Organisational choice and disruptive technologyBlog

By Hans Lekkerkerk (and Jesper Hanssen)

Improving the quality of work in organisations should be an important goal for organisation designers. Two of the things that can really threaten QoW are poor organisational structure design and poor implementation of technology.

These two are in this year’s EODF conference theme ‘Designing and leading technology enabled organisations’ because implementing (disruptive) technologies has such an influence on many jobs, that it is more an organisational redesign endeavour, than just a technological innovation project.

Our aim in the pre-conference workshop is to introduce you to an organisational design methodology that helps you to improve the quality of work by a smart approach to design the division of labour and the coordination and control work, and then redesign and adapt the technology to the demands of the worker.

Let me tell you something about the view on technology first, and then say something about smart structuring.

There is a long history of organisations struggling with implementation of technological innovations. You all know the much-cited number that hardly 30% of these projects succeeds. Part of the 70% failures even caused the demise of the organisation. Large ICT projects are among these fail statistics. In the 1980s a lot of industrial automation projects went wrong. Most of you will know the Durham case that the Tavistock institute studied in the 1950s. Large investments in mechanizing coal getting, but no increase in productivity and a detrimental effect on worker morale. An even older example is the Dutch National Giro in the 1920s. Its payment service was forced to close for 1,5 year because centralizing and mechanizing the processing of payments with punch cards, led to a total disaster. So, it seems that in organisations mistakes are made when implementing technology.

Now there is hardly any technology that an organisation may want to implement that is not influencing a large number of jobs some way or another; jobs change, jobs become obsolete, and new jobs are created. An industrial robot needs a programmer, and takes work from craftsmen, leaving them without a job, or one in which their craftsmanship is valueless.
An artificial intelligence based workflow can automatically process most insurance claims or income tax returns, and the claims and returns processors are only needed for complex cases, or those that are labeled suspicious by the AI-system.

This brings us to organisational structure design. Changing jobs and loss of jobs imply a change in the structure. That may be accommodated without changing the overall structure (or the basic look of the orgchart), by adding a few programmers here, and reducing headcount there. The new technology may also limit the freedom to change the organisational structure, during its economic or technical lifespan. Two examples: A big, economies of scale bottleneck piece of technology, a ‘monument’ in lean speak’, will normally work for 5 or more years. Should you want to implement a lean, flow-based structure say two years after you turned the key of this bottleneck, you can’t, because the monument is a shared resource for all the flows. Or, once an ERP-system is flexibly adapted to the existing structure, changing the basic division of labour in the primary process, is possible only with a complete re-implementation of the ‘flexible’ ERP-system.

These examples indicate that implementing a technology while taking the existing structure as a given, is a recipe for disaster in the worst case, or at least for growing discontent and loss of QoW. You are stuck with a combination of technology and structure that is as flexible as reinforced concrete. So, wouldn’t it be a better idea to start a technology implementation project with diagnosing the existing structure?

The outcome of this diagnosis, will probably be that the existing structure is not future proof, and does not help in realizing the purpose and strategic goals. When units on the shop or office floor are activity based, there is a tremendous coordination effort needed to get the customer orders processed via all the units. Like the baton in a relay race falls at the handover between runners, the interfaces between the units in a process are a notorious source of trouble. Trouble that must be solved by coordination and control activities, to keep customer satisfaction high enough. The activity based or functional structure are the rule rather than the exception. And at the same time the amount of workers suffering from burn-out is rapidly increasing in more advanced economies. For the Netherlands it’s 14% averaged over various occupational subsets, with education and healthcare as sectors with highest number of burn-outs.

Karasek found that in individual jobs there must be a balance between job demands and job control. High demands with low levels of (self)control lead to stress, resulting in burn-out of the worker in a unbalanced job. The content of each and every job in an organisation is the end result of structure (re-)design and the structure is also shaped by the technology implemented in the past.

So, any organisation faced with an emerging and potentially disrupting technology, will probably have a poor structure. When taking learning from the past seriously, there is only one way out: you need an integral approach enabling you to design a future proof structure with high quality of work jobs, and match the disruptive technology to the needs of the workers. Or systems follow structure.

In our pre-conference workshop in the UK, Jesper and I will show you this approach that has been developed in the Lowlands over the last 40 years at various universities. It has been tried and tested by consultants in all kinds of organisations, but for some reasons we kept this OD-pearl in the oyster of the Dutch language. When applied carefully you at least fulfill a necessary condition for success.

We hope to see you on October 24th in our workshop.
Hans ( L.J. Lekkerkerk)

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