Category Archives: Llibres

The knowledge-creating company: How japanese companies create the dynamics of innovation – Nonaka and Takeushi (1995)

Summary of the book:

The knowledge-creating company: How japanese companies create the dynamics of innovation – Nonaka and Takeushi (1995)

  1. Introduction to knowledge organizations
  2. Knowledge and management
  3. Theory of organizational knowledge creation
  4.  creating knowledge in practice
  5. Middle-up-down management process for knowledge creation
  6. A new organizational structure
  7. Global organizational knowledge creation
  8. Managerial and theoretical implications


1.- Introduction to knowledge organizations

  • Three key characteristics of knowledge creation:
    •  Metaphor and analogy
    • From personal to organizational knowledge
      • Although we use the term “organizational” knowledge creation, the organization cannot create knowledge on its own without the initiative of the individual and the interaction that takes place within the group. –p13
    • Ambiguity and redundancy
    • Ambiguity can prove useful at time not only as a source of a new sense of direction, but also as a source of alternate meanings and a fresh way of thinking about things. In this respect, new knowledge is born of chaos – p14
    • Redundancy is important because it encourages frequent dialogue and communication. This helps create a “common cognitive ground” among employees and thus facilitates the transfer of tacit knowledge. – p14

 2.- Knowledge and management

3.- Theory of organizational knowledge creation

  • Epistemological dimension: explicit knowledge / tacit knowledge
  • Ontological dimension: knowledge level (individual/group/organization/inter-organization)
Tacit knowledge (subjective)

Explicit Knowledge (objective)

Knowledge of experience (body) Knowledge of rationality (mind)
Simultaneous knowledge (here and now) Sequential knowledge (there and then)
Analog knowledge (practice) Digital knowledge (theory)
  • Four modes of knowledge conversion
    • Socialization: from tacit to tacit
    • Externalization: from tacit to explicit
    • Combination: from explicit to explicit
    • Internalization: from explicit to tacit


TACIT Knowledge

EXPLICIT Knowledge


TACIT Knowledge



EXPLICIT Knowledge



  •  Contents of knowledge and the knowledge spiral
    • First, the socialization mode usually starts with building a “field” of interaction. .. sharing of member’s experiences and metal models. Second the externalization mode is triggered by meaningful “dialogue or collective reflection”, in which using appropriate metaphor or analogy…Third, the combination mode is triggered by “networking” newly created knowledge and existing knowledge from other sections of the organization, thereby crystallizing them into a new product, service, pr managerial system. Finally, “learning by doing” triggers internalization. – p71





  • tacit knowledge if individuals is the basis of organizational knowledge creation – p72
  • The mobilized tacit knowledge is “organizationally” amplified through four modes of knowledge conversion and crystallized at higher ontological levels. We call this the “knowledge spiral” – p72
  • This process is exemplified by product development. Creating a product concept involves a community of interacting individuals with different backgrounds and mental models. – p73


  • Enabling conditions for organizational knowledge creation:
    • Intention: (organization’s aspiration to its goals – p74)
    • Autonomy
    • Fluctuation and creative chaos (which stimulates the interaction between the organization and the external environment -p78). Chaos is generated naturally when organization faces areal crisis…. it can also be generated intentionally when organization’s leaders try to evoke a “sense of crisis”… by proposing challenging goals.
    • Redundancy
    • Requisite Variety



  • Five-phase Model of the organizational Knowledge-creation process (p83)
  1. Sharing tacit knowledge
  2. Creating concepts
  3. Justifying concepts
  4. Building an archetype
  5. cross-leveling of knowledge
  • The truly dynamic nature of our theory can be depicted as the interaction of the two knowledge spirals over time. Innovation emerges out of these spirals.

4.- Creating knowledge in practice




5.- Middle-up-down management Process for Knowledge Creation

  • Simply put, knowledge is created by middle managers, who are often leaders fo a team or task force, through  a spiral conversion process involving both the top and the front-line employees (i.e. bottom). -p127
  • Middle managers are the key to continuous innovation. -p127





