1. The design parameters
In Adhocracy, we have a fifth distinct configuration: highly organic struc- ture, with little formalization of behavior; high horizontal job specializa- tion based on formal training; a tendency to group the specialists in functional units for housekeeping purposes but to deploy them in small, market-based project teams to do their work; a reliance on the liaison devices to encourage mutual adjustment, the key coordinating mecha- nism, within and between these teams; and selective decentralization to and within these teams, which are located at various places in the organi- zation and involve various mixtures of line managers and staff and oper- ating experts.
To innovate means to break away from established patterns. So the innovative organization cannot rely on any form of standardization for coordination. In other words, it must avoid all the trappings of bureaucrat- ic structure, notably sharp divisions of labor, extensive unit differentiation, highly formalized behaviors, and an emphasis on planning and control systems. Above all, it must remain flexible. Thus Toffler (1970) notes that Adhocracies “now change their internal shape with a frequency—and sometimes a rashness—that makes the head swim. . . . Vast organiza- tional structures are taken apart, bolted together again in new forms, then rearranged again. Departments and divisions spring up overnight only to vanish in another, and yet another, reorganization” (p. 128). For example, the Manned Space Flight Center of NASA, America’s most famous Ad- hocracy of the 1960s, changed its structure seventeen times in the first eight years of its existence (Litzinger et al., 1970:7). A search for organi- grams to illustrate this chapter elicited the following response from one corporation well known for its Adhocracy structure: “.. . we would prefer not to supply an organization chart, since it would change too quickly to serve any useful purpose.”
Of all the configurations, Adhocracy shows the least reverence for the classical principles of management, especially unity of command. The regulated system does not matter much either. In this configuration, infor- mation and decision processes flow flexibly and informally, wherever they must, to promote innovation. And that means overriding the chain of authority if need be.
The Simple Structure also retains an organic structure, and so is able to innovate as well. But that innovation is restricted to simple environ- ments, ones that can be easily comprehended by a central leader. Innova- tion of the sophisticated variety takes place in environments not easily understood. So another kind of organic structure is required, one that relies on the application of sophisticated expertise. The Adhocracy must hire and give power to experts—professionals whose knowledge and skills have been highly developed in training programs. But unlike the Professional Bureaucracy, the Adhocracy cannot rely on the standardized skills of these experts to achieve coordination, because that would lead to standardization instead of innovation. Rather, it must treat existing knowl- edge and skills merely as bases on which to build new ones.
Moreover, the building of new knowledge and skills requires the combination of different bodies of existing ones. So rather than allowing the specialization of the expert or the differentiation of the functional unit to dominate its behavior, the Adhocracy must instead break through the boundaries of conventional specialization and differentiation. “An electri- cal specialist can spot a mechanical problem, perhaps in part because he does not know the conventional wisdom, and a bright engineer working in an apparently unrelated field can come up with a solution to a problem that has been frustrating the functional specialists” (Chandler and Sayles, 1971:202). Thus, whereas each professional of the Professional Bureaucracy can operate on his own, in the Adhocracy the professionals must amalga- mate their efforts. “Traditional organizations can assume that they know all the problems and the methods. They therefore can assign expertise to a single specialist or compartmentalized, functional group” (p. 203). In sharp cdntrast, in Adhocracies the different specialists must join forces in multi- disciplinary teams, each formed around a specific project of innovation. How does the organization cope with the problem of “uprooting the professional yet allowing him to maintain his ties to his field of expertise” (Chandler and Sayles, p. 15)? The solution is obvious: The Adhocracy tends to use the functional and market bases for grouping concurrently, in a matrix structure. The experts are grouped in functional units for housekeeping purposes—for hiring, professional communication, and the like—but then are deployed in project teams to carry out their basic work of innovation.
