems to increase their viability and well-being (Wieland et al., 2012).

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On the other hand, the application of information technologies plays a crucial role in the mobilization of resources, given that through the sep­ar­ation of physical and information properties, resources can be de-materialized (or ‘liquefied’) and moved about with the greatest of ease. They can also be unbundled, in the sense that different parts of the same resource can now be held in different places and by different actors. This combination of ­de-materialization and un-bundleability has created hosts of new possibilities for the mobilization of resources with optimal value/cost combinations (Michel et al., 2008). Such new economic capability afforded by information technologies has had some important consequences in the designing of organizations. The most visible effect is the rise of the e-business economy, where the role played by social actors in the integration of resources becomes quite evident. Through the electronic links enabled by information technologies, many more people are able to participate in the political and economic marketplace. For example, through the use of networks such as e-Bay, producers and con­ sumers can integrate resources in ways never imagined before. This trend is explained by S-D logic in defining service as ‘a process, situated beyond trad­ ition­al firm boundaries linking actors together, or, in other words “controlled bilaterally” with other actors’ (Chandler & Vargo, 2011: 39).

Value is Uniquely Determined by the Beneficiary, Phenomenologically and Experientially As it may be clear at this point, the S-D logic is entirely aligned with the human-centred approach to organization design put forward in this book, especially in what concerns the link between the notion of organization design-as-meaning and S-D logic’s idea of value as something ‘idiosyncratic, experiential, contextual and meaning laden to the actor’ (Vargo & Lusch, 2014: 240). Akaka et al. (2014) reinforce this by suggesting that for any value cocreation to occur, there must be sharing of meanings regarding the value of particular resources. Thus, co-creation of value critically depends on sym­ bols which can support not only the articulation and communication of potential value (i.e. value propositions), but also the integration of resources and evaluation of value for individual actors. Symbols convey meanings which help to guide future interactions and determinations of value. Four critical points are proposed, where symbols and meaning play a crucial role in the processes of value co-creation: (i) coordination of interaction, (ii) communication of information, (iii) integration of resources, and (iv) evalu­ ation of value.

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SERVICE EXPERIENCE

Networks of multiple actors Socio-historic structures; intersecting and overlapping institutions Phenomenological value determination

Fig. 7.1:  The service system Adapted from Akaka & Vargo (2015)

SERVICE SCAPES

CONTEXTUAL PARAMETERS OF SERVICE

SERVICE ECOSYSTEMS

FOCAL RELATIONSHIP(S)

Self-service, Interpersonal services, Remote services

Application of knowledge and skills for the benefit of others

CONCEPTUALIZATION OF SERVICE

Firm-customer; Customer-customer Contrived physical space with physical, social, symbolic and natural dimensions Satisfaction, social connection, healing

SERVICE ENCOUNTERS

Akaka et al. (2015) argue that consumers define value as experiences and propose a shift from conceptualizing value as created by the firm, to value as the co-creation of experiences emerging from the interaction between firms and customers. Thus, value is not only co-created in the interactions between customers and firms but is also influenced by a positive evaluation of the interaction experience during a specific exchange encounter. However, while it is clear that any type of encounter offers opportunities to uniquely co-create value, it must also be recognized that the context of service goes beyond the direct interactions between customers and firms. Akaka & Vargo (2015) sug­ gest a more comprehensive framework for explaining how the entire service system works holistically. The framework is shown in Figure 7.1 where service ecosystems can be seen as being made up of two nested layers—service-scapes and service encounters—which together create the perception of service experience. In other words, the perspectives of value and experience that ultimately shape a purchasing decision depend on a multitude of intersect­ ing and overlapping interactions, as well as institutional arrangements. Service ecosystem are defined as ‘relatively self-contained, self-adjusting system of resource-integrating entities that are connected by shared institu­ tional logics and mutual value creation through service exchange’ (Greer et al., 2016: 30). They are made up of tiers of heterogeneous stakeholders (employ­ ees, customers, suppliers, etc.) connected by value propositions, interacting to achieve shared goals. Socioeconomic interface with other actors, inside and outside the firm, and use their senses to determine how and when to

Market offerings that involve direct interaction between firm and customer Firm-customer dyad

Peripheral and Core service Interactions

Satisfaction, Relationship

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respond or act. They use language, symbols, and social institutions (such as monetary systems, law, etc.) to make sense and regulate the interfacing and exchange (Chandler & Vargo, 2011). Service-scapes are locations or settings which enable service encounters, for example interactive online market­ places. Service encounters are the discrete moments in time of direct inter­ action between firms and customers, which provide customers the opportunity to evaluate and re-evaluate service experiences over time and space. For example, the interactions between a customer and an employee during a service encounter in a clothes shop provide the basis for an evaluation of the service experience in the process of choosing and buying a skirt. The quality of the interaction during the sales process is crucial, however the overall evaluation is influenced by a number of other social and cultural fac­ tors and processes. The service encounter will be influenced, for example, by the social mores that guide the interactions between customers and employ­ ees in that type of shop (i.e. a service-scape). Moreover, the service encoun­ ter will also be evaluated against the broader social norms of the service ecosystem, for example about the fashion of the day, the role of women in society, and the skirts that they are expected to wear. Akaka & Vargo (2015) emphasize the point that the context for value-as-experience is not deter­ mined by the service provider, but rather by the ‘individual’s lifeworld’ and the actions and interactions among multiple actors.

The Meaning Dimension In the last of the four axioms of the S-D logic cited above, Vargo & Lusch (2014) assert that value is not only ‘idiosyncratic, experiential and contextual’ but is also ‘meaning laden to the actor’. This links up the S-D perspective with another important school of thought, also highlighting meaning as a variable to be taken into account in the real life of organizational design and strategy. We refer to the work of Roberto Verganti (2008, 2009, 2016) on design-driven innovation. Although not associated with the S-D logic, parts of Verganti’s theory come remarkably close to this school of thought. For example, it shares with service ecosystems the sociohistoric structures and overlapping institu­ tions and traditions that define the ecosystems’ contexts. Writing from the point of view of business strategy, Verganti’s theory relies heavily on Krippendorff ’s (2006) human-centred design for its epistemological foundations. The theory, which is empirically based, is supported by research work carried out with Italian manufacturers aimed at uncovering the tacit cap­abil­ities required for an understanding of the emergence of new product meanings (Verganti, 2008).

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Design- or Meaning-Driven Innovation Innovation and its management have been the object of a great deal of aca­ demic research. They have been approached from a variety of viewpoints according to the object of innovation, for example product innovation, busi­ ness model innovation, or process innovation (Abernathy & Clark,  1985; Christensen & Bower, 1996; Christensen, 1997). Given that our special inter­ est is on the role of design in service innovation and subsequently in or­gan­ iza­tion design, we have focused on the new approach proposed by Verganti where meaning is the driver of innovation. The approach emphasizes not only the functional needs of consumers, but also the symbolic and emotional meanings of products, giving particular attention to the evolution of socio­ cultural trends in a networked process involving ‘market interpreters’. Market interpreters are experts in a given segment of the market, who help the com­ pany understand the unfolding sociocultural trends. For the meaning-driven innovation school of thought, product innovation is a process of interpreting and envisioning based on the skills of her­men­eut­ ics (Verganti & Öberg, 2013). Hermeneutics is founded upon the notion that the acquisition of knowledge happens through interpretation and reflection, where interpretation takes place in the process of trying to understand parts of a situation, placed in a larger contextual whole or, conversely, trying to understand the context as being made up of many component parts. Reflection implies the iterations between the two. The meanings of a product are the result of these processes, occurring through continuous interactions among designers, users, and several other stakeholders, both inside and out­ side the company. So, if manufacturers are able to understand the meanings that people give to products, then designers can devise product languages that not only convey but also modify such meaning, in line with perceived long-term sociocultural trends. In other words, in addition to the function­ ality of a product, the customer’s affective and sociocultural needs are also ‘tickled’ by the product’s emotional and symbolic value (i.e. its meaning). This approach is unique in the sense that it contains a novel definition of radical innovation, where radical changes in meaning cause important leaps in product innovation. Gasparin & Green (2018) argue that the meaning of products is not inher­ ent to the product. Given that values are interpreted not as enduring but as perpetually modified, meanings are neither established a priori nor embed­ ded in the product. Meanings of products or services have to be created or recreated each time in different markets, when the design managers design

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the value creation process, taking into account the relevant social aspects, specific, languages, symbols, and icons associated with the product. Product meanings can be managed by managing their intended meanings, thus con­ tributing to their long-term sustainability and economic impact. This approach is therefore both entrepreneurial and strategic: entrepreneurial, in view of its emphasis on the sharing and recombination of resources, aimed at building new and unique value propositions; strategic, in the sense that it emphasizes the need to build capabilities that are unique and difficult to replicate by the competition, thus adding to the company’s competitive edge.

The Building Blocks of Meaning-Driven Innovation Verganti (2008) mentions nine building blocks of meaning-driven in­nov­ ation. Considering that there is a whole raft of internal and external or­gan­ iza­ tion­ al design issues that facilitate or constrain product innovation, including the organization’s structure, it is reasonable to assume that there is a relationship between radical product innovation and organization design. Thus, it is worth looking at the building blocks in some detail and then try­ ing to draw conclusions about organization design. The nine blocks have been aggregated and synthesized into four, as follows: 1 . Changes in sociocultural regimes and models 2. Networking (of interpreters), alliances and co-design 3. Design discourse, new languages and meanings 4. Designers as brokers of languages and gatekeepers of change. Changes in Sociocultural Regimes and Models The design-driven approach to innovation implies a modification of socio­ cul­tural regimes. The speed of change in sociocultural regimes affecting every society in every corner of the world is really nothing new. As a social, economic, and political phenomenon, the topic of sociocultural change has been around since the early days of globalization, along with the realization that everything that was stable and predictable is now a source of uncer­ tainty. The Italian manufacturers that were part of Verganti’s empirical stud­ ies understood this, as well as the need to build up knowledge about possible future sociocultural evolutions, associated with (new) product meanings.

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A Networked Research Process The manufacturers were also aware that the interpretation of sociocultural models in terms of product languages depended on countless interactions between users, firms, designers, products, communication media, cultural centres, schools, artists. Thus, the importance of identifying interpreters who can convert this mostly tacit knowledge into something that companies can use. This makes design-driven innovation a collective and networked research process that takes places outside the boundaries of the firm, inter­ acting with the design discourse to access knowledge on product languages. The firm then needs to interpret this knowledge, in order to select some stimuli and disregard others, to interiorize it, and finally to develop its own unique vision and language. Design Discourse Italian manufacturers surveyed in Verganti’s research recognize that an important part of their competitive advantage is built on their capability to access and influence the design discourse that surrounds the product’s lan­ guage. Their capability to create radical innovations of meanings depends therefore on the successful creation of a design discourse that includes lead users but also firms in other industries, artists, media, architects, cultural centres, designers, schools, universities, exhibitions, etc. . . .  Designers as Brokers of Languages and as Gatekeepers of Sociocultural Change Among the variety of interpreters of the design discourse that the firm may use in its product development effort, there are some that play more special roles in the processes of facilitation and transfer of knowledge on meanings and languages among different contexts. Some interpreters may act as gate­ keepers that facilitate access to the design discourse, while others may act as linchpins between the firm and certain industries. Similar roles have been identified in the literature on the management of technological innovation. The task of the interpreters is not only to interpret but also to influence the evolution of sociocultural models is an indication showing a recognition of the long-term nature of meaning-driven innovation.

Meaning-Driven and Technology-Push Innovation Combining to Create New Markets In a joint paper, Verganti & Norman (2014) consider the need to combine technology and meaning as drivers of innovation, while simultaneously

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highlighting incremental and radical innovation as complementary modes of innovation. This integrated approach is relevant to the purposes of this chapter since it provides a fuller picture about innovation as service development. Verganti & Norman’s approach is set against the background of another research stream associated with the design discipline known as user-centred design. User-centred design is an approach that advocates a deep understanding of user needs and applies the creativity of design thinking to generate new product concepts. Although investigations on  user-centred design have provided crucial contributions they do not explain the radical nature of the product innovation as reported in Verganti’s (2008, 2011) work. Design-driven innovation, on the other  hand, is not driven by user requirements, but is based on changes in  meaning that might create radical leaps, which in turn lead to the emergence of new competitive marketplaces. Radical changes in ­ meanings  are associated with long-term changes in socio­ ­ cul­ tural regimes,  which need to be identified through considerably sophisticated research. Incremental product innovation, on the other hand, usually means the same product or a new version of the same product but with improved performance, lower costs, and/or enhanced desirability. Most successful products continually undergo the small changes which constitute incre­ mental innovation. This type of innovation is not usually given the same attention as radical innovation but is just as important. Radical innovation brings new paradigms and is con­sidered as disruptive of business models or of core competencies. It implies a discontinuity with the past and ­creates a potential for major change, but it usually takes considerable time to deliver its full potential and become accepted. Incremental innovation, on the other hand, is crucial for transforming the radical idea into a form that is acceptable to both producers and consumers. In other words, with­ out incremental innovation, the potential value enabled by radical change may never be captured. Figure  7.2 shows the four modes of product innovation. • Technology-push innovation. It involves radical changes in technology without any change in the meaning of products, for example the inven­ tion of colour television • Meaning-driven innovation. A type of innovation that involves only changes in the meanings and languages surrounding a certain product involving no technology at all. The mini-skirt in the 1960s is an ex­ample of a radical innovation that signalled a major change in the socio­cul­ tural regime of the time

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200  Designing Organization Design Radical Change TECHNOLOGY

Technology-Push Innovation

Incremental Change

Technology Epiphanies

Meaning-Driven Innovation

Market-pull Innovation

Incremental Change

MEANING

Radical Change

Fig. 7.2:  Dimensions of product innovation Norman & Verganti (2014)

• Technology epiphanies. This type of innovation occurs when the dom­in­ ant interpretation of what a product is is challenged and a new product that people are not currently seeking is created. The term is used to describe an innovation breakthrough that is enabled by a new technol­ ogy or by the use of existing technologies in wholly new contexts • Market-pull innovation. It involves the analysis of user needs and the development of products taking such needs into account. As an example of a technology epiphany, Verganti & Norman provide the case of the games platform Wii. Figure 7.3 shows the competitive trajectory of Wii, plotted as the outcome of the two strategic choices in product in­nov­ ation: change in technology versus change in product meaning. Within each of these, there is a progression of events between radical and incremental types of innovation. In the early days, games were played by small numbers of usually young people gathered around a console. Sony and Microsoft followed a strategy of improvement of the primitive graphics technology and gained market dom­ in­ance of the game market with ever more sophisticated graphics. As Internet speeds increased, games become multi-player, with thousands of people playing the same game in different locations across the world. Nintendo, however, adopted the strategic choice of competing not on cutting-edge technology but on the well-trodden technology of micro-electro-mechanical sensors (MEMS), also known as accelerometers. These relatively inexpensive motion sensors, as well as the infrared imaging sensors also used by Nintendo, had been around for a while, however a smart use of this technology allowed

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Technology Change

Gesture Recognition

MICROSOFT KINECT

MEMS Accelerometers

NINTENDO WII

Faster Processors High Speed Internet

SONY, MICROSOFT: dramatically better graphics

Original Games

Primitive graphics Developing artificial, virtual worlds

SONY, MICROSOFT: massive, multiplayer role-playing online games

Allowing massive numbers of simultaneous players

Games for everyone, controlled by the whole body and gestures

Meaning Change

Fig. 7.3:  Service innovation and new market creation: the story of Nintendo Wii Adapted from Norman & Verganti, 2014

the company to develop a game controlled by whole body movements which was not only innovative but was also within everybody’s reach. Thus, the conclusion of this brief case is that Nintendo did not engage in the competi­ tive battle along the technology dimension but instead focused on the mean­ ing dimension. In the process, Nintendo not only won the battle, but they also revolutionized the video game market. This case is interesting insofar as it raises the issue of the creation of new markets or re-creation of old ones. The new combination of approaches to technology and to product meaning followed by Wii radically changed the market for games, that is, rather than a small niche segment of skilled experts, the Wii games were something for the entire family to play, exercise, and interact. It took some time until Sony and Microsoft were able to catch up, but Microsoft’s Kinect eventually became the market leader, again by using a new wave of technology not requiring the hand-held wands. Thus, the example of the play-station Wii serves to illustrate, first, how value is meaning-laden to the actor; second, how service and markets are co-created; third, how in­nov­ ation is a limiting factor of service. These three deeply interrelated issues carry important messages for the theory and practice of or­gan­iza­tion design.

The Messages for Organization Design In the first instance, the meaning-driven innovation approach focuses attention on the need to develop products that people find meaningful, and therefore love and purchase. The implication of this is that the concept of product

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development should be revised, and market research should not be about what users need now but about what users might need in the future, in line with evolving socioeconomic trends. Second, in the Wii case the competitive market is not considered as a ‘given’ to be discovered but the result of a fluid process of co-creation, involving the firm and a whole network of stake­holders. This is an important reversal of the old mind-set according to which organiza­ tions should be designed to adjust to markets and other en­vir­on­mental contin­ gencies. Rather than a product of planning, meaning-driven innovation is the result of the co-emergence of new products and new markets. Hence, this approach has all the characteristics of ‘effectual thinking’, a way of reasoning found in expert entrepreneurs that follows a non-predictive logic in the evolu­ tion of entrepreneurial ventures. Sarasvathy (2008b: 92) explains: Effectuation brings into stark relief the predominant ontological stance of most of the literature of decision making under uncertainty. Efforts in this stream of research have been dedicated almost exclusively to causal analysis that lead to improved predictions precisely because good prediction allows us to capitalize on our expectations about the future. But focussing so much on causal and hence on predictive aspects, we have mostly neglected the study of techniques of control that do not require us to predict the future.

The distinction between the logic of effectuation as opposed to the trad­ ition­al logic of causation in what concerns the (re-)formation of markets is depicted in Figure 7.4. While in the classic causation model, ‘a’ market is pre­ sumed to exist and all subsequent planning is carried in accordance with such presumption, under effectuation reasoning the market is largely unknown. The effectuation model in the figure illustrates well the process of Wii’s market creation by Nintendo. The third conclusion to be drawn from, the Wii case is that it serves to show how innovation can be considered to be a boundary condition for service Ng et al. (2012). While it may seem obvious that in­nov­ation does move the boundaries of service, it is less clear how innovation might evolve with the service system and become a regular component of the service system in operation. On the other hand, Schumpeter (1934) was very clear in high­ lighting the fact that profits depend on in­nov­ation and that is always up to the entrepreneur to bring about innovation, through new ‘combinations’ of resources that produce new services, new products, new methods of produc­ tion, new control systems, etc. Thus, innovation has become associated with the work of the entrepreneurs and with boundaries conditions, but not normally as a problem of regular operations nor an organization design issue. This leads to the status quo of

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Service Logic and Logic of Effectual Reasoning  203 Market definition Segmentation

(To be read in this direction)

Ta r g e t i n g , O b j e c t i v e s e t t i n g Positioning (through marketing strategies to reach

Classic causation model

The Customer Customer identification (through: Who am I – What do I know – Whom do I know)

Effectuation model

Customer definition Ad d i n g s e g m e nt s / s t r at e g i c p a r t n e r s D e f i n i t i on of on e of s e v e r a l p o s s i b l e m a r k e ts

Fig. 7.4:  Two opposing views on home to approach the market Adapted from Sarasvathy & Dew (2005)

organizations that are not routinely designed for innovation but for ‘business as usual’. If, however, organizations are considered to be the moorings of service ecosystems, then any boundary conditions for the service ecosystems are likely to have repercussions on the organization. This, in turn, means that if ­in­nov­ation is a boundary condition for the routine operation of service ecosystems, an in­nov­ation mind-set is sure to be a requirement from the organization’s design. In Chapter  5, we have suggested that logics of service and of effectual reason­ing are complementary. In the present chapter, we provide more sub­ stance to this suggestion and put forward that effectual reasoning is the organization design requirement for the organization’s service ecosystems to remain permanently innovative. Let us then take a look, in some detail, at the logic of effectual reasoning.

The Logic of Effectual Reasoning Effectuation is an idea born of the PhD dissertation of Saras Sarasvathy, under the mentorship of Herbert Simon. Looking at the age-old problem of what makes entrepreneurs entrepreneurial, Sarasvathy’s (2001) study combines Schumpeterian perspectives on innovation and growth with the writings from evolutionary economics on the dynamics of markets and industries,

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with an added emphasis on human decision-making from the point of view of behavioural economics. Sarasvathy concluded that expert entrepreneurs believe that they have the ability to shape the future and that instead of pre­ dicting the future, they focus their attention on controlling events as they unfold. She explains: Entrepreneurs are entrepreneurial, as differentiated from managerial or strategic, because they think effectually; they believe in a yet-to-be-made future that can substantially be shaped by human action; and they realize that to the extent that this human action can control the future, they need not expend energies trying to predict it. In fact, to the extent that the future is shaped by human action, it is not much use trying to predict it – it is much more useful to understand and work with the people who are engaged in the decisions and actions that bring it into existence.  (Sarasvathy, 2008a: 9)

Sarasvathy calls this ‘effectual logic’, in opposition to ‘causal logic’ of business reasoning. Effectuation has achieved remarkable success not only as an epis­ temological tool but also as a method that anyone can learn in starting a business venture. The method allows would-be entrepreneurs to decrease the risk, use fewer resources, and eventually fail more effectively. The method proposes five simple principles (Sarasvathy, 2003): 1. Bird in Hand Principle. Start with your means, that is, do not wait for the ­perfect opportunity, but start taking action, based on what you have now.

This principle illustrates the means-driven rather than goal-driven nature of effectual logic. The emphasis is on using existing resources or means, rather than focusing on objectives predicting aspects of an uncertain future. Entrepreneurs using the effectual approach will start by assessing what they possess, who they are, what they know, and who they know. They start their entrepreneurial activity with no set goals or targets, but instead seek an array of different possibilities as they take actions. By using the means at their dis­ posal, the entrepreneurs start envisioning what could be the possible out­ comes of these means and their actions. In contrast, the causal logic emphasizes goals to be achieved, that is, accurate prediction of the future is crucial for firms to outperform competition (Wiltbank et al., 2006). 2. Affordable Loss Principle. Set affordable loss, that is, evaluate opportunities based on whether the downside is acceptable, rather than on the attractiveness of the predicted upside.

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This concept emphasizes committing beforehand to the loss one can endure, as opposed to investing in calculating expected returns. Entrepreneurs fol­ lowing this logic evaluate what they can afford to lose and try to minimize the downside, rather that predicting the expected returns and trying to maximize the upside (Chandler et al., 2011). The investment margin here is subjective and varies from one individual to the other based on his or her personal circumstances or beliefs. In contrast, in the causation logic expected returns weight upside and downside information equally. 3. The Pilot in the Plane Principle. Focus on activities within your control and your actions will result in the desired outcomes. The future is neither found nor predicted, but rather made.

The effectuation approach emphasizes dealing with uncertainty by knowing how to control and by dealing with what is known and controllable, rather than by trying to eliminate control by predicting the unknown. From the perspective of a business venture in its early stages, the causal logic is not fit to deal with Knightian uncertainty. When uncertainty cannot be calculated and quantified, then effectual logic becomes the approach of choice. This is the reason why expert entrepreneurs focus on their means, and on how much they can afford to lose, rather than on predicting the future through market research and analysis. 4. The Lemonade Principle or Leveraging Contingencies. If you come across ­lemons, make lemonade! This principle is at the heart of entrepreneurial ex­pert­ ise, that is, the ability to embrace surprises arising from uncertain situations and turn the unexpected into the profitable.

The focus of effectuation is on leveraging rather than avoiding contingen­ cies and recognizing unforeseen events by managing surprises as opposed to trying to overcome or avoid them. The effectual entrepreneur accepts the changed reality and capitalizes on the unexpected opportunities that contingencies present. Contingencies serve as a course correction meas­ urement necessary to re-evaluate the decisions and goals (Wiltbank et al., 2006). 5.  Crazy-Quilt Principle. Form partnerships with people and organizations willing to make a real commitment to jointly creating the future (product, firm, market) with you.

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This principle refers to how the entrepreneur perceives his or her business environment. According to the causal logic, the environment is populated by competitors but in the effectual logic, the firm is surrounded by potential partner. Thus, rather than spending his or her time on competitive analysis, the goal of the effectual entrepreneur is to bring stakeholders to the venture and to get commitments from them as early as possible. In this way, the future can be controlled rather than predicted (Read & Sarasvathy,  2005). Also, focusing on cooperation enables the firm to expand its resources (i.e. its means) and to find competencies in the external environment difficult to find inside the firm. Establishing pre-commitments helps to reduce the uncertainty and by forming alliances the potential risk associated with the venture gets distributed among the partners. These can be the suppliers, cus­ tomers, distributors, or other stakeholders.

Effectuation versus Causation Effectuation is the inverse of causation or the predictive logic which has conventionally guided business planning. Effectuation theory explains that insofar as the entrepreneur feels that he or she can control the future (through constant innovation efforts) the entrepreneur will not need to pre­ dict it. Effectuation is a process of generating planning alternatives, rather than a process of choosing among known alternatives. Table 7.1 contains a self-explanatory summary of the differences between effectuation and causation. To sum up, in the ‘predictive’ mode, decision-makers seek to achieve given goals within a given environment and attempt to adapt to changes in that environment by insisting on better predictions and faster responses. In the ‘effectual’ mode, however, organization designers operate within: • A given set of constraints on the means (largely consisting of un­alter­ able characteristics and circumstances of the decision-maker) • A set of possible operationalizations (effects) of very generalized goals (mostly generated through discovery processes) • Constraints on (and opportunities for) possible effects (usually imposed by the contingencies of a dynamic and interactive environment) • Criteria for selecting between the effects, many generated by inter­action with the events of the developing situation, and some concerned with a (somewhat predetermined) level of affordable loss or acceptable risk in light of the constraints on the means (Dew et al., 2008: 42).

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Service Logic and Logic of Effectual Reasoning  207 Table 7.1:  Summary of differences between prediction and effectuation Issue

Predictive Position

Effectual Position

View of the future

Prediction. The future is a continuation of the past; can be acceptably predicted To the extent we can predict the future, we can control it Goals are the starting point. A business vision determines goals; goals determine sub-goals, commitments, and actions

Design. The future is contingent on actions by wilful agents

Underlying logic Goals and Means

Resources and effects Basis for commitment Stakeholders Risks Contingencies

Success/failure

Probability estimates Competition/ cooperation

To the extent we can control the future, we do not need to predict it Means (who I am, what I know, and whom I know) are the starting points. Means and stakeholder commitments determine possible sub-goals and goals emerge through an aggregation of sub-goals Resources. What resources ought I Effects. What effects can I create with to accumulate to achieve the the means I have? stated goals? Should. Do what you ought to do; Can. Do what you are able to do–based based on analysis and on imagination and satisficing maximization Instrumental view of stakeholders. Instrumental view of objectives. Who Project objectives determine who comes on board determines project comes on board objectives Expected return. Calculate upside Affordable loss. Calculate downside potential and pursue (riskpotential and risk no more than you can adjusted) best opportunity afford to lose Leverage. Surprises can be positive, so Avoid. Surprises may be invest in techniques that are open to unpleasant, so invest in techniques to avoid or them and leverage them into new neutralize them opportunities Outcomes. Success and failure are Process. Successes and failures are inputs into a process that needs to be managed discrete outcomes to be sought such that failures are outlived and after or avoided, respectively successes are accumulated Update beliefs. Estimates are used Manipulate conditionals. Estimates signal that conditionals may reified or in a Bayesian fashion, that is, to falsified so the future can be skewed update one’s beliefs about the through action future Partnership. Build YOUR market Competition. Constrain task relationships with customers and together with customers, suppliers, and suppliers to what is necessary even prospective competitors

Source: Adapted from Dew et al. (2008).