Knowledge-Creating Crew

  • In fact, creating new knowledge sis the product of dynamic interaction among the following three players: (1) knowledge practitioners, (2) knowledge engineers, and (3) knowledge officers. -p151
  • (1) knowledge practitioners: front-line employees and line managers
    • high intellectual standards
    • strong sense of commitment to re-create the world according to their own perspective
    • wide variety of experiences, both inside and outside the company
    • skilled in carrying a dialogue with customers and colleagues
    • open to carrying out candid discussions as well as debates with others -p154
  • (2) knowledge engineers: middle managers
    • capabilities of project coordination and management
    • skilled at coming with hypotheses in order to create new concepts
    • ability to integrate various methodologies for knowledge creation
    • proficient at employing metaphors in order to help others generate and articulate imagination
    • engender trust among team members
    • ability to envision the future course of action based on an understanding of the past
  • (3) knowledge officers: top managers
    • ability to aerticulate a knowledge vision in order to gicve a copany’s knowledge-creating activitiesa  sense of direction
    • capability to communicati the vision, as well as teh corporate culture on whi it is based, to project team members
    • capability to justiofy the quaklity of hte created knowledge based on organizatuionap criteria or standards
    • uncanny talent for selecting the rioght project ledaer
    • willingness to create chaos within the project team by, for example, setting inordinately challenging goals
    • skillfulness in intearctign with team members on a hands-on basis and soliciting commitment from them; and
    • capability to direct and manage the total process of orgnaizationasl knoweledge creation. -p158

6.- A new organizational structure

In search of a synthesis – the hypertext organization

  • A business organization should have a nonhierarchical, self-organizaing structure workign in tandem with its hierarchical formal structure. This potin is particularly important for organizaational knoledge creation -p166
  • …hypertext organization is made up of intercoinnected layers or contexts: the business ssystem, the project team, and teh knowledge base. -p167





  • The central layer is the business layer in which normal, routine operations are carried out. Since a bureacratic structure is suitable for conducting routine work efficiently, this layer is shaped like hierarchical pyramid. The top layer is the “project team” layer, where multiple project teams engage in knowledge creating activities such as new product development… at the bottom is the “knowledge base” layer, where organizational knowledge generated in the above two layers is recatergorized and recontextualized. This layer does not exist as an actual organizational entity, but is embedded in corporate vision, organizational culture, or technology…. While corporate vision and organizational culture provide the knowledge base to tap tacit knowledge, technology taps the explicit knowledge generated in the two other layers… -p168
  • the key characteristic of the hypertext organization is the ability of its members to shift contexts –p170
  • the efficiency and stability of the bureaucracy is combined with the effectiveness and dynamism of the task force in a hypertext organization. Moreover, it adds another layer, the “knowledge base”, that serves as a clearinghouse for the new knowledge generated in the business system at the project team layers.
  • A hypertext organization should not be confused with a matrix structure, which is used to actually two or more different tasks in a conventional hierarchical organization. P170
  • in the matrix structure, and organization member must belong or report to two structures at the same time. In contrast, an organization member in a hypertext structure belongs or reports to only one structure at one point in time.
  • matrix structure is not primarily oriented toward knowledge conversionin a hypertext organization, knowledge contents are combined more fixedly across layers and over time.
  • Since deadlines are set for the projects, the resources and energy of the hypertext organization can be used in a more concentrated manner to fulfill the goal of the project during the project period.
  • … in a sense, a hypertext organization fosters middle-up-down management


7.- Global organizational knowledge creation



8.- Managerial and theoretical implications

  • A summary of our major findings
  1. tacit and explicit knowledge
  2. interaction between tacit and explicit knowledge is performed by an individual, not by the organization itself
  3. the core of the organizational knowledge creation process takes place at the group level, but the organization provides the necessary enabling conditions. The knowledge spiral: invention, autonomy, fluctuation and creative chaos, redundancy, and requisite variety
  4. organizational knowledge duration is nonlinear and interactive. Is a never-ending iterative process
  5. middle up down management
  6. hypertext organization
  7. we need to integrate the merits of both the Japanese and Western methodologies to develop a universal model of organizational knowledge creation
  • practical implications
  1. create a knowledge vision
  2. develop a knowledge crew
  3. Build high density field of interaction at the front line
  4. Piggyback on the new product development process
  5. adopt middle-up-down management
  6. switch to a hypertext organization
  7. construct a knowledge network with the outside world
  • theoretical implications
  • false dichotomies
  1. tacit / explicit
  2. body / mind
  3. individual / organization
  4. top-down / bottom up
  5.  bureaucracy / task force
  6. relay / rugby
  7. East / West



Creative Ecologies: Where thinking is a proper job – John Howkins (2009)


Creative Ecologies: Where Thinking is a Proper Job
Published by UQP in 2009, Transaction (USA) in 2010

Author’s web:


  • The old question ‘Where do you want to live?’ is now ‘Where do you want to think’ – p2
  • Modern ecology is part of the shift in thinking generated by quantum physics and system theory, from the old view based on reductionism, mechanics and fixed quantities to a new view based on holistic systems where qualities are contingent on the observer and on each other – p3
  • Creative or repetitive? – p5
Creativity Repetition
Diverse / variegated Unified
Implicit Explicit
Unstable (challenges/questions) Stable (safe/ answers)
Fluid/emerging Rigid/ settled
Feedbcka Little feedback
Learning Education
Networks Hierarchies
Desires beauty Desires irder
Access Control
High automnmy / low dependence Hidh dependence / low autonomy
Complex Simple
Self-orgnaising Closed, shielded
Quality Quantity
Systemic / whole Fragmented / parts
Analogue Digital (especially binary0
Cyclical Linear
Process / collaboration Event / Competition
Mind Body

The Challenge

Learning to look

  • Vincent van Gogh’s nine weeks with Gauguin in his studio were astonishingly creative for both of them. Van Gogh produced 49 oil paintings, several watercolours and hundreds of drawings and Gauguin about one-third as many. – p8


  • Creativity is the use of ideas to produce new ideas. The input, the original idea, may be novel or familiar…. The output’s commercial value may depend on this uniqueness …or on how easily it can be copied. – p9
  • This raw creativity is not the same as talent, which is a kind of expertise, usually learned and repeatable. – p9
  • Creativity is not the same as innovation. Creativity is internal, personal and subjective, whereas innovation is external and objective. Creativity often leads to innovation, but innovation seldom leads to creativity – p10
  • Business has seen creativity and innovation as specialist functions. I call this repetitive economy. –p10
  • But while the commodities and manufactures goods in a classical economy are physical and quantifiable, the inputs and outputs of a creative economy are subjective and qualitative –p11
  • A creative ecology is a niche where diverse individuals express themselves in a systemic and adaptive way, using ideas to produce new ideas; and where others support this endeavor even if they don’t understand it. These energy-expressive relationships are found in both physical places and intangible communities; it is the relationships and actions that count, not the infrastructure. –p11


  • Maslow spent years clarifying and refining what he meant by self-fulfillment, and in 1970, just before he died, he replaced the term with two others: the ‘aesthetic (appreciation of the beauty) and ‘cognitive’ (desire for knowledge and particularly understanding knowledge). – p18


  • Network economy, knowledge economy… all these labels miss something vital. … We need to treat people not as an economic unit but as autonomous, thinking individuals…. The theory of creative ecology … tries to answer:


  • What is the nature of creativity?
  • What is the nature of creative work and the creative economy?
  • What is their relation to other factors of change, such as innovation?
  •  What should governments do, if anything?


First Ideas

  • DCMS : thirteen industries: advertising, architecture, art and antiques, crafts, design, designer fashion, film and video, interactive leisure software, music, performing arts, publishing, software and computer services, and TV and radio. – p22
  • My own added R&D and toys and games, and I referred to ‘core’ industries with significant multiplier effect, especially in media, advertising, design and software. – p23

Individuals and occupations

  • The nature of creative work means that industries are not the main characters in  the story… the large number of people who are full-time creative workers but work outside an industry requires an economic model based on individuals and what people do… -p25
  • Florida’s approach generates a more subtle and more multi-dimensional approach and helps us to relate creative work to demographic and socio logical conditions that facilitate it.

Cores and circles – p26

  • Britain’s BOP Consultants: 1) creative Originals (i.e. art) ; 2) creative content (music); 3) creative experiences (live performances); 4) creative services (advertising)
  • NEFA: core, cultural periphery and creative industries
  • Kern European Affairs (KEA): 1)  Cultural products that are non-industrial; 2) Cultural industries whose outputs are exclusively cultural; 3) Creative industries and activities that incorporate elements of 1 and 2; 4) related industries specializing in equipments to facilitate the use of copyright works.
  • Ambiguity of these descriptions…blurred relationship….


