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Traditional responses of corporate strategy, hierarchical structures and control systems are among the major factors that inhibit the flexibility of a company, its ability to take up new opportunities and thrive in the ever changing external relationships. Mainly, these factors are caused by organizational similarity. Organizations need to be legitimate. Most of their behavioral and structural aspects are targeted towards environmental acceptance rather than internal organization similarity. Hence, most organizations tend to be similar, adopting traditional business practices. The success of companies is mainly determined by their flexibility to changing needs, new opportunities and the ability to create new and healthy relationships in the business environment. Thus, companies find it necessary to transit from traditional strategies to more innovative organizational forms.
Two themes that influence the transition from traditional responses of corporate strategy include the amount of complexity and change and scarcity of financial and material resources. The amount of complexity and change within an organization has an influence on the need for information. It also brings about uncertainty within the organization. A high level of information uncertainty is solved through high level of structural flexibility, along with establishing additional boundary roles and departments. This means moving away from conventional responses of corporate strategy and designing hierarchical structures and control systems. When the level of doubt is low, organizational structures are mechanistic, while the figure of boundary roles and departments is smaller. In terms of scarcity of resources, if an organization is highly dependent on other organizations for resources, establishing favourable resources is crucial. If reliance on external resources is low, the company’s autonomy can be maintained and hence to need to establish favourable linkage. However, no organization is self dependent; organizations have to keep relying on each other hence indicating the need for favourable linkages by making adjustments form the traditional management practices.
The way in which traditional corporate strategies hinder the organizations’ ability to adapt to the ever changing environmental needs and take up new opportunities can be illustrated using the organizations’ population ecology model as follows;
Population ecology
This concept is derived from natural selection theory in Biology. The biological evolution theories aim at explaining why life forms emerge and survive as best fitted to their immediate environment. The organizations’ population ecology helps explain why some organizations adapt to fit into the environment and why they either survive or fail. The concept gives a varying perspective on the relation among different organizations. It differs from other perspectives because it puts emphasis on organizational adaptation and diversity among other organizations or populations. I this case, a population can be described as a number of organizations that take part in the same activities, with the same resource utilization patterns and outcomes. These organizations compete for the same resources and customers. The main question that emerges from the population is why new organizational forms are appearing to move from the traditional management practices. Well, organizations change to adapt to the changing environment. Change and innovation within a population occurs through evolution of new kinds and forms of organizations, in addition to making reforms on the traditional management practices within the existing organizations. Most organizational forms are stable, limiting the organizations from new opportunities. Enforcement of modern management practices by entrepreneurial abilities open the organizations up to new opportunities. New organizations and reformed organizations are able to meet societal needs more efficiently compared to the established organizations that have rigid management practices which are resistant to change.
In practical terms, the theory means that established and rigid organizations grow big but fail to change depending on the needs of the society. For example, companies like Barnes & Nobel and Toys “R” Us have a lot of difficulty trying to adopt to the continuously changing environment. Therefore, innovative and competitive forms such as Amazon.com and e Toys attract customers away from the large companies. Large established companies are having a hard time shifting to the internet business model due to their rigid traditional management practices. According to the organizations’ population ecology, traditional practices that limit the companies from change include limited information, huge investments in plant, highly specialized personnel and use of the company’s history to justify existing procedures. Most importantly, inability to change the existing corporate culture also limits organization’s ability to change and take up new opportunities.
Currently, new and innovative organizational forms are emerging. Taking the example of gas stations, they initially sold gas and only a few offered repair services. Currently, gas pumps are allocated close to most of the convenience stores. A new organizational form is emerging to require multiple facilities at the same site, for instance, a gas station, a dry cleaner and a fast food restaurant. Modern customers want to access facilities at a more convenient way compared to customers of decades ago. The travel industry was also dominated by only a few carriers. Currently, small low cost innovative carriers such as West Jet in Canada and South West Airlines in the U.S. Also, there has been an increase in the number of corporate universities simply because the desired services couldn’t be acquired from the big and established universities which are rigid due to their traditional ways of teaching and thinking.