And how is coordination effected in and between these project teams? As noted earlier, standardization is precluded as a major coordinat- ing mechanism. The efforts must be innovative, not standardized. So, too, is direct supervision, because of the complexity of the work. Coordination must be effected by those with the knowledge, the experts who actually do the project work. That leaves mutual adjustment, the prime coordinating mechanism of the Adhocracy. And, of course, with the concentration on mutual adjustment in the Adhocracy comes an emphasis on the design parameter meant to encourage it—namely, the set of liaison devices. Inte- grating managers and liaison positions are established to coordinate the efforts among and between the functional units and project teams; the teams themselves are established as task forces; and, as noted above, ma- trix structure is favored to achieve concurrent functional and market grouping. As Sayles notes, matrix structure “reuses old organizations in- stead of creating new ones for new goals and problems. It forces organiza- tions to keep changing themselves because of conflicting goals, values, and priorities and builds instability into the very structure of the organization” (1976:15).
Thus, managers abound in the Adhocracy—functional managers, integrating managers, project managers. The last-named are particularly numerous, since the project teams must be small to encourage mutual adjustment among their members, and each team needs a designated lead- er, a “manager.” This results in narrow “spans of control” for the Ad- hocracy, by conventional measures. But that measure has nothing to do with the control; it merely reflects the small size of the work units. Most of the managers do not “manage” in the usual sense—that is, give orders by direct supervision. Instead, they spend a good deal of their time acting in a liaison and negotiating capacity, coordinating the work laterally among the different teams and between them and the functional units. Many of these managers are, in fact, experts, too, who take their place alongside the others on the project teams.
With its reliance on highly trained experts, the Adhocracy—like the Professional Bureaucracy—is decentralized. But not in the same way, be-cause in the Adhocracy, the experts are distributed throughout the struc- ture, notably in the support staff and managerial ranks as well as the operating core. So rather than a concentration of power in the operating core, there is a more even distribution of it in all the parts. The decentral- ization of the Adhocracy is what we labeled selective in Chapter 5, in both the horizontal and vertical dimensions. Decision-making power is dis- tributed among managers and nonmanagers at all the levels of the hier- archy, according to the nature of the different decisions to be made. No one in the Adhocracy monopolizes the power to innovate.
To proceed with our discussion, and to elaborate on how the Ad- hocracy makes decisions, we must at this point divide it into two types— the Operating Adhocracy and the Administrative Adhocracy.
2. The operating adhocracy
The Operating Adhocracy innovates and solves problems directly on be- half of its clients. Its multidisciplinary teams of experts often work directly under contract, as in the think-tank consulting firm, creative advertising agency, or manufacturer of engineering prototypes. In some cases, howev- er, there is no contract per se, as in the film-making agency or theater company.
In fact, for every Operating Adhocracy, there is a corresponding Professional Bureaucracy, one that does similar work but with a narrower orientation. Faced with a client problem, the Operating Adhocracy en- gages in creative effort to find a novel solution; the Professional Bureau- cracy pigeonholes it into a known contingency to which it can apply a standard program. One engages in divergent thinking aimed at innova- tion; the other, in convergent thinking aimed at perfection. One manage- ment consulting firm treats each contract as a creative challenge; another interprets each as the need to divisionalize the client’s structure or strengthen its planning system, or both. One theater company seeks out new avant-garde plays to perform; another perfects its performance of Shakespeare year after year. In effect, one is prepared to consider an in- finite number of contingencies and solutions; the other restricts itself to a few. The missions are the same, but the outputs and the structures that produce them differ radically. Both decentralize power to their highly trained specialists. But because the Operating Adhocracy seeks to inno- vate, its specialists must interact informally by mutual adjustment in organically structured project teams; the Professional Bureaucracy, be- cause it standardizes its services, structures itself as a bureaucracy in which each specialist can function on his own, his work automatically coordi- nated with the others by virtue of his standardized knowledge and skills.
A key feature of the Operating Adhocracy is that its administrative and operating work tend to blend into a single effort. That is, in ad hoc project work, it is difficult to differentiate the planning and design of the work from its execution. Both require the same specialized skills, on a project-by-project basis. As a result, the Operating Adhocracy may not even bother to distinguish its middle levels from its operating core. Manag- ers of the middle line and members of what in other organizations would be called the support staff—typically a highly trained and important group in the Operating Adhocracy—may take their place right alongside the op- erating specialists on the project teams. And even when distinctions are made, a close rapport must develop between the administrative and oper- ating levels, sometimes to the point where they are able to interchange their roles freely.