The Nature of the External Interface In Chapter 6, we suggested that one of the interfaces that defines the or­gan­ iza­tion’s design is the ‘external interface’, that is, the interface that establishes the linkage between the organization’s service and its external environment,

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mediated by its market-interfacing competencies. In other words, from the point of view of the organization’s design the external interface is made up of the combined effects of the organization’s service logic and its effectuation (ver­ sus causation) logic. In order to form a better understanding of this interface, it is important to get to grips with the notion of ‘the market’. This is a classic issue and the literatures of economics, strategy, and organization are filled with debates about the most appropriate definition of the market, in a debate that goes all the way back to the 18th century with the writings of Adam Smith. In this chapter, we follow the proponents of effectuation theory in their views of about the genesis of markets (Dew et al., 2008, 2011). Two alternative views are put forward: the traditional view of ‘search and selection’ and the design-oriented ‘transformational’ view the market. The former consists of conceptualizing the problem of market creation as a form of search and selection among a universe of exogenously existing market opportunities. The key idea is that new markets open up due to macroeconomic changes of a technological, political, or regulatory nature, and that the actual emergence of any new economic opportunities depends on the subsequent efforts of entrepreneurs. For the transformational view, however, the creation of a new market is not necessarily an intentional process or even the result of fore­ sight or imagination of possible new markets. Search and selection is largely limited to a finite set of very local possibilities, and assumes a conscious intent to capture a new or latent market. In contrast, in the concept of trans­ formation, it is the actions and interactions with stakeholders that lead to particular transformations, which in turn may or may not lead to new markets. These two opposing views of how to approach the market correspond very closely to the two approaches shown in Figure 7.4, with the ‘search and selec­ tion’ school of thought being represented by the top triangle, while the ‘transformational’ view is represented by the bottom triangle. This means that while search and selection rests upon causal reasoning, the trans­form­ ation­al view of the market requires effectual reasoning.

Integrating Effectuation and Service as Design Logics Figure  7.5 shows our proposal for a conceptual integration of effectuation and service as organization design logics. The figure includes concepts from the S-D logic and from effectuation theory which in many cases are entirely compatible. The entrepreneurial phase is based, essentially, on the precepts of effectuation theory and refers to the birth of service and the early shaping of

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Service Logic and Logic of Effectual Reasoning  209 Resource Integration

Docility-enabled Co-Creation

Leveraging Contingencies

Interactions with people

What can I do?

Stakeholder commitments

New goals

Identity-Based, Means-Driven Transformation • Who am I? • What I know? • Whom I know?

Entrepreneurial phase

Service Innovation

New means

Further resource integration

Reinforced stakeholder networks

What can the organization do?

• Who is the organization? • What does the organization know? • Whom does the organization know?

Postentrepreneurial phase

New artefacts

Fig. 7.5:  Organization design as the outcome of the logics of service and effectual reasoning Adapted from Sarasvathy & Dew (2005)

organization design. The post-entrepreneurial phase refers to the development of service, growth, innovation, and more complex shaping of or­gan­iza­tion design. The concepts displayed in the figure are described and discussed in the remainder of the chapter.

The Birth of Service (Start-Up Phase) According to Sarasvathy (2001, 2008b), expert entrepreneurs are guided by effectuation, a type of reasoning which takes the future as fundamentally unpredictable yet controllable through human action, and treats the en­vir­ on­ment as constructible through choice. Given the impossibility of predict­ ing the future, entrepreneurs tend to make use of identity-based criteria for their choices, rather than other types of criteria. Identity-based criteria allow entrepreneurs to make choices based on their beliefs (i.e. their identity), rather than on a process of ordering of preferences for particular conse­ quences (i.e. procedural rationality). One example of the application of such criteria is the preference for decision-making based on the losses that the entrepreneur can endure, rather than on the calculation of the expected returns for a specific course of action. The emphasis on identity-based criteria is also reminiscent of the pro­ cesses of identity emergence from autopoietic theory, according to which identity constitution in living organisms is a foundational process that gives rise to an emerging interactive capability within the organism (Varela, 1997). Indeed, in effectuation theory, it is also suggested that the formation of

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entrepreneurial ventures follows a ‘bottom-up process of systems formation, through iterative, committed interactions that differentiate and specialize’ (Sarasvathy, 2008b: 163). Thus, there is a process that starts with the identifi­ cation of a set of primitive means, pertaining to the identity of the entrepre­ neur him- or herself (‘Who I am’), the knowledge of the entrepreneur (‘What I Know’) and is augmented by the knowledge of the entrepreneur’s net­ work (‘Whom I Know’). Next, once answers are received to these founda­ tional questions, a series of interactions are set in motion, involving the entrepreneur and a number of actual and potential partners. Such interactions constitute the very first steps in the formation of the artefact called ­organizational design.

The Growth of Service (Post-Start-Up Phase) The primitive means that enable the birth of service expand by means of the partnering efforts of the entrepreneur and become resources, whose applica­ tion, according to the S-D logic, are services. Applied resources are divided into operand and operant. Operant are the resources that can act on or in concert with other resources, to create value. They are typically people-based (e.g. the skills and knowledge of organizational members, including relation­ ships with competitors, suppliers, and customers), organizational (e.g. con­ trol systems, routines, cultures, and capabilities), informational (e.g. past data about markets, competitors, or technology).Operand resources are those that require action in order to create any benefits and they are typically physical (such as raw materials) or financial resources. The distinction between operant and operand resources is important because it shifts the focus away from units of production and from static resources, such as plant or finance to knowledge-based resources, such as capabilities and rela­ tionships. According to the resource-based view, firm heterogeneity is the dif­ ferentiating factor in the economy, in terms of market competition. Firms are fundamentally heterogeneous, in terms of their in­tern­al knowledge, skills, and capabilities (Rumelt,  2011). As discussed in Chapter  3, the resource-based approach and the view of the organization as a knowledge creating system is part of the ontological foundations adopted in this book. We had sug­ gested then that organizational knowledge and or­gan­iza­tion design are linked at the core, thus justifying the use of the expression organizational knowledge-qua-design. In this context, it is reasonable to assume that the individual-level means and competences that take the organization forward in the start-up phase

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evolve to organization-level capabilities made up of combinations of operand and operant resources in the post-start-up phase. Such evolution from the bottom up resulting in the emergence of higher level capabilities (i.e. organiz­ ational knowledge) has already been discussed in some detail in Chapter 3. This allows us to suggest that the processes that lead to the identity-based identification of a set of primitive means at the individual level can be trans­ lated into similar processes for the identification of a more complex set of means and resources at the organizational level. The identification leads would be as follows (Bettencourt et al., 2014): 1. ‘Who is the firm?’ An adequate answer to the question must necessarily broach the point of what services the firm can provide 2. ‘What does the firm know?’ The answers must include a broad range of knowledge the company that might draw upon to create complemen­ tary or related services 3. ‘Who does the firm know?’ Answers to this question must refer to the whole gamut of partnerships that are accessible to the company and further the array of resources the company might draw upon 4. ‘What can the firm do?’ In obtaining answers to the preceding ques­ tions, the firm is ready to lay out its possibilities for shaping the mar­ kets of the future In answering these questions, the organization is designing the ensemble of capabilities required for long-term organizational survival and growth, achieved not only through the right combination of company resources but also on the willingness of the customer to be part of the company’s service offer. Given that the knowledge of products and production activities ­co-evolves with the design of service and related capabilities (Helfat & Raubitschek, 2000), improved capabilities enable further design development.

The Effectual Basis of Service Innovation Effectuation theory has not been with criticism. In an article by Arend et al. (2015), it is suggested that effectuation might be ineffectual as a new theory of entrepreneurship. The key contention is that effectuation has been sub­ jected to insufficient empirical testing and critical analysis. In response, the main proponents and supporters of the theory (Read et al., 2016) argue that the evaluation by Arend et al. is carried out from a wholly positivist viewpoint, while effectuation is informed by a pragmatist or interpretivist epis­tem­ol­ogy.

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Indeed, the point made by Read et al. is a reminder that effectuation is a cognitive category used to describe a type of human problem-solving. Likewise, in the context of the non-positivist perspective that also informs our own thinking in this book, effectual reasoning represents a tendency in organizational design thinking. In line with Schon’s approach to design, effectuation articulates a dynamic and iterative process of creating new artefacts in the world. Starting with the identity-based criteria outlined above as the birth of any entrepreneurial venture, each of the questions put by the designer (i.e. the entrepreneur) to the design situation (i.e. the new venture) constitutes a hermeneutical circle, or ‘a dialogical exchange’, which lead to ‘limitless interpretations applicable in unique and unprecedented situations (Snodgrass & Coyne, 1992: 72). We posit therefore that the entire process underpinning the effectual logic is a ‘process of interpretation’, where new meanings and new ingenious practical solutions emerge (Jahnke (2012: 40). This includes the processes of forma­ tion and re-formation of service, that is, innovation. Going back to the work of Verganti and colleagues on meaning-driven innovation, a few examples of the effectual basis of service innovation will be highlighted here. The case of Nintendo’s Wii summarized above and reported in Verganti & Norman (2014) is also a good example coming from a wellestablished company, of the type of innovation that transforms rather than adapts to existing markets. Nintendo challenged the existing meaning of game consoles and made a brand-new value proposition, moving the user away from the passive participation in a virtual world to the active, phys­ic­ al­ly engaged participation in the real world. Morillo et al. (2015) report on the Italian company Cassina’s technological vision of future living en­vir­on­ ments and suggest that meaning-driven innovation requires companies to adapt different bridging strategies towards innovation partnerships when collaborating with outside interpreters. The case suggests that allowing the partner to adopt a more mediating role enables the firm access to a more diverse innovation network. Using empirical data from four companies, Dell’Era et al. (2017) develop the theme of ‘technology epiphany’ (Verganti,  2009), the notion that each technology is considered to contain a set of potentially disruptive new mean­ ings waiting to be uncovered. The job of the organization’s design is to facili­ tate the uncovering of those ‘quiescent’ meanings, so that the technology’s full potential can be harnessed, in terms of value creation. Hence, rather than using up the company’s energy in search and selection of markets for a new technology, the advice from meaning-driven innovation research is to use the company’s resources to study meanings embedded in potential uses of

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the technology. Dell’Era et al. call this interpreting technology as enabling platform, that is, the identification of innovative meanings can be embedded in new services or goods. The expression ‘technology’ should therefore be interpreted broadly, to include new materials, surface treatments, manufac­ turing processes, etc. Thus, future organization design research ought to deal with a combination of research into the technological characteristics of arte­ facts with meaning-driven design research, aimed at exploring new potential languages embedded in the artefacts.

Effectual Reasoning as Mental Disposition: Corporate Effectuation as a Tool of Organization Design The Domination of (Strategic) Planning An organization’s design is strongly influenced by its dominant managerial orientation. Prahalad & Bettis (1986), for example, put forward the notion of the organization’s ‘dominant logic’; similarly, Drucker (1994) talks about the ‘theory of its business’ as a set of assumptions that shape the way decisions are made in the organization. However, behind such company-specific ­logics, there is a grand paradigm that dominates managerial thought. The prevailing paradigm, we suggest, is planning, sometimes referred to strategic planning. Planning has been central to the logics of organization design since the early days of management, mainly through the work of Fayol (1949) and the celebrated five functions of management—planning, organizing, leading, coordinating, and controlling. More recently, pioneered by the writ­ ings of Igor Ansoff (Ansoff, 1965; Ansoff & McDonnell, 1990) and success­ fully disseminated worldwide by Harvard Business School (Andrews, 1971, 1980, 1981), the notion of strategic planning has become a tenet of manage­ ment education. Traditional planning (and control) models are associated with rational decision-making theory and work on the assumption that (1) there is an independent environment out there which needs to be reached through good planning; (2) the goals to be achieved are known and well-specified; (3) predictions about the future can safely be made based on past histories of performance; (4) there is no distinction between planning under manage­ ment and planning under entrepreneurship. Techniques such as forecasting, brainstorming, contingency planning, scenario creation, benchmarking, SWOT analysis, the product/market expansion grid (Ansoff ’s matrix), the BCG portfolio, and Porter’s five forces model are all underpinned by notions

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of planning and rational decision-making. The advantages and benefits of adopting such notions are clear. Research shows that both the output of busi­ ness planning (i.e. written plans) and the process of business planning (i.e. planning meetings) improve firm performance and while some scholars view the formal aspects of planning as being the key sources of value of busi­ ness planning, others see planning as a way of symbolizing and legitimating the intent of the company’s higher management (Brinckmann et al., 2010). Planning enhances coordination and plays a crucial role in organization design, but despite their positive contributions, planning processes can very quickly become sclerotic and lose the ability to add value to the company’s bottom line. Planning creates a belief in the organization that the future can safely be predicted and that the organization’s markets remain relatively ­stable and ready to be exploited. This, as we will see below, stands in op­pos­ ition to a design perspective which emphasizes creating new artefacts or new ways of doing things. The managerial/entrepreneurial equivalent to the design perspective is the logic of effectuation (Sarasvathy, 2001) and the idea that instead of devoting 100 per cent of their energy to the causes behind their decisions (i.e. to launch a new venture, to develop a new product, or to improve an existing service), entrepreneurs/managers should also turn their attention to the potential effects of their decisions.

Exploration versus Exploitation (or Re-search) Going back to Krippendorff ’s (2011) principles of design, we will recall the distinction between Exploration versus Re-search, which is explained in the following manner: Instead of examining the past for generalizations and constraints on what can be done, designers have to explore the present for what is variable, combinable into new artefacts, fusible into new technologies in order to reach desirable futures for targeted communities.  (p. 416)

The two poles from this principle are reminiscent of the classic distinction by March (1991) between the ‘exploitation’ and the ‘exploration’ modes in organizational learning. As March explains, both exploration and ex­ploit­ ation are vital for organizational growth, but the problem is that they com­ pete against each other for scarce resources. Organizations have to make choices between the two, on issues such as investments, systems, procedures, policies, practices, and other variables. Understanding the choices between

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exploration and exploitation is complicated by the wide differences in the returns expected from the two options, not only with respect values, but also with respect to timing and market impact. The returns from exploitation are always quantitatively less in the short term and more difficult to evaluate in the long term, than returns from exploitation decisions. The only solution is to constantly strive for balance between the two, with the knowledge that a greater emphasis on exploitation can lead companies to a dangerous path, such as was the case of Nokia in the early 2000s. March’s ‘exploitation’ versus ‘exploration’ modes reflects different orienta­ tions to strategizing within the organization, whereas ‘predictive’ and ‘nonpredictive’ control refer to different attitudes in relation to the market. Exploitation and predictive control are closely related and together they cre­ ate a mind-set of adaptation, whereas exploitation and non-predictive con­ trol leads managers to think in transformative ways. For managers holding an adaptive perspective it is assumed that the environment is predictable, but is largely beyond the control of the firm, in which case investing in predictive techniques, and positioning the firm for the future is the best way forward. Managers and entrepreneurs using a transformational logic believe that while they cannot predict the future, they can control it to some extent, by recognizing, responding, and reshaping opportunities, and remaining flex­ ible as regards future events. Traditional managers perceive their business environment as being populated by competitors, while for effectual man­ agers the firm is surrounded by potential partners. Thus, rather spending their time on competitive analysis, the goal of effectual managers or entre­ preneurs is to bring stakeholders to the venture and to get commitments from them as early as possible. In this way, the future can be controlled rather than predicted. Partly due to the growing interest in design thinking (Collins,  2013; Carlgren et al., 2016; Garbuio et al., 2018), an increasing number of or­gan­ iza­tions are becoming aware of the need to shift from a mind-set of market adaptation to a mind-set of market transformation. Such a shift, which is summarized in Figure 7.6, constitutes a trend that will bring about im­port­ ant changes in the way organizations are designed.

Corporate Effectuation and Entrepreneurial Firms As part of their response to the criticism by Arend et al. (2015), Read et al. (2016) outline a number of topics which, according to the authors, need to be further refined in order to boost the theoretical backing of effectuation

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216  Designing Organization Design E x plor ati on Search, variation, risk taking, experimentation, play, flexibility, discovery, innovation (March, 1991)

Non-Predictive Control High emphasis on controlling the environment and low emphasis on predicting the environment (e.g. Sarasvathy, 2001)

Attitude towards market axis

TRANSFORMATION ADAPTATION

Internal decision-making orientation axis

Predictive Control (Stategic Planning) High emphasis on predicting the environment and low emphasis on controlling the environment (e.g. Ansoff & McDonnell, 1990)

E x ploitati on Refinement, choice, production, efficiency, selection, implementation, execution (March, 1991)

Fig. 7.6:  The shift in the centre of gravity of organization designing from a mind-set of market adaptation to a mind-set of market transformation

theory. One of the topics concerns the transitioning from effectual to causal approaches and vice versa. The authors explain that effectuation research needs to spell out in more detail the conditions under which such transition­ ing may be necessary, including ways of mixing and matching predictive and non-predictive strategies. They use the term ‘corporate effectuation’ to sig­ nify that the scope of effectuation can be extended beyond the realm of entrepreneurship. Corporate effectuation is characterized by an entrepreneurial orientation, which, according to Wales et al. (2011), can be defined by the existence of certain patterns of behaviour within the organization. On the other hand, Burns (2016) suggests that the five principles of effectuation mentioned above (Sarasvathy, 2003) can be seen as an alternative decision-making para­ digm, not only for entrepreneurs but also for entrepreneurially minded man­ agers. Thus, the five principles might offer a useful characterization of the behaviour patterns found in entrepreneurial orientation. For example, rather than waiting to gain perfect information about new opportunities, an entre­ preneurially minded manager would build on strengths and resources that they already have and react to contingencies as they occur. Also, while trad­ ition­ al executives would insist on researching the market and perform detailed financial analysis to evaluate possible gains, effectual managers are more inclined to go to market as quickly as possible, based on the principle of affordable loss. Some authors, however, prefer to make a keen distinction between entre­ preneurial firms and non- or post-entrepreneurial firms. Dew et al. (2008) assert that

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Service Logic and Logic of Effectual Reasoning  217 The entrepreneurial firm faces a design problem rather than an adaptation problem (…) This means acting under a rubric of ‘design’ rather than ‘discovery’ (i.e. placing an emphasis on taking actions that fabricate opportunities rather than searching for them). It also means little attention is given to searching for pre-existent competitive threats because the entrepreneurial firm does not know which markets or event spaces it may end up constructing.  (2008: 52)

According to these authors, the distinction between entrepreneurial and post-entrepreneurial firms is made mostly on the basis of the demarcation lines between the organization and its environment and the corresponding propensity for entrepreneurial firms to hold primarily a transformational outlook, whereas non-entrepreneurial firm (or established firms) tend to hold an adaptive view of the market. As it happens, for entrepreneurial firms the demarcation lines between the organization and the environment are not clearly drawn: first, due to the fact that there are no established practices or procedures; and, second, because the environment itself is not clearly speci­ fied. As the firm grows and learns through processes of trial-and-error and feedback, after a while it does become more established and adapted to its environment. Established firms tend to have clearer demarcation points created by a variety of legal and bureaucratic mechanisms, as well as informal practices that establish the separation between the organizations and their en­vir­on­ ments. These mechanisms define who interacts with whom, when, how, and why, and once they are created, they become difficult to change. This can only lead one to conclude that while entrepreneurial firms tend to be trans­form­ation­al, established firms naturally tend to become adaptive in their approach to the market. It also follows that established firms will lose their ‘entrepreneurial’ characteristics and struggle to have a transformational outlook. While this certainly seems to hold true for companies designed under the prevailing contingency-dominated paradigm, there is an increasing number of examples of established companies that have remained ‘entrepreneurial’ in terms of their outlook. An example is Starbucks, a non-technological in­nov­ ator. In a study of the evolution of the company’s organizational designs by Sarasvathy et al. (2008), the authors conclude that causal/adaptive and effec­ tual/transformational reasoning were both successfully used in upholding the company’s innovation strategy. They assert that, over time, there was an important interplay between different Starbucks designs and the resulting organizational environments. “with the ‘visible’ artefact design being con­ stantly refined and redefined at the interface between its inner environment

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and its external environment” (2008: 345). Another example is the case of Xbox 360 described by Verganti & Shani (2016), about the successful devel­ opment of a new innovative capability within a giant like Microsoft, through the use of “radical circles”, a form of democratized, bottom up innovation. Thus, it would seem that a transformational view of markets is not incom­ patible with the status of ‘established company’ and that established com­pan­ ies can also have an entrepreneurial orientation. Thus, we posit that the term ‘entrepreneurial firm’ should not be restricted to recently created start-ups but should be understood as any organization whose design is dominated by effectual reasoning and by a logic of environmental transformation.

Conclusion This chapter deals with two logics of organization design: the service logic and the logic of effectual reasoning. The following quotation by Verganti (2016) helps to explain why it makes sense to deal with the two together: Until recently many of the problems in people’s lives were substantially predefined: graduating, meeting a life mate, finding a job, having children (…) These things were rooted in the structure of society and they gave meaning to life. They gave direction. People did not question the problems to address They focused on finding the most appropriate solution (…) In a few years, the world has changed dramatically (…) One of the cyclonic changes in our society is that people do not have a crystallized, conformed and stable idea of what is meaningful. Their life is not just focused on finding solutions to pre-defined problems, but on finding what questions to address (…) They are in constant search of meaning. They seek purpose more than solutions.  (Verganti, 2016: 27–28)

The quotation outlines one of the key problems that we all face as 21st-century citizens of the world, which have a direct bearing on the way or­gan­iza­tions approach the issue of service, that is, the problem of too much data and information and not enough meaning. At the same time, in highlighting the “cyclonic” speed of societal change, the quotation highlights the need for organizations to keep ahead of the swell. This, in turn, means that innovation should no longer be seen as a strategic-level issue mostly associated with achieving competitive advantage, but as an operational-level issue of daily organization design. Meaning, purpose and image affect the way people choose products to purchase or organizations to be associated with. Increasingly, managers and

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entrepreneurs know that service beneficiaries realize value through the evalu­ation of experience, which means that in designing organizations, man­ agers and entrepreneurs need to pay closer attention to the contextual and meaning-driven aspects of service. This conclusion flows from one of the axioms of the S-D logic of marketing, that is, value is uniquely determined by the beneficiary phenomenologically and experientially. The S-D logic provides the economic justification for the service logic of organization design, defining service as the fundamental basis of economic exchange. Thus, that axiom and the other three axioms of the S-D logic high­ lighted in the chapter provide crucial guidelines about how organizations should be designed. For example, another of the axioms states that all eco­ nomic and social actors are resource integrators, a resource being anything, tangible or intangible, an individual or firm can draw upon for building up a service. Organizations should, therefore, be designed in such a way that resource integration is facilitated, for example by making partnerships pos­ sible and attractive. A related axiom is about the role of the customer and asserts that the customer is always a co-creator of value. Value should be understood as something that is always dependent upon use and context, as well as something that is co-created through the interaction of individuals or between individuals and firms. In stakeholder theory the issue of co-creation of value has also been vastly explored, with an emphasis on how stakeholder utility (and preferences) actually exert influence on value creation. Value-as-utility is defined as ‘any­ thing that has the potential to be of worth to stakeholders’ (Harrison & Wicks,  2013: 100). Given that service co-creation implies mutual depend­ ence and reciprocal exchange, the utility-centred view of the organization gets drawn directly into the ethical behaviour of the actors involved and therefore into the normative logic (Abela & Murphy,  2008; Williams & Aitken, 2011). This means that in their search for utility in service ecosys­ tems, stakeholders will move away when they perceive that the ethical stance of the organization or its service system has begun to deliver negative utility. Thus, it can also be concluded that the service logic has an important integrative potential, bringing together not only the economic and commercial concerns of organizational design but also a significant part of its normative considerations. Moreover, service integrates also the logic of ‘effectuation’, a concept put forward to explain entrepreneurial action, in terms of the pro­ cesses of creation and development of firms. The logic of effectuation rests upon the assumption that rather than attempting to predict the future and wasting resources on complicated planning exercises, managers should attempt to control the environmental factors that are within their reach. Such

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a logic is therefore the first shaper of the organization’s design; however, as the organization grows and becomes more established, effectuation evolves to the more traditional logic of predictive reasoning or causation. This logic, which stands in opposition to the logic of effectuation, has been dominant because traditional management education is geared towards the manage­ ment of large companies and profit maximization through sound financial management. As a result, there is strong reluctance to accept any business development proposals that is not supported by conventional business plan­ ning techniques. The chapter’s final proposal is that if organizations are to be designed for innovation and, not for perpetuating the status quo, managers should be taught to think primarily as entrepreneurs and only secondarily as financial managers. Indeed, in the life of real companies, most decisions are taken out­ side the business plans and budgets. Planning and budgeting are ceremoni­ ally done mainly to comply with the organization’s SOP (standard operating procedures) but to the cost of a great deal of organizational energy. It may be concluded then that just as service shapes design by means of the or­gan­iza­ tion’s outputs, as well as the myriad internal and external transactions related to the outputs, effectual (or causal) reasoning shape design by moulding the thinking and acting that lead to service. Thus, as a logic of organization design, effectual reasoning represents a mind-set of permanent innovation that creates evolutionary paths for the organization’s service offerings. This is the way forward in terms of putting into practice Verganti’s (2016) advice about creating products and services which take into account the customer’s expected meanings, purpose or image.