  • …the economic conundrum (infinite need, limited resources) collapses. – p30
  • Whereas Schumpeter focused on the entrepreneur’s skills in fomenting creative destruction, the creative ecology treats all individuals as potentially creative, thus generating greater scale and scope. – p31



Scope and scale

  • We enjoy crossovers between art and science, between fashion and technology, between fact and fiction (i.e. Tusquets and Krasu in auditorium in Grand Canaria) – p37
  • McKinsey consultants: “45% of British jobs require the workers to exercise their tacit knowledge, or talent… 70% of new jobs in Britain and America require personal judgment – p38
  • Everyone can go. The creative ecology has very low barriers to entry
  • Although creativity has few barriers to entry except education and ambition, some creative businesses can face very high barriers of talent, capital, regulation and market power… few large companies that dominate distribution, especially where they can achieve significant economies of scale.
  • Exponential variety: … varied because they express personal meanings and contradictory because there is virtually no consensus.
  • These two factors, low barriers to entry and exponential variety, result in high level of volatility. Life in an ecology requires rapidly adaptive behavior of an organism ist o survive, let alone develop. – p40
  • Autonomy and openness… diversity and collaboration. Compared with previous emphases on institutions and mechanics, there are themes of fluidity and fuzziness, and of emergent thinking. – p42

The adaptive mind

  • By including an awareness of the self and perception, deep ecology is especially relevant to creativity. – p45
  • Four aspects of ecological thinking relevant to creativity and innovation:

1. Diversity: tolerance (Florida)
2. Change: theory of evolution

  • There is not a gene for creativity however “there may well be genetic sequences that predispose people towards characteristics that assist creativity, such as reasoning, memory and spatial awareness. P50
  • Whereas biological evolution precedes by increasing divisions into separate species, cultural change occurs by borrowing and mixing; and whereas evolution is Mendelian (inherited, digital), cultural change is Lamarckian (learned, analogue), – p51

3. Learning

4. Adaptation

  • Imitation
  • Communities
  • Collaboration
  • Competition


Creative places

  • Instruction will be replaced by dialogue in which listening ia a respected and enjoyable as speaking. Since it is impossible to anticipate a new idea or the appropriate group to develop it, you will have access to many different groups and the ability to form an indefinitely large number of new ones. –p72
  • This process can flourish in large organizations so long as they operate as a network of small groups. ..p72
  • A creative dialogue is informal –p72
  • My own RIDER system consists of Review, Incubation, Dreams, Excitement and Reality Checks – p74
  • Cities have become icons of the creative economy: their startling new building. Their crowds, clusters and cultural diversity, their elite stars and industry gatherings, … p74
  • Cities: Creative magnets (p76)….CREATIVE CITIES
  • Cities score high in our four indicators of a creative ecology: diversity, change, learning, and adaptation. – p78
  • Urban-based collaboration is one of the most powerful forces in contemporary social change -p79
  • Architect Jaime Lerner, the charismatic mayor of Curitiba in southern Brazil, invented the idea of “Acupuntura Urbana” to describe the insertion of building-as-events into the urban landscape to spice it up. (Joern Utzon, Gehry, Zaha Hadid, Starck, Moneo..)
  • In ecological terms, cities are prime energy exchangers. They attract people that are both producers and buyers –p81
  • The focus now is on sustainability. Can cities,,, lead in creating sustainable eco-systems? – P82
  • The internet: The world’s most adaptive market –p82
  • The internet’s greatest impact is on individual autonomy and network collaboration. These may seem mutually incompatible. –p85

Negotiating uncertainty

  • If we want to turn an idea into money, we have to negotiate a contract.
  • The ten factors in these negotiations are:
  1. Serial change
  2. Niches
  3. The personal difference
  4. Novelty
  5. Meaning is uncertain
  6. Value is uncertain
  7. Demand is uncertain
  8. The network office
  9. Copyright is currency
  10. Mixed portfolios

The way forward

  • Schumpeter rejected the classical assumption that supply and demand would always resolve themselves around equilibrium point. ….He was more interested in the process of moving from one state to another. – p106
  • The claims for today’s creative ecology rest in Schumpeter’s first claim about creative destruction being right and his second claim about hostile intellectuals being wrong. – p107
  • An economic system that consists entirely of state- or oligarchy-owned resources of land, capital and labour dos not prevent creativity but it does prevent a creative ecology. – p108
  • In some European countries, the creative ecology is seen as the side-effect of a a decline in manufacturing,
  • Japan’s weakness is its uniformity –p110
  • China: its main vulnerability is its dislikes of diversity,. Perhaps matched by the current shortness of creative talent, but its creative ecology has grown faster than any other country, ever.
  • East and West: Western companies emphasize the novelty of what is produced and sue ‘breakthrough’ and ‘disruption’ as words of praise….There are signs of change on both sides. –p114

New places, new policies

  • A government’s job is to know and to control, but creativity is often not knowable and never controllable. – p117
  • Governments that want a creative ecology will carry out a policy audit  on their laws and regulations to ensure that they are fit for the ecology… Three examples: learning to learn, copyright (balancing ownership and access) and international trade. – p120


Three steps to growth

  1. Everyone is creative
  2. Creativity needs freedom
  3. Freedom needs markets
  • In this sense, freedom is a primary tool that enables one to use other tools such as technology and money.
  • A market of some sort is a necessary condition for economic activity.
  • Creativity needs an indefinitely large number of market-places: social marketplaces… Commercial marketplaces… -p134

The new billion

  • There will always be a tension between private creativity and the public transactions that result, between the individual and the group, and between freedom and regulation.
  • Looking for a job: every few years, a billion young people are looking for their first job (thinking is a proper job).


