Organization is a unity that some people create to reach their objectives, however, the founders of organization cannot control everything. There are some stakeholders who affect organization or get affected by organization. Organization and its stakeholders live in an environment. In this environment, organization has three dimensions: 1) Contextual dimension, 2) System design dimension, and 3) Effectiveness dimension. Organization should take these dimensions into consideration during its planning process (McLarney 2003, p.423).
There are two main approaches of managing organization: planned and emergent approaches. Both analytical/planned and emergent approaches have pros and cons. Organization has some resources and uses them to reach its objectives: 1) Tangible, 2) Intangible, and 3) Capabilities. While making strategies, organization takes these into consideration and tries use them efficiently (Collis and Montgomery 2008, p.145 and Grant 1991, p.116).
Planned approach tries to foresee all variables changes and create a planned set of activities in time (Mitzberg and Waters 1985, p.258). Thus, everybody and every unit in organization know the next action to be taken. Planned approach brings us the following principles in organization: 1) Controllability, 2) Clear beginning, continuing and ending, 3) Processes driven by management, 4) Promising a success as a result of following a line, 5) Spending more time on decision making process, 6) Resistance against change, 6) Time consistency problems in activities due to change.
Planned approach tries to make a strategic plan appriory and it insists on a development depending on this plan strictly (Mintzberg and Waters 259). This approach can create advantages to produce a line of activities for organization with lower risks because of a well developed plan. The strategic plan draws a line of development and gives some alternatives which might be taken when an unexpected change occurs, however, it might not be elastic enough to adjust to an unexpected change in the environment of organization (McGahan 1994, p.3). Also the decision making processes might take longer times and create extra costs for organization. If organization cannot create a well designed strategic development plan, then it might make organization resist against unexpected changes which might cause higher costs and disadvantages for organization. If no change occurs during the planned term, it is highly possible that organization's development plan can be succeeded.
Emergent approach is a distinct approach from planned approach. It has the following working criteria: 1) Continuous processes of adaptation and experimentation, 2) Possible multi level changes in organization, 3) Interaction between processes, 4) Managing change in organization instead of strictly insisting on a stable plan, 5) Inefficiency due to messiness in organization, 6) Taking respectively more management controlling precautions, and 7) Inefficiency in organization's activities due to messiness. Emergent approaches is a design that keeps organization responsive to any change in the environment in which organization runs. According to this approach, organization should develop a dynamic design and everybody in organization should be more elastic to changes (Mintzberg and Waters 1985, p.258). The objective of this approach is to find ways to reach its objectives in a continuously changing environment and minimize riskiness by creating some mechanisms which enable organization to respond to changes timely. However, such a design requires more controlling mechanisms and that might create higher costs for organization. Also this approach might create messiness in organization. The size of messiness will be negatively correlated with success.
The best approach in designing an organization is the one which enables organization run smoothly and reach its objectives (Porter 1996, p.64). To be able to create such a design requires gathering some information about the environment in which organization runs (Grant 1991, p.119). Organization aims at reaching a set of objectives which means organization will move from an initial point and reach an end point where its objectives are realized theoretically. During this journey, organization will go through some processes; some of them might have certain conditions and those conditions can be foreseen appriory, however, some processes might have more fluctuating characteristics (Porter 1996/2008/1979).
Designers should do a list of processes that organization has to pass. After defining each process, they should study on the characteristics of each process and then define possible fluctuations in these processes (Porter 2008/1979, p.70). Upon completing defining processes and possible fluctuations, designers should classify processes in terms of possible fluctuations sizes; some fluctuations can be small enough and can be ignored whereas some of them might require a more elastic organization which can gives proper responses to changes so that organization can pass this process successfully (Brown’s Video). For the processes with small possible fluctuations, organization can develop a strategic plan with a planned approach. Designers should be careful that any change in these processes should not be large enough to lead organization an undesired biased results. For the processes with larger fluctuations, emergent approach is to be utilized so that organization can have a proper responses creating mechanism (Yoffie 2006, p.12).
Considering that two or more process might occur simultaneously or subsequently, designers should create a strategy using a mix of planned and emergent approaches.
Which benefits do you see in either approach for managing a firm and for legitimizing your actions and gaining support from different stakeholders?
Stakeholders with different objective settings and different characteristics are very essential agents for an organization because they might affect organization deeply. Organization aims at maximizing all stakeholders’ utilities which are defined according to their utility functions depending on organization’s capabilities (Barney 1995, p.51). To be able to legitimize actions and gain support from different stakeholders, organization management should express some values that organization is supposed to follow during its operations. Transparency, being open to participation, transparent recording of organization’s activities and accountability are some of them. If organization follows these principles, then stakeholders can create a trust for organization management and that enables management to gain stakeholders’ trust and support. Otherwise, stakeholders might create a riskier environment for organization management and it might lead organization biased results (Barney 1995, p.51).
While taking considerations of stakeholders, another important issue is to assess the value of resources. The resources that organization uses to produce might have time varying values and management should be able to use them timely so that they can maximize stakeholders’ utilities (Collis and Montgomery 2008, p.143 and Yoffie 2006, p.9).
If mechanisms are well-developed, then emergent approach might show stakeholders that even though very strong fluctuations are in the environment, organization is not getting damaged and even organization is a learning organization which can adapt easily to changing conditions. However, a reverse situation might occur and organization might lose all stakeholders’ trust.
Planned approach might be considered more trustable, however, planning everything in details might increase fragility of organization and even small fluctuations might create very large costs.
Considering that stakeholders’ type of risk lover or risk aversion, their approach preferences can be different. Depending on their types, they might prefer an emergent approach or a planned approach or mix of them.
References
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