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8 The Logic of Interactive Structure Introduction Organizational structure is a pivotal dimension of organization design. In our review of four schools of thought in Chapter 5, the ‘structure’ dimension was described mostly through terms such as bureaucracy, legitimate authority, formal rules, division of labour, hierarchy, or predictability. However, one of the reviewed schools of thought (Nahapiet & Ghoshal, 1998) described it differently, using expressions such as ‘network ties’, ‘connections between actors’, or ‘who you reach and how you reach’ them. The first description ­corresponds to what structure was traditionally meant to be, whereas the second description of organizational structure is about what structure is in practice. The first talks mostly about the formal side of or­gan­iza­tion, whereas the second addresses the informal side in the main. Unfortunately, these sides have lived separate lives, practically ever since organization theory was created as a discipline. Despite the many studies that have been conducted over the years about the informal organization, most management and organization textbooks still present organizational structure according the first description. This is not helpful, insofar as it creates a very distorted picture of what organizations are in the eyes of fresh management and organization graduates, and it is only three or four years into their professional careers that they begin to appreciate that legitimate authority, formal rules, division of labour, hierarchy, or predictability form but a very small part of the picture. The disconnect between the formal and the informal sides of organization is of course not a new realization for the organization studies community, however in the past couple of decades the divide has been growing apace. The key reason for this is the massive increase in information technology (IT)-driven interactivity and improvisation which has swept over the or­gan­iza­tion­al world. From the point of view of organization design, the formal organization cannot be detached from the informal of organization because both sides contribute to the final aims of achieving desiderata and providing a service, while taking into consideration the views and concerns of all the stake­holders Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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involved. At the same time, theories of organizational structuring must also take into account the changes in interactivity and generativity (i.e. im­pro­ visa­tion) happening across the entire spectrum of organizations. In this scen­ario, what would be the most appropriate response in terms of organization structure? The answers to this question are found in both the classic texts on or­gan­iza­ tion theory and in the human-centric design principles as outlined in Chapter 5. As discussed there, several of Krippendorff ’s (2011) design prin­ ciples are applicable to organization structure, however two are particularly relevant, that is, technology thrives in heterarchy, not hierarchy and inter­activ­ity replaces materiality. In articulating the former, Krippendorff states that “in information-rich environments (…) design tasks involving teams or stakeholders can no longer be organized hierarchically” and that “design needs to operate with heterarchical conceptions, embrace a great diversity of meanings and negotiate its possible outcomes with many interested parties. (p. 415). These brief statements encapsulate the key opportunities and challenges faced by the designers of organizational structures in today’s word and which will be developed in the present chapter. Such opportunities and challenges might be summed up as follows: 1. Organizational structures are ever-increasing, information-rich, and communication-rich environments, actively eroding traditional hier­ arch­ies and replacing them with multiple heterarchical features 2. The exponential increases in the levels of interactivity and generativity brought about by digital infrastructures in organizations has created a wider split between the formal (i.e. intended design) and the informal organization (i.e. emergent design) 3. In the absence of the traditional hierarchical scaffolding, or­gan­iza­ tion­al designers (i.e. managers) need to adjust to the fact that the vital support functions of the organization’s structure can only be fulfilled by an increased ability to control and manage the greater diversity of meanings with which they are faced. This chapter also builds on the discussions in Chapter 4 about the bridging between organization design (design as a noun) and organization designing (design as a verb). Indeed, we will return to this theme but this time enriched by Giddens’ (1984) social theory, where the concept of structure can be taken to be a rough equivalent to organization design as a noun and the notion of structuration bears some similarities to organization design as a verb. On the other hand, the notions of structure and struc­tur­ation are also related to the theme of formal versus information or­gan­iza­tion. The work by

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Soderstrom & Weber (2019) shows that the interactional dynamics between participants play an identifiable and measurable role in the levels of structuration achieved by the organization at any point in time. Soderstrom & Weber propose a scale of structuration levels ranging from formal to situ­ ation­al, where ‘situational’ refers to the momentaneous configuration of ­people, roles, norms, objects, and place where interactions take place. The notion of levels of structuration opens up new possibilities for improvisation, creativity, and innovation to become part of the discussions on organizational structure, as forms of emergent organizational design. Reinforced by the new technology-enabled channels as ever-present sources of interactivity and generativity in the organization, the stage is set for new proposals to be put forward regarding the concept of interactive structure. The concept highlights the fact that it no longer makes sense to associate structure primarily with hierarchy because the traditional hierarchical set up has largely been taken over by electronic communication channels, many of which cannot be harnessed in any way by bureaucratic rules. Hence, rules and principles of heterarchy need to be considered much more than in the days of traditional organization design thinking. Heterarchy describes the organization of power relations that exist in certain types of organization, such as soccer matches or jazz orchestras, organizations where im­pro­visa­ tional and situational interactions prevail. This chapter does not explicitly focus on the dimension of power in or­gan­ iza­tion­al structure; however, it assumes that such a dimension is implicitly included in Giddens’ (1984) structuration theory, which does allow for divergent interests, active advocacy, and conflict to be taken into account in the structuring of organizations. In other words, in using Giddens’ framework in the analysis and description of interactive structure, the power dimension is deemed to be implicitly included. The chapter ends with an explanatory framework for the notion of inter­ active structure, which can also be used as a prescriptive tool. It establishes a relationship between the organization’s level of structuration (improvisation versus formalization) and the type of design trace used or available (affectual versus techno-rational). In organizations where attention is paid to the affectual type of design trace, the greater the possibility that the organization is ready to absorb the outcomes from improvisation and informality.

Hierarchy and Heterarchy Hierarchy is a fundamental organizing principle which underpins all the classic approaches to organization design, and which has been adopted by

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organization theory from the early days. It is defined as ‘a complex system in which each of the subsystems is subordinated by an authority relation to the system it belongs to’ (Simon, 1962: 468). Influenced by this and by the writing of classical organizational theorists, organizational design has traditionally relied on hierarchical mechanisms as the primary means of control and coordination. (March & Simon,  1958; Perrow,  1967; Thompson,  1967). Although successful in bringing about the control and coordination needed for adequate organizational integration, hierarchy as an organizing principle has limitations. The same mechanisms that hierarchy affords for control and coordination also serve as constraints on broader collaboration both within and across firms. Hierarchy imposes multiple filters on the interactions among individuals and organizational units and/or external partners, creating delays and even blockages to the establishment of good connections and interactions. A concept that is often presented as the opposite of hierarchy is heterarchy. Although heterarchy has always been present in alternative organizational designations, such as informal, network (Borgatti & Foster, 2003), hypertext (Nonaka & Takeuchy, 1995), or pluralist organization (Brès et al., 2018), the dichotomy hierarchy-heterarchy has not drawn much attention in organization studies. The concept of heterarchy was first adopted by McCulloch (1945) in his research into nerve nets having then been concluded that the nervous system, while perfectly orderly, was not organized hierarchically. Alternatively, it was proposed that the collective organization of the nervous system is heterarchical. Heterarchy is thus defined as the ‘relation of elements to one another when they are unranked or when they possess the potential for being ranked in a number of different ways’ (Crumley, 1995: 3). While hierarchy characterizes the organization of power relations in some societies or in a bureaucratic system, heterarchy describes the organization of power relations that exist in other types of organization, such as coalitions, soccer matches, or jazz orchestras. The term heterarchy reminds us that the organization of power and order are not exclusively hierarchical and, more importantly, that ‘interactive elements in complex systems need not be permanently ranked relative to one another’ (p. 3). Although hierarchy is the first image of organization, mainly due to the omnipresence of the traditional organizational chart, real-life organizations do not comply with the definition of hierarchy. The organization of power is never such that it can be located where it is supposed to be located, but instead is dispersed throughout the organization and often found in unsuspecting places. Hierarchy and heterarchy have always co-existed in social organizations and the balance between the two is an organizational design

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concern. Too much hierarchy will stifle innovation and creativity, while too much heterarchy will risk loss of organizational control. One of the factors that can upset the balance between hierarchy and heterarchy is the quantity and quality of the interactivity inherent to the organization. In the last few decades the never-ending development of information technology infrastructures in organizations has created a host of phenomena that run counter to the traditional hierarchical model. The world of the hyperlink and increasingly cheap ways to convey large amounts of information through the Internet are changing the rules of the game and the structure of organizations. There is a significant shift from a time when organizational structures were essentially laid down by management to the world of today, when structures are increasingly being shaped by new interaction and collaboration demands and possibilities. In other words, or­gan­iza­tion design has entered the paradigm of connect-and-collaborate, where an increasing number of features of heterarchy can be found to be replacing features of the hierarchical model. Zammuto et al. (2007: 752) explain that ‘as IT takes over many coordination and control responsibilities from hier­archy, traditional hierarchical views of organizational form become incomplete’. Whereas the traditional hierarchy is embedded in a single logic that dictates coherent rules and norms, the heterarchy that underpins the pluralistic organization of the future is embedded in multiple logics which require interactive relationship to negotiate the rules (Brès et al., 2018). On the other hand, the move away from formal organizational structures and towards structures based on emergent patterns of individual behaviour and inter­ actions among individuals fuelled by increased levels of interactivity is creating new challenges as well as new opportunities. As McEvily et al. (2014) explain, both formal and informal elements generate a ‘web of interactions connecting actors’ (p. 5) and, whether formally designed or informally emergent, this new web of interactions has become the way to conduct business in organizations and between organizations. This means that once people realize the interactive potential of the new electronic media, they will make use of such potential and all communication—formal and informal—begins to be conducted in very different ways. This happens not only at the level of individual users but also at the interface between individuals and institutions. For example, once students understand that they can force universities to change their policies through pressure exerted by means of the interactive capabilities of Twitter, they will start using that social medium to their advantage. Faced with this type of challenge, universities need to act quickly, and often established procedure needs to be changed on-the-fly. Another example is what happens when a government department understands that

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it can usefully communicate with the citizens through the interactive cap­abil­ities of WhatsApp and starts to conduct all manner of official business through that social medium. In these two examples, the traditional bound­ ar­ ies between formal and informal or between hierarchy to heterarchy have ­broken down and interactivity has become the central feature of or­gan­iza­ tion­al structure.

Structure An organization[’s structure] is an elaborate architecture of multiplex ties, both formally designed and informally emergent, that channels information, knowledge, and resources to actors. The intricate interplay between formal and informal elements is, in our view, what ul­tim­ate­ly determines individuals’ ability to get things done and, consequently, their capacity to facilitate (or, at times, hinder) the pursuit of or­gan­iza­ tion­al objectives.  (McEvily et al., 2014: 333; parenthesis added)

Structure and Structuring The most common understanding of organizational structure is the very tangible organizational chart showing levels of responsibility, authority, and accountability, the nature and the extent of formal rules and procedures, the organization of task-related units and sub-units, human resources policies and procedures, as well as the communication channels needed to link of all the above (Kimberly, 1984). This is one way of looking at structure, that is, the manner in which the organization divides its mission into distinct tasks and then achieves coordination of such tasks in order to accomplish its mission (Mintzberg,  1980). Taking a different perspective, Scott (2003: 20) defines formal organizational structures as those ‘in which the social pos­ition and the relationships among them have been explicitly specified and are defined independently of the personal characteristics and relations of the participants occupying these positions’. In the end, the purpose of or­gan­iza­tion­al structures is to make action reliable and not contingent on personal or situ­ ation­al factors. Whichever way we look at organizational structure, it has long been recognized that the organization behind the organizational chart is quite

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different from the lines and boxes of the organigram. There is increasing recognition of the fact that structures cannot simply be derived from the organization’s goals and strategies or selected from a choice of con­fig­ur­ations, in a rational exercise. Recent scholarship has shown that there are processes of emergence, collective sense-making, power play, and mo­bil­iza­tion involved. These are processes of ‘structuration’ which, according to contemporary social theory, are the result of the emergence of invisible ‘structural properties’ of social systems. Structurational theory posits that human actors are able to exercise agency in the pursuance of their objectives and that while this power is constrained by social structures, human agency is also capable of changing social structures. For the creator of the structurational model of society—Anthony Giddens (1984)—structural properties are the (virtual) features of social systems that become institutionalized and which make it possible for social practices to span space and time. According to this model, a social system is made up of two parts: first, there is the ongoing, situated action of human beings, also known as ‘the agency’; and, second, there is ‘the structure’. Structures, in the words of Whittington (1992: 696), ‘have no reality except as they are instantiated in activity [of human actors]’, that is, they are just properties of action-empowering resources and action-guiding rules that are either instantiated in social practices or remembered as memories (or habits) in the minds of social actors. The realm of action refers to the specific inter­ actions between people happening in real-time, while the realm of structure is meant to represent an abstract framework of relations derived from previous interactions which serves as the guidance for organizational actors in enacting their daily practices. Between the very visible layer of agency and the invisible layer of structure, Giddens’ model features a third layer, made up of the actual rules and resources that explain the properties of the structure (see Figure 8.1). This layer is known as the ‘modalities of structuration’ and is described as something tangible that human actors draw upon ‘in the reproduction of systems of interaction, by the same token reconstituting their structural properties’ (Gidden,  1984: 28). Modalities can be seen as the interface between the knowledgeable capacities of actors and the structural features of social systems. There are three different types of modalities: facilities, norms, and interpretive schemes. An example of a norm is a law, and an example of an interpretive scheme is the customary interpretation of the law. Thus, a law is a rule that imposes restrictions, customarily used and legitimized by society

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Structure

Definition of Structurational Mode Enactment of the structural properties of the organization

Design Processes Emergent Design

Rules and resources instantiated in sociomaterial practice

Modalities of Structuration Including the organization’s digital infrastructure

Agency

Facilities

Norms

Buildings, hardware, software, etc.

Rules of interaction, procedures, codes of conduct

Interpretive Schemes Assumptions, knowledge

Intended Design

Perceived Design

Ongoing, situated, technology-bound human Design-Inspired action Agency

Fig. 8.1:  A sociomaterial perspective of Giddens’ structurational model adapted to design-oriented terminology

(i.e. the structure), which bear upon the agent. However, society also has resources that can be used to change the law and one day the agent might succeed in his or her attempts at changing the law. The above example is a very simple illustration of the dynamics of struc­ tur­ation theory, which can be applied to the analysis of organizational structures. However, before we go any deeper into the topic, let us first clarify the confusion that is often evident among students and teachers, around the concept of ‘structure’. The word structure seems to have different meanings, depending on whether we are talking about the organizational structure or the process of organizational structuring. The confusion is indeed similar to the one we have already alluded to, regarding the word design, that is, design as a noun and design as a verb. Gidden’s three-layered model is quite helpful in making the distinction between structure and structuring. So, if we focus on the middle layer— modalities—we suggest that organizational structure, in the sense of the artefacts shown in organizational charts and reflecting the organization’s choices regarding responsibility, authority and accountability, fits perfectly under this layer. Like the modalities, this layer is responsible for providing the rules and resources that help create and recreate the structure, and therefore this layer might also be called organizational infrastructure.

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The term structuration, on the other hand, is used to describe not only an ongoing process, but also the extent to which the structure as an artefact has been produced or reproduced. Hence, one should be able to talk of levels of structuration. And if structures have no reality except as they are instantiated in the activity of human actors, then the distinction between structure and infrastructure is totally invisible, in terms of daily activity. The structure, then, is the emergent result, in terms of the relationships and the interactions between actors, of the affordances and the constraints placed by the infrastructure (i.e. the modalities). Gidden’s model, which will serve as the basis for the discussion in the rest of the chapter, is instrumental in explaining not only the entangled nature of the social and material constitution of today’s organizations, but also the label ‘interactive structure’ as one of our logics of organization design.

The Sociomateriality of the Organization’s Digital Infrastructure Going back to modalities layer discussed above and to the suggestion that it might also be called “organizational infrastructure”, we posit that this layer corresponds to what Mintzberg (1980) calls the ‘coordinating mechanisms’ and ‘design parameters’ of organizational structure. The coordinating mechanisms are procedures aimed at standardizing work processes, outputs, and skills, and they included direct supervision by the manager and informal mutual adjustment between individuals to coordinate their work. The design parameters are also standardizing artefacts, including job specialization, behaviour formalization, unit grouping, unit size, and liaison devices. With the passage of time, more and more of these infrastructural facilities, norms, and interpretive schemes have been automated and added to what is known as the organization’s digital infrastructure. Digital infrastructures have been treated in the literature as being equivalent to information systems’ infrastructures but have also been referred to as work-related or simply work infrastructures. Hanseth & Lundberg (2001: 365) use the expression ‘work oriented infrastructures’, while Pipek & Wulf (2009: 455) define ‘work infrastructure’ as the ‘entirety of devices, tools, technologies, standards, conventions and protocols upon which the individual worker or the organization rely to carry out the tasks and achieve the goals assigned to them’. Using a different approach, Hanseth & Lyytinen (2010: 4) define information infrastructure as a ‘recursive composition of IT cap­abil­ities,

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platforms and infrastructures over time’, to include not only IT cap­abil­ities but also the issues related to the communities that use, operate, and design the infrastructure. The discipline of organization theory and the field of organization design in particular have partially disregarded the ways in which management and organizing are bound up with the material forms and spaces created by digital infrastructures. To the extent that such neglect continues, our understanding of the ways people act and interact in organizational life will remain necessarily restricted (Orlikowski, 2007). Nevertheless, since the 1980s there has been a steady stream of research into the consequences of IT, investigating technology adoption, diffusion, and use within and across organizations. Some of this important research follows Giddens’ (1984) model of struc­tur­ ation. Three oft cited examples are Barley (1986), Orlikowski (1992), and DeSanctis and Poole (1994). In a study on the use of CT scanners in radiology departments, Barley (1986) suggested that technologies were occasions during which or­gan­iza­ tion­al actors could re-assess their work structures. Orlikowski (1992) put forward a structurational model of technology, where technology use becomes a constitutive feature of organizational structure. Her study concludes that given the ability of organizational actors to change the cycle of development, appropriation, institutionalization, and reproduction of technology, relations of cause-and-effect between technology and organization become virtually impossible to establish. DeSanctis & Poole (1994) proposed the notion of adaptive structuration to explain the process of the emergence of structures through the structural appropriation which happens as people go about their daily tasks, in interaction with technology. Building on her previous work, Orlikowski (2000) provides yet another important contribution, where she adopts a practice lens for studying technology in organizations. This approach extends the structurational model of technology, to examine how structures are enacted by people as they interact with the technology. The following excerpts provide a flavour of this contribution: • A practice lens accommodates more easily people’s situated use of dynamic technologies because it makes no assumptions about stability or predictability of the technologies (p. 407) • All structures are virtual and continually enacted through actors’ recurrent practices (p. 412) • These enacted structures of technology use, which I term technologies in practice, are the set of rules and resources that are reconstituted in people’s recurrent engagement with the technology (p. 407)

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• Technology in practice serves essentially as a behavioural and in­ter­pret­ ive template for people’s situated use of the technology (p. 410) • To the extent that people enact a multiplicity of structures (including other technologies in practice, as well as other normative and authoritative structures) in their recurrent practices (p. 412). Orlikowski’s practice lens has been criticized for offering an overly socialized view of technology, in the sense that the technologies themselves seem to be only ‘peripheral players that are subject to the whims of their users’ (Leonardi, 2013: 64). In other words, the realm of action is reduced to people having a choice of using a technology this way or that way, a choice that some observers say is simply not available. Increasingly, people have to use the technology as part of daily life. In response to the criticism, the notion of sociomateriality has been put forward with the message that ‘there is no social that is not also material, and no material that is not also social’ (Orlikowski, 2007: 1437). Thus, organizational structures need to be understood not as social but as sociomaterial constructs, made up by mutually constituted social and ma­ter­ ial elements (Orlikowski & Scott, 2008; Orlikowski, 2010). According to this epistemological departure, technology itself is considered to be part of the realm of institutional structure, capable of shaping its use in the reality of agency, by means of its material features. In other words, technology becomes a phenomenon within the realm of structure, while technology use is featured in the realm of agency. Leonardi (2013) clarifies, by offering the following explanation: Moving from a discussion about technology to a discussion about sociomateriality aims to remind those who would not normally make an explicit consideration of technology in their work to attend to the importance of the technical bases of or­gan­ iza­tion­al life, without using the term ‘technology’ directly.  (Leonardi, 2013: 65)

Thus, the use of the term ‘sociomaterial’ also builds on the structurational approaches to technology, but it goes beyond looking at technology from the viewpoint of the people. ‘Classic’ structuration shows that all technological artefacts are created through social interaction and that any effects that those artefacts might have on the organization were mediated and shaped by social interaction. The sociomaterial version highlights the fact that it is not only human agency influencing organizational structure through technology use but it is also structure bearing upon human agency, through the institutional role of technology. Figure 8.1 contains a graphic representation of Orlikowski’s model adjusted to the terminology not only of sociomateriality, but also of

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the design-driven perspective on organization design explored in this book. It contains a suggestion of how the different layers of the struc­tur­ational model correspond to intended, emergent and perceived design. Emergent design is akin to the layer of structure, where the sociomaterial properties of the organization’s structure are enacted by organizational actors. This layer depicts the unintended, informal consequences of intended design and the place where organization designing happens. Intended design concerns the planning and implementation of the organization’s material infrastructure, including its digital platforms and applications. It cor­res­ ponds to the layer of the modalities of structuration. The bottom layer depicts the real-time, situated action of people, also comprehensively entangled with technology, but simultaneously inspired by design principles and ideals. Given the recurrent nature of the model, design-inspired agency is both a cause and a consequence of an organizational structure that is strongly influenced by design thinking and design culture. Finally, perceived design happens in the recursion of intended and emergent design as the in­stant­an­ eous snapshot of any aspect of the organization’s design, as perceived by internal or external stakeholders.

Interactivity The notion of ‘interaction’ has been one of the defining features of or­gan­iza­ tions since the early days of organization theory (Barnard, 1938), where the interaction rather than the individual often became the basic unit of analysis (Goffman,  1972,  1983). References to informal organizational interactions have been part of organization studies since Elton Mayo’s (2003, originally published in 1933) Hawthorne studies found that job satisfaction depended to a large extent on the informal social pattern of the work group. Similarly, the work by the Tavistock Institute (Emery & Trist, 1960) proposes a framework that integrates the social and technical aspects of organizational structure. Also, the highly influential work by Granovetter (1985,  1992) on informal social networks in organizations has shown how economic rationality is ‘embedded’ in social interactions and relationships, with people guiding their choices about who to continue dealing with in accordance with past actions and judgements of trustworthiness. From the point of view of the formal organization, interactions are mandated by intentional design. Formal organizational arrangements, that

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is, the fixed set of rules, procedures, and processes that are set up for purposes of coordination and control are designed to shape the interactions required for the organization to achieve its goals. Such interactions follow a certain logic, usually driven by strategic objectives such as efficiency, effectiveness and legitimacy, set in accordance with market and institutional imperatives. From the point of view of the informal organization, interactions are emergent and situational, resulting from the variety of interpersonal relations that form as organizational actors pursue their own interests and socio-emotional needs. While interaction flows in the formal organization are structured, in the informal organization they are unstructured, however both identify interactions among actors which are crucial for an understanding of or­gan­ iza­tion­al behaviour and performance. In other words, behaviour and per­ form­ ance in the organization are substantially shaped by both formal organization and informal social structure. Traditional organizational design theory rests upon the formal side of organizational interactions, emphasizing elements such as coordination and integration mechanisms, job design, boundary-spanning roles, mentorship, and training programmes, evaluation, and feedback processes, or reward and incentive systems. However, as argued by McEvily et al. (2014: 310; italics added), focusing on these elements in isolation and apart from the patterns of interactions created by the informal organization, ‘may yield imprecise and unrealistic portrayals of actors’ behaviour and organizational performance’. In addition to this important realization, the concept of inter­ activ­ity assumes new relevance in tandem with the mass adoption of IT in organizations. The turn towards IT-driven and IT-enabled organizational structure has radically changed all notions of interactivity, however the full implications of this shift have not yet been taken on board by the organization design community.

Interactivity and Generativity In articulating the design principle Interactivity Replaces Materiality, Krippendorff (2011) argues that ‘technology resides less in the materiality of its artefacts than in its social utilization (p. 414) and that ‘the interactivity that makes projects succeed is largely due to compelling narratives that orient the participants toward a goal’ (p. 415). On the other hand, looking again at Krippendorff ’s trajectory of artificiality (previously referred to in Chapter 5),

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we see generativity placed at the upper end of the trajectory and defined as the ‘capacity of discourses to bring forth novel practices’ (p. 412). In this section, we look more closely at this design axiom to see how inter­activ­ity and generativity are connected and how both concepts might be part of a definition of interactive structure. A hint about the link between interactivity and generativity can be detected in the second part of Krippendorff ’s principle, that is, ‘the inter­ activ­ity that makes projects succeed is largely due to compelling narratives that orient the participants toward a goal’. Here, we are reminded that inter­ activ­ity in organizations cannot be seen as a disembodied phenomenon. In other words, it is not enough to focus on the quantity and quality of inter­ activ­ity that can be made possible, improved, or augmented by computerbased systems. The message is that the interactivity that makes the difference in terms of the success or failure of organizational projects depends on nar­ ratives and meanings that make sense to human beings. Thus, generativity might be seen as a human-driven capability which emanates from the properties of interactivity, which in turn is driven by the potential of IT to recombine data sources, generate, assemble, and redistribute content. Tilson et al. (2010: 750) put it in the following way: Generativity allows individuals, groups, and organizations to cocreate services, applications, and content. These services can, thanks to fully digital infrastruc­ tures, in principle, combine any information, behaviors, or states available on the network.

Table 8.1 summarizes the distinction between interactivity and generativity. The key point to make is perhaps that the former is associated with both formal and informal organization, whereas the latter is a capacity that supports mainly informal manifestations, and is instrumental in contributing to improvisation as a crucial form of organizational development. Table 8.1:  The distinction between interactivity and generativity INTERACTIVITY

GENERATIVITY

Technology-driven Facilitates formal and informal organization

Human-driven Facilitates informal organization and improvisation Refers to embodied narratives and meanings

Refers to abstract communication flows and systems

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Generativity and Improvisation Yoo (2015) claims that we are entering a new era of ‘generative economy’, where the new logics of generativity and rapid recombination are changing businesses and organizations. It is argued that both the immaterial nature of digital information and the benefits of generativity tend to accelerate the ‘decomposition’ of hierarchical structures, with all the organizational and managerial tensions that such major shift implies. However, Yoo’ s contribution, as most of the literature on IT-driven generativity, does not address the problem of how the void left by the traditional hierarchical structures might be filled. Surprisingly, this literature seems oblivious of the long tradition of organizational research into a type innovation known as improvisation. It stands to reason that technology-driven interactivity and generativity should somehow be linked to organizational improvisation; therefore, it might safely be speculated that the gap left by the decomposing hierarchical structures will gradually be filled by various forms, levels, and degrees of improvisation. Having said this, it is important to point out that we do not envisage hierarchical structures being entirely replaced by heterarchies. Organizations will always need to have a formal structure organized more of less hier­arch­ ic­al­ly in order to fulfil their basic functions. What will tend to happen, in our view, is that there will be increasing recognition of the heterarchical, informal, improvisational side of the structure, translated into a whole new generation of managerial approaches. The term ‘interactive structure’ is part of such new approaches, where the word ‘interactive’ becomes a permanent reminder of the fleeting nature of organizational structure.

