Organizational Strategy, Structure, and Process (Stanford Business Classics) - Softcover

Miles, Raymond E.; Snow, Charles C.

Softcover

ISBN 10: 0804748403 ISBN 13: 9780804748407

Publisher: Stanford Business Books, 2003

Synopsis

"Books and articles come and go, endlessly. But a few do stick, and this book is such a one. Organizational Strategy, Structure, and Process broke fresh ground in the understanding of strategy at a time when thinking about strategy was still in its early days, and it has not been displaced since."

―David J. Hickson, Emeritus Professor of International Management & Organization, University of Bradford School of Management

Originally published in 1978, Organizational Strategy, Structure, and Process became an instant classic, as it bridged the formerly separate fields of strategic management and organizational behavior. In this Stanford Business Classics reissue, noted strategy scholar Donald Hambrick provides a new introduction that describes the book's contribution to the field of organization studies. Miles and Snow also contribute new introductory material to update the book's central concepts and themes.

Organizational Strategy, Structure, and Process focuses on how organizations adapt to their environments. The book introduced a theoretical framework composed of a dynamic adaptive cycle and an empirically based strategy typology showing four different types of adaptation. This framework helped to define subsequent research by other scholars on important topics such as configurational analysis, organizational fit, strategic human resource management, and multi-firm network organizations.

About this title

About the Author

Raymond E. Miles is Professor Emeritus and former Dean of the Haas School of Business, University of California, Berkeley. He is currently writing a book on entrepreneurial strategies to be published by Stanford Business Books. Charles C. Snow is the Mellon Foundation Professor of Business Administration at Penn State University. He teaches in the areas of strategic management and international business.

From the Back Cover

"Miles and Snow's path-breaking work seems as fresh and original today as when it was originally published. Their pioneering efforts at linking strategy, structure, process, and a management mindset is a model for today's researchers who seek to be both academically respectable yet managerially relevant. This book belongs in the core collection of any manager or serious student of strategy organization or management." --Christopher Bartlett, Thomas D. Casserly Professor of Business
Administration, Harvard Business School
"I grew up with Organizational Strategy, Structure, and Process as the primary intellectual framework for understanding business-level strategy. Now, twenty-five years later, this book remains as relevant and insightful as when it was written. All those who are interested in business strategy, whether, an academic or a manager, need to read this book as a foundational text." --S. Ghoshal, Professor of Strategic Leadership, London Business School

From the Inside Flap

"Books and articles come and go, endlessly. But a few do stick, and this book is such a one. Organizational Strategy, Structure, and Process broke fresh ground in the understanding of strategy at a time when thinking about strategy was still in its early days, and it has not been displaced since."
--David J. Hickson, Emeritus Professor of International Management & Organization, University of Bradford School of Management
Originally published in 1978, Organizational Strategy, Structure, and Process became an instant classic, as it bridged the formerly separate fields of strategic management and organizational behavior. In this Stanford Business Classics reissue, noted strategy scholar Donald Hambrick provides a new introduction that describes the book's contribution to the field of organization studies. Miles and Snow also contribute new introductory material to update the book's central concepts and themes.
Organizational Strategy, Structure, and Process focuses on how organizations adapt to their environments. The book introduced a theoretical framework composed of a dynamic adaptive cycle and an empirically based strategy typology showing four different types of adaptation. This framework helped to define subsequent research by other scholars on important topics such as configurational analysis, organizational fit, strategic human resource management, and multi-firm network organizations.

Excerpt. © Reprinted by permission. All rights reserved.

Organizational Strategy, Structure, and Process

By Raymond E. Miles Charles C. Snow

Stanford University Press

Copyright © 2003 Board of Trustees of the Leland Stanford Junior University
All right reserved.
ISBN: 978-0-8047-4840-7

