As we observed at the start of the previous chapter, understanding of individual skills informs understanding of organizational behavior in two ways. First, because individuals exercise skills in their roles as organization members, the characteristics of organizational capabili-ties are directly affected by the characteristics of individual skilled behavior. We have noted some of these connections. For example, an organization’s capabilities require the exercise of individual skills that may involve a large component of tacit knowledge; this directly implies limits on the extent to which the organization’s capabilities can themselves be articulated, and there are attendant implications for the character of the replication task. Then, too, the inflexibility of behavior displayed by large organizations is attributable in part to the fact that individual skills become rusty when not exercised; it is therefore hard for an organization to hold in memory a coordinated response to contingencies that arise only rarely.
Here we make explicit the other sort of contribution that under standing of individual skills makes to understanding of organi zational functioning: the contribution at the level of metaphor. Routines are the skills of an organization. The performance of an or-ganizational routine involves the effective integration of a number of component subroutines (themselves further reducible), and is ordi narily accomplished without “conscious awareness”- that is, without requiring the attention of top management. This sort of de centralization in organizational functioning parallels the skilled indi vidual’s ability to perform without attending to the details. A routine may involve extensive direct interactions with the organization’ s environment and the making of numerous uchoices” that are contin gent both upon the state of the environment and the state of the orga nization itself, but these choices involve no process of deliberation by top management. The intervention of top management in the de tailed functioning of lower levels is ordinarily symptomatic of an at tempt to modify routine or of difficulties with the functioning of ex isting routines -just as conscious awareness of detail and attempts at articulation are symptomatic of new learning or of trouble in the case of individual skills.
In a number of respects, organizational behavior seems to be subject to magnified versions of problems and pathologies that afflict individual skilled behavior. The scale and complexity of a large orga nization make impossible the degree of centralization of control rep resented by the brain of an individual human being. This rel ative weakness of centralized analysis and control in organizations, when compared to i ndividuals, is the obvious explanation for the relative severity of the difficulties that organizations encounter in areas where centralization is for some reason important. Thus, for ex ample, we noted that limits on articulation in the case of individual skills derive partly from the uwhole versus parts” problem of recon ciling an exhaustive account of details with a coherent view of the whole. Much more severe limits on the articulation of organizational knowledge arise from the same cause, because although attending to details is something that can be shared and decentralized, the task of achieving a coherent view of the whole is not. Similarly, improvisa tion of a coordinated response from a system requires centralized control of the system. Organizations are poor at improvising coordi nated responses to novel situations; an individual lacking skills appropriate to the situation may respond awkwardly, but an organi zation lacking appropriate routines may not respond at all .
Organizations can get a great deal accomplished that they do not know how to do, by drawing on the capabilities of other individuals and organizations. In doing so, however, they exercise planning rou tines that involve the manipulation of symbols representing highly complex entities. Like individuals, organizations may make ineffec tive use of the array of capabilities available in their environments, or be victimized by hucksters, because of limitations on their plan-ning vocabulary-particularly when they do not themselves possess even the rudiments of the capabilities they seek to acquire.
The basic metaphor can be elaborated and extended in a number of other directions, but we will leave these byways unexplored. The important contribution of the metaphor is the insight it provides into the role of bounded rationality in organizational behavior. We observed in our discussion of individual skills that bounded rationality imposes a tradeoff between capability and deliberate choice. That tradeoff exists for organizations as well, but the relative weakness of centralized control in an organization makes the terms of the tradeoff much less favorable to deliberate choice. One cannot infer from the fact that an organization functions smoothly and successfully in a particular range of observed environments that it is a rational and “intelligent” organism that will cope successfully with novel chal lenges. If anything, one should expect environmental change to make manifest the sacrifice of flexibility that is the price paid for highly effective capabilities of limited scope.
Source: Nelson Richard R., Winter Sidney G. (1985), An Evolutionary Theory of Economic Change, Belknap Press: An Imprint of Harvard University Press.