Improvisation Cunha et al. (2016: 559) explain that improvisation represents a special type of innovation, but given that innovation is often planned and managed, not all innovation activity can be said to represent improvisation. These authors provide the following dimensions as constituting the minimal formal def­in­ ition of the process of organizational improvisation: • Extemporaneity—improvisation is characterized by the convergence of design and performance • Novelty—improvisation involves the creation of some degree of novel action

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• Intentionality—improvisation implies the deliberateness of the design that is created as the improvisation is enacted • Improvisational referent—often the improvisation process involves a prior version of an action pattern or prior plan. The above definition implies that improvisation represents a special type of unplanned action, involving deliberate new designs and excluding random change. Interestingly, in expounding the concept of improvisation, these authors use the word design throughout (see italics above) and although not explicitly mentioned, they are indeed referring to organizational design. Thus, in saying that organizational designs are created or changed through improvisation, such an assertion fits perfectly our own articulation of the concept of emergent design. Moreover, Cunha & Clegg (2019) argue that improvisation should be considered part of the largely ‘trivial and mundane process of organizational learning’ (p. 239), rather than something unusual, exceptional, or even extreme. Indeed, if one assumes, as discussed in Chapter  2, the epis­temo­ logic­al stance of organization design-as-practice, the mundane and infraordinary contributions to organizing afforded by improvisation should be understood as contributions from ordinary daily practices to the or­gan­iza­ tion’s (emergent) design. Also, improvisation as a concept is complementary to the notion of effectuation, discussed in Chapter 7. In both cases, the key concern is not with planning and the focus is not on the causes behind the action but on the future consequences of the action. In either case, there is the realization that planning itself does not ensure market success and that organizations that do not formulate plans are not necessarily less profitable than those that do.

Hatch’s (1999) Jazz Metaphor A significant number of studies on organizational improvisation has made use of jazz music to illustrate and shed light on improvisation in or­gan­iza­ tions, relying on data from musicology monographs and on the experiences of jazz authors, with jazz audiences and jazz musicians as sources. In one of the best-known studies using jazz as a metaphor, Hatch (1999) redescribes organizational structure in a way that is entirely compatible with our logic of interactive structure, starting from her definition of organizational structures as ‘patterns of interactions and relationships’ (p. 89). She asserts that the distinguishing feature of jazz is in its improvisational use of music

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structure. The development of structure through improvisation is explained as follows: In the context of performing a jazz tune, musicians build intensity from the struc­ ture of their playing (…) The structure [of jazz] developed via improvising around a previous structure. The organizational equivalent would be everyone doing their job at once such that ideas and skills come together in an intense moment of interactivity which has the potential to inform and inspire each participant in a different, albeit synchronized, way.  (1999: 92; italics added)

In her redescribing of organizational structure, Hatch highlights three major features of structure seen through the lens of jazz: temporal, ambiguous, and emotional. The temporal feature is also part of the definition of im­pro­visa­ tion discussed above by Cunha et al. (2016). The notion of extemporaneity and the idea that improvisation is characterized by the convergence of design and performance is also part of Hatch’s (1999) thinking, and the claim that ‘structure is temporal (…) in the sense that it constitutes temporal experiences in the commingling of past, present and future in the threefold present’, just as for jazz musicians, ‘the playing of a tune is the connecting point between past, present and future’ (pp. 93‒4). While this definition of the temporality of structure fits perfectly the description of organization designing as the ‘the existential moment of action where the past and the future meet’ (Yoo et al., 2006: 228), the other two features of structure—ambiguous and emotional—confirm the design orientation of Hatch’s interpretation of the jazz metaphor. The concern with the ambiguity of organizational structure, which originates in a long trad­ ition of organizational research, might be summed up as the potential for interpretive multiplicity, which supports creativity and innovation. However, the design point of view, coupled with the new impact of digital information, provides a slightly different tack. Thus, it is posited that the vast possibilities for information access provided by IT-based artefacts in organizations are also associated with a large-scale diversification of perceptions and meanings. While hier­arch­ies were very suited at keeping meanings uniform, through the power of gen­era­tiv­ity, organizational structures become much more diversified with respect to organizational meanings. This poses a new challenge that organization designers have to deal with, that is, the bal­an­cing between the in­nov­ation advantages of diversified meanings, and the risks of confusion, misunderstanding, and ultimately inefficiency. The third and perhaps most significant feature of the re-interpretation of organizational structural in the light of the jazz metaphor is emotionality.

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Hatch (1999) explains that: ‘the jazz metaphor suggests that whenever we interact, communication rests as heavily upon emotional and physical feeling as it does on the intellectual content of the messages involved’ (p. 89). We regard this feature as being especially relevant for our discussion due to two key reasons. First, although relationships are usually recognized as part of organizational structure, structure is mostly depicted as a mechanistic and rational construct, with no role for emotions. Second, in our prior discussion of the key integration mechanism between organization design as noun and organization design as verb—formative affectual contexts—emotionality also plays a central role. Hatch argues that, like in jazz, the feelings of or­gan­iza­tion members towards each other orient them in particular ways and create emotional relationships which ultimately constitute the basis of successful performances. Emotions work through connections evoked by people’s memories of past events and the anticipation of future developments, gearing participants towards action at every moment. The emotional and tem­poral dimensions of structure are very aptly summarized in the following way: ‘The jazz metaphor suggests recognizing how the memories and ex­pect­ations of organizational actors intersect at any given moment to structure the emotional and temporal dimensions of work and organizing in such a way as to influence action’ (p. 94). Summing up. Figure 8.2 provides a summary of the arguments conveyed so far in this chapter. First, we established the key differences between hierarchy and heterarchy, in order to set the set the scene of the interactivity-induced changes in organizational structure. Next, we discussed the theme of structure against the backgrounds of structuration theory and sociomateriality. Ongoing developments in digital infrastructures within and between organizations

Increased interactivity within and between the organization and its environments

Increased recognition of the role of generativity in organizational improvisation

Changing traditional hierarchical structure

with increasing recognition of the need to manage emergent design

Interactive structure

a new sociomaterial perpective on organizational structure where interaction becomes the unit of analysis

Fig. 8.2:  The evolution and revolution of interactive structure

Gradual replacement of hierarchical features by hetrarchical ones

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Logic of Interactive Structure  239

Such developments have led to interactivity, an old topic in organization theory, gaining new notoriety, mainly due to the omnipresence of IT in  organizations. Interactivity and generativity are often associated as ­topics,  with generativity being associated with creativity, innovation, and improvisation. In the second and final part of the chapter, the discussion will be focused on the new logic of interactive structure, with the argument that interaction, rather than the functional hierarchy, should be recognized as the unit of analysis of organizational structure.

Interactive Structure Developing a theoretical account of organizations that is centered on interactions and that integrates mechanisms underlying formally assigned and informally emergent interactions as they form, develop, persist, and dissolve is an essential undertaking. At a more abstract level, this constitutes developing a theory of organizations, organizational forms, processes, and outcomes where multiplexity of interactions is not just a possibility, but rather is an essential and defining feature of the theory and at the heart of its explanatory power. (McEvily et al., 2014: 335; italics added)

Having drawn the background, we now proceed to put forward our prop­ os­ition for the new logic of interactive structure. The proposition rests on three pillars: (i) the notions of structure and structuration; (ii) the gap between formal and informal organization; (iii) the notions of interaction and meaningful interactivity. Let us situate the discussion within the realm of or­gan­iza­tion design and for the sake of brevity, let us postulate that formal organization encompasses the universe of intended organizational design, while informal organization corresponds to the space of emergent design. Formal and informal elements of the organization are intricately enmeshed and attempting to disentangle them seems to be a fruitless undertaking. They form a complex compound and rather than trying to understand their unique effects separately, the proposal is that, in terms of organization design, the formal and informal sides of organization should be integrated (McEvily et al., 2014). The achievement of organizational objectives through organizational action is only possible through both the formally designed organizational arrangements and the informally emergent social structure. These suggestions have already been made in Chapter 4 in what concerns are intended and the emergent design. Also suggested then was that the required

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integration ought to be achieved through a design trace methodology based and supported by formative affectual contexts. McEvily et al. (2014) reinforce such proposals in suggesting that while it is not possible to ‘engineer’ social systems, it is possible ‘to imagine an active role of organizational design to create the conditions that might favor the emergence of the desired informal social structure’ (p. 42; italics added). These authors recommend research aimed at understanding the extent to which informal interactions ‘follow’ from the formally designed and imposed organizational elements. Citing Salancik (1995) they argue that the process of design should focus on ‘observing the emerging system of informal relationships in order to understand how formal structures can accommodate established patterns of interaction and improve upon them with sensible designs’, rather than trying to predict what the structure should be like (McEvily et al., 2014: 334).

The Structuration of Formal and Informal Structure Our notion of interactive structure has also received vital support from recent work by Soderstrom & Weber’s (2019), showing how organizational interactions can be related to the emergence of organizational structures. Using Gidden’s (1984) structuration theory, they argue that by studying the processes of social interaction dynamics, it is possible to draw conclusions about levels of structuring, within the same domain. In their research project the term ‘structuring’ is used to refer to the creation of formal and informal organizational structures, where structures are features of the organization that limit the discretion of people’s actions and create regularity in behaviour. Their starting point is: ‘why do some practices within a broad domain become enshrined in organizational structures, while others do not?’. For example, when addressing equal opportunity at the workplace, why do some aspects become formalized, such as formal hiring policies, while others, like promotion practices, do not? In outlining their framework, they assert that ‘the structuring of organizational action resembles a process of sedimentation in which structures emerge from an accumulation of interaction traces’ (p. 35). Thus, Soderstrom & Weber (2019) propose that structures emerge from processes in which formal routines and policies are intertwined with informal processes of sense-making occurring at the interpersonal level. They provide two important contributions for an understanding of interactive structure. First, they propose that formal structures emerge in gradual processes of structuring, where it is possible to distinguish four

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different levels or stages: situational, provisional, informal, and formal. Second, they highlight the role of interaction traces, explained as ‘the mechanisms that transform interaction activity into structure’ and defined as the ‘results of previous interactions that reside outside the interaction situation, for example as changes in the states of participants or the organiz­ ational environment’ (2019: 11). Based on empirical work, Soderstrom & Weber concluded that five different types of traces could be detected, that is, attention, motivation, knowledge, relationships, and resources. In conducting their data analysis, Soderstrom & Weber map out sequences and trajectories of structuring by levels, which allows them to relate situ­ ation­al interactions to emergent structures at various levels. ‘Situation’ is defined as ‘the configuration of people, roles, norms, objects, and place in which a bounded interaction takes place’ with a further clarification that ‘situ­ ation­al outcomes of an interaction are not automatically carried forward to other interactions’ (Soderstrom & Weber, 2019:10). The next stage is labelled ‘provisional’ and relates to interactions which are not routinized or formalized, involving prior interactions and agreement to continue the interaction on the part of the participants. This stage is followed by the stage of ‘informal’ interaction which is characterized as recurrent and routine, but discretionary in the sense of not being included in formal organizational structures or procedures. The final stage—‘formal’—is portrayed as including interactions that are tied to structures, roles, and standards sanctioned by organizational authority and not dependent on individuals who hold positions. The situational, provisional, and informal stages of Soderstrom & Weber’s processes of structuration are all pre-formal in the traditional divide between formal and informal structure. Additionally, these stages fulfil all the requirements of ‘improvisation’ as discussed earlier in the chapter, that is, they are extemporaneous, novel, intentional, and play a referent role, in the sense that such processes involve a prior version of an action pattern or prior plan. Thus, the informal modes of organizing in Soderstrom & Weber’s model precede formal structure, while in other approaches informal organizing (i.e. improvisation) succeed formal structure. In most writing about or­gan­ iza­tion­al improvisation, there is an assumption that the formal structure already exists and that the improvisation events (i.e. the informal) are a departure from the formal. For example, in the framework proposed by Hadida et al. (2015), improvisation evolves from minor to structural and from individual to organizational. Hadida et al. (2015) propose an integrated framework which brings together different approaches and taxonomies on organizational im­pro­visa­ tion and consists of a matrix featuring nine different types of innovation,

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organized along two axes: level of improvisation and degree of im­pro­visa­tion. Such an integrated view helps to explain the evolution of informal organiza­ tion through improvisation. The three levels of improvisation are: individual, interpersonal, and organization. Individual improvisation happens when participants adjust their work in real time to new information and go beyond their usual routines to deliver novel solutions. Interpersonal improvisation takes place in groups or teams, where real-time adjusting and responding to new information is multilateral. Organizational-level im­pro­visa­tion refers to the ability of the whole organization to improvise. Regarding the degrees of improvisation, the framework considers three degrees: minor improvisation, consisting of modest improvisation within an existing process or product; bounded improvisation, which concerns improvising new processes or products within established structures; structural improvisation implies improvising the very structure itself. Discussing and analysing the entire framework here would be tedious and distract from the objectives of this chapter. Rather, we focus only on the evolutionary process of improvisation proposed in the article by Hadida et al., from individual to organizational and from minor to structural. Assuming that all organizations have a formal structure, the dynamics of groups and communities create forces that push away from the established rules and resources, and drive the organization through the various levels and degrees of improvisation. Going back to the jazz metaphor, it is possible to discern improvisation at the individual-minor level when the metaphor illustrates how individual players make use of whatever freedom is given to them to start improvising and tinkering modestly at first. At the interpersonal-bounded level, the metaphor highlights how dyads or triads engage in improvisation, in the same way that, for example, a drummer in a band picks up and responds to, say, the saxophonist’s idea and builds on it. At the or­ gan­ iza­ tion­ alstructural level, jazz illustrates how a band as a whole engages in the development of a new emerging idea, with the same general theme arising again in future performances. The organizational-structural level of improvisation is explained as the ‘institutionalization of structures or practices that enable or lead to im­pro­ visa­tion within the organization’ (Hadida et al. 2015: 450). Turning this into the language of structuration used earlier in the chapter, what this means is that the intangible rules and resources that inhabit the structure change due to the engagement of agents in daily processes of improvisation and become institutionalized. Thus, this level of improvisation merges naturally with the organization’s processes of structuration, contributing towards more creativity and flexibility in everything the organization does, either internally or

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Logic of Interactive Structure  243 EVOLUTION OF FORMALIZATION QUALITY OF INTERACTIONS

LEVELS OF IMPROVISATION

EVOLUTION OF IMPROVISATION

From: Minor improvisation

To: Structural improvisation

From: Situational improvisation

To: Formal structure

Fig. 8.3:  Shifting between formal and informal organization (two examples from the literature) Hadida et al. (2015) and Soderstrom & Weber (2019)

externally in the dealings between the organization and the market. Indeed, Hadida et al. (2015) offer Ciborra’s (1996) platform organization as the exemplar organizational-structural level of improvisation. As discussed in Chapter  4, the platform organization underpins a structural model that is inherently interactive and generative. Figure 8.3 summarizes the discussion in this section, showing the models by Hadida et al. (2015) and Soderstrom & Weber (2019) side by side. In the first, we see the evolution of improvisation from minor to structural and recognize the assumption that improvisation is a move away from formal structure. In the second model, we see the opposite, that is, a move away from improvisational activity and towards formal structure, in a process of increasing structuration. If it is considered that the rules of structuration theory (Giddens, 1984) apply to the evolutionary processes in both cases, it can be concluded that the ever present processes of formalization and im­pro­ visa­tion determine the interplay between formal and informal organization. In other words, given the availability of the right set of indicators, it ought to be possible to monitor the level of formalization (i.e. intended design) versus the level of improvisation (i.e. emergent design) in an organization or a given organizational unit.

The Role of Technology As mentioned earlier in the chapter, the topic of interaction has always been one of the research interests of theorists of organization. Sadly, such interests have not been kept up to date with respect to the massive transformation of

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organizational interactions with the mediation of IT. Although credit must be given to a number of important research publications, there are still some important knowledge gaps, for example on the effect of IT on interactions under the formal structure versus interaction under the informal communication channels. IT affects both types, but some IT-based systems particularly affect the formal side of the organization more, while other systems particularly impact the informal side. This is the case of enterprise resources planning (ERP) and enterprise social media (ESM), two types of information systems which account for a large percentage of IT-based applications currently found in organizations. ERPs affect mostly the formal organization, while ESM platforms impact typically the informal side of organization. Tables 8.2 and 8.3 show some of the key characteristics of each of the two types of system. ERP systems are large-scale information packages aimed at avoiding costly data inconsistencies across the organization, through seamless data integration across functions, departments, and task modules. They exhibit a modular architecture which roughly coincides with the conventional functional segmentation of the organization. The literature dedicated to the analysis of ERP packages is vast, however one of its principal conclusions might be that such systems have profound effects in the shaping of human agency in organizations by ‘proactively stipulating the steps that have to be followed in order for a transaction to be properly executed’ (Kallinikos,  2004: 11). In other words, organizational roles, procedures, and processes are all shaped by Table 8.2:  A brief summary of ERP expected outcomes • Vertical integration – ERP systems allow interconnection (i.e. connectivity and compatibility) between hierarchical levels in the organization. • Horizontal integration – ERP systems allow interconnection between various organizational functions or departments • Inter-organizational integration – ERP systems allow the organization’s interconnection with its main business partners • Common language – ERP systems allow a common language to be adopted throughout the organization • Cooperation – ERP systems contribute to better cooperation between the various units of the organization • Holistic view – ERP systems allow employees at all levels to develop a better overall view of the organization’s operations • Standardization – ERP systems contribute to the standardization of practices within the organization • Coordination – ERP systems contribute to a better coordination of the organization’s various operations Source: Adapted from Uwizeyemungu & Raymond (2012).

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Logic of Interactive Structure  245 Table 8.3:  Some features of enterprise social media • Persistent relationships – ESM platforms enable persistent interpersonal connections. How these digital relationships are managed will influence who a user connects with and why. • Multiple connection types – ESM platforms can support multiple types of connections which may be used in combination to support different types of connections. • Content supportSeveral – ESM platforms allow users to contribute different types of content, such as text, multimedia, and hypermedia. • Digital traceMany – ESM platforms capture and present a digital record of a user’s activity on the platform, such as how long they have been a member and what content they have viewed. • Profile authenticity – ESM platforms ensure that a user’s online identity corresponds to his or her offline identity in other platforms. • Visualization – ESM platforms can create visualizations of the entire network of interactions Source: Adapted from Kane (2015).

the ERP package, forcing not only the work to be carried out in a standardized fashion, but also organizational structures to conform to pre-established moulds. Whether or not ERP packages deliver on the promises made by their promoters is clearly another issue which will not be explored here. At this juncture, we are only concerned with impressing upon the reader the huge structural changes brought about by ERP systems. As regards ESM, they are systems that operate as platforms upon which social interaction occurs. ESM are distinct from traditional communication technologies used in organizations, such as the email or the intranet, because their users can see conversations occurring between other organizational members who are not necessarily their communication counterparts. They are much more than channels through which communication travel because, the platforms being digital, anyone in the organization can participate at any time and from any place. Thus, ESM mark a major shift in the way communication happens in organizations. Leonardi (2013) suggest three major types of consequences caused by these platforms on the social fabric of organizations: (i) ESM act as leaky communication pipes, suggesting that both the directionality and the content of a particular communication is visible to other people who are actually not involved in the communication event. (ii) ESM act as echo chambers, where like-minded people connect with each other and conflicting ideas are avoided. (iii) ESM is a social lubricant contributing to the development of social capital within the organization. The implications of these three metaphors are, on the positive side, the new levels of organizational transparency, the benefits of increased personalization of communication and the clear advantages well-oiled and smooth-running social networks with decreased needs for

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managerial intervention. On the negative side, increased transparency also increases the potential for damaging ambiguity and an intensification of differences and disagreements in organizational communications. Undesirable consequences of ESM can ultimately result in loss of managerial control. Thus, whether the interactions take place between human beings and computers, between human beings through computers or between human beings because of computers, ERP systems and ESM platforms cause all manner of change to interactivity within organizations and between the organization and its environments.

Interaction Types and Design Challenges in Organizations Quiring (2017) proposes a definition of interactivity as a multidimensional quality manifest in terms of three types of relations: (1) relations between human beings; (2) relations between human beings via technological systems; (3) relations between human beings and technological systems. Each of these types of relations has a different origin in terms of academic interest. The first comes from the notion of social interaction and refers to inter­ actions happening between two or more people who perceive one another and try to coordinate their actions through communication. The second belongs to the realm of engineering and refers to interactions between ­people via technological systems, such as email, chat, or video conferencing. The third refers to the interfacing between people and machines and is researched in the realm of human-computer interaction (HCI). However, whether mediated or not, all interactions contribute to the shaping of the organization’s social structure and, in this sense, there should be a common denominator for all types of interactions. Considering that all interactions have to be designed and that according to human-centred doctrine, meaning is design’s ultimate defining feature, we posit that meaning or the level of meaningfulness in the interactivity is the common denominator . This assertion is inspired by Pentland & Feldman’s (2008) distinction between artefact-based and human-enacted routines. Human-enacted routines are generative and carry meaning, which means that enacting them gives rise to new actions (i.e. performances) and sometimes new interactions or new patterns of action. Computer-based routines, on the other hand, are mechanistic, show no variations in performance (unless there is a bug in the software), and all the meanings and definitions are known and understood in advance. They say:

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Logic of Interactive Structure  247 Events that occur between two humans are most ‘alive’. They are most subject to agency and improvisation, learning by experience, and also to the private inten­ tions of the participants. Each time the event occurs, the participants have the opportunity to (re)enact it according to their preferences at that moment. At the other extreme, events that transpire between two material artifacts, such as two computers on a network, are most nearly ‘dead’ (…) They can be fully scripted in advance, and if any parameter fails to meet the expected value, the event simply will not occur.  (p. 246; italics added)

The distinction between artefact-based and human-enacted routines has important design implications in what concerns the degree of control of available to the organizational designer. In other words, if the routine encompasses only interactions between two or more non-human actors (e.g. in the interactions between automatic teller machines (ATMs) and the banks), then the designer has full control of the design and implementation processes. However, if the routine encompasses interactions that involve both human and non-human actors, the degree of control by the designer is significantly more limited, and if the interactions involve only human actors, then control is often close to nil. For practical purposes, control of the design and implementation processes translates as control of the meanings required for the interactions to return positive outcomes. This, in turn, means that the designer’s need to control and manage the meanings contained within each of the types of interactions varies from low need in the case of artefactto-artefact interaction (because meaning is embedded in the interactions) to very substantial need in the case of human-to-human interaction (because meaning cannot be embedded in the interactions). Figure  8.4 shows the various possible communication and interaction types found in organizations. The interaction types are arranged according to the designer’s capacity to control the design processes and each inter­ actions type is related to a design challenge. There two types of design challenge, one being the mirror image of the other. The first challenge is the degree of control available to the designer in the processes of design and implementation. The second is the degree to which the designer is able to control and manage the meanings required for the interactions to return positive outcomes. Full control of the design and implementation processes can only happen when artefacts interact only with other artefacts; in such cases the required meanings are also fully under control. At the other extreme, in human-to-human interactions, the control that the designer is able to exert is greatly reduced because it is difficult (perhaps impossible) to

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248  Designing Organization Design Design Challenges Communication Type

Automatic

Mediated

Interaction Type

Designer’s Level of Control over Designer’s Need to Control and Implementation Process Manage Meanings

High

Low

Low

High

Artifact to Artefact Interaction Human to Artefact Interaction Human to Human Interaction through Artefacts

Nonmediated

Human to Human Interaction

Fig. 8.4:  Interacting types and design challenged in organizations Inspired by Pentland & Feldman (2008)

predict every possible meaning likely to feature in the interaction. The two communication modes, the four interaction types, and the range of design challenges associated with the four interaction types cover the entire universe of interactions which make up the organization’s structure. Building on the distinction between causal and narrative trace suggested by Garud et al. (2008) and discussed in Chapter  4, there is an interesting convergence to be proposed between causal trace and the artefact-to-artefact interaction type, where the designer is able to control and manage the meanings required for the inter­actions to return positive outcomes. Conversely, a relationship of proximity might also be hypothesized between the notion of narrative trace and the human-to-human interaction type, where the designer has great difficulty in controlling the meanings required for the interactions to deliver the expected results.

Pulling Together the Elements of Interactive Structure We suggest that interactive structure might be characterized by the following four opposites: 1 . 2. 3. 4.

Structure versus structuration Formal versus informal organization Formalization versus improvisation Causal versus narrative design trace.

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Logic of Interactive Structure  249

As argued before, the structuration of organizations works both ways: either away from improvisational activity and towards formal structure, in a process of increasing structuration; or away from formal structure, in a move towards greater improvisation. On the other hand, the work by Soderstrom & Weber (2019) allows us to establish a novel relationship between inter­actions, as assessed by their traces and the organization’s level of struc­tur­ation. They explain that ‘traces preserve the fleeting nature of situational experiences but also show their role in animating emergence through repeated nudges that modify attention, motivation, knowledge, relationships, and resources at the level of people, objects, task routines’ (p. 34). Going back to the distinction between causal and narrative trace (Garud et al. (2008) and the proposed relationships between type of trace and the designer’s need to control and manage meanings, a relationship may be hypothesized between type of design trace and the organization’s level of structuration. An explanatory framework (Figure  8.5) is thus put forward, where the organization’s level of structuration (improvisation versus formalization) is plotted against the type of design trace available or achievable (affectual versus techno-rational). The more the affectual-type trace is available, the greater the possibilities for the organization’s design to be based on im­pro­ visa­tion. At the end of the continuum, if the available design trace is mostly of the techno-rational kind, the organization’s design will tend towards formalization. On the other hand, the type of interaction trace available depends on and is influenced by the type of organization, as well as by the designer’s (i.e. the manager’s) ability to control or manage the meanings embedded in the trace. The framework is an attempt to explain and to op­er­ation­al­ize the notion of interactive structure, that is, how to monitor the invisible balance Affectual

(high need to manage meanings)

INFORMAL ORGANIZATION

DESIGN TRACE (Interaction-based)

FORMAL ORGANIZATION

Rational-technical

(low need to manage meanings)

Pull towards Formalization

Push towards Improvisation

STRUCTURAL IMPROVISATION VERSUS FORMALIZATION

Fig. 8.5:  Bringing together the elements of interactive structure

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between formal and informal organization (i.e. improvisation versus formalization) by means of visible design traces. For example, in the Linux and Wikipedia cases discussed in Chapter 4, the only type of design trace available and required is a rational-technical type of trace. Given the technological basis and type of organization, neither Linux nor Wikipedia require other types of design trace, which it turn means that the kind of structure one would expect to find in both these organizations is one dominated by rules and procedures. However, in the instance of the staff interrelating on flight decks in the case reported by Weick & Roberts (1993), one would expect to find significant efforts to capture design trace of the narrative (i.e. affectual) type. Correspondingly, one would also expect to find an organizational structure dominated by informality and improvisation. Hence, it is proposed that through the indicators provided by the design trace, it is possible to manage the level of structuration in the organization, thereby achieving a pragmatic balance between formal and informal or­gan­ iza­tion. However, it is also important to point out that the choice of design trace is not uncontroversial and will vary from organization to organization depending not only on the type of organization, but also on the or­gan­iza­ tion’s managerial mind-set.