According to the organizations’ population ecology model, the changing environment and needs determine the organizations that fail or survive. The main assumption is that organizations have structural issues and find it hard to adapt to changes. Therefore, when change occurs, the old established organizations have high chances of failing or declining, while the new innovative organizations or the reformed organizations thrive.
Organizational niche and form
Organizational form refers to an organization’s products, structure, personnel, goals and technology, which are determine by the environment. An organization makes an effort to acquire a niche which is adequate to support its activities. In this case, niche refers to a domain of certain unique and adequate environmental needs and resources. During the initial stages of the organization, the small is niche but gradually increases in size as the company grows and becomes successful. If the company does not have a niche, it is likely to decline or fail.
The survival of a firm is to some extent determined by randomness, chance and luck. In a bid to survive and succeed, new ideas and products are proposed in these organizations. Whether these organizational forms and ideas fail or survive, often, it is about chance, even though the factors are involved. If a person started a real estate business in a rapidly growing state like Florida, the business is likely to thrive. However, if the same person started the same business in a declining state, the business is likely to flop. Therefore the failure or success of an organization is dependent on environmental characteristics and the strategies or skills applied by the organization. For an organization to succeed, it has to move from traditional organizational forms take up innovative strategies that are in line with environmental needs.
Ecological change
It is the assumption of the model of population ecology that new and renewed organizations always emerge in a population. Hence, the populations continually experience change. Change in the organization population is defined by three principles; retention, variation and selection.
Variation
This dictates that new organizational forms appear in organization populations continually. New organizational forms are formulated by entrepreneurs who may have been rented by huge established organizations or the government in a bid to provide new services. Some forms may be established to meet certain perceived needs within the external environment. For example, a computer software company may be established to offer computer software, consultancy services and other services to large corporations or for the sake of internet commerce. Other companies may be established to develop steel at minimal expenses. Variations in organization can be compared to mutation of genes in Biology they increase the complexity and scope of organizational forms with the organization population.
Selection
This dictates that while some forms may suit the external environment, some will suit the environment better. Some appear to be more beneficial and hence acquire a niche for them to survive. Others are unable to meet the needs of the environment and hence fail. Only few of the organizations are ‘selected in’ to meet the needs of the environment. Those selected in have sufficient demand for the products and sufficient resources to meet the needs, coupled up with innovative management and control systems.
Retention
It involves maintenance of the institutionalization of the organizational forms that have been selected. The environment highly values certain services, products and technologies. Sometimes, the organizational forms which have been retain become a dominate part of our lives, basically the environment. Various organizations like automobile manufacturers, schools, government and churches have been institutionalized. For example, McDonald’s, which offers the initial jobs to a huge percentage of teenagers and holds large share in the industry if fast foods got institutionalized. Basically, organizations get institutionalized based on their ability to meet most of the needs in the environment, which also requires innovative management and business practices that can easily adapt to the environment.
Institutionalized organizations seem to be permanent structures in their populations but in the long run, they may not e permanent. The business environment keep changing every now and then and if institutionalized organizations do not renew their organizational forms to adopt to the change, they will fail or decline, and eventually they’ll be replaced by new and innovative organizations. Despite being an institutionalized organization, most of McDonald’s regular customers were attracted to Taco Bell because McDonald’s keep increasing fast food process yet the later offer food at relatively low prices. Hence, unless McDonald’s adapts to the changing environment, it may not be competitive in the fast food industry for long.
Survival strategies
The model of organization population ecology also presents the concept of competition of struggle for existence. Usually, organizations compete for resources and customers. Also, organizations struggle to survive. This struggle is usually intense among new organizations and new organizational forms. Survival of these new forms is dependent on characteristics of the larger environment. From the perspective of population ecology, specialist and generalist establish differences in the organizations in their struggle for survival. Specialist organizations are those covering a smaller niche and a smaller range of services and goods. Generalist organizations are those covering a wider niche and providing a wider range of services and goods. In the area which domains overlap, specialists are highly competitive compared to generalists. While demand for services and products for the generalists in this domain decrease, for some it increases. Moreover, due to product diversity, generalists easily internally relocate resources to adapt to the environment. Specialists are not able to adapt to the environment easily. However, since most of the specialist companies are small companies, sometimes, they move quickly and become highly flexible to adapting to the environment.