Contents

Foreword to the Classic Edition Donald C. Hambrick............................................viiIntroduction to the Classic Edition............................................................xvPreface........................................................................................xxvI. Theory and Applications1. Introduction................................................................................32. The Process of Organizational Adaptation....................................................133. Defenders...................................................................................314. Prospectors.................................................................................495. Analyzers...................................................................................686. Reactors....................................................................................817. Applications of the Model...................................................................948. Management Theory Linkages to Organizational Strategy and Structure.........................1169. Mixed Strategies and Structures.............................................................13010. Conclusions and Extensions.................................................................152II. Industry Studies11. Strategy in a Single Industry: The Case of College Textbook Publishing.....................17112. Interindustry Comparisons of Strategy: Electronics and Food Processing.....................19313. Management and Strategy: The Case of the Voluntary Hospital................................214III. Overview of the Literature14. Prior Theory and Research..................................................................249Bibliography...................................................................................264Index..........................................................................................271

Chapter One

Introduction

An organization is both an articulated purpose and an established mechanism for achieving it. Most organizations engage in an ongoing process of evaluating their purposes-questioning, verifying, and redefining the manner in which they interact with their environments. Effective organizations carve out and maintain a viable market for their goods or services. Ineffective organizations fail at this market alignment task. Organizations must also constantly modify and refine the mechanism by which they achieve their purposes-rearranging their structure of roles and relationships and their decision making and control processes. Efficient organizations establish mechanisms that complement their market strategy. Inefficient organizations struggle with these structure and process mechanisms.

For most organizations, the dynamic process of adjusting to environmental change and uncertainty-of maintaining an effective alignment with the environment while efficiently managing internal interdependencies-is enormously complex, encompassing myriad decisions and behaviors at several organization levels. Nonetheless, we believe that the complexity of the adjustment process can be penetrated: by searching for patterns in the behavior of organizations, one can describe and even predict the process of organizational adaptation. This book, which is based on our interpretation of the existing literature and continuing studies in four industries, provides a theoretical framework for portraying the adjustment or adaptive process, identifying its key variables, and defining their interrelationships.

More specifically, the framework presented in this book suggests some tentative answers to the following organizational and managerial questions:

To what extent and why do organizations within the same industry differ in their strategy, structure, and process? That is, what factors influence the decision to offer a narrow or broad line of products or ser vices, to structure the organization around functions or products, to centralize or disperse decision making and control, and so forth?

How is an organization's market strategy related to the structures and processes that management selects to pursue this strategy?

To what extent and why do organizations develop typical ways of responding to environmental change and uncertainty? Within a given industry, can persistent types of organizational behaviors be identified?

Can an organization's type be diagnosed and changed? What key variables, relationships, and characteristics must be altered if change is to be effective?

Does a particular type or form of organization require a specific style of management? How does the theory of management held by an organization's leaders enhance or inhibit the organization's ability to adapt to its environment?

Are existing models of organization strategy, structure, and process able to meet all environmental conditions? If not, can new organizational forms be constructed? What characteristics will these new forms have?

The answers we offer in this book are tentative in that we have no final proof of the validity of our theoretical framework, nor is such proof likely to become available. Any attempt to examine organizational adaptation is difficult since the process is both highly complex and changeable. Nevertheless, we believe it is important to develop conceptual models of the adaptive process and to examine empirically the behaviors employed by organizations as they adjust to their environments. Managers and students of management need a theory and vocabulary that deal with the organization as an integrated and dynamic whole-a model that takes into account the interrelationships among strategy, structure, and process.

The theoretical framework proposed in this book has two major elements: (1) a general model of the process of adaptation that describes the decisions needed by the organization to maintain an effective alignment with its environment, and (2) an organizational typology that portrays the different patterns of adaptive behavior used by organizations within a given industry or other grouping. The framework is used to describe and diagnose existing organizational behaviors and to prescribe alternative directions for change where necessary. Successful organizational change, however, requires another important element to be added to the framework-management theory. Organizations are limited in their choices of adaptive behavior to those which top management believes will allow the effective direction and control of human resources. Therefore, at several points, managers' theories about how people can and should be managed are brought into our discussion.

THEORY AND RESEARCH FOUNDATIONS

The cornerstones of both the research summarized in this book and our ongoing studies consist of three pivotal ideas that were introduced and developed by a number of other authors. Although these ideas did not necessarily grow out of studies of organizational adaptation, we have nonetheless found them useful in our own research.