Conclusion When a concept such as organizational structure no longer suits our descriptive or analytical purposes (e.g., because it is too static to help us understand or­gan­iza­ tions described by terms such as ‘adaptable’, ‘flexible’ and ‘virtual’) it is generally acceptable to replace it with another, better formulated concept. The trouble is that for the time being anyway, nothing better has come along.  (Hatch, 1999: 76)

Responding to the challenge laid out by Hatch in the passage above, in this chapter we propose an alternative designation to organizational structure as one of the design-oriented logics of organization design, that is, the notion of interactive structure. Standing in opposition to hierarchical structure, inter­ active structure recognizes the fact that the widespread application of IT has exacerbated the demise of the bureaucratic model and has opened up the way for new thinking in the design of organizational structures, where an ever increasing number of heterarchical features co-exist with hierarchical ones. In suggesting how interactive structure can serve as a logic for organization design, the chapter builds on the key precepts of Giddens’ (1984) social theory and proposes that the concept of structure might be taken to be a rough

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equivalent to organization design as a noun (i.e. the organization’s design) and that the notion of structuration bears some similarities to organization design as a verb (i.e. organization designing). On the other hand, it has also been asserted that the notions of structure may be associated with formal organization, while the notion of structuration may be linked to information organization. The work by Soderstrom & Weber (2019) supports this idea, by demonstrating that the interactional dynamics within the organization play an identifiable and measurable role in the levels of structuration achieved by the organization at any point in time. The scale of structuration levels ranging from formal to situational levels, proposed by Soderstrom & Weber, opens up new ways of looking at the role of organizational structure, other than the traditional role of command-andcontrol. It allows organizational designers to manage the levels of struc­tur­ ation and to provide support to the organization’s vital functions by means of a monitoring of the interactivity within the organization. Rather than controlling people, interactive structure emphasizes the monitoring of inter­ actions between human and non-human actors, through multiple types of traces. This means that the notion of interactive structure allows organizations to deal with the disconnect between the formal and the informal sides of organization and to take full advantage of the organizational capital to be found in improvisation. Improvisation and generativity give rise to creativity and new ways of being in the organization, in line with a culture of design and democratic leadership spreading worldwide. Such an assertion will be developed further in Chapter 9.

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9 Leaderful Organization Design Moving Organizations Closer to a Human-Centric Paradigm

Introduction In this final chapter, the discussion moves to the ‘how’ of organizational design. In Chapter 1, the view expressed by Kolko (2018) about the ills of the design thinking movement were briefly surveyed. Kolko’s claim is that the key problem is one of over-emphasis on ‘thinking’ to the relative neglect of ‘design doing’. We strongly concur and opine that much more serious consideration needs to be given to the role of implementation in all aspects of organization design. We believe that the traditional premise that or­gan­iza­ tion design is a non-operational issue, divorced from the worries of implementation, needs to be overturned. If, indeed, organization design can be considered as a punctuated process (Boland, 2004) with frequent interspersing of moments of design and moments of implementation, then it becomes difficult (or impossible) to separate the role of designer from the role of implementer. The people who design organizations must necessarily also concern themselves with the messy world of implementation. Implementation inevitably entails organizational change, one of the key attributes of managerial action. But, what kind of change and what type of action? At this point we need to go back to Chapter  4, where the issue of bridging between organization design as-is and organization design to-be was raised. Then, it was suggested that processes of intended design are usually the starting point for most organizational change initiatives, however not all managerial decisions are executed in accordance with managerial intent. Many decisions are modified by design initiatives emerging at the local level. On the other hand, perceptions of organization design by internal and external stakeholders exert constant pressures for improvement, re­design, and change. Thus, mechanisms for integrating the three design categories, summed up as the design legacy (design-as-is) and future designs (designto-be) rest at the core of the implementation of organization design. Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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The key integrating mechanisms put forward then were the formative context and the design trace. Design trace is a control mechanism that can be used by management with no direct behavioural implications. Formative context, however, is a tool for behavioural change. Considering that change in organizations always needs to be led and that ‘leadership is assumed to make a special, significant and positive contribution to action processes in most organizations’ (Crevani et al., 2010: 77), it may reasonably be asserted that design change requires organizational leadership. Leadership and or­gan­ iza­tion design are topics that usually do not go together; however so long as design is considered as a process (and not just as a noun), leadership needs to be part of the picture. The traditional view is that leadership is associated with the personality traits or characteristics of particular individuals or is a reflection of the influence of some individuals over others, mostly of leaders over followers. The alternative approach, which has its origins in the phenomenology of relations and interactions, considers leadership occurring as a practice. The movement, described as ‘leadership-as-practice’ (L-A-P) (Caroll et al. 2008; Crevani et al., 2010; Raelin, 2011), is closely articulated with the perspective on social practice described in Chapter 2. It considers leadership as a dynamic process and emphasizes its situated, banal, and mundane character. Apart from the relationality component, meaning is also an important building block of the L-A-P perspective. Indeed, if leadership is connected to a practice, then the negotiation of shared understanding among a group of organizational participants can become a source of leadership (Raelin, 2011). As part of the L-A-P movement, Raelin argues that leadership cannot be agnostic. In other words, leadership cannot ignore the fact that social interactions rely upon ‘reflective emancipatory processes in which taken-for-granted assumptions and meanings become subject to scrutiny’ (p. 203). In brief, Raelin stresses that L-A-P must also be democratic leadership. But, the most important feature of the L-A-P movement is that it dovetails with the key premise of our book regarding the need for organization design to embrace not only a new design orientation but, especially, a human-centric one. In his book the Semantic Turn, Krippendorff (2006) predicts the rise of a design culture which would eventually take over from the science-led culture that has dominated thinking in the Western world. Other design scholars have also highlighted the view that a design culture can move the world towards a more human-centric or humanistic paradigm, such as the design scholar Gui Bonsiepe (2006), who establishes a crucial link between design and democracy. Hence, if design is inherently democratic, in a scen­ario where

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organization design is governed by design values and principles, organization design would also be construed as being essentially democratic. Traditional approaches to organization design are wholly silent on matters of democracy or democratic participation, however, as it has been argued at several points in this book, there is a growing recognition that organization design needs to leave its agnostic comfort zone and embrace an approach closer to the concerns of contemporary society. Thus, after discussing the notions of L-A-P and democratic leadership, the chapter adopts Raelin’s suggestion of ‘leaderful practice’ as an approach unrepentantly ideological in its advocacy of democratic values. Next, it moves to the theme of design culture as the intellectual setting of human-centric or humanistic design which constitute the foundations of the new paradigm for organization design. The expression leaderful designing is proposed as the type of leadership action required in sustaining the new paradigm.

Design Thinking, Organizational Culture, and Leadership All organizations depend heavily on their historic capabilities, and cap­abil­ ities, in turn, are closely intertwined with the legacies of practices that emerge over time. Hence, when the organization decides to embark on a design thinking programme, the objective is the triggering of cognitive processes that will hopefully have a beneficial effect on the organization’s stock or legacy of practices. A beneficial effect should be understood as a change in the practices that stand behind the organization’s capabilities. However, while the legacy’s practices are usually well-routinized, in the sense that they have been rehearsed many times amongst the organization’s members, design thinking practices are foreign to the established routines. Thus, a change in the practices requires an effort on the part of the organization’s management to promote the absorption of the new practices into the organization’s design culture. Such absorption does not happen naturally and needs to be led by the designers, that is, the organization’s managers. This topic has been taken up by Elsbach & Stigliani (2018), who recognize that design thinking is an essential skill for managers to possess and that there is consistent empirical evidence to suggest that design thinking is bene­fi­cial for bringing innovation to management and management practices. However, the authors propose that in order for the tools of design thinking to produce results, design needs to be woven into the fabric of the

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organization and become part of the organization’s culture. This point is reinforced by Micheli et al. (2019) who assert that organizational design is a ‘necessary condition for successful design thinking, insofar as it necessitates a change in an organization’s culture, structure, and policies’ (p. 145). We take a social constructionist view of organizational culture, meaning that culture is a dynamic outcome of the interactions of organizational actors, with special emphasis on the action taken with the purpose of causing change. Such a view is part of a wider trend in organization studies known as social constructionist leadership (Fairhurst & Grant, 2010). Let us recall that social constructionism questions the belief from traditional psych­ ology that individual traits can be established independent of the social interactions that the individual is subject to. Likewise, social constructionist leadership rejects the notion of the heroic leader and the idea that leadership phenomena can be founded upon the leader’s personality, style, or behaviour. This school of thought defends that leadership is a reality co-constructed in the interaction between and among social actors, through communicative practices, such as talk, discourse, and other symbolic media. The formal def­ in­ition of social constructionist leadership provided by Fairhurst & Grant (2010: 172) is: ‘A co-constructed product of sociohistorical and collective meaning-making, negotiated on an ongoing basis through a complex interplay among leadership actors, be they designed or emergent leaders, managers and/or followers’. This view of leadership shifts our attention from heroic and individualized attributes of leaders to the creation of cultural contexts, where organizational responsibilities are something that is not just formalized in job descriptions and policy documents but is also demonstrated in everyday relationships. The social constructionist logic of acting and responding to others, creating joint understandings, and allowing coherent action to develop, highlight two crucial aspects of social constructionist leadership: its relational nature and the role of meaning.

Leadership as Relational Meaning-Making Trying to arrive at any form of summary about leadership is a challenge. According to Annie Pye (2005: 33), conceptualizing leadership is: akin to capturing the ethereal qualities of ‘the moon on the water’: you know it when you see it, but it absolutely defies capture. We have had decades of work on

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256  Designing Organization Design traits, styles, contingency theories and more recently, ‘new’ theories of leadership. Dispersed, transformational, empowered, inspirational, spiritual and servant are all prefixes used to describe variations on ‘new’ theorising about leadership as well as super-leadership, co-leadership and a host of other varieties which comprise current business bookshelves.

In adopting a human-centric approach to organization design, based on Krippendorff ’s (2006) definition of design as creation of meaning, the view of leadership as meaning becomes foundational and needs to be dissected further. Smircich & Morgan (1982), who are among the earliest proponents of a constructionist, meaning-making view of leadership, define leadership as the act or the outcome of framing or defining the reality of others and becoming the basis for organized action. This means that when applying certain leadership practices, managers enact a certain type of reality—a frame— based on an acceptable set of shared meanings. The activity of managing meaning can be achieved in many ways, for example, by articulating and making explicit what previously has remained implicit, by creating images and metaphors, or by challenging prevailing wisdom. By virtue of their employment contract with the organization, managers become the primary creators of meaning. Smircich & Morgan (1982) explain that as leadership becomes more institutionalized, patterns of desired meanings begin to emerge and specific frames or ‘contexts of meaning’ (p. 262) begin to be formed. What this means is that constrained by the routines ingrained in the organization’s legacy of practices, the design values and ideas adopted by the top of the organization and promoted by managerial (leadership) action create contexts of meaning, which contribute to the formative contexts discussed in Chapter 4. However, one should bear in mind that it is not only the managers who create contexts, but all those involved in making sense and enacting the reality of the or­gan­ iza­tion­al set-up where they jointly participate. This, in turn, means that the role played by the followers in the process of construction of meaning must not be underestimated. The notion of leadership as a set of processes aimed at the making and managing of meaning has been developed by a number of distinguished authors, whose writings deserve a dedicated review. The gist of these writings entails a compelling case for managers to understand their role as man­ agers of meaning and co-constructors of reality. Shotter (1993) and Shotter & Cunliff (2003) have opted for treating managers as “practical authors” who create between them and their subordinates a unique sense of their shared circumstances, which enables them to act in ways that are intelligible to each

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other. Citing Holman and Thorpe (2003) Fairhurst (2005: 177) suggest the following as the key hints from practical authoring: • Articulating a clear formulation of what for others might be chaotic and vague, and to give them a shared or sharable significance • Creating a landscape of enabling constraints relevant for a range of next possible actions • Setting out a network of moral positions or commitments, understood as the rights and duties of players in that landscape • Arguing persuasively and authoritatively for this landscape among those who must work in it • Doing the above in joint action with others The social constructionist approach to leadership is also relational. Cooper (2005) explains that the act of relating is a constitutive feature of human agency and puts forward a view of ‘relating’ as ‘the continuous work of connecting and disconnecting in a fluctuating network of existential events’ (p. 1689). Following the same line of thought, Cunliff & Erikson (2011) point out that social constructionism provides a lens of ‘relational ontology’ (p. 1431) which supports the view that meaning-making in organizations should not be understood only as the result of the actions of the managers but as the outcome of the interactions of communities of participants engaged in conversations. The relational lens highlights the origin of our experience as intersubjective rather than individual and pave the way for a relational view of leadership, conceived by these authors as ‘broadly hermeneutic’ and conceptualized as a way of ‘being and relating with others, embedded in everyday experience and interwoven with a sense of moral responsibility’ (p. 1432). Once again, such a perspective shifts our attention from heroic and individualized forms of leadership to the ‘ethics of reciprocity’ (2011: 1439), a form of living well with others and of understanding organizational responsibilities as something that is not just formalized in job descriptions and policy documents but is situated in everyday relationships. Such a relational perspective changes the focus of organizational meaning-making from a management-centred endeavour to a decentralized one, with many players contributing to the creation, change, and sharing of meaning. The social constructionist logic of acting and responding to others, creating joint understandings, and allowing coherent action to go on places the relational approach very close to the view of design as a systemic activity that focuses attention on the connections and relations between things rather than on the things themselves (Nelson & Stolterman, 2014).

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Leadership-as-Practice (L-A-P) In Western historical tradition, the notion of ‘leadership’ rests on some preconceived ideas which date back more than a hundred years. Here are some of the mostly commonly held beliefs, according to Raelin (2003): 1. Leadership comes with position. Leaders are appointed and while in a position of leadership giving up or sharing power is seen as a sign of weakness and lack of responsibility 2. Leadership is linear, meaning that the person in authority is appointed for a certain term of office and when that period ends, the position is transferred to the next leader 3. Leadership is individual. That a leader is individual signifies its solitary role. There is only one leader of an enterprise and normally such a person is designated as the authority or position leader 4. Leadership is command-and-control. To ensure smooth coordination of managerial functions, the leader is the only person in control. Subordinates follow the guidance of the leader and help him or her successfully accomplish the company’s mission 5. Leadership is unemotional. The leader’s function is to make the tough decisions which sometimes may result in hurting particular stake­ holders, including employees; however, accomplishing the company’s mission must come first. The social constructionist view of leadership discussed above, along with its relational and meaning-making characteristics demolish such traditional views of leadership. This is reinforced by the contemporary perspectives on social practice discussed in Chapter 2, which suggest that leadership occurs when a number of tasks in the organization are performed, rather than who performs the tasks. Also, the practice view does not rely on the dyadic relationship between leaders and followers which historically has been the focus of leadership studies. Increasingly, it is recognized that middle and lower level employees also engage in leadership practices and that such practices are distributed far and wide in the organization. L-A-P captures the way practice is evoked ‘everyday’ and ‘in the moment’ by practitioners (Carroll et al., 2008: 367). Conceiving of leadership as something that is part of organizational practice rather than the influence arising as cause and consequence of the interactions between a leader and a group of followers brings this approach very close to the approach to organization design followed in this book.

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According to the L-A-P approach, the work of leadership is likely to be found not in the traditional characteristics of managerial action but in the day-to-day discourse among organizational members, including the man­ agers. Thus, design change becomes a much more relational and inter­action­al issue, rather than just a managerial action problem. From this, three conclusions can be reached about L-A-P (Raelin, 2016b). First, if leadership is associated with interaction, then dialogue and the formation of meaning need to be seen as part of the leadership process. Therefore, meaning-making and the negotiation of shared understanding among a group of interacting in­di­vid­uals can become a source of leadership. Second, if leadership is seen as a social process that affects not only vertical flows of communication but also horizontal ones across a range of individuals connected with each other in a practice, then leadership, like design, must be considered as a holistic phenomenon. Third, the practice view highlights the role of improvisation and innovation as a source of learning and new knowledge-qua-design.

Meaning-Making Meaning-making is the primary means for designing organizations. It occurs naturally in the normal functioning of organizations, when members interact, communicate, and exchange views as they go about their daily practices. However, there are many occasions when organizational communities need to be guided in terms of the range of choices available to them. Those in managerial roles are best positioned to provide guidance and coordination by limiting the myriad choices available to the actors involved. Nevertheless, anyone else can play such a role, based on wider work experience or a better image in the eyes of group members. Such people become meaning-makers and play a key role in articulating the meaning(s) of what the group members are seeking to accomplish in their joint effort. Meaning-makers extract or provide crucial cues or tags that serve to guide behavioural patterns and transmit cultural norms to the group members (Raelin, 2016b). A variety of techniques can be used to create or transmit meaning, such as using ex­amples or metaphors, identifying what is missing, presenting a synthesis of the facts, or looking for patterns in a situation (Raelin, 2006). In addressing the very practical point of how to bring about new product meaning(s) to the inside of the organization, Verganti and colleagues (Morillo et al., 2015; Verganti & Shani, 2016; Altuna et al., 2017) assert that this is a responsibility of top management. Hence, sometimes top managers have to

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play the role of meaning-makers and as part of their practices, they need to draw on all resources at their disposal to achieve a level of cognitive consensus that will facilitate the organization-wide adoption of the new meanings. However, there are many other cases where the steering of the organization does not rely on individual visionaries but on meaning-makers who may sit anywhere in the organization. While managerial meaning-makers may take the initiative, anyone within the team can be responsible, albeit temporarily, ‘provided they have astute awareness of the perspectives, reason­ing patterns, and narratives of others’ (Raelin, 2016a: 4). Hence, the practice of leadership is not dependent on any one person to mobilize action on behalf of others. The effort is intrinsically collective and collaborative in deciding on the course of action, such as in the jazz metaphor masterfully worked on by Hatch (1999) and explored in Chapter 8.

Democratic Leadership and Leaderful Practice The L-A-P perspective fits perfectly the epistemologies of design-as-practice and design-as-meaning defended in this book, as foundation for or­gan­iza­ tion design. However, as Raelin (2011) warns, L-A-P may hold a flat ideological position which may bring benefits in terms of methodological characterization but may prove to be unrealistic in the long run. Raelin argues that an agnostic approach to L-A-P ignores the fact that social interactions rely upon ‘reflective emancipatory processes in which taken-forgranted assumptions and meanings become subject to scrutiny’ (2011: 203). Raelin claims that involving participants in an activity in which they have a stake is eventually the most important tenet of humanism and that allowing organizational members equal access to important organizational design decisions is associated with the public engagement aspects of democracy. Based on this, Raelin (2011) proposes the expression leaderful practice as an approach to L-A-P that is unrepentantly ideological in its advocacy of democratic values. Democratic leadership, which is conceptually distinct from leadership-asposition-of-authority, has been a topic of research interest for a number of decades. Gastil (1994) provides a good literature review and defines the concept as ‘the performance of three functions: distributing responsibility among the membership, empowering group members and aiding the group's decision-making process’ (p. 953). He further explains that in an environment of democratic leadership, most or all members of a group serve the three functions and regularly exchange the roles of leader and follower.

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L-A-P is consistent with democratic practices and outcomes given its encouragement of the equal contribution and access of all engaged within the organizational effort, however it introduces a new element of sociological foundation. It is democracy by direct participation, where organizational participants find themselves as persons ‘in relation to others’ (Cunliffe & Eriksen, 2011), while going about their professional practices.

L-A-P as Promoter of Democratic Leadership Woods (2016) provides a compelling argument in favour of the democratic roots of L-A-P. He contends that democratic practice, from the perspective of L-A-P, involves working towards the development as whole human beings, with ethical, spiritual, cognitive dimensions, as well as inclusive participation. He adds that explicit recognition of such rich democratic background might help L-A-P extend its reach into questions of ethics and human wellbeing which are part of leadership practice. Woods starts off by distinguishing between two epistemological positions in organizational leadership: the first labelled as philosophy of dependence and the second as philosophy of co-development. The first promotes the view that authority and rules are needed in order to curb and shape the inherent imperfections of human beings. To be ethically good, people need to be directed and to follow rules or ethical signposts, showing the correct action to be followed. There is a belief that a person in authority (i.e. a leader) is required to establish a vision of moral truths for the organization and to translate such a vision into practical rules that others can follow. The second position, and the one that provides the theoretical justification for L-A-P, is founded upon the belief that to be ethically good, people need to discover for themselves their own potential for knowing and feeling what is right and beautiful. In other words, leadership is the product of co-development. Wood argues that because leadership is a continuous exercise of social construction between interacting parties, leadership is a carrier, en­act­or, and constructor of values and ethical viewpoints. He explains that the affective and aesthetic aspects of relationships are crucial in understanding approaches that entail dialogue, collaborative working or shared learning, such as L-A-P. Wood puts forward that the contemporary understanding of or­gan­iza­ tion­al leadership is informed by what he calls “the philosophy of dependence”, a mind-set which places market values above all other values and promotes subservience to financial performance. In most cases, he explains, leadership is no more than an illusion, in the sense that the so-called leaders

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have to follow pre-established values that are not to be questioned or disputed. By contrast, in spreading the idea that leadership is something ubiquitous in the organization and rejecting the notion of followership, L-A-P is closely aligned with the philosophy of co-development. An organizational environment rich in democratic values inspires participants to aspire not only for technical expertise but also for other capabilities of a spiritual, aesthetic, affective, or ethical nature, leading them to question issues that may challenge or undermine social justice.

Leaderful Practice Such organizational environments are labelled by Raelin (2011) as ‘leaderful’ and the practices that lead to them as ‘leaderful practices’. He suggests a leaderful model comprised of four ‘Cs’, as follows (p. 2014): • Collectiveness—extent to which everyone in the entity can serve as a leader • Concurrency—extent to which members of the unit of organization are serving as leaders at the same time • Collaboration—extent to which members are co-creating their enterprise. It also reviews the nature of the dialogue in which members determine together what needs to be done and how to do it • Compassion—extent to which members commit to preserving the dignity of every single member of the entity regardless of background, status, or point of view. Through the democratic environments created by these practices, or­gan­ iza­tion­al participants have the opportunity to grow both as organizational citizens and citizens of their own country. Trends in organizational management towards participatory organizational change throughout the world are moving towards such leaderful practices, guided by a common belief that companies have much to gain from allowing people to achieve their highest level of self-expression. Thus, many people in positions of authority are rapidly converging on the view that leadership is not about forcing members into dependence but, on the contrary, it is more about allowing people to participate in decision-making on issues that affect the internal workings of the organization, which amounts to saying that people are allowed to participate in the organization’s design. Hence, trends are already in place towards a more participative and leaderful style of organization designing.

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Raelin (2014) also makes an important point in asserting that the practice of leaderful behaviour extends to the contemporary concerns regarding sustainability, defined as the enhancement of the quality of human life, as well as the carrying capacity of our supporting ecosystems. He states that there seems to be a natural link between the elements of leaderful practice and the issues of sustainable development and particularly in the growing consensus in organizational discourse regarding ‘the connection between our individual problems and the social context within which they are embedded’ (p. 70).

Design Culture As it has been made clear from the outset, one of this book’s key sources of inspiration are the writings of Krippendorff about human-centred design, with special reference to his ambitious mission of creating a societal role for design. In his 2006 book, he states: ‘the semantic turn acknowledges design as a fundamental human right, the right to construct one’s own world, interact with fellow beings in theirs and make contributions to the ecology of human accessible artifacts’ (2006: 322). Such desiderata are part of a wider trend of design humanism focused on the reduction of domination of the powerful over the powerless, the excluded and the economically less favoured. Thus, at this juncture it is appropriate to ponder the words of one of the best-known representatives of this trend, Gui Bonsiepe (2006): Design humanism is the exercise of design activities in order to interpret the needs of social groups, and to develop viable emancipative proposals in the form of material and semiotic artifacts. Why emancipative? Because humanism implies the reduction of domination. In the field of design, it also means to focus on the excluded, the discriminated, and economically less-favored groups (as they are called in economist jargon), which amounts to the majority of the population of this planet. I want to make it clear that I don’t propagate a universalistic attitude according to the pattern of design for the world. Also, I don’t believe that this claim should be interpreted as the expression of a naive idealism, supposedly out of touch with reality. On the contrary, each profession should face this uncomfortable question, not only the profession of designers. It would be an error to take this claim as the expression of a normative request of how a designer—exposed to the pressure of the market and the antinomies between reality and what could be reality—should act today. The intention is more modest, that is, to foster a critical consciousness when facing the enormous imbalance between the centers of power and the people submitted to these powers, because the imbalance is deeply undemocratic insofar as it negates participation.

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264  Designing Organization Design It treats human beings as mere instances in the process of objectivization (Verdinglichung) and commodification.  (Bonsiepe, 2006: 30)

This line of thought, which is generally aligned with the principles of democratic leadership discussed in the preceding sections, is part of a broader culture of design. However, before proceeding to other perspectives of design culture that also provide useful support for the links between leadership, design, and organizational design, let us have a brief look at the effects of social constructionism on the rise of design culture.

The Role of Social Constructionism in the Move Away from Contingency and towards a Culture of Design As previously mentioned, the field of study of organization design has trad­ ition­al­ly been dominated by a (social) scientific approach known as contingency theory. It considers organization design to be the result of external forces, with little concern for the internal workings of the structure-in-practice, the role of agency or the properties of human interaction. The final goal of this approach would be the establishment of a universal theory that would achieve maximum efficiency in the use of the invested resources, through the establishment of the ideal organizational structure. The advent of social constructionism, offering an alternative definition of human action and placing social process and relationships at the origin of meaningful action induces serious doubts about the validity of contingency theory as the intellectual foundation of organization design. Based on Krippendorff ’s (2006) proposals about the nature of design, in Chapter 2 we made a reference to the theoretical lens of social constructionism as a key underpinning of the position of design-as-meaning. In the same chapter, we also flagged the influence of social constructionism in that scholar’s ambitious undertaking for setting up a new design paradigm at societal level. Thus, when Krippendorff predicts the rise of a culture of design taking over from the science-led culture that has dominated thinking in the Western world since the days of the Renaissance, this goes hand-in-hand with the spread of social constructionist ideology throughout the world. Both exert a strong influence on the direction of manifold changes to the building blocks of organization design. In a major review of the literature, Sugiman et al. (2008) highlight two megatrends from social constructionism which are also helping drive global design culture. First, there is the move away from prediction towards control

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and transformation. A major goal of the traditional scientific method has been to enhance the capacity for prediction and control of events in the natural world, including human behaviour. However, ‘as widely recognized, a century’s pursuit of this project has added very little to the human capacity for prediction and control’ (p. 11). Thus, constructionist epistemology suggests that rather than researching the past with the aim of predicting and controlling the future, the emphasis should be on understanding a culturally and historically situated present in order to shape the future. The second megatrend is a paradigm shift from neutrality to sociopolitical engagement. Theorizing about the nature and behaviour of individuals and groups follows the principle of the scientific method, to be ideologically neutral in the production of generalizable theories about the world. However social constructionists argue that all propositions about the functioning of the world depend on language, and language cannot be neutral. In psychological science, where research inevitably touches on ‘real-world’ issues, such as mental illness, prejudice, or intelligence, neutrality is clearly not possible. Likewise, in organization design, where value-laden topics such as corporate governance, ethics, or sustainability are at the forefront of the concerns of today’s managers, social engagement is all but an inevitable new trend of organization design. Thus, under the influence of design culture, the ethical orientation of organization design is shifting from one of careless agnosticism to one of concerned and democratic participation.