Figure 12-1 shows the organigram of the National Film Board of Canada, a classic Operating Adhocracy (even though it does produce an organigram—one that changes frequently, it might be added). The board is an agency of the Canadian federal government and produces mostly short films, many of them documentaries. The organigram shows a large num- ber of support units as well as liaison positions (for example, research, technical, and production coordinators). The operating core can also be seen to include loose, concurrent functional and market groupings (the latter by region as well as type of film produced).
Figure 12-1. The National Film Board of Canada: an Oper- ating Adhocracy (circa 1975, used with permission)
3. The administrative adhocracy
The second major type of Adhocracy also functions with project teams, but toward a different end. Whereas the Operating Adhocracy undertakes projects to serve its clients, the Administrative Adhocracy undertakes its projects to serve itself. And in sharp contrast to the Operating Adhocracy, the Administrative Adhocracy makes a sharp distinction between its ad- ministrative component and operating core. The operating core is trun- cated—cut right off from the rest of the organization—so that the admin- istrative component that remains can be structured as an Adhocracy.
This truncation may take place in a number of ways. First, when an organization has a special need to be innovative, perhaps because of intense product competition or a very dynamic technology, but its operat- ing core must be machine bureaucratic, the operating core may be estab- lished as a separate organization. As we saw in Chapter 9, the social tensions at the base of the Machine Bureaucracy overflow the operating core and permeate the administration. The whole organization becomes ridden with conflict and obsessed by control, too bureaucratic to innovate. By truncating the operating core—setting it up apart with its own admin- istration that reports in at the strategic apex—the main administrative com- ponent of the organization can be structured organically for innovation.1 Second, the operating core may be done away with altogether—in effect, contracted out to other organizations. This leaves the organization free to concentrate on development work. Thus, for the Apollo project, NASA conducted much of its own development work but contracted production out to independent manufacturing firms. A third form of truncation arises when the operating core becomes automated. This amounts to truncation because an automated operating core is able to run itself, largely free of the need for direct supervision or other direct control from the administrative component. The latter, because it need not give attention to routine operat- ing matters, can structure itself as an Adhocracy, concerned with change and innovation, with projects to bring new operating facilities on line.
Oil companies, because of the high automation of their production process, are in part at least drawn toward the Administrative Adhocracy configuration. Figure 12-2 shows the organigram for one oil company, reproduced exactly as presented by the company (except for modifications to mask its identity, made at the company’s request). Note the domination of “Administration and Services,” shown at the bottom of the chart; the operating functions, particularly “Production,” are lost by comparison.
Figure 12-2. Organigram of an oil company: an Admin- istrative Adhocracy (circa 1976)
Note also the description of the strategic apex in terms of standing commit- tees instead of individual executives.
4. The administrative component of the adhocracies
The important conclusion to be drawn from this discussion is that in both types of Adhocracy, the relation between the operating core and the ad- ministrative component is unlike that of any other configuration. In the Administrative Adhocracy, the operating core is truncated and becomes a relatively unimportant part of the organization; in the Operating Ad- hocracy, the two merge into a single entity. In both cases, there is little need for line managers to exercise close direct supervision over the opera- tors. Rather, the managers become functioning members of the project teams, with special responsibility to effect coordination between them. But in this capacity, they act more as peers than as supervisors, their influence deriving from their expertise and interpersonal skill rather than from their formal position. And, of course, to the extent that direct supervi- sion and formal authority diminish in importance, the distinction between line and staff blurrs. It no longer makes sense to distinguish those who have the formal power to decide from those who have only the informal right to advise. Power over decision making flows to anyone in the Ad- hocracy with expertise, regardless of position.
The support staff plays a key role in the Adhocracy. In fact, it is the key part of the Administrative Adhocracy, for that is where this configura- tion houses most of the experts on which it is so dependent. The Operating Adhocracy also depends on experts, but since it retains its operating core, it houses many of them there as well as in its support staff. But in both cases, as noted above, much of the support staff is not sharply differenti- ated from other parts of the organization, not off to one side, to speak only when spoken to, as in the bureaucratic configurations. Rather, the support staff, together with the line managers (and the operators, in the case of the Operating Adhocracy), form part of the central pool of expert talent from which the project personnel are drawn. (There are, of course, exceptions. Some support units must always remain bureaucratic, and apart. Even NASA needs cafeterias.)