Organizations act to create their environments. Until recently, much organizational research has been based on the assumption that organizations respond in predictable ways to the conditions which surround them, adjusting their purpose and shape to meet market and other environmental characteristics. As a result, researchers have tended to search for those environmental factors which shape organizational behavior. Over the past several years, however, organizational scholars have become increasingly disenchanted with this mechanical, deterministic conception of the organization-environment relationship. Child (1972) and others argue for a less rigid view of the interaction between organizations and their environments that takes into account the dynamic interchange between the two forces. Child has called for a strategic-choice approach to organization-environment relations-recognition that major decisions made by management serve to define the organization's relationship with the broader environment.

Weick (1969, 1977) introduced a similar concept which he calls environmental enactment. He argues that organizations do not respond to preordained environmental conditions but instead create their own environments through a series of choices regarding markets, products, technologies, desired scale of operations, and so forth. Given the range of choice regarding each of these factors, the number and kinds of different environments which might be enacted are theoretically limited only by man's imagination. Indeed, much of what is taken for granted in organizations today was, in some earlier time, seen as novel.

In fact, however, the type of environment which managers can enact is severely constrained by two broad factors: existing knowledge of alternative organizational forms and managers' beliefs about how people can and should be managed. The ability to enact a new or different environment is significantly constrained by what is known about allocating, structuring, and developing resources in the form of organizations. Since their appearance as a social invention, organizations have evolved through several distinct forms. Each of these new or modified forms has enabled managers to accomplish objectives previously considered unattainable. However, as Stinchcombe (1965) has indicated, each new form has also suffered from the "liability of newness"-managers may be reluctant to adopt new structures and processes unless environmental demands are especially strong. Therefore, environmental enactment is likely to proceed cautiously and incrementally until new organizational forms are clearly articulated.

Furthermore, each new form of organization has also required a new, or at least expanded, theory of management before it became practically useful. If managers believe that people cannot be properly guided, coordinated, and controlled within a new type of organization, then they are unlikely to behave in a way that will allow the system to become fully operational. As Argyris (1973) has argued, changes in managerial attitudes and behavior must usually precede changes in organization design.

In sum, the enactment of an organizational environment cannot readily occur outside the boundaries of present knowledge concerning organizational form and management theory. Nevertheless, it is clear, as Child, Weick, Argyris, and others have argued, that managers enjoy substantial freedom to create, shape, and manage the environments in which their organizations exist.

Viewing organizations from an organic rather than a mechanical perspective requires that theories of organizational behavior place considerable emphasis on those individuals who make strategic choices, the organization's top managers. From its vantage point, top management has both the opportunity and the requirement to view the organization as a total system-a collection of people, structures, and processes that must be effectively aligned with the organization's chosen environment. Thompson (1967) emphasized the importance of this administrative role and discussed certain structure-process arrangements associated with different organizational environments. We have sought to extend Thompson's thinking in our research, particularly in examining how organizations develop means for consistently responding to the environments which they have enacted.

Management's strategic choices shape the organization's structure and process. To many observers, the development of a consistent organization strategy is a highly situational art characterized by insightful managerial decisions which dramatically redirect the organization's resources toward environmental opportunities. However, in Mintzberg's (1976) view, and in ours, strategy is more of a pattern or stream of major and minor decisions about an organization's possible future domains. Further, these decisions take on meaning only as they are implemented through the organization's structure and processes. In other words, an organization's strategy can best be inferred from its behavior, though one can conceptually associate strategy with intent and structure with action.

Two of the most influential proponents of this link between strategy and structure have been Drucker (1954, 1974a) and Chandler (1962). Chandler defined strategy as "... the determination of the basic long term goals and objectives of the enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals" (p. 13). In his study of 100 U.S. companies (including an intensive investigation of the development of four large firms), Chandler cogently discussed the impact of strategy on organization structure. He discovered that "a new strategy required a new or at least refashioned structure if the enlarged enterprise was to be operated efficiently" (p. 15). However, it is clear from both Chandler's and Drucker's descriptions that no simple causal linkage exists between strategy and structure. Pioneering companies which they both studied, such as General Motors and Sears, spent years developing and clarifying the structures required to implement their strategies. Following the early work of Drucker and Chandler, other authors such as Thompson (1967), Lawrence and Lorsch (1967), Perrow (1967), and Galbraith (1973) have attempted to develop frameworks and criteria for making choices about organizational structure and processes given the nature of the environment and management's choice of strategy. We have attempted in this book to point out the advantages and disadvantages of these alternative choices concerning strategy and structure.