Global, Local, and Organizational Design Culture Julier (2006) defines design culture as ‘context-informed practice’, to imply a set of ‘collectively-held norms of practice shared within or across contexts’ (p. 70). This definition assumes that design culture is a process with local reach and global reach. In local contexts, design culture refers to the ma­ter­ ials, technologies, cultural factors, climate, and local modes of exchange that affect business activities at the local level. In global contexts, design culture refers to a forum and a platform for communication, supported mainly by the Internet and allowing mainstream forms of practice to be shared and legitimized by global actors. In addition to context-informed practice, that author explains that design culture can have different types of in­ter­pret­ ations, such as: (1) attitudinal, where the focus goes beyond agents of design and become organizational or institutional; it expresses attitudes or values embedded in manifestations such as team-working, creative empowerment or innovation; (2) agency, where design culture is taken to be a “way of doing

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things” and is based on the belief that the world can be changed through a new kind of culture; (3) pervasive but differentiated value, to mean design as a provider of a label of distinction and representing a “conceptual breadth that goes beyond traditionally used notions of excellence or innovation” (Julier, 2006: 72). Manzini (2016) is another scholar writing about design culture but with a conception significantly different from Julier’s. For Manzini, design culture is about the culture of the designers themselves and the source of the in­nov­ ations that design experts can bring about in triggering meaningful change. He says: “while for Julier design culture is principally a specific study discipline that produces its specific experts, for me it is mainly the culture of the designers themselves and of the communities in which they operate: the culture on which design itself is based and thanks to which innovative meanings can also be proposed” (p. 54) This approach is very consistent with the human-centric orientation to organization design, and while containing a very sharp on focus on the design expert, it does include “the communities” in which the experts operate. In the case of an organizationally oriented design culture, this might be interpreted as the organization being the community and the managers as the design experts. However, this interpretation must be offered with a caveat. As it has been argued elsewhere in the book, the activities that make up organizational designing cannot be set apart from the other activities that constitute a manager’s job, for example the activities of managing or strat­ egiz­ing. It is important to highlight this point because the notion of “design expert” can cause confusion in the context of organizational development. In some of the design thinking literature there is a tendency to consider the application of design-driven techniques and methodologies to be the remit of design consultants (i.e. the experts). But if organization designing is considered to be an ongoing activity, how can it be left to consultants? Perhaps with the exception of odd projects of re-organization where additional expertise may be required, managers need to take charge and stay committed to organization designing on a permanent basis. A lack of understanding of these facts has led to the criticism of the design thinking movement, already alluded to in Chapter 1. However, an epistemology of design-as-practice circumvents this problem, given that if associated with practice design is not only about “thinking” but is mostly about ‘doing’. The following insight by Kimbell (2012: 141) aptly illustrates this point: Attending to practice offers ways to understand design activity not just as the work of design professionals and what they do or think but sees designing as

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Leaderful Organization Design  267 constituted in the intra-action (…) Design thinking can thus be rethought as a set of contingent, embodied routines that reconfigure the sociomaterial world, and which are institutionalized in different ways. (…) This offers a rich way to understand designing that challenges the efforts to describe a generalized (and often celebratory) design thinking.

The reconfiguration of the sociomaterial world of (organization) design mentioned in Kimbell’s (2012) excerpt above has already been extensively discussed in Chapter 4, where the issue of bridging the static and the dynamic conceptions of organization design has been approached. The notion of formative context (Ciborra, 1996) was then put forward as a set of sociomaterial, cognitive, and cultural constructs that shape ‘the ways people perceive, understand, make meaning, perform and get organized in a situation bounded in space and time’ (Ciborra & Lanzara, 1990: 152). Going back to the writings of Manzini (2016), that author explains that the notion of design culture has its roots in the Italian design tradition and the idea of “cultura del progetto”, according to which design culture can be defined as the ‘meaningful context in which a new project is conceived and developed and in which new meanings are produced’ (p. 55). By situating the emergence of design culture at the level of specific ‘projects’, Manzini’s thinking is amenable to be applied to the design of organizations, where a “project” should be interpreted broadly and taken to mean the organization as a whole. Hence, an organization might be seen as an appropriate basis for a localized design culture (i.e. the materials, technologies, cultural factors, climate, and local modes of exchange that affect business activities at the local level), which in turn supports a variety of “meaningful” or “formative” contexts On the other hand, considering the global dimension and the fact that design culture is ‘located within network society’ (Julier, 2006: 71), it might be asserted that local design culture at the level of the single organization is also connected to the values and principles of global design culture.

Towards a Culture of Human-Centric, Leaderful Organization Design(ing) Bringing together the various trends and schools of thought discussed so far, we are now in a position to make a final proposition regarding the new intellectual posture vis-à-vis the required paradigm change in organization design theory.

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The Feeling that Something has to be Done In the broader field of the social sciences, including the management and organization communities, there is growing recognition that the ‘enormous imbalance between the centers of power and the people submitted to these powers’ (Bonsiepe’s (2006: 30) is largely behind the malaise felt in and with organizations throughout the world. There is also an acceptance that the adoption of a new stance on the ethics and sustainability of business is no longer an issue of ‘if ’ but of ‘when’. As Greta Thunberg warned in her speech at the United Nations (see Introduction), time is running out and if anything at all is going to be done, change needs to come fast and from all sides, that is, from governments, investment bankers, academic researchers, and professional groups, such as engineers, architects, and medical doctors. However, the professional group that is in charge of creating, designing, and managing or­gan­iza­tions – the managers and the entrepreneurs – are in a privileged position to start the movement towards alleviating the malaise. They are the professionals who can assume the front line in the ‘fostering a critical consciousness’ (Bonsiepe, 2006: 30) about the undemocratic imbalances that negate participation and tend to treat people as mere factors of production. But managers and entrepreneurs can be more ambitious and go beyond building consciousness. They can reflect on their practice and move forward with the building of alternative and more (socially) satisfying designs in their organizations.

Leaderful Organization Design(ing) Leaderful organization design(ing) is a model for the enaction of design culture in organizations, according to the definitions proposed by Julier (2006) and Manzini (2016) , as discussed above. It aims to guide the management of organization design by following the values and principles of design and democracy (Bonsiepe,  2006), leadership-as-practice (Carroll et al.,  2008), and leaderful practice (Raelin, 2011). In bringing together these intellectual influences, the model has a number of distinguishing features: 1 . It is practice-based, which means that it always implies action 2. It is guided by values of democratic participation with character 3. It places meaning-making and meaning-taking at the centre of or­gan­ iza­tion­al life as the sources of all design

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4. It acknowledges that organization design is driven by logics which can be adopted and adapted to suit different internal and external environments 5. It is put into practice, at the local level, through formative affectual contexts. Practice-Based Leaderful design encapsulates the notion of design leadership but avoids the debate around the definition, characteristics, or qualities of the concept of leadership. It represents an attitude towards the design of organizations which indicates, primarily, a concern with action, participation, and contribution to collective action. It shares the defining features of L-A-P, with emphasis on the situated, banal, and mundane nature of the organizational interactions which provide leadership opportunities. The notion of leadership opportunity should be taken to mean any situ­ ation where participants can contribute to collective action by means of dialogue or non-verbal communication. An important type of leadership opportunity concerns the creation, modification, or clarification of meaning, contributing directly to the remediation of one of the main reasons for poor organizational design performance, that is, misunderstandings, miscommunication, misinterpretations, misreading, and the like. Thus, participants who do not seize opportunities to create, clarify, or modify meaning among a group of interacting individuals can be said to be designing in a leaderless fashion (as opposed to leaderful). Meaning-Making and Meaning-Taking A crucial part of leaderful design concerns the issue of meaning. Meaning is constantly created, communicated and changed in organizations, and all participants play a role in articulating the meaning(s) of what their group members need in accomplishing their tasks. Meaning-makers play a crucial role in extracting or providing cues or tags that serve to guide behavioural patterns and transmit cultural norms to the group members (Raelin,  2016b). Anyone can play such a role, however, organization designing needs to be accountable and, therefore, in many situations it is important to know who the primary designers are. Managers are the ­primary designers and they are responsible not only for meaning-making but also meaning-taking, to signify remaining attentive and being good listeners.

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Democratic Participation with Character Leaderful designing is also about democratic leadership. Bonsiepe (2006: 30) defines the goal of design as ‘to develop viable emancipative proposals in the form of material and semiotic artifacts’ and clarifies that this is achieved through the exercise of democracy. He provides a simple explanation of the concept of democracy as referring to the reduction of domination by external forces (i.e. ‘heteronomy’) and, interestingly, he adds: ‘without a utopian ingredient, residual though it may be, heteronomy cannot be reduced’. Indeed, although many of the proposals made in this chapter (and perhaps throughout the book) have a utopian flavour, we believe that it is not utopian to expect that the creation of wealth can go hand-in-hand with a practice paradigm that stands counter to turning a blind eye as long as ‘it is good for business’. The emphasis on co-creation of value, stakeholder networks, and partnerships that is found in the approaches to the normative, service, and effectual reasoning logics discussed in Chapters 6 and 7 are aligned with the ideas that democratic leadership can go hand-in-hand with business success. In designing with a leaderful mind, managers need to ensure that all the participants affected by the activity and decision in question are engaged and participate with equal rights (Raelin, 2014). However, in adopting a leaderful stance, organization designers create the conditions for organizational stake­ holders to participate, not only democratically but also ‘with character’. Cunliffe & Eriksen (2011) explain: Character is embedded and expressed within conversations not as traits or constructs, but as a way of being-in-relation-to-others that brings a moral responsibility to treat people as human beings, of having ‘a heart’, appreciating others, and encouraging them to grow and learn from each other. While this might be ‘common sense’, it is not always widely practiced as recent actions of leaders such as (…) the literature on toxic leaders indicates.  (p. 1433)

Participation includes a host of ideas and recommendations for or­gan­iza­ tion­al management, such as coaching, facilitation team building, empowerment, and the like. Although most of these might be seen as ‘common sense’, they are often practiced as rituals without any sense of moral responsibility towards other people. The notion that participation must be carried out with character helps to change this attitude. Driven by Design Logics In Chapter 5 we offered a generic definition of organization design logics, as a set of beliefs shared by managers and entrepreneurs in given sectors of the

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economy about the way organizations should be designed. In the same chapter, we made a distinction between design-before-use and design-in-use and explained that while the ‘design logics’ form the conceptual umbrella for design-before-use, the management of the design process provides the context for design-in-use. We then proposed a set of five logics, some of which containing elements that are likely to influence to behaviour and per­form­ ance of managers. Thus, in considering the content of the cultural concept of leaderful organization design(ing), we need to consider that the action present in design-in-use is always influenced by the context of design-before-use. Hence, in leading organization design managers need to be aware not only that the logics exist but also that they need to be adapted to different sectors of the economy. We also suggested that the managerial beliefs which constitute the logics of organization design evolve with the prevailing trends in management education. This means that any hope to re-shape the mind-set of managers into a mould of leaderful organization designing rests with a reform of formal education for management and business. Enacted through Formative Affectual Contexts Last, leaderful designing is enacted through formative affectual contexts within the organization. Organizational context may be understood as the ‘background’ or ‘environment’ (virtual or conceptual, but very real) in which organizational communities operate. Such a background or environment is a reflection of the institutional environment and of the leadership practices promoted and accepted within the network of organizational conversations. Organizational contexts are social constructions generated by all the participants; however, a special part is played by the managers in their role as cre­ ators of strategic and operational guidelines. As the promoters of many organizational design initiatives, managers act as conversational architects and in this role they are able to exert crucial influence in the way or­gan­iza­ tion­al contexts are created or maintained. Thus, formative affectual contexts are social constructions which link individuals together, as well as the individuals to material objects. They are to be found not in the individuals taken separately but in the interrelations between the individuals. Such contexts have formative or behaviour-moulding properties that emerge from the fact that when people act in the belief that a joint action context is in place, they construct their actions by contributing, assisting, and supplementing each other while subordinating themselves to the requirements of joint action. But contexts are also affectual because while interacting participants create an evaluative layer of sense-making that en­ables each participant to gauge and share emotional states within the group. Examples of emotional states are the heeding and heedful

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interrelating which drive participants to participate and cooperate in the workplace, such as that described by Weick & Roberts (1993). From different viewpoints, formative contexts are strong influencers of the democratic intent of an organization’s design culture but at the same time they are also a consequence of an organizational culture of democratic leadership.

Conclusion This chapter raises the question of the implementation of new or modified organization designs and, therefore, it is a chapter about organization design change. This type of change is different from change in other areas of design. For example, change in software design means going back to an assessment of needs and changing the structure or the code of the software application. Change in the design of a drug means going back to the chemical compounds and changing the drug’s concentration, composition, or presentation. In both examples, people are the users of the artefact (the software or the drug) but in the case of organization design, people are part and parcel of the artefact. Therefore, it is not feasible to talk of organization design change without talking about people changing. This, in turn, means that organization design change implies organization design leadership. We have opted to avoid the expression ‘design leadership’ and to use that of ‘leaderful designing’ instead. Leaderful designing represents an attitude towards the design of organizations which indicates, primarily, a concern with action, participation, and contribution to collective action. It shares the defining features of democratic leadership, understood not in its representative sense but in its endorsement of public engagement of all those affected by the activity and decision in question (Raelin,  2014). Under an ethos of leaderful design, leadership is seen as distributed, meaning that the responsibility for principled designing is also distributed throughout the or­gan­iza­ tion. Hence, in organizations where leaderful designing is encouraged, participants naturally tend towards participation and collective action, rather than towards ego-satisfying empire building. In advocating leaderful designing, it has also been emphasized that it is not utopian to expect the creation of wealth, welfare, and well-being of stake­holders to go hand-in-hand with the practice of democratic and eth­ ic­al leadership, since in the end all stakeholders stand to gain, including the investors. As discussed in Chapter 6, a central premise of stakeholder theory is that taking stakeholders’ interests into account helps firm performance by

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creating value along a number of dimensions, not just economic value. Thus, the logic of leaderful designing adduced in this book leaves us acutely aware of the leadership action that is required for a new culture of humanistic design to be promoted throughout the organization and for the badly needed global turn to a more human-centric paradigm to begin in earnest.

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Conclusion A New (Design) Discourse for Organization Design

Throughout this book, our task has been to draw attention to the fact that organization design needs a new paradigm given that the old paradigm has produced organizations that are at the centre of a host of social, environmen­ tal, ethical, and economic problems. Of course, most organizations do not cause global warming on their own but in their institutional capacity, many play a crucial role in maintaining the status quo that has led to global warm­ ing over the years. Indeed, as social actors, organizations play a major role in creating or changing the status quo. In other words, the organizations we design will determine the world we live in. Paradigm change of this magnitude can only happen through a gradual (hopefully fast) change in the discourse of the people in charge of designing and managing organizations. The fol­ lowing excerpt by Buchanan (2001) reminds us of the kind of opportunity offered by design for paradigm change in organization design: We are under no illusion that design is everything in human life, nor do we foolishly believe that individuals who specialize in one or another area of design are necessarily capable of carrying out successful work in other areas. What we do believe is that design offers a way of thinking about the world that is significant for addressing many of the problems that human beings face in contemporary culture.  (p. 38; italics added)

The managerial world has gone through radical changes before, although none as radical as the one needed in this early 21st century. An example of a change in managerial discourse happened in the 1950s when marketing aca­ demics were trying to break free from the domination of economics, and Alderson (1957) had the following advice for his colleagues: ‘what is needed is not an interpretation of the utility created by marketing but a marketing interpretation of the whole process of creating utility’ (quoted in Vargo & Lusch, 2004: 8). Borrowing from such wisdom, we suggest that what is needed in organization design studies is not an interpretation of the efficiency and Designing Organization Design: A Human-Centred Approach. Rodrigo Magalhães, Oxford University Press 2020. © Rodrigo Magalhães. DOI: 10.1093/oso/9780198867333.001.0001

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effectiveness created by organization design, but a design interpretation of the processes of creation of organizational efficiency and effectiveness. So, how can design become part of the discourse change that the or­gan­iza­ tion­al world is in urgent need of? First, we submit, design must become a recognizable part of the roles of managers. According to traditional manage­ ment education, managers have a number of roles and although organization design is included in many of them in a more or less implicit manner, design­ ing remains relatively marginal. Second, in order for the new design role of managerial activity to flourish and take hold, it must be framed within a type of culture that is conducive to the adoption of the design values and prin­ciples discussed throughout the book. Such a culture, which stands in op­pos­ition to the science-led paradigm of contingency, has already been discussed in Chapter  9 under the label of human-centred, leaderful organization design(ing) culture.

Distinguishing Designing from Managing and Strategizing In Chapter  1, we suggested that the new approach proposed in this book identifies organizational designing as a distinct activity from managing or strategizing, but still very much part of the responsibilities of management. Such a suggestion is based on the adopted definition of design, that is, that to design is to create meaning. From this premise, we further suggested that the social construction of organizational reality is in part due to the meanings or symbolic action created by managers as initiators of a great deal of or­gan­iza­ tion­al change. By placing the activity of organization designing squarely on the shoulders of managers at all levels, the discourse on organization design begins to shift from something wholly abstract to something more tangible that needs to be done continually in organizations. As learned from the five logics, or­gan­iza­ tion designing is concerned with interactivity between people inside and outside the organization, with the organization’s identity, image, and reputa­ tion, with an organizational mind-set focused on service and innovation, and with an unshakable commitment towards all those who are affected by the organization’s design, that is, the stakeholders. But organization design­ ing cannot be just a wish list of good intentions. It needs to be actionable and accountable and therefore it must be taught, as a separate role, among the responsibilities of all managers. The other two groups of managerial respon­ sibilities are: managing and strategizing.

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The relationship between organization design/designing, management/ managing, and strategy/strategizing has attracted the attention of scholarly work in the attempt to bridge between design and management as academic disciplines. As discussed in Chapter 4, Boland (2004) puts forward the idea that design happens in the ‘punctuation of managerial action’. That author focuses on the distinction between design, intelligence, and choice as a sequence of steps (i.e. ‘points’) in managerial decision-making; however, he makes no attempt at distinguishing between designing and managing as dis­ tinct activities that managers engage in during their working day. We pro­ pose instead that the notion of punctuation can be used in a different way, that is, not to distinguish between design, intelligence, and choice as steps in managerial decision-making, but to distinguish between the three major activities of regular managerial action. As suggested in Figure C.1, designing, strategizing, and managing can be seen as wholly intertwined activities that happen in the punctuation of man­ agerial action. This means that during their working day managers engage in any of the three activities at any one time, and switch between them in a subconscious manner. They are not discrete activities that can be neatly parsed out in the real life of organizations, however for analytical and educa­ tional purposes, it is suggested that they constitute the three arms of or­gan­ iza­tion­al management. Designing creates the artefacts that condition the performance of managing and strategizing, thus standing as the foundations for organizational excellence and business competitivity (Sadler,  1994). Strategizing is crucial not only in keeping the organization aligned with the competitive market but also in creating new markets. Managing plays a vital

STRATEGIZING Scouring the environment and maintaining the competitivity of the organization DESIGNING Creating, monitoring, shaping, reshaping, assessing and improving an infrastructure of artefacts in accordance with principles of design MANAGING Running the business in accordance with principles of efficiency and effectiveness

C.1:  The intertwining of organization designing, managing, and strategizing

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role in ensuring the organization’s commercial success, financial well-being and return on investment.

Organization Designing Competencies In his work on the sciences of the artificial Simon (1996) mentions ‘configur­ ing organizations’ as one of society’s most important tasks of design, and by design he means ‘courses of action aimed at changing existing situations into preferred ones’ (p. 111). Hence, design is understood, first and foremost, as a purposeful set of activities aimed at creating or improving the objects of the world. In the case of organizations, such a responsibility is naturally attrib­ uted to managers and relates to every aspect of organizational life. Organization designing concerns all the artefacts found at the three or­gan­ iza­tion­al interfaces suggested in Chapter 5: (1) the identity and values inter­ face (e.g. policy statements, management attitudes), (2) the market interface (e.g. communications with clients, brand building), and (3) the internal interface (e.g. management control systems, internal procedures). Designing competencies need to match the types of artefacts found at every type of organizational interface. For example, at the identity and values interface we find competencies that are mostly conceptual and abstract but at the market interface, the required competencies are more practical, involving the assess­ ment of product characteristics or customers’ perceptions. However, there are three meta-competencies that define organization designing and under­ pin all other competencies. They are: • Reflection-in-action • Generativity • Heuristic rules. Reflection-in-action, the best-known design meta-competency is master­ fully explained by Donald Schön (1983) in the ‘Art of Managing’, one of the chapters from the influential The Reflective Practitioner. Schön explains that the word ‘art’ has a two-fold meaning: first, it is meant as something that is intuitive and akin to knowing-in-practice; second, it means that as part of the core of their activity, managers need to develop skills of reflection-inaction. Such skills, which consist of ‘on-the-spot surfacing, criticizing, restructuring and testing intuitive understandings of experienced phenome­ non’ (p. 241), are crucial for the organization to learn and grow. Thus,

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reflection-in-action can be summed up as a skilled process of trial and error that organization designers need to learn in order to deal with the ‘messy’ problems of organizational life. The second type of designing meta-competency is generativity. Yoo et al. (2006: 228) explain the notion of design as a capability as something ‘genera­ tive’ and ‘form-giving’, capable of combining ‘ideas, values, resources, tools and people into ensembles’. Buchanan (2008), on the other hand, asserts that in contemporary understanding of design the concept of form has become more flexible and complex, and that when extended to include the social and environmental contexts of design, ‘form-giving’ and ‘form-making’ must be considered as semantic issues. Thus, considering Schön’s (1983: 242) repre­ sentation of organizations as ‘repositories of cumulative built-up knowledge’ that managers draw upon in order to adapt to some present instance, and that the building up of knowledge is tied to the generation of meaning, it becomes clear how organization designing depends on generativity as a meta-competency. The third organization designing meta-competency are heuristic rules or ‘organization design constants’ (Parrish, 2010: 510). Heuristic rules of action provide a means of codifying the practical and mostly intuitive expertise of successful organization designers. Similarly, a design constant is something that guides the application of organization design values to the requirements of organizing. For example, the values of sustainability, in the case of Parrish’s study discussed in Chapter 3. Along similar lines, Sarasvathy (2004) suggests that enterprise design is a creative process, mixing novelty with heuristic rules, thus creating possibilities for realizing design intentions.

Strategizing Strategizing is a term used to mean ‘the practice of strategy’ (Denis et al., 2007). The word ‘practice’ carries a double meaning: on the one hand, it signals an attempt to move closer to the world of practitioners, that is, the managers involved in strategy work; on the other hand, it indicates a com­ mitment to sociological theories of practice. The term also characterizes the new approach to strategic management known as strategy-as-practice. The approach reflects a degree of unease in some sectors of the strategic manage­ ment community (where organization design is sometimes included) about the relevance of traditional theory-making undertaken at high levels of granu­lar­ity (e.g. positioning, structures, cultures, etc.). The strategy-as-practice

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movement highlights the fact that strategy can only be understood through the daily practices of the people who create and implement strat­ egies (Jarzabkowski & Whittington, 2008; Mantere, 2013; Balogun et al., 2014). In the words of Whittington (2004: 62), the strategy discipline is ready to throw away ‘the epistemological straight jacket’ of modernism that has val­ ued ‘scientific detachment over practical engagement, the general over the contextual, and the quantitative over the qualitative’. The new school of thought proposes that the generalizability of economics-driven strategy theory should be complemented by the incorporation of the messy realities of ‘doing strategy’ in real-life organizations (Whittington,  2003). The em­phasis on ‘doing’ (i.e. practice) places this movement closer to the con­ cerns of design as a discipline. Indeed, Johansson-Sköldberg & Woodilla (2009) argue that conditions exist for a synergistic dialogue between strat­ egists and designers, standing on a humanistic ground and ready to harness the resources of design thinking. An example of strategy-as-design is the concept of ‘blue ocean strategy’ (Kim & Mauborgne, 2005), a process-oriented and more open-ended way of thinking about strategy than previous strategic models. Moreover, strategy-as-practice features a strong influence from the narra­ tive approach as its favoured research methodology. Narratives from the micro-stories told by managers and non-managers can be extracted from the accounts people give of their work as executors of strategy, as well as in the artefacts they produce or modify through their ‘strategizing’ and ‘strategic sense-making’ (Fenton & Langley,  2011; Jalonen et al.,  2018; Vaara,  2010). This places strategy-as-practice in even closer proximity to the design-based approach to organization design espoused in this book. Thus, strategizing is about maintaining the competitivity of the organization through a focus on execution, daily practice and capabilities that provide the organization with differentiation in the marketplace.

Managing Managing is by far the best-known managerial responsibility. It encompasses the full set of operational activities covering all areas of organizational man­ agement, with a sharp focus on fulfilling strategic and operational objectives set by the organization’s mission and vision. Managing can be sub-divided into the traditional activities of planning, resourcing, coordinating, and con­ trolling, and might be summed up as the set of activities required for ‘running

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the business’. Efficiency, effectiveness, and sound budgetary control are the guiding principles of managing, as opposed to striving for competitive advan­ tage, the key defining feature of the activity of strategizing or instilling an ethos of creativity, innovation, and change, foundational characteristics of designing. Hence, it can be said that while managing is focused on the main­ tenance of the status quo and strategizing is aimed at exploring new competi­ tive frontiers, designing might adequately be labelled as the agency of change.

Designing Organization Design Wrapping up. A shift in managerial discourse towards a greater design orienta­ tion in matters of organization design can only happen if a new culture is recog­ nized and adopted by the management communities, starting with management educators. We concur with Michlewski (2008: 373) in arguing that ‘the essence of a truly radical design-based paradigm may in fact lie in an attitude and value set that is very different from the dispositions and values espoused by most management scholars’. However, it is not enough to hope that conventional managers will start acting more like designers in breaking the rules, going against accepted norms, or refusing to align with the status quo. In order for any significant change to come about it is essential that organization design is understood and taught in a different way by management educators. This means a complete revamping of the concepts that underlie the teaching or­gan­ iza­tion design, starting from epistemological principles, ontological processes, design logics and normative values as has been suggested in this book. Design Logics

(underpinned by design principles and values) IDENTITY and IDENTIFICATION: Superordinate and Ordinate Meaning and Ambition

govern

Designing Processes

(and subsequent creation of organizational artefacts)

EMERGENT DESIGN

NORMATIVE Ethics SERVICE Service EFFECTUAL REASONING Desiderata

influences

Design Leadership

(through a culture of human-centric, leaderful organization design(ing)

HUMAN-CENTRIC DESIGN CULTURE FORMATIVE CONTEXTS

INTENDED DESIGN PERCEIVED DESIGN

INTERACTIVE STRUCTURE Systemics, Interactivity

C.2:  Designing organization design: the key components

DESIGN TRACE interaction trace

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Conclusion  281

Figure C.2 and Table C.1 contain a summary of the main concepts and ideas which constitute our proposal for a human-centred approach to organization designing. Table C.1 contains an explanation of the concepts depicted in Figure  C.2, in the form of comments and observations of a more practical nature which organizational designers (i.e. managers) can reflect on and hopefully use in their daily activity. Taken together, they will contribute towards the ongoing shift away from the science-led con­ tingency approach that has dominated traditional organization design discourse to a more humanistic organization design culture inspired by design values and principles.