The impact of the management system on an organization’s success results from the selection of strategies which propel the company to an open environmental niche. The Charles Schwab Corp. emerged successful through creation of a new niche (houses for discount brokerage). Later, the company identified an open niche of online securities trading. This made the company a huge share in the market.
Role of the management
In this evolving world, organization’s managers put more emphasis on horizontal process instead of vertical processes. Many of the most important activities or initiatives in the organization are not only from the top downwards but also cut across the organizational units. Apart from organizational units’ boundaries, horizontal processes include linkage with customers and suppliers who are a vital part of the organization’s activities. Also, relationships with other organizations are an aspect of horizontal relationships.
Managers are in a good position to propel the organization to success. Instead of imposing their instructions to be enforced downwards, managers should also seek to hear out their employees at the organizational unit. Managers may not necessarily have all the ideas required solve issues within the company or to push the company towards success. On the other hand, employees are a number of people. Moreover, some companies are multicultural companies, meaning that they employ people from different cultures and geographical regions. There are numerous benefits that a company can enjoy if it puts in place systems that enhance contribution of the employees. First, the management is offered numerous ideas on how to solve issues affecting the company, from which they can pool to get the best idea. Second, in some of the organization’s major projects, the company is able to enjoy collective and high skilled input from all the employees, hence producing quality output. Mostly, since employees are from different places, they bring aboard ways used in their countries, which is a good way of enriching the organization’s output. Third, getting the employees involved brings about a sense of inclusiveness, respect and appreciation which motivates them to work towards achieving the organization’s goals.
Managers should also learn to appreciate the productive relationships with the organization’s suppliers and consumers. For example, instead of imposing high prices on their customers, the managers should devise strategies to ensure that the organization maintains healthy relationships with its consumers by ensuring that they are able to get their services and products at an affordable price. Also, instead of forcing suppliers into delivering products a considerably low price, managers should strive to understand the broader picture and find ways of taking part.
Managers should also make an effort to form a network with their competitors, regardless of the organizations’ sizes. Relationships among these companies are determined by whether the companies are dissimilar or similar and whether the relationship is expected to be cooperative or competitive. By understanding these factors, managers can form the best collaborative networks.
The network serves as an opportunity to collectively market their capabilities and skills and collectively acquire business processes which a single company could not acquire alone. The network also allows the organizations to share knowledge about business systems, share costs by making use of each other sales representatives, pass on customers and consult each other before making huge investments. Although they cooperate, the organizations will still compete. Cooperation is only meant to cut down costs, improve quality and increase revenues.
Initially, companies in North America believed in self reliance and individualism; each company worked by itself and competed with each other. However, the uncertain environment of business led to creation of corporate relationships. Companies collaborated and came together with the aim of sharing some of the scarcest resources.
In conclusion, as illustrated by the organizations’ population ecology model, traditional responses of corporate strategy, hierarchical structures and control systems largely inhibit the flexibility of a company, its ability to take up new opportunities and thrive in the ever changing external relationships. Since a business opportunity arises depending on needs in the environment, traditional practices limit the organization from being able to adapt to the needs hence losing the opportunity. Traditional practices are also cumbersome and time consuming. Further, managers are in a good position to influence the transition from traditional practices and maximize the benefits of new and innovative forms. Managers are in a god position of acquiring the collective input of the organization’s employees, suppliers and customers. Moreover, they are in a good position to lobby for a common business network with other competitors. These innovative organizational forms enable the organization to take up new opportunities and create healthy external relationship hence propelling the organization to success.
References
Abe, J. M. (2012). Business Ecology. Routledge.
Jonker, J. (2015). The future of corporate sustainability: Towards an ecology of organisations focused on sustainability. In new perspectives on corporate social responsibility , 23-47.
Watson, T. (2013). Management, organisation and employmnet strategy: New directions in theory and practice. Routledge.