Because the Adhocracy does not rely on standardization for coordina- tion, it has little need for a technostructure to develop systems for regula- tion. The Administrative Adhocracy does employ analysts concerned with adaptation to its external environment, such as marketing researchers and economic forecasters. As we shall see later, it does do some action plan- ning, although of a rather general kind. But these analysts do not design systems to control other people so much as take their place alongside the line managers and the support staffers as members of the project teams. To summarize, the administrative component of the Adhocracy emerges as an organic mass of line managers and staff experts (with operators in the Operating Adhocracy), working together in ever-shifting relationships on ad hoc projects. Figure 12-3 shows the Adhocracy in terms of our logo, with its parts mingled together in one amorphous mass in the middle. In the Operating Adhocracy, this mass includes the middle line, support staff, technostructure, and operating core. The Administra- tive Adhocracy includes all of these except the operating core, which is kept apart in a truncated, bureaucratic structure, shown by the dotted section below the central mass. The reader will also note that the strategic apex of the figure is shown partly merged into the central mass as well. We shall see why in the discussion of strategy formation that follows.
Figure 12-3. The Adhocracy
5. Strategy formation in the adhocracy
In the Professional Bureaucracy, the strategy formulation process is con- trolled primarily by the professional associations outside the structure, secondarily by the professionals of the operating core themselves, and only after that by the administrators. In effect, the process is bottom-up, and outside-in. In all the other configurations so far discussed, the process is clearly top-down, controlled by the strategic apex (and in the Division- alized Form, the strategic apexes of the divisions as well). In sharp con- trast, control of the strategy formulation process in the Adhocracy is not clearly placed, at the strategic apex or elsewhere.
Moreover, the process is best thought of as strategy formation, be- cause strategy in these structures is not so much formulated consciously by individuals as formed implicitly by the decisions they make, one at a time. The concept of the formulation-implementation dichotomy in strat- egy making—a pillar of the Machine Bureaucracy—loses its meaning in the Adhocracy. It is in the making of specific decisions within and about pro- jects, what would normally be considered implementation, that strategies evolve—that is, are formed—in the Adhocracy. That is because when the central purpose of an organization is to innovate, the results of its efforts can never be predetermined. So it cannot specify a full strategy—a pattern or consistency in its stream of decisions—in advance, before it makes its decisions. Such patterns at best emerge after the fact, the results of specific decisions: “.. . goals continue to emerge as the task is pursued .. . a single engine fighter plane may evolve into a twin-engine attack bomber; a funding program for exceptional children may become a strategy for inte- gration; a construction project may become a training program for the unskilled” (Goodman and Goodman, 1976:496). That is why action plan- ning cannot be extensively relied upon in the Adhocracy. Any process that separates conception from action—planning from execution, formalization from implementation—impedes the flexibility of the organization to re- spond creatively to its dynamic environment.2
Consider the case of the Operating Adhocracy, a structure never quite sure what it will do next. That depends on what projects come along, which in turn depends partly on how well it does in its current projects. So its strategy never really stabilizes, but changes continuously as projects change. To put this another way, when the strategy does stabilize, the structure ceases to be Adhocracy. A stable strategy means that the organi- zation has determined which markets it will serve, and how; in other words, which contingencies it will respond to and with which standard programs. It has, in effect, restructured itself as a bureaucracy, machine if it concentrates on a single simple program, professional if it remains open to a few, complex ones. Now if strategy evolves continuously according to the projects being done, it stands to reason that strategy formation is controlled by whoever decides what projects are done and how. And in the Operating Adhocracy, that includes line managers, staff specialists, and operators—in other words, potentially everyone in the organization.