Table C.1:  What the managers-as-designers need to be aware of (as part of a new discourse for organization design) The Logics

Identity and Identification

That the organization’s manifestations of identity, such as image, reputation or legitimacy can work as centripetal or centrifugal forces that keep organizations together or tear them apart. Managers need to learn to use identity as a means of upholding superordinate organizational ambitions and members’ motivation. Normative Logic That design is about intentional change, that all the consequences of change need to be weighed against a moral background, and that ethical governance practices need to be embedded in the organization’s design. By being aware of the need to commit to preserving the dignity of every single stakeholder regardless of background, status, or point of view, managers need to ensure that values come before targets or objectives. Service That service is at the heart of organizational purpose and that cooperation and networking of resources are key ingredients of organizational design required to reach that purpose. Managers and entrepreneurs need to pay closer attention to the contextual and meaning-related aspects of service and to the organizational design requirements of a service-dominant logic. Effectual That there is a need to endow the organization with a Reasoning mind-set of permanent innovation, which in turn creates evolutionary paths for the organization’s service offerings. Effectual thinking should become the primary influence in regular management education, while causation-based thinking should play an ancillary role. Interactive That, in the future, organizational designs will no longer rely Structure on hierarchy and structural rules, but on control and integration mechanisms that are essentially dialogue- and behaviour-based. As part of this, managers need to deal with the ongoing challenge of increased interactivity and the new opportunities for integration of the formal and the informal sides of organizational structure. (Continued)

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282  Designing Organization Design Table C.1:  Continued The Processes

Intended Design

That intended design processes contribute with the meanings, interpretations, and motivations from managers as initiators of much of the organization’s design. Thus, managers need to ensure that top-down inspired artefacts are meaningful, acceptable, and useful not only for their intended organizational objectives but also in terms of their effects on stakeholders. Emergent Design That organizational capabilities emerge from the bottom up, in processes generated at the local level, in the interplay between every-day practices and the creation or re-creation of organizational artefacts. Such local competencies aggregate upward and become the dynamic organizational capabilities that provide the organization with differentiation in the marketplace. Managers need to focus on key factors that influence such bottom-up aggregation, that is, participation, and coordination. Perceived Design That a major part of the organization’s design rests upon its historical legacy of perceived practices, leanings, and outcomes. Perceived design processes contribute to the overall design through the feedback provided by the stakeholders (internal and external) about such a legacy, which includes perceptions of fairness, identity, image, and legitimacy, as well as their myriad views on the organization’s products and services. Managers need to focus attention on this feedback as the primary input for design change.

The Leaderful, Leadership Human-Centric Organization Design Culture

Formative Affectual Contexts

Design Trace (interaction based)

That the activity of designing organizations should be informed by the set of values and principles embedded in a global culture of design which is translated into a set of designing practices at the level of each individual organization. At the organizational level, the design discourse favours notions such as democratic leadership and leaderful practice which are brought to bear in supporting the implementation of organizational design change through the tools of formative affectual contexts and design trace. That formative affectual contexts are collective minds that give life to the notion of organization design as a process and reinforce the notion that it is people’s actions and behaviour that creates the design. They are meaningful contexts that facilitate or inhibit change, by shaping the ways people in organizational communities perceive, understand, make meaning, perform, and get organized. Managers need to learn how to use such contexts if they are to contribute to the major shifts afoot in organization design theory and practice. That all organizational interactions leave a trace that can be harnessed and used to help manage the organization’s design. Design or interaction trace can be subdivided into two broad types: a causal type and a narrative type. The causal type is mostly enabled by technological means and provides data and information about past interactions or past designs. The narrative type is associated with qualitative human-centred approaches and relies on people and people’s recollections of past events. Both types can/should be used in tandem, as tools of organization design management .

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References  303 Zacarias, M., Magalhães, R., Caetano, A., Pinto, H.  S., & Tribolet, J.  M. 2007. ‘Towards Organizational Self-Awareness: an architecture and ontology framework’, in P. Ritten (ed.), Handbook of Ontologies for Business Interaction. Hershey, PA: IRM Press Zammuto, R. F., Griffith, T. L., Majchrzak, A., Dougherty, D. J., & Faraj, S. 2007. ‘Information Technology and the Changing Fabric of Organization’. Organization Science, 18(5): 749–62 Zell, D. 2001. ‘The Market-Driven Business School: has the pendulum swung too far?’ Journal of Management Enquiry, 10(4): 324–8

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Index Note: Tables and figures, are indicated by an italic “t” and “f ”, respectively, following the page number. For the benefit of digital users, indexed terms that span two pages (e.g., 52–53) may, on occasion, appear on only one of those pages. Abernathy, W. J.  196 academic analyses 173 community 12 context 224 debate 4 disciplines 276 interest 246 literature  40, 123 logic 61 management  6, 13 research  13, 196, 268 writing 184 academics  16, 76–7, 123, 179, 274–5 accountability  36, 85, 89, 132t, 226, 228 action  14–17, 19–21, 23–4, 27–8, 31–8, 43–6, 49–50, 52–8, 55f, 56t, 61–2, 70, 73–4, 77–9, 88–9, 92–3, 101, 107–10, 114–15, 117, 120–2, 129, 140–1, 144, 148, 153–4, 168, 170, 172, 174–8, 180–1, 187, 191–2, 204, 207t, 209–10, 219–20, 226–7, 231–2, 235–41, 246, 252–7, 259–61, 264, 266–9, 271–3, 275–8 actions  11, 15, 34, 43, 61–3, 68–9, 78–9, 85–7, 90–1, 100, 103–5, 107–12, 120–1, 126–7, 143, 161, 164, 166f, 167–70, 172, 176, 178, 182–3, 187–8, 195, 204–5, 207t, 208, 217, 232, 240, 246, 257, 270–2, 276f, 281t activity system  31, 108 activity theory  62–3 actors  15, 24, 35–6, 62, 82–8, 92, 107, 132t, 134–5, 153, 181, 183–4, 186–7, 190, 192–5, 201, 219, 221, 225–6, 230, 233, 259, 265–6, see also economic actors, human actors, non-human actors, organizational actors, social actors

adaptation  17, 42, 67–9, 90–1, 160, 192, 212, 215, 217–18, 250, 269–71 adaptivity  112–13, 206, 217, 230 Adler, P. S.  128–30, 132t, 134–5, 152 Adler, R. W.  90 affect 111–18 affective capabilities 261–2 character 111–12 needs  10–11, 196 relationships 261 resonance 117–18 affective–cognitive system  113 affects 115–16 affectual contexts  15–17, 103–4, 104f, 110–16, 120–2, 237–40, 269, 271–2, 281t trace  116–17, 119, 223, 249–50 affiliation  87, 174–5 affordable loss  204, 206, 207t, 216 agency  3–4, 37–8, 41, 97–8, 126, 148, 227–8, 231–2, 244–5, 247, 257, 264–6, 279–80 agents  17, 30–1, 38t, 48–51, 59f, 60, 62–4, 66, 139–40, 143, 160, 165, 176, 207t, 227–8, 242–3, 265–6 Aitken, R.  149–50, 172, 219 Akaka, M. A.  147, 186–7, 192–5, 194f Akerlof, G. A.  130, 146, 163–4, 181 Albert, S.  151 Alderson, W.  274–5 alliances  33, 35, 124–5, 197, 206 altruism 191–2 Altuna, N.  45, 259–60 ambition  13–14, 20, 26, 60, 137, 139–41, 151, 153, 161, 280f, 281t Andrews, K. R.  213 Ansoff, H. I.  27–8, 46, 213–14 Corporate Strategy 27

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306 Index Anthony, R. N.  89 Apple  60, 84 archetypes  22–3, 68–9, 125 Argote, L.  129, 146, 163–4 Argyris, C.  73–4, 77, 170 Arrow, K.  146, 163–4 artefacts  9–10, 15, 25, 28, 44, 47–8, 50–4, 58–9, 62–5, 69–70, 73, 80–2, 80f, 87–91, 93–6, 101, 106–8, 116, 118–19, 127–8, 137–45, 147, 151, 154, 158, 170, 182, 192, 209–10, 212–14, 217–18, 228–9, 231–4, 237, 246–8, 263–4, 270, 272, 276–7, 276f, 279, 280f, 281t Ashforth, B. E.  146–7, 164, 166–7, 169–70, 172–3 assumptions  5–9, 12, 25–6, 30–1, 31t, 47–9, 70–1, 77, 84–6, 126–7, 147–8, 174–6, 180–1, 187–8, 213–14, 219–20, 230, 241, 243, 253, 260 Aston group/researchers  21–2 attitudes 39t, 81, 102–3, 111–12, 167–8, 215, 216f, 263–6, 269–70, 272, 277, 280 attributes  15, 82, 85, 106, 129, 132t, 134–6, 252, 255 authority  22, 28, 32, 76, 83, 132t, 134–5, 142, 221, 223–4, 226, 228, 241, 258, 260–2 autonomy  23, 112–13 autopoiesis  75, 112, 209–10 Aveiro, D.  119 axioms  26, 136–45, 138f, 147, 150, 153, 189–90, 195, 218–19, 247–8 Balmer, J. M. T.  172–3 Balogun, J.  278–9 banks/bankers  175, 247, 268 Barley, S. R.  31, 230 Barnard, C. I.  21, 41–3, 123, 232 Barney, J. B.  75–6, 129, 149, 172–3 Barry, D.  4 Bartlett, C. A.  43 Bartunek, J. M.  31 Bastiat, F.  189 Bate, P.  2, 120–1 Becker, M. C.  92 bedrock of practices  105–6, 116 behaviour  11, 21, 34, 57, 61, 78–9, 84–7, 90, 92–3, 95–8, 103–4, 107, 111–12, 115–16, 129–30, 140, 146, 148, 153, 155–6, 162–5, 170–2, 174–5, 179, 182, 219, 225, 232–4, 240, 255, 263–5, 270–1, 281t

formalization 229 literatures 146–7 of company officials  4 of designers  141–2 of human beings  1, 52 of organizational members  37, 108, 169–70 of participants  103–4 behavioural change 253 disposition 99–100 economics  146, 203–4 implications 253 orientation 130 patterns  66, 92, 216, 259, 269 qualities 191 template 231 behaviour-moulding properties  120–1, 271–2 beliefs  12–13, 16, 24, 29–30, 32, 34–5, 45, 59f, 60, 64, 78–9, 84–6, 88–9, 109, 120–1, 126, 128, 132t, 146–8, 158, 172, 176, 179, 182–3, 205, 207t, 209, 214, 255, 258, 261–2, 265–6, 270–2 Bellini, E.  45 beneficiaries  48–9, 67, 70, 79, 153, 190, 193–5, 218–19 benefits  1, 25–6, 57, 67, 74–5, 78–9, 85, 109, 123, 174–5, 183, 186, 189, 192, 210, 213–14, 235, 245–6, 260 Bettencourt, L. A.  210–11 Bettis, R. A.  213 bird in hand principle  204 blue ocean strategy  279 Boland, R. J.  32, 54, 56–8, 56t, 252, 276 Bonsiepe. G.  144, 253–4, 263–4, 268, 270 Borgatti, S. P.  224 boundary conditions for service  202–3 boundary-spanning roles  233 boundary systems  88–9 Bower, J. L.  196 Boy, G. A.  10 Breitsohl, H.  86–7 Brennan, M.  30–1 Brès, L.  224–5 Brickson S. L.  161–2, 164, 169–70, 182 bridging  15–17, 33, 63, 88–9, 102, 104, 117, 120, 143–4, 173, 212, 222–3, 252, 267, 276 Brown, J. S.  61, 75, 78 Brown, T.  6–7, 38–9 Brown, T. J.  168

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Index  307 Bruner, J. S.  118–19 Buchanan, R.  1, 8, 38–9, 41, 50, 54–6, 55f, 59, 82, 139, 144, 183, 274, 278 budgets/budgeting  64, 89, 127–8, 188, 220, 279–80 bureaucracies  4, 76, 132t bureaucracy  22–3, 129, 134–5, 221 bureaucratic approaches 152 dimensions 131 elements 36 form 19 hierarchies 137 mechanisms 217–18 model  134–5, 154, 250 organization  129, 152 rules  134–5, 223 system 224 Burns, P.  216 Burns, T.  21–2 Burrell, G.  43–4 capabilities  5, 8, 20, 32, 34, 37, 54–5, 55f, 72, 75–6, 80–1, 80f, 83–5, 88, 91–103, 129, 143, 178, 192, 195–7, 210–11, 225–6, 229–30, 254, 261–2, 281t capitalism  3, 160, 173–4, 178–81, 183–4, see also shareholder capitalism, stakeholder capitalism Carlgren, L.  40, 215 Carroll, B.  16, 178, 253, 258, 268 carrot-and-stick 123 Cassina 212 categories of design  39t, 102 of knowledge-qua-design  17, 80f of meaning  17, 61, 74, 79 of meaning-making  67–9, 68f of mental events  52–3 causal analysis 202 antecedent 32–3 approaches 215–16 connections  61, 69 entanglements 125 explanations 140 factor 28–9 logic  118–19, 147–8, 204–6 powers 126–7 properties 65 reasoning  208, 217–18, 220

relations  3–4, 64 role 84–5 thinking 187–8 trace  119, 248–9 type 281t causality  35–6, 61, 172–3 causation  14, 147–8, 150–1, 153–4, 187–8, 202, 203f, 205–8, 219–20, 281t cause-and-effect  24–5, 33, 37, 127–8, 230 centralization  22, 83, 128–9 challenges  1–3, 33, 35, 38–9, 39t, 54–5, 70, 72, 91, 97–8, 101, 103, 117, 119, 123–4, 132t, 149, 154–5, 157, 166f, 184, 200, 212, 222, 225–6, 237, 246–8, 248f, 250, 255, 261–2, 266–7, 281t Chalmers 113 Chandler, A. D.  27–8 Strategy and Structure 26 Chandler, G. N.  205 Chandler, J. D.  186–7, 192–5 Child, J.  41 Chittipeddi, K.  164 Christensen, C. M.  196 Ciborra, C. U.  15, 32, 103–10, 116, 242–3, 267 circular design  32–3, 112, 172 clan  129, 131, 132t, 135, 151 Clark, A.  113 Clark, K. B.  196 Clegg, C.  236 Clegg, S.  21–2, 128–9 clients  87, 127, 139–42, 277 Cluley 45 co-creation  3, 21–2, 147, 157, 180–1, 186–7, 191–4, 201–2, 219, 270 code of conduct  3, 182 co-evolution  34–6, 38t cognition  15, 40, 57, 63, 66–8, 88, 95, 103–4, 107–113, 121, 126, 135–6, 146–7, 165 cognitive approaches  16–17, 30–4, 38–9, 39t backgrounds 114 bias 31 characteristics 10 components 104–7 constructs  107, 267 dimensions  108, 130–1, 135–6, 146, 151, 261 economy 92 epistemology 106 force  164, 181

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308 Index cognitive (cont.) frames  15, 107 interface 54–5 outcomes 166 processes  40, 164, 254 properties  31, 111 resources  92–3, 132t schemes 105–6 school of thought  32 sciences 78 systems  64–5, 113, 147 cold cognitive scripts  111–12 collaboration  3, 23–4, 39t, 53–4, 157, 179, 181, 186, 212, 223–5, 259–62 collective cognitive scheme  105–6 collective mind  31, 103–4, 108 Collins, H.  215 Collis, D. J.  99–100 Colombetti, G.  15, 103–4, 112–14, 146–7, 149–50, 165 command and control  4, 7–8, 14, 19, 123, 143, 154–5, 225, 251, 258 commitment  21, 27–8, 46, 127, 146, 163–4, 171, 205–6, 207t, 215, 257, 275, 278–9 communication  4, 28, 32, 36, 42, 52–6, 55f, 59f, 60, 65–6, 95–6, 103–5, 112–13, 116–19, 132t, 134–5, 143–4, 146, 164–5, 167, 176–7, 193, 198, 222–3, 225–6, 234t, 237–8, 243–8, 248f, 259, 265–6, 269, 277 communitarian attributes 135 dimension 132t, 135–6, 151 elements  36, 129, 131 communities of practice  73–4, 78, 81, 94–7, 99 companies  2, 6–8, 23, 32, 35, 86, 88–9, 119, 123, 127, 137, 165, 167, 175, 183, 188, 190, 198, 212–15, 217–20, 262 competence  86, 91–100 competencies 80f, 81, 91–2, 101–3, 189, 199, 206–8, 210–11, 277–8, 281t, see also meta-competency competition  178–9, 196–7, 201, 204 competitive actions 276f advantage  97–8, 175, 198, 218, 279–80 analysis  206, 215 challenges 35 environments 88–9 landscape 126 market  45, 78–9, 189, 198–9, 201–2

service 192 threats 217 trajectory 200 competitiveness  9, 32, 98, 167 competitivity  5, 183–4, 276–7 complementarity  29, 34–7, 38t, 62, 128–9, 158 compositional assemblies  125, 143 computer-based routines  246 computer-based systems  24, 234 computer industry  32 computer/information science  10 computers  28, 246–7 condensation  166–7, 170 configuration  3–4, 7–8, 16–17, 21–5, 28, 32–3, 35–7, 104–5, 125, 128–30, 132t, 147, 186, 189, 222–3, 226–7, 241, 267 configurational approach  24–5 configuring organizations  26, 53, 277 confirmation  166–7, 170 connect-and-collaborate 225 connect-and-communicate  14, 154–6 constraints  25, 37, 39t, 57, 69, 140, 170, 206, 214, 223–4, 229, 257 constructionism, see social constructionism consultancies  7, 40 consultants  12, 266 consumers  29–30, 126, 152, 165, 167, 178–9, 186, 192–4, 196, 199 contingency  16–17, 19–25, 29, 35–7, 38t, 49, 51–2, 154, 201–2, 205–6, 207t, 213–14, 216–18, 226, 255–6, 264–7, 275 approach  8–9, 22, 24–5, 29–30, 41, 281 factors  34–5, 41 movement  21, 31 theory  3–5, 20, 22, 25, 41, 255–6, 264 contracts  22, 76, 83–5, 149–50, 174–5, 256 control mechanisms  129, 132t, 134–5, 253 Cooper, R.  6–7, 257 cooperation  3, 42, 52–3, 95, 114–15, 121, 171–2, 174–5, 179, 183–5, 187, 191–2, 206, 207t, 244t, 271–2, 281t coordination  33, 36, 60, 76, 92–3, 95–8, 101, 113, 119, 121, 132t, 134, 146, 154, 164, 193, 214, 223–6, 232–3, 244t, 258–9, 281t Cornelissen, J. P.  85–6 corporate culture 99–100 design policies  142 effectuation 213–18 governance 265

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Index  309 identity  85–6, 165–7 scandals 86–7 social responsibility  85, 149 value 76–7 world 19 Coyne, R.  51, 57–8, 79, 100, 111, 139, 212 crazy-quilt principle  205 creativity  14, 33, 49, 154–5, 180–1, 185, 198–9, 223–5, 237–9, 242–3, 251, 279–80 Crevani, L.  253 Cross, N.  5–6, 50 Crumley, C. L.  224 cultural affects 115 artefacts 63 centres 198 change 120 component  104–5, 107–8 constructs 267 contexts  120–1, 165, 255 development 63 factors  99–100, 195, 265–7 frames 107 means 62 needs 10–11 norms  259, 269 values 20 culture of design  251, 264–5, 281t Cunha, M. P.  235–7 Cunliffe, A. L.  53, 107–8, 136, 177, 256–7, 260–1, 270 Daft, R. L.  19–20, 31 Davidson, D.  17, 48–9, 63–71, 73 decision-makers  57, 145, 206 decision-making  5, 22, 25–6, 28–9, 50–1, 56–8, 56t, 81, 97–8, 109–10, 143, 147–8, 152, 154, 202–4, 209, 213–14, 216, 260–2, 276 Deepwater Horizon  84 De Jaegher, H.  66, 113, 117–18, 121 Dell’Era, C.  212–13 democracy  19, 136, 183–4, 253–4, 260–1, 268, 270 democratic 136 concerns 45 design 253–4 dimension  131, 132t, 155 elements  36, 129, 131 environments 262

leaderful organization design  270 leadership  16, 46, 251, 253–4, 260–4, 270–3, 281t participation  265, 268 practices 260–1 values  16, 120, 254, 260–2 DeSanctis, G.  230 desiderata  14, 137, 138f, 140–2, 150f, 153, 156–7, 221–2, 263, 280f design gestalt  32–3, 100f, 106, 117 legacies  101, 114, 120, 252 logics  12–13, 15, 17–18, 124–36, 124f, 150–6, 158, 187, 208–11, 270–1, 280f principles  3, 13, 16, 19–20, 78–9, 134–45, 138f, 147–8, 156–7, 161, 184, 187, 222, 232–4, 280f problems  25–6, 34, 45, 50–2, 217 process  14, 25–6, 29, 47–8, 51–2, 58, 100–1, 126–8, 139–41, 153, 247–8, 270–1, 281t theory  14, 27–8, 32–3, 47, 62, 82, 140–1, 153, 162, 188, 233, 267, 281t thinking  2, 6–7, 16, 21, 38–41, 39t, 103–4, 198–9, 211–12, 215, 223, 232, 252, 254–8, 266–7, 279, 281 trace  15–16, 33, 102, 104, 116–20, 223, 239–40, 248–50, 253, 104f, 280f, 281t design-as-is 12f, 15, 252 design-as-meaning  10–12, 17, 47–61, 63–70, 138–40, 173, 193, 264 design-as-practice  11–12, 47–9, 61–70, 105, 173, 182, 236, 260, 266 design-before-use  127–8, 270–1 design-driven discourse 72 epistemology 47 innovation  10–11, 45, 195–9 perspective 231–2 sociomaterial infrastructure  154 techniques 266 design-in-use  127–8, 270–1 design-oriented approach  17, 70, 160 logics of design  250 terminology 228f transformational view  208 design-to-be 12f, 15, 252 Dew, N.  132t, 187, 203f, 206–8, 209f, 216 digital architecture 119

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310 Index digital (cont.) communications 4 information  235, 237 infrastructures  125, 127, 222, 229–32, 234 platforms  232, 245 relationships 245t Di Maggio, P. J.  29–30, 126 Di Paolo, E.  4–5, 66, 103–4, 112–13, 117–18, 121 Donaldson, L.  3–4 Donaldson, T.  149, 176 Dorst, K.  10 Dosi, G.  96 Drazin, R.  34–5 Drucker, P.  213 drugs  72, 272 Duguid, P.  61, 75, 78 Dukerich, J. M.  167–8, 171–2 Dumas, A.  58, 69 Dunbar, R. L. M.  2, 4, 32 Dutton, J. E.  167–8 Dyllick, T.  184 economic actors  96, 178–9, 186, 189, 191 economics  13, 16–17, 19–20, 34–8, 73–4, 92, 96, 115–16, 129, 146, 150–1, 161, 170–1, 175, 178–9, 181, 185, 188, 191, 203–4, 207–8, 274–5, 279 economists  74–5, 130, 146, 163–4, 189, 192, 263–4 economy  2, 13, 74, 92, 97–8, 128, 152–3, 193, 210, 235, 270–1 ecosystems  82, 98, 189, 192, 194–5, 202–3, 219, 263 education  5–7, 9, 18, 50, 67–8, 88, 128, 142, 144–5, 150, 152–3, 155–6, 184–5, 188, 213, 219–20, 270–1, 275–7, 281t effectiveness  2, 5, 9, 25, 32, 34–5, 81, 139, 146, 163–4, 232–3, 274–5, 279–80 effectual designing 12f, 14, 157 logic  14, 153, 204–6, 212 reasoning  153–4, 156, 158, 160, 186–7, 203–8, 209f, 211–18, 220, 270, 280f, 281t thinking  3, 201–2, 281t effectuation  14, 146, 150–1, 154, 180–1, 187–8, 202–5, 203f, 207t, 208–20, 236 effectuation theory  146–8, 187–8, 206, 208–12

Eisenhardt, K. M.  97–8 Elsbach, K. D.  40, 86–7, 111–12, 254–5 embeddedness  30–1, 35, 52, 56–7, 80f, 108–10, 113, 130, 139–40, 176–8, 182, 189, 196–7, 212–13, 225, 232, 247, 249–50, 257, 263, 265–6, 270 emergent design  5, 12f, 15–16, 64, 80–1, 80f, 91–100, 102–3, 121–2, 222, 232, 236, 239–40, 243, 280f, 281t emergent meanings  52, 59f, 69–71, 79 Emery, F. E.  232 emotional attachment 99 bonds  165, 181 meanings 196 needs  10, 83–4, 232–3 states  110, 113–16, 120–2, 163 structure 237 value  10–11, 196 emotionality  111–12, 237–8 emotions  19–20, 111–12, 114–16, 121–2, 146–7, 165, 237–8 employees  3, 8, 14, 16, 74, 84–5, 87–8, 90, 99–100, 134–5, 140, 149, 159, 162, 165, 167, 172, 174–5, 191, 194–5, 244t, 258 enactivism 114 enactment 112 Endenburg Elektrotechniek  33 Endenburg, G.  32–3 enterprise design  34, 278 enterprise resource planning (ERP)  127–8, 243–6, 244t enterprises  14, 26, 79, 149, 162, 190 enterprise social media (ESM)  243–6, 245t entrepreneurial action  23–4, 219–20 activity 204 approach  73–4, 196–7 behaviours 97–8 choice 16–17 expertise 205 firms 215–18 genesis 74–6 initiatives 74–5 options 156 orientation  216, 218 origins 188 phase  83, 208–9 stages 86 thinking 180 ventures  201–2, 209–10, 212