Some references:

European Ambassadors for Creativity and Innovation : Manifesto


CRITICAL DISCOURSE ANALYSIS – The critical study of language (Norman Fairclough, 1997)

This book summary can be downloaded here.


Séminaire en Théories des Organisations

Travail présenté à : Linda Rouleau


Rencontre des « Grands Esprits »


The critical study of language

Norman Fairclough

Ignasi Capdevila



HEC Montréal, 5 Avril 2011

Table of contents

o   About the author
o   Key concepts
o   Book Summary

o   Section A : Language, ideology and power

o   1.- Critical and descriptive goals in discourse analysis

o   2.- Discourse representation in media discourse

o   3.- Language and ideology


o   Section B: Discourse and sociocultural change

o   4.- Discourse, change and hegemony

o   5.- What might we mean by “enterprise discourse”?

o   6.- Critical discourse analysis and the marketization of public discourse: the universities

o   7.- Ideology and identity change in political television


o   Section C: Textual analysis in social research

o   8.- Discourse and text: linguistic and intertextual analysis within discourse analysis

o   Section D: Critical language awareness

    • 9.- Critical language awareness and self-identity in education
    • 10.- The appropriacy of “appropriateness”

About the author


Norman Fairclough (born 1941) is emeritus Professor of Linguistics at Lancaster University. He is one of the founders of critical discourse analysis, a branch of sociolinguistics or discourse analysis that looks at the influence of power relations on the content and structure of writings.

Fairclough’s theories have been influenced by Mikhail Bakhtin and Michael Halliday on the linguistic field, and ideology theorists such as Antonio Gramsci, Louis Althusser, Michel Foucault and Pierre Bourdieu on the sociological one. (Source:


Research Interests

(Written by the author; source:

Since the early 1980s, my research has focused on critical discourse analysis – including the place of language in social relations of power and ideology, and how language figures in processes of social change. My main current interest is in language (discourse) as an element in contemporary social changes which are referred to as ‘globalisation’, ‘neo-liberalism’, ‘new capitalism’, the ‘knowledge economy’ and so forth. Over the past three years I have been working specifically on aspects of ‘transition’ in Central and Eastern Europe, especially Romania, from a discourse analytical perspective.

This research is based upon the theoretical claim that discourse is an element of social life which is dialectically interconnected with other elements, and may have constructive and transformative effects on other elements. It also makes the claim that discourse has in many ways become a more salient and potent element of social life in the contemporary world, and that more general processes of current social change often seem to be initiated and driven by changes in discourse. Discourse analysis, including linguistic analysis, therefore has a great deal more to contribute to social research than has generally been recognised, especially when integrated into interdisciplinary research projects.

My own recent contribution to this research has included three main elements:

o   Theoretical development of critical discourse analysis to enhance its capacity to contribute to this area of social research

o   Developing approaches to linguistic analysis of texts and interactions which are adapted to social research

o   Application of this theory and method in researching aspects of contemporary social change

I have maintained research contacts with Lancaster since my retirement through collaborative projects in the Institute for Advanced Studies and the Linguistics department on the ‘knowledge-based economy’, the Bologna reforms of higher education in Europe, and ‘moral economy’.


Key concepts

Here are presented the main concepts of the Critical Discourse Analysis (CDA from now on) as were developed by Norman Fairclough.

‘Discourse’ is a category used by both social theorists and analysts on the one hand and linguists on the other. Fairclough uses the term as many linguists, to refer primarily to spoken or written language use, though he extends it to include semiotic practice such as printed information and non-verbal communication. But referring to language as a discourse, he considers language as a form of social practice. This implies that language is a mode of action (socially reproductive) and also socially shaping, or constitutive (creative, socially transformative). CDA explores the tension between these two sides of the language use, the socially shaped and the constitutive, Language is always constitutive of 1) social identities; 2) social relations and 3) systems of knowledge and belief. CDA is then developed as a theory of language which stresses in the multifunctionality of language and which sees every text as simultaneously having the “ideational”, “interpersonal” and “textual” functions of language.

