On The Margins

Tuesday September 28, 2004

[ Economics ] Simple vs. Complex Organizations

Simple facts are often quite difficult to recognize, remember or articulate. They just are true. So, for example, why do we work in teams? We don't really know. For many of us, it is just the way it is. Earlier, I wrote about how Chester Barnard, father of modern organizational theory, draws a distinction between effectiveness and efficiency. Here, I will add a short note on how he draws the distinction between "simple" and "complex" organizations. Barnard was very interested in how organizations actually formed. He gives examples of spontaneous organizations, where people get organized because of some accident. Any person in an urban area who has witnessed an open source conference, a disaster, a revolution, military action or occupation knows how spontaneous, simple organizations form to handle particular tasks unachievable as an individual. Such spontaneous organizations are usually of a small size.

The largest simple organization, according to Barnard, are probably orchestras and speaking forums where the audience and the speaker form, at least, a temporary organization. These large simple organizations, according to Barnard, share a common theme. They all imply a mostly unidirectional communication from the leader (conductor, speaker) to the rest of the members. They all involve well-understood, specialized symbolism, sometimes even a specialized language (e.g. musical notes, the conductor's movements, etc.).

In his 1938 book, The Functions of the Executive (Harvard University Press), Barnard writes

The clue to the structural requirements of large complex organizations lies in the reason for the limitations of the size of simple organizations. The limitations are inherent in the necessities of intercommunication. . . . [Communication] between persons as an essential element of cooperative systems; it is also the limiting factor in the size of simple organizations and, therefore, a dominant factor in the structure of complex organizations.

The key here is that Barnard sees the large, complex oragnization as a byproduct of the smaller, simpler organizations through growth, divisions and mergers. He also sees "intercommunication" as the limiting constraint on the size of simple organizations, a limiting constraint that also plays the most significant role in determining the structure of the complex organizations such as a corporation.

I wonder what role blogs will play in complex organizations. Corporate blogs could be a centrifugal and gravitational force that help an organization to reconfigure and hold together spontaneously and continuously, but that view seems like an exaggerated one. I guess we will have to wait and see how it all unfolds.

2004-09-28 12:14:38.0 -- ; Permalink ; Trackback.