OUP CORRECTED AUTOPAGE PROOFS – FINAL, 15/08/20, SPi

Index  311 entrepreneurs  16–17, 20–1, 29–30, 34, 53–4, 74–5, 78–9, 140, 161, 179, 281t entrepreneurship  3, 123, 145, 147–8, 180, 188, 211–16 environmental changes  3–4, 32, 38t, 41, 84–5, 112–13, 158 constraints 37 contingencies  7–8, 34–5, 37, 201–2 degradation  173–4, 183 factors  84, 153–4, 219–20 forces 23–4 ills 1 mismanagement 86 problems 274 processes 114 transformation 218 uncertainty 21–2 epistemological approaches  7–8, 24–5 assumption 8–9 base 48–9 departure 231 foundations  21, 40, 47–8, 195 orientation  131, 156 perspectives 11–12 positions  10, 17, 261 proposition 41 roots 100f stance  51–2, 236 standpoint 64–5 tool  63, 204 turn 76–8 epistemology  10, 20, 47, 52–3, 75, 80f, 106, 155, 211–12, 264–6 Eriksen, M.  107–8, 177–8, 257, 260–1, 270 ethical behaviour  155–7, 219 concerns  45, 145 dimension  144–5, 261 governance  123, 281t issues 136 leadership 272–3 nature  145, 155, 261–2 orientation  182, 265 practices 2 principles 14 problems 274 productivity 176–7 quality 109–10 questions 144

sense  146–7, 165 signposts 261 stance  78–9, 145, 155, 157 standards 9 values 156 viewpoints 261 ethics  8–9, 123–8, 137, 140, 144, 146, 149–50, 155–7, 162, 173–6, 179, 183–4, 257, 261, 265, 268, 280f evaluation  27, 81, 87, 112–13, 132t, 139, 186–7, 190, 193–5, 211–12, 218–19, 233 exploitation  14, 78–9, 91, 137, 154, 156–7, 160, 214–15 exploration  92–3, 137, 138f, 140–1, 147–8, 154, 156–7, 160, 178–9, 187, 214–15 Fairhurst, G. T.  255–7 Fayol, H.  123, 213 feedback  24–5, 33, 67, 81, 90–1, 101, 123–4, 137, 217, 230, 233, 281t Feldman, M. S.  62, 92–3, 246, 248f Felin, T.  72 Fenton, C.  279 Ferreira, A.  90 financial analysis 216 capital 179 crises  173–4, 184 forecasts 180–1 incentive 41–2 management 219–20 managers  188, 220 performance  176, 261–2 resources  23, 192, 210 success 2 well-being 276–7 five forces model  213–14 Fjeldstad, O. D.  24 Follett 123 Fong, C. T.  184 Ford 23 formalization  19–20, 22, 25, 128–9, 149–50, 223, 229, 240–1, 243, 248–50, 255, 257 formative context  15–16, 32–3, 103–12, 114, 121, 253, 256, 267, 271–2 Foss, N. J.  37, 128–9 Foster, P. C.  224 Freeman, R. E.  149, 173–4, 176–9, 183 Friesen, P.  125

OUP CORRECTED AUTOPAGE PROOFS – FINAL, 15/08/20, SPi

312 Index functional activities 64 areas 156 artefacts 47 aspect 144 configurations 24 dimensions 161–2 hierarchy 238–9 needs  145, 196 products  51, 138, 141 reasoning 26 segmentation 244–5 functionality  10–11, 34–5, 139, 143, 196 Furnari, S.  36–7, 128–31, 134–6, 151, 155 Galbraith, J. R.  5, 28–9, 75–6 Galle, P.  25–6, 50 Garbuio, M.  40, 215 Garud, R.  23–4, 32–5, 118–19, 248–9 Gasparin, M.  45, 196–7 Gehry Partners  116 General Motors  19, 84 generative approaches  16–17, 30–4, 37 capabilities 129 capacity  32–3, 106 economy 235 engagement 33 organisation design  32–4, 278 perspectives  37, 38t principles 163–4 routines 246 rules  34, 79, 153 systems 92–3 generativity  221–3, 233–9, 234t, 251, 277–8 Gergen, K. J.  7–8, 52–3, 143 Gherardi, S.  116–18 Ghoshal, S.  2, 35, 43, 74–5, 128–31, 132t, 134–6, 151, 154 Giacomin, J.  54, 58–61, 59f, 68–9, 139, 182 Gibbs, B. W.  172–3 Giddens, A.  48, 92, 222–3, 227–30, 228f, 240, 243, 250–1 Gioia, D. A.  163–4, 172 Glavas, A.  140, 168 Godwin, L. N.  140, 168 Goffman, E.  10, 232 goods  23, 147, 152–3, 186, 188–90, 192, 212–13 goods and services  41, 174–5 goods-dominant (G-D) economy  152–3

Gorb, P.  58, 69 Grandori, A.  35–7, 128–31, 132t, 134–6, 151, 155 Granovetter, M. S.  35, 130, 232 Grant, D.  255 Grant, R. M.  76 Green, W.  45, 196–7 Greenwood, R.  125 Greer, C. R.  152–3, 189, 194–5 Gresov, C.  34–5 Grey, C.  184 Hadida, A. L.  241–3 Hansen, M. H.  149 Hanseth, O.  229–30 Harquail, C. V.  146–7, 165 Harrison, J. S.  14, 149, 162, 174, 219 Cambridge Handbook of Stakeholder Theory 175 Harvard Business School  27, 184, 213 Hassi, L.  38–9, 39t Hatch, M. J.  44, 148–9, 161, 163, 165, 236–9, 250, 259–60 The Expressive Organization 8 Hephaistos 49 hermeneutic approach 111 circle  51–2, 139, 212 enterprise  57–8, 79 ontology 107–8 structures 100–1 hermeneutics 196 heterarchy  14, 137, 142, 154–5, 222–6, 235, 238–9, 250 Heugens, P. P. M. A. R.  86 heuristic rules  34, 277–8 heuristics 38t, 78–9, 153–4 Hickson, D. J.  21–2, 128–9 hierarchical approaches 152 bureaucracy  4, 76, 134–5 dimension, 132t, 225 levels 244t mechanisms 223–4 model  3, 131, 143 modes of control  33 rules 154–5 structures  12, 28, 60, 131, 143, 148–9, 154–5, 235, 250 hierarchy  14, 23, 33, 35, 58–9, 130, 137, 142, 167, 221–3

OUP CORRECTED AUTOPAGE PROOFS – FINAL, 15/08/20, SPi

Index  313 of human-centred design  58–61, 59f of meanings  59 Hinings, C. R.  125 holistic attributes 10 character 32 design  9, 137 entity 86–7 perspective 30 phenomenon 259 process 32 stance 168 system 194 view 39t, 184–5, 244t Holman, D.  256–7 Hosking, D. M.  53 Hui, A.  11 human actors  100f, 227–9, 247 human-centred design (HCD)  10–13, 17–18, 47–8, 50–1, 58–62, 59f, 64–5, 123–4, 136–51, 155, 187, 195, 222, 263, 280f Hunt, S. D.  188 Hypothesis of Extended Cognition  113 identification  13, 17–18, 49, 60, 81, 86–7, 94–6, 128, 132t, 135, 145–7, 151–2, 156–7, 163–5, 168–73, 181–3, 191, 209–13, 281t identity orientation  161–2, 164, 167–73, 169f, 178, 182 improvisation  154–5, 221–3, 234–9, 234t, 241–3, 247–51, 259 improvisational jazz  148–9, 185, 236–7 information  10, 34, 50–1, 57, 69, 112–13, 142–4, 146–8, 152, 166–7, 186–9, 193, 205, 210, 216, 218, 221–2, 226, 234–5, 237, 244–5, 281t flows  28–9, 90–1 organization  222–3, 250–1 processing  28–9, 37, 38t, 75–6, 191–2 sharing  134–5, 154–5 systems  80–1, 102–3, 119, 229–30, 233, 243–4 information technology (IT)  63, 104–5, 134–5, 143, 148–9, 154–5, 193, 221, 225, 229–30, 233–5, 237–9, 243–4, 250 Infosys Technologies  34 innovation  3, 8–11, 14, 23, 33, 38–9, 43, 45–6, 60, 119, 129, 140–1, 149–51, 162, 173–4, 179–81, 187–8, 191–2, 195–204,

200f, 206, 208–9, 211–13, 217–18, 220, 223–5, 235, 237–9, 241–2, 254–5, 259, 265–6, 275, 279–81 integration 12f, 13, 22–6, 33, 39t, 54–6, 55f, 63–5, 73–4, 76, 103, 104f, 116, 132t, 136–45, 155–61, 159f, 163, 166–7, 181, 186, 190, 192–5, 198–9, 208–11, 219–20, 223–4, 232–3, 237–42, 244–5, 244t, 281t intended design  5, 12f, 17, 64, 80–1, 80f, 88–92, 101–3, 222, 232, 243, 252, 280f, 281t intended meanings  52, 59f, 60, 69–71, 79–81, 102–3, 196–7 intentionality  15, 61, 70, 84–6, 236 interaction trace  118–19, 240, 249–50, 280f, 281t interactive structure  12, 14–16, 148–9, 154–7, 221, 223, 229, 233–51, 238f, 249f, 280f, 281t interactivity  14, 46, 66, 142–3, 146, 148–9, 154–5, 157, 221–6, 232–5, 234t, 237–9, 246, 251, 275, 280f, 281t interactivity replaces materiality  59f, 137, 142, 222, 233–4 Internet  19–20, 134–5, 152–4, 200–1, 225, 265–6 Jahnke, M.  51–2, 111, 212 Jalonen, K.  97, 279 Jarzabkowski, P. A.  278–9 jazz  223–4, 237 jazz metaphor  148–9, 185, 236–9, 242, 259–60 jobs  2, 8, 12, 22, 69, 74–5, 129, 136, 152, 218, 229, 232–3, 255, 257 Johansson-Sköldberg, U.  40, 50–1, 79, 279 Johnston, R. B.  30–1 joint action  109, 120–1, 257, 271–2 Jonas, W.  112 Jones, T. M.  175–6 Julier, G.  265–8 Junginger, S.  104, 116, 123 Kahn, R. L.  19–20 Kallinikos 244–5 Kane, A. A.  129, 146, 163–4 Kane, C. G.  245t Kates, A.  5, 29 Katz, D.  19–20 Kay, N. M.  98 Kazmierczak, E. T.  54–6

OUP CORRECTED AUTOPAGE PROOFS – FINAL, 15/08/20, SPi

314 Index Khashoggi affair  9 Kiesler, S.  31 Kilman, R. H.  31 Kimbell, L.  11, 48, 266–7 Kimberly, J. R.  24–5, 226 Kim, W. C.  279 King, A. W.  146–7, 165 King, B. G.  8–9, 15, 82–5, 83f knowledge-based approach (KBA)  75–7, 129 knowledge-qua-design  17, 63, 72, 74, 76–80, 80f, 97–102, 259 Kogut, B.  95–6, 129, 146, 164 Kolko, J.  40–1, 252 Kotha, S.  32 Kranton, R. E.  130, 146, 163–4, 181 Krippendorff, K.  2, 9–10, 44, 47–8, 50–4, 62, 103, 136–45, 147, 151, 154–6, 184–5, 187, 195, 214, 222, 233–4, 253–4, 256, 263–4 The Semantic Turn  52, 253–4 Kumaraswamy, A.  35 Kwon, S. W.  128–30, 132t, 134–5, 152 Laakso, M.  38–9, 39t Lander, M. W.  86 Lane, V. R.  169–70, 172–3 Langley, A.  279 Lanzara, G. F.  15, 63, 103–5, 107–10, 267 Larsen, M. H. The Expressive Organization 8 Lave, J.  73–4, 78, 95–6 Lawrence, P. R.  22 Lawson, B.  50 leaderful designing 12f, 254, 269–73 organization design  16, 18, 252, 269–70 organization design(ing)  267–72, 275, 280f practices  120, 254, 260–3, 268, 281t leadership-as-practice (L-A-P)  178, 253–4, 258–62, 268–9 legitimacy  81–2, 85–7, 101, 106, 169f, 172–3, 182–3, 232–3, 281t lemonade principle  205 Leonardi, P. M.  143, 231, 245–6 levers of control (LOC)  88–9 Lewin, A. Y.  35–6 Linux  33, 119, 250 Lorsch, J. W.  22 Lovallo, D.  40 Löwstedt, J.  31 Lundberg, N.  229–30

Lusch, R. F.  14, 147, 153, 180–1, 186, 188–93, 195, 274–5 Lyytinen, K.  229–30 Magalhães, R.  119 Maines, D. R.  52–3 Mantere, S.  278–9 Manzini, E.  266–8 March, J. G.  1, 19–20, 137, 154, 214–15, 223–4 Martin, J. A.  97–8 Martin, R.  6–7, 38–9 materiality  67, 137, 142–3, 222, 233–4, see also sociomateriality Maturana, H. R.  66, 112, 114–15 Mauborgne 279 Mayo, E.  123, 232 McCulloch, W. S.  224 McDonnell, E.  213, 216f McEvily, B.  24, 34, 117, 148, 225–6, 233, 239–40 McKelvey, B.  47 Mead, M.  107 meaning-driven innovation  45, 187, 196–202, 212–13 meaning-making  8, 68f, 255–60, 268–9 meaning-taking  8, 268–9 meta-competency  97–8, 277–8, see also competency meta-organization  32–3, 104–5, 107 Meyer, J. W.  29–30 Meyers, P. Knowledge Management and Organization Design 78 Micheli, P.  40, 254–5 Michel, S.  193 micro-electro-mechanical sensors (MEMS)  200–1, 201f Microsoft  200–1, 217–18 Miettinen, R.  62–3 Miller, D.  22–4, 125 mind-set 39t, 150–1, 154, 156–7, 176, 178–81, 184, 191, 201–3, 215, 216f, 220, 261–2, 270–1, 275, 281t Mintzberg, H.  22–3, 27, 104–5, 128–9, 184, 226, 229 ‘The Fall and Rise of Strategic Planning’ 27–8 Mitroff, I.  20 modalities 228–9 of structuration  227–8, 228f, 232 modernism 279

OUP CORRECTED AUTOPAGE PROOFS – FINAL, 15/08/20, SPi

Index  315 modernity 115 monetary systems  186–7, 194–5 Monteiro, P.  61–2, 64, 126–7, 164 Moran, P.  2, 74–5 Morgan, G.  43–4, 256 Images of Organization 72 Morillo, M.  45, 212, 259–60 Mumby, D.  115–16 Nadler, D.  28 Nag, R.  169 Nahapiet, J.  35, 128–31, 132t, 134–6, 151, 154, 221 Nelson, H. G.  8, 49, 124–5, 136–7, 139–43, 188, 257 Nelson, R. R.  92 Ng, I.  202 Nicolini, D.  47–8, 61–2, 64, 92, 103, 105, 107–8, 116, 126–7 Nintendo Wii  200–2, 201f, 212 Nokia  84, 167, 214–15 Nonaka, I.  44, 73–7, 99–100, 224 Nonet, G.  184 non-human actors  100f, 105, 247, 251 non-human agents  160 non-predictive control  215, 216f logic 201–2 strategies 215–16 Norman, D. A.  198–200, 200f, 212 normative core 176–8 design 49 dimension  9, 131, 144, 177–8 discourse 155–6 logic  14, 155–8, 161–2, 172–85, 219, 270, 281t principles 159 strategy 25 structures 231 territory 95 Öberg, A.  196 Ocasio, W.  30, 126 ontogenesis  74, 80f ontological bases 72 building bocks  100f flavour 130–1 focus  37, 38t foundation  70, 210 framework 80

model  79–82, 90–1, 100–1 stance 202 thinking 72 ontology  16–17, 21, 79, 99, 101, 107–8, 112–13, 130–1, 135, 257 organizational actors  148, 153–4, 163, 182, 191, 227, 230, 232–3, 237–8, 255 Orlikowski, W. J.  62, 78, 228f, 230–2 Otley, D.  89–90 Ouchi, W. G.  128–31, 132t, 134–5, 151 Ozcan, K.  3, 5, 180, 190 paradigms  1–9, 14, 104–5, 153, 156, 180–1, 183, 190, 199, 213, 216–18, 225, 252–4, 264–5, 267, 270, 272–5, 280 Parrish, B. D.  32, 34, 78–9, 278 Penrose, E.  73–5, 192 Pentland, B.  92–3, 246, 248f perceived design  5, 17, 80–8, 80f, 90–1, 101–3, 231–2, 280f, 281t perceived meanings  55–6, 59f , 68–71, 79 perceived organization design  12f, 44, 81, 85–6, 102–3, 173, 182 performance  19, 149, 233, 235 performance management systems (PMS) 80f, 89–91 Perrow, C.  223–4 Peteraf, M. A.  75–6 Pfeffer, J.  2, 183–4 pilot in the plane principle  205 Pipek, V.  127–8, 229–30 planning, see enterprise resource planning (ERP), strategic planning platform organization  32–3, 104–10, 116, 242–3 Poirier, L.  127 Pondy, L.  20 Poole, M. S.  230 Pope Francis  183 positivist intellectual environment  123 paradigm 5–6 sensitivities 20 stance 21 viewpoint 211–12 Powell, W. W.  29–30, 126 practice theory  9–12, 17, 48–9, 61–4, 70, 105, 107, 115–16, 126–7 practice-based approach 48 competencies 80f, 91–100 leaderful organization design  269

OUP CORRECTED AUTOPAGE PROOFS – FINAL, 15/08/20, SPi

316 Index practice-based (cont.) learning 96–7 model 268 theorists 126–7 Prahalad, C. K.  3, 190, 213 Pratt, M. G.  172–3 Preston, L. E.  149, 176 product innovation  45, 196–200, 200f profit  1, 9, 12, 41–2, 74–5, 145, 149, 155–6, 174, 176, 179–81, 202, 205, 219–20, 236 Pugh, D. S.  21–2, 128–9 Purnell, L. S.  176–7 Putnam, L. L.  43–4, 115–16 Pye, A.  255 Quiring, O.  143, 246 Raelin, J. A.  16, 253–4, 258–60, 262–3, 268–70, 272 Ramaswamy, V.  3, 5, 180, 190 Rappaport, A.  174 Read, S.  187, 206, 211–12, 215–16 Reckwitz, A.  11, 61, 115 reflection-in-action  73–4, 77, 277–8 re-search  137, 138f, 140–1, 147–8, 154, 187, 214–15 resource-based approach  73–4, 210 resource-based genesis  74–6 resource-based view (RBV)  75–6 Rindova, V. P.  32 Rittel, H.  50–1 Roberts, J.  36 Roberts, K. H.  31, 35, 103–4, 108–10, 114, 250, 271–2 Romanelli, E.  22–3 Romme, A. G. L.  6, 32–3 Roos, J.  77 Organizational Epistemology 75 Rowan, B.  29–30 Rumelt, R.  75–6, 210 Sadler, P.  276–7 Salaman, G.  43–4 Salancik, G. R.  240 Samsung 84 Sarasvathy, S. D.  14, 32, 34, 147–8, 153–4, 180–1, 187–8, 201–4, 203f, 206, 209–10, 209f, 214, 216–18, 278 Schatzki, T.  11, 61–2, 126–7 Schneider, S.  107 Schon, D.  50–2, 73–4, 77, 170, 212, 278 ‘Art of Managing’  277–8

Schultz, M.  44, 161, 163, 165 Schumpeter, J. A.  73–5, 202–4 sciences of the artificial  5–6, 47–9, 53, 277 Scott, S. G.  169–70, 172–3 Scott, S. V.  231 Scott, W. R.  19–20, 226 Seidl, D.  165–7, 166f Selznick, P.  21, 42–3, 86 semantic foundation 93 issues 278 relationship  13, 161 turn  52–3, 64–5, 253–4, 263 semantics 135–6 semiotic artefacts  263–4, 270 semiotic interfaces  54–5 semiotics 59f sense-making  15, 57–8, 66, 111–18, 120–1, 162–4, 166–7, 172, 176–7, 226–7, 240, 271–2, 279 service-dominant (S-D) logic  145, 147, 180, 186, 188–90, 281t service logic  12f, 134–5, 150–1, 153, 156–7, 186, 188–95, 207–8, 218–20 service systems  147, 186, 194f Shani, A. B.  45, 217–18, 259–60 shareholder capitalism  178–81, 183–4, see also capitalism, stakeholder capitalism shareholders  67, 150, 174, 176, 179, 183, see also stakeholders, stockholders shareholder value  149, 181 Shotter, J.  256–7 Shrivastava, P.  107 Simon, H. A.  2, 5–6, 19–20, 24–8, 47–50, 53, 56–7, 56t, 103, 146, 158, 164, 181, 183–4, 191–2, 203–4, 223–4, 277 The Sciences of the Artificial 26 Simonian conception of design  50–1 influences 25–9 tradition 33 Simons, R.  28, 89, 129 Levers of Control 88–9 Levers of Organization Design 88–9 Sloan, A. P.  19 Smircich, L.  44, 256 Smith, A.  178–9, 207–8 Snodgrass, A.  51, 57–8, 79, 100, 111, 139, 212 Snow, C. C.  4, 22–4

OUP CORRECTED AUTOPAGE PROOFS – FINAL, 15/08/20, SPi

Index  317 social actors  8–9, 15, 73, 80f, 82–8, 83f, 100–1, 100f, 161–2, 173, 181, 183–4, 192–3, 227, 274 social constructionism  43–4, 52–3, 63, 107, 255, 257, 264–5 social constructionist approach  23–4, 257 leadership  255, 258 logic  255, 257 perspective 54 theories 43–4 thought 44 social constructionists  4–5, 53, 265 sociocultural change 197–8 regimes/models 197–9 trends 196 socioeconomic actors 192 interface 194–5 landscape 2 trends 201–2 sociomaterial architecture 48 component 105 constructs 231 entity 105 environments 103–4 infrastructure 154 perspective 228f, 238f practices  11, 48, 143, 228f properties 232 trace of affect  115–18 world 266–7 sociomateriality  73, 107, 229–32, 238–9 see also materiality Soda, G.  35–7 Soderstrom, S. B.  15–16, 118, 222–3, 240–1, 243, 249–51 software  3, 72, 119, 127, 246, 272 Sony  200–1, 201f Sproull, L.  31 stakeholder capitalism  3, 179–81, 183–4, see also capitalism, shareholder capitalism stakeholders  3, 5, 9–12, 14–15, 17, 27, 39t, 45–6, 48–51, 59f, 60, 68–73, 80–2, 80f, 84–8, 90–2, 101, 103, 106, 123, 136–7, 141–7, 149–53, 155, 157, 159–64, 166–75, 169f, 179–87, 177–8, 192, 194–6, 201–2, 206, 207t, 208, 215, 219, 221–2, 252, 258, 270, 272–3, 275, 281t, see also shareholders, stockholders

stakeholder theory  3, 149–50, 173–82 standard operating procedure (SOP)  3, 127, 220 Stanford, N.  5 Stapleton, M.  113–14, 146–7 Starbucks  45, 217–18 Starbuck, W. H.  2, 4 Starkey, K.  184–5 Star Model  5, 29 Stewart, A. C.  172–3 Stigliani, I.  40, 254–5 stockholders  14, 149, 162, 165, 167, 175, see also shareholders, stakeholders Stolterman, E.  8, 49, 124–5, 136–7, 139–43, 188, 257 Strand, R.  178–9 strategic planning  5, 26–8, 40, 89, 213–14 strategy-as-practice  40–1, 99, 278–9 structuration  222–3, 226–32, 228f, 238–43, 248–51 structure-in-practice  3–4, 264 structuring  3, 31, 78, 111, 221–3, 226–9, 240–1 Suchman, L.  27–8, 78, 86, 172, 182–3 Sugiman, T.  4–5, 52, 264–5 superordinate ambition  13, 137, 161, 280f, 281t meanings  13, 59–60, 138–40, 151, 157, 161, 163, 280f mechanisms  129, 146 organizational identity  163–4 sustainability  3, 78–9, 149, 196–7, 263, 265, 268, 278 Sutton, R. I.  86–7 symbolic action/interaction  37–8, 43–4, 46, 275 activity 186–7 artefacts  107 content 43–4 expression 107 information 146–7 meanings 196 media 255 practices 172–3 representations 96 value  10–11, 196 symbols  54–6, 55f, 165, 186–7, 191, 193–7 systemic activity 257 approaches  16–17, 34–8 design  9, 29, 49, 124–6, 137, 143, 148–9 emergence 99–100

OUP CORRECTED AUTOPAGE PROOFS – FINAL, 15/08/20, SPi

318 Index systemic (cont.) flavour 35 integration  54–6, 55f model 103 perspectives 31t, 37, 192 relationships 141–2 view 34–5 systemics  54–6, 103, 124–5, 142–3, 157, 159f, 280f Takeuchi, H.  44, 73–5, 77, 224 Taylor, F. W.  123 technological artefacts 231–2 basis 250 changes 208 characteristics 212–13 infrastructure 119 innovation  45, 198 systems 246 vision 212 technology-push innovation  198–201, 200f Teece, D. J.  97–8 Tempest, S.  184–5 Thompson, E.  15, 103–4 Thompson, J.  22, 223–4 Thornton, P.  30, 126 Thorpe, R.  256–7 three-layered model  228 Thunberg, G.  1, 268 Tilson, D.  234 Torrance, S.  146–7, 149–50, 165 trace, see affectual trace, causal trace, design trace, interaction trace, sociomaterial trace transaction cost economics (TCE)  191 triangular theory  17, 48–9, 67–70 Tribolet, J.  119 Trist, E. L.  232 Tsoukas, H.  75 Tushman, M.  28 Twitter 225–6 Unger, R. M.  107 United Nations  1, 183, 268 Uzzi, B.  35 Vaara, E.  279 Van Aken, J. E.  6 Van der Bijl-Brouwer, M.  10

Van de Ven, A. H.  4, 23–5 Varela, F. J.  66, 112–13, 209–10 Vargo, S. L.  14, 147, 153, 180–1, 186–90, 192–5, 194f, 274–5 Venkataraman, S.  130 Verganti, R.  10–11, 45, 187, 195–200, 200f, 212–13, 217–18, 220, 259–60 Volberda, H. W.  35–6 Volkswagen  86, 140 Von Krogh, G.  76–7 Organizational Epistemology 75 Vygotsky, L. S.  62–3 Wagemans, J.  106 Wales, W.  216 Ward, D.  113–14, 146–7 Webber, M.  50–1 Weber, K.  15–16, 118, 222–3, 240–1, 243, 249–51 Weber, M.  7–8, 19–22, 123, 128–9 Weick, K. E.  4, 24–5, 31, 31t, 53–4, 57, 62, 103–4, 108–12, 114, 121–2, 162–3, 176–7, 250, 271–2 Wenger, E.  73–4, 78, 94 Wenger-Trayner, E.  73–4 WhatsApp 225–6 Whetten, D. A.  151 Whittington, R.  40–1, 97, 227, 278–9 Wicks, A. C.  149, 174–5, 219 Wieland, H.  186, 192 Wikipedia  33, 119, 250 Williams, J.  149–50, 172, 219 Williamson, O. E.  191 Wiltbank, R.  204–5 Winter, S.  92 Wittgenstein, L.  52–3, 65 Woodilla, J.  79, 279 Woods, P. A.  261 Woodward, J.  21–2 Worren, N.  5 Wulf, V.  127–8, 229–30 Yanow, D. M.  44 Yoo, Y.  32–3, 106, 116, 121, 235, 237, 278 York, J. G.  191–2 Zacarias, M.  119 Zammuto, R. F.  225 Zander, U.  95–6, 129, 146, 164 Zell, D.  184