Language use is dynamically shaped. On the one hand, societies and particular institutions within them sustain a variety of coexisting, contrasting and often competing discursive practices or “discourses”. On the other hand, there is a complex relationship between particular discursive events and underlying conventions or norms of language use. Language may on occasion be used “appropriately” but not always. This fact led Fairclough to develop the theories of appropriateness.

Fairclough conceptualizes conventions which underlie discursive events in terms of orders of discourse. There is a complexity of the relationship between discursive event and convention, where discursive events commonly combine two or more conventional types of discourse, and texts are routinely heterogeneous in their forms and meanings. The order of the discourse is the relationships of the discursive practices (complementarity, inclusion/exclusion, opposition). The orders of discourse in a society are the set and relationships between more “local” orders of discourse.

The boundaries and insulations between and within orders may be points of conflict, open to being weakened of strengthen, as a part of wider social struggles.

Categorization of discourses: Fairclough distinguishes between discourses (as a count noun, so that be used in the plural form) defined as “ways of signifying areas of experience from a particular perspective (e.g. patriarchal versus feminist discourses in sexuality” (p132), and genres, defined as “uses of language associated with particular socially ratified activity types such as job interview or scientific papers” (p.132).

CDA aims “systematically explore often opaque relationships of causality and determination between (a) discursive practices, events, and texts, and (b) wider social and cultural structures, relations and processes” (p.132)

Fairclough through CDA, investigates how discursive practices are ideologically shaped by relations of power and struggles over power and explores how the opacity of these relationships between discourse and society is itself a factor providing power and hegemony. Opacity means that the linkages between discourse and ideology might be unclear to those involved.

Fairclough preaches for the education in critical language awareness in the teaching of the mother tongue to equip learners with the capacities and understanding of the powers and hegemony involved and to emancipate them in the struggle against alienation of marketization and give them a meaningful choice to be democratic and effective citizens.



Some key definitions (p.135):

Discourse (abstract noun)  language use conceived as social practice.

Discursive event                   instance of language use, analysed as text, discursive practice, social practice.

Text                                        the written or spoken language produced in a discursive event.

Discourse practice               the production, distribution and consumption of a text.

Interdiscursivity                   the constitution of a text from diverse discourses and genres.

Discourse (count noun)      way of signifying experiences from a particular perspective.

Genre                                     use of language associated with a particular social activity

Order of discourse               totality of discursive practices of an institution, and relations between them.



Book Summary

The book is a collection of ten papers on critical discourse analysis which were written between 1983 and 1992 and were published between 1985 and 1993.

Section A : Language, ideology and power

In this section, the author develops an analytical framework (theory and method) to study language in its relationship to power and ideology and the struggle against domination and oppression of linguistic forms.

1.- Critical and descriptive goals in discourse analysis

In this article, the author views social institutions as containing diverse “ideological-discursive formations” (IDFs) associated to different groups of the institution and there is usually one IDF which is clearly dominant. Dominant IDF has the capacity to “naturalize” ideologies, to win acceptance as non-ideological common-sense. The goal of CDA is to “denaturalize” the discourses. Naturalization gives dominant ideologies tha status of common sense, and thereby makes them opaque (there are no longer visible).

Assumptions: 1) the verbal interaction is a mode of social action and this presupposes a range of “structures”; 2) these structures are also the products of action, so actions reproduce structures.

To build his framework, Fairclough integrates “micro” and “macro” research and identifies three levels of social phenomena: the social formation, the social institution, and social action. The institutional frame includes “formulation and symbolizations of a particular set of ideological representations: particular ways of talking are based upon particular ‘ways of seeing’” (p.38). Ways of talking and seeing are inseparably related. Social institutions are pluralistic and this leads to institutional struggles that are connected to class struggles.

Even though some concepts developed in this paper were not taken in consideration in further work (like the IDF concept), Fairclough considered that some aspects of this article are significant. First, the claim that ideologies are primarily located in the “unsaid” (implicit propositions). Second, norms of interaction involving aspects of the impersonal meaning and forms (i.e. turn-taking systems) may be ideological as well as the “content” of texts. Third, the theorization of power as in part “ideological/discoursal”. Even casual conversation has its conditions of possibility within relations of ideological/discoursal power.

2. – Discourse representation in media discourse

The article is based on the analysis of a set of five newspaper articles and argues that the detail of text is tuned to social structures and power relations within which the media operate, and has ideological effects in mystifying relations of domination. The paper is an application of the emergent CDA framework to a specific case and identifies the “convertionalisation” of public discourse.