Take the case of the National Film Board. Among its most important strategies are those related to the content of the one hundred or so mostly short documentary-type films that it makes each year—some about the geography of Canada and the sociology of its peoples, others on pure experimental themes, and so on. Were the board structured as a Machine Bureaucracy, the word on what films to make would come down from on high. There would be one stable film strategy, formulated at the strategic apex and implemented lower down. (If the Board were structured as the Divisionalized Form, the word would come down from the head of each film division.) If it were structured as a Professional Bureaucracy, each filmmaker would have his own standard repertoire of basic film scenarios, which he would repeat year after year, and the organization would have a series of stable film-content strategies coming up from the operating core.
In fact, because it is structured as an Operating Adhocracy, the Board follows none of these procedures. About one-third of its films are spon- sored by agencies of the Canadian government. As long as interested filmmakers can be found, these are accepted, and clients can be thought to impose the strategy. The other two-thirds are proposed by the Board’s own employees and are funded from its own general budget. Each proposal is submitted to a standing committee, which at the time of this writing con- sists of four members elected by the filmmakers, two appointed by the Distribution (marketing) Branch, and the Director of Production and the Director of Programming. The Commissioner—the chief executive—must approve the committee’s choices. Thus, operators, middle-line managers, support staffers, and managers at the strategic apex all get involved in the choices of what films to make. But the vast majority of the proposals are initiated by the filmmakers and the executive producers. Each has his own general preferences, whether those be for animated or experimental films, documentaries, or whatever. But a glance at the Board’s catalog invalidates any conclusion about standardization. Certain general themes do develop from time to time. But these also change frequently, according to styles and successes and so on. So although there is no stable film-content strategy, a dynamic one can be identified, one in a continual state of adaptation.
The Operating Adhocracy’s strategy evolves continuously as hun- dreds of these kinds of decisions are made each year in complicated ways. Each project leaves its imprint on the strategy. And to return to the basic point being made, so many people at so many levels are involved in these projects—both in deciding which ones to carry out and then in actually carrying them out—that we cannot point a finger at any one part of the organization and say that is where the strategy is formulated. Everyone who gets involved—and that means top- and middle-level managers, staff specialists, and operators, all combined in various task forces and standing committees—has a hand in influencing the strategy that gets formed. That is why we concluded earlier that the Operating Adhocracy is decentralized selectively, in both the horizontal and vertical dimensions. The power for decision making is distributed widely, in the most complicated of ways, among managerial and nonmanagerial personnel, at all levels of the hierarchy.
Similar conclusions can be reached about the Administrative Ad- hocracy, although the strategy-making process is slightly neater there. That is because the Administrative Adhocracy tends to concentrate its attention on fewer projects, which involve more people in interdependent relationships. NASA’s Apollo project involved most of its personnel for almost ten years; similarly, the bringing on line of a new processing plant can involve a good deal of the administrative staff of a petrochemical com- pany for years. Moreover, since it carries out its projects only for itself, not for a range of outside clients, the Administrative Adhocracy tends to have a more concentrated product-market sphere of operations. Through the 1960s, for example, NASA focused on the single goal of landing an Ameri- can on the moon before 1970.
Larger, more integrated projects and a more focused sphere of opera- tions means that the efforts of the various specialists must be more care- fully structured than in the Operating Adhocracy. As a result, the Admin- istrative Adhocracy structures itself as a system of work constellations, each located at the level of the hierarchy commensurate with the kinds of functional decisions it must make. We saw a clear example of this in Chapter 5 (see Figure 5-2), with manufacturing, marketing, finance, and research constellations located at various levels of the hierarchy. Each con- stellation draws on line managers and staff specialists as necessary and distributes power to them according to the requirement for their expertise in the decisions that must be made. Hence, the Administrative Adhocracy is also decentralized selectively in the vertical and horizontal dimensions. And once again we cannot point to any one part of the organization as the place where strategy is formulated, although the existence of the work constellations does enable us to identify certain kinds of strategic decisions with certain parts of the organization.