Structure and process constrain strategy. Once an organization has developed a particular strategy-structure arrangement, it may have difficulty pursuing activities outside its normal scope of operations. For example, Fouraker and Stopford (1968), who sought to extend Chandler's findings to multinational companies, found that diversified organizations made up of semiadtonomous divisions were far more likely, and presumably far more able, to move into foreign operations than centralized, functionally structured companies.

March and Simon's (1958) discussion of how individuals make decisions provides a perspective on why such constraints on strategy might arise. They concluded that because human beings are limited in their ability to make completely rational decisions, organizational structure and process evolve so as to prevent uncertainty from overwhelming these limited capacities. Thus, the development of rules, programs, and other repertoires of action serve to break down large and complex problems into more manageable units for human decision makers. In effect, then, organizations can put boundaries around the areas in which rational decisions are needed.

However, in reducing uncertainty in this manner, organizations encourage, if not demand, that individual decision makers be parochial in their perceptions and felt responsibilities. Based on their studies, Cyert and March (1963) concluded that managers searched only in the "neighborhood" of familiar alternatives in attempting to develop solutions to the organization's problems. Essentially, then, the structure and processes of the organization influenced the scope of the scanning mechanisms available to top management. Over time, this limited search activity tends to become routinized in any organization, so that the organization may do some things very well (such as manufacture products efficiently) but lack capabilities in other areas (such as developing new products).

As these studies suggest, the interactions between strategy and structure become highly complex. On one hand, Drucker's, Chandler's, and Perrow's research shows that structure tends to follow strategy and that the two must be properly aligned for an organization to be effective. On the other hand, investigators like Fouraker, Stopford, March, Simon, and Cyert have demonstrated that structure constrains strategy; an organization is seldom able to veer substantially from its current course without major structure-process alterations. In our research and in this book, we have attempted to take these strategy-structure interactions into account. We have looked not only for consistencies in the alignment of strategy, structure, and process, but also for the structural constraints on strategy.

DEVELOPMENT OF THE THEORETICAL FRAMEWORK

As indicated, the theoretical framework presented in this book draws not only on the authors mentioned above (and others to be cited later) but also on our own ongoing research in four industries. Our studies have emerged, in part fortuitously, in a loose but logical sequence which has given us the opportunity to construct and at least, partially test a dynamic model of the adaptive process-a model which we believe synthesizes, extends, and gives operational meaning to much of the existing literature. In our opinion, it now appears possible to classify organizations according to their strategic orientation and to predict with some reliability the structural and process characteristics associated with a chosen strategy. To a lesser extent it is also possible to predict the future development of an organization given management's choice of strategy and to point out the strengths and weaknesses inherent in this pattern of evolution. Lastly, we have a preliminary indication that some types of organizations require specific styles of management whereas other types permit a broader range of managerial philosophies and practices.

College Textbook Publishing

Our first study, which took place within 16 firms in the college textbook publishing industry, broadly explored the question, "Does an organization's form of enactment-its selection and development of a particular domain within the larger environment-produce predictable patterns in organizational structure and processes?" The college textbook publishing industry was chosen for this research because at the time (1972) the industry was, and had been, undergoing significant changes, and we believed that these changes would elicit a variety of responses from the industry's major participants. This indeed turned out to be the case, as many firms were experiencing some form of organizational adjustment: entering or dropping certain markets, modifying technologies for producing textbooks, altering organization structure, and so forth. In company after company, management had recently made a major decision concerning company policy or structure or was on the verge of doing so. As researchers, caught in the middle of what appeared to be an ongoing and sometimes rushing stream of adjustment, we were often reluctant to stop studying a particular organization for fear that it would change as soon as we left.

(Continues...)

Excerpted from Organizational Strategy, Structure, and Processby Raymond E. Miles Charles C. Snow Copyright © 2003 by Board of Trustees of the Leland Stanford Junior University. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Edition details

• Publisher: Stanford Business Books
• Publication date: 2003
• Language: English
• ISBN 10: 0804748403
• ISBN 13: 9780804748407
• Binding: Paperback
• Edition number: 1
• Number of pages: 304