The articles are analyzed on the base of Direct Discourse (DD), Indirect Discourse (ID) as converted DD and unsignalled codes (UNSIG) that is secondary, discourse  without being explicitly marked as represented discourse and which the author calls “dissemination”. UNSIG is the main mode for dissemination, and all instances of UNSIG involve dissemination.

The author identifies two tendencies in the representation of discourse in the five articles:

  • “Tendency 1: low demarcation between primary and secondary discourse” (p.61).

Newsgivers (the media) have come to adopt the position of mediators.   This shift reflects economic pressures to make news a more “saleable commodity” in order to win more readers and advertising  possibilities. The author identifies three roles of media: 1) animator – the person who is actually making the marks on paper; 2) the author – the one who puts the words together and3) the principal – the one whose position is represented by the words. Newsgivers are animators, sometimes authors and even principals, when in reality they are not. Access to the media is most open to socially dominant sectors and it can be regarded as transmitting the voices of social power-holders. This doesn’t mean that they are always transmitting a conscious distortion or manipulation of the information; rather they can be regarded as built into common-sense professional practices. In this way, media legitimize and reproduce existing asymmetrical power relationships by assimilating the voices of the powerful to voices of “common sense”.

  • “Tendency 2: focus upon representation of the ideational meaning of the words used” (p.61).

News tends to be seen as very much a conceptual and ideational business (statements, claims, beliefs and positions) rather than feeling, circumstances, social and interpersonal relationships. The focus is on ‘what’ and the ‘how’ is left outside. This assumption is that words themselves are ideationally transparent and the myth is that the media are a ‘mirror’ to reality. It supposes that reality is transparent and can be ‘read’ without mediation or interpretation. News media can be seen as an ideological process of considerable social importance.


3. – Language and ideology

In this article, the author explores the theoretical question of what sort of relationships are between language and ideology. Ideologies reside in texts but it is not possible ‘read off’ ideologies from texts because meanings are produced through interpretations of texts and texts are open to diverse interpretations.

Language is imbricated in social relations. Language is a material form of ideology, and language is invested by ideology. Discourses have three interrelated dimensions: social practice, discoursal practice and text. Ideology enters in the ideological elements of producing and interpreting a text and in the ways in which these elements are articulated together and orders of discourse rearticulated  in discoursal events. Ideology is reflected on the ‘content’ but also on the ‘form’. Formal features of texts at various levels may be ideologically invested.

Hegemony, a concept that originates from Lenin but further elaborated by Gramsci, is “leadership as well as domination across the economic, political, cultural and ideological domains of a society” (p.76). Hegemonic ideologies become naturalised, or automatized in common sense. People are faced with ‘ideological dilemmas’, which they attempt to resolve or contain through discoursal forms of struggle. Hegemonic struggle can be conceptualized and analyzed in terms od the view of discourse even though hegemony is a process at the societal level, whereas most discourse has a more local character.

An apparent democratization of discourse involves the reduction of power asymmetry between people of unequal institutional power. Discoursal democratization is linked to political democratization, and to the broad shift from coercion to consent, incorporation and pluralism in the exercise of power. But it can be seen in pessimistic terms as illusions of democracy. For instance, counselling, that has its origins in therapy, is now a very spread technique across many institutional domains. Counselling is seen as giving space to people as individuals and look like a counter-hegemonic practice. However, it has a disciplinary nature in various institutions. Hegemonic struggle is partly through counselling and partly over counselling.

Limits of ideology. Not all discourse is irredeemably ideological. Furthermore, CDA can systematize awareness, critique ideology and arise possibilities of empowerment and change.

Fairclough was later not happy with the view of ideology in this paper but underlined that the features worth noting were “the idea that discourse may be ideologically creative and productive, the concept of ideological complex, the question of whether discursive practices may be reinvested ideologically, and the broad sweep of features of texts that are seen as potentially ideological” (p.26)


Section B: Discourse and sociocultural change


4.- Discourse, change and hegemony


This article links the ‘macro’ domain of state, government and policy with the ‘micro’ domain of discursive practice, by way of the concept of ‘technologization of discourse’.

Fairclough regards technologization of discourse as an important resource in attempts by dominant social forces to direct and control the course of major social and cultural changes which are affecting contemporary societies. This argument is based on the theory of power of Gramsci and his concept of ‘hegemony’ and on the consideration that hegemonic struggle is embedded to a significant degree in the discursive practices of institutions and organizations.