The need to structure the efforts of the specialists also suggests a need for action planning in the Administrative Adhocracy. The problem with such planning, however, is that although the end or goal of the organiza- tion may be known, the means for reaching it are not. These must be worked out en route, by trial and error. So only a general kind of action planning can take place, one that sets out broad, flexible guidelines within which the work constellations can proceed to make their specific decisions. Again, therefore, it is only through the making of specific decisions— namely, those that determine which projects are undertaken and how these projects turn out—that strategies evolve. Even in the case of NASA, an organization thought to rely heavily on planning, that “turns out to be a dynamic, iterative process. This inevitably disperses authority, since a small group of expert, high-level ‘planners’ cannot define strategy” (Chan- dler and Sayles, 1971:7).
6. The roles of the strategic apex
The top managers of the strategic apex of the Adhocracy may not spend much time formulating explicit strategies, but they must spend a good deal of their time in the battles that ensue over strategic choices, and in handling the many other disturbances that arise all over these fluid struc- tures. The Adhocracy combines organic working arrangements instead of bureaucratic ones, with expert power instead of formal authority. Together these conditions breed aggressiveness and conflict. But the job of the top managers is not to bottle up that aggressiveness, as in the Machine Bureau- cracy—that would be impossible in any event—but to channel it to produc- tive ends. Thus, the top managers of the Adhocracy (as well as those in its middle line) must be masters of human relations, able to use persuasion, negotiation, coalition, reputation, rapport, or whatever to fuse the indi- vidualistic experts into smoothly functioning multidisciplinary teams.
The top managers must also devote a good deal of time to monitor- ing the projects. Innovative project work is notoriously difficult to control. No MIS can be relied upon to send up complete, unambiguous results. So there must be careful, personal monitoring of projects to ensure that they are completed according to specifications, on schedule, and at the esti- mates projected (or, more exactly, not excessively late with too great cost overruns).
But perhaps the most important single role of the top management of Adhocracy (especially Operating Adhocracy) is that of liaison with the external environment. The other configurations tend to focus their atten- tion on clearly defined markets, and are more or less assured of a steady flow of work. Not so in the Operating Adhocracy, which lives from project to project and disappears when it can find no more. Since each project is different, the Operating Adhocracy can never be sure where the next one will come from. Moreover, in the Professional Bureaucracy, it is frequently the operators who bring in their own clients. This is less common in the Operating Adhocracy, where the operators work in teams. So that respon- sibility often falls on the top managers. In the Operating Adhocracy, there- fore, the managers of the strategic apex must devote a great deal of their time to ensuring a steady and balanced stream of incoming projects. That means developing liaison contacts with potential customers and negotiat- ing contracts with them.
Nowhere is this more clearly illustrated than in the consulting busi- ness, particularly where the approach is innovative and the structure therefore Adhocracy in nature. An executive once commented to this au- thor that “every consulting firm is three months away from bankruptcy.”
In other words, three dry months could use up all the surplus funds, leaving none to pay the high professional salaries. And so when a consul- tant becomes a partner in one of these firms—in effect, moves into the strategic apex—he normally hangs up his calculator and becomes virtually a full-time salesperson. It is a distinguishing characteristic of many an Operating Adhocracy that the selling function literally takes place at the strategic apex.
Project work poses similar problems in the Administrative Ad- hocracy, with similar results. Reeser asked a group of managers in three aerospace companies, “What are some of the human problems of project management?” Among the common answers were two related to balanc- ing the workload:
- The temporary nature of the organization often necessitates “make work” assignments for its displaced members after the or- ganization has been disbanded, until productive jobs can be found for them. Sometimes the “make-work” assignments last so long that the individuals lose initiative.
- Members of the organization who are displaced because of the phasing out of the work upon which they are engaged may have to wait a long time before they get another assignment at as high a level of (1969:463)
And so the top managers of the Administrative Adhocracy must also de- vote considerable attention to liaison and negotiation activities in order to ensure a steady stream of work. As Chandler and Sayles note in the case of NASA, dependent on government budgets and public support in general, “a good deal of the time of the key top managers was devoted to external relations with various units of the Executive Branch, with Congress, and with key public groups representing private business, universities, the scientific community, and various international interests” (1971:173).
Source: Mintzberg Henry (1992), Structure in Fives: Designing Effective Organizations, Pearson; 1st edition.