Technologization of discourse is part of a struggle o the part of dominant social forces to modify existing institutional discursive practices, as one dimension of the engineering of social and cultural change and the restructuring of hegemonies, on the basis of strategic calculations of the wider hegemonic and ideological effects of discursive practices. Technologization of discourses is a process of intervention with the objective of constructing a new hegemony to shape a new synthesis between discourse practice sociocultural practice and texts. For example, ‘social skills training’ is a well-established application of social psychological research and technology of government.

Technologization constitutes a powerful impetus towards standardization and normalization of discourse practices, across as well as within institutions. However the engineering of social identity may have pathological consequences as it may lead to a crisis of sincerity and a crisis of credibility and a general cynicism. The gap between practices of accommodation and compromise and the impetus within technologization of discourse towards more standardized and context-free discourse practice generate strategies of resistance.

Technologization of discourse involves the combination of 1) research into the discursive practices of social institutions and organizations, 2) redesign of those practices in accordance with particular strategies and objectives, usually those of bureaucrats or managers, and 3) training of institutional personnel in these redesigned practices.


5. – What might we mean by “enterprise discourse”?


This paper is an analysis of ‘enterprise discourse’ in the political speeches of a minister in Thatcher’s government, and in a brochure produced by his ministry. The article highlights the diffuse nature in changes in discursive practices. A change appears explicitly in the political speeches as shifting in the meanings of the word ‘enterprise’. The three meanings of the word ‘enterprise’ are: 1) engagement in arduous undertakings, 2) disposition of readiness to engage in undertakings of difficulty or risk, and 3) ‘private business’ as a collective noun. Fairclough hierarchically orders in salience the different meanings of the word ‘enterprise’ and explains how a sociocultural change may be discoursally realized through a restructuring of such hierarchical relations, by means of a manipulation of context and cotext.

The author also identifies levels of explicitness of enterprise discourse. A most explicit level, where enterprise discourse are overt discourse topics; a second level, the discoursal level, where enterprise discourse is still overtly present in describable features of texts and a third level, a subdiscoursal level, where enterprise discourse is an implicit interpretative resource.

Enterprise discourse is not a well-defined closed entity, but rather a set of tendencies and cannot be located in any text. The focus needs to be rather on processes across time and social space of text production and the wider strategies of texts readers.


6.- Critical discourse analysis and the marketization of public discourse: the universities


In this paper, Fairclough analyzes of discourse samples which illustrates the marketization of higher education in Britain. As examples, he uses extracts from advertisements for academic posts, materials of a conference, a CV, and undergraduate prospectuses. The focus is on shifts in the identities of groups within higher education, especially academics, and upon authority relations between groups, for example, between institutional managements and academic staff or students.

Fairclough identifies three sets of interconnected developments in contemporary discursive practices, characteristics of the language and discourse in late capitalist society:

1.- Contemporary society is ‘post-traditional’: This means that traditions have to be justified against alternative possibilities rather than being taken for granted; that relationships in public based automatically upon authority are in decline, as are personal relationships based upon rights and duties. People’s self-identity, rather than to be a feature of roles, is reflexively built up through a process of negotiation. This negotiation requires highly developed dialogical capacities. The ‘informalization’ (or ‘conversationalization’) of public discourse can be seen as a colonization of the public domain by the practices of the private domain. On the other hand, it can be seen as an ‘appropriation’ of private domain practices by the public domain.

2.- “Reflexivity, in the sense of the systematic use of knowledge about social life for organizing and transforming it, is a fundamental feature if contemporary society” (Giddens, p138). Technologization of discourse can be understood as the constitution of expert systems (as developed by Giddens) whose domain is the discursive practices of public institutions.

3.- Contemporary culture as ‘promotional’, ‘consumer’ culture point to the marketization and commoditization and about seeing the discourse as a vehicle for ‘selling’ goods. The genre of consumer advertising has been colonizing professional and public service orders of discourse, generating many new hybrid partly promotional genres (such as the genre of contemporary university prospectuses).

The colonization of discourse has pathological and ethical effects. There is a serious problem of trust on the discourses but there is a deeper consequence: it is increasingly difficult not to be involved oneself in promoting, because self-promotion is becoming part-and-parcel of self-identity. This calls the ethics of language and discourse. A critical awareness of language and discourse would then be a urgent prerequisite for democratic citizenship and a urgent priority for language education.

Fairclough concludes that CDA is a resource for people who are trying to cope with the alienating and disabling effects of changes imposed upon them.


7.- Ideology and identity change in political television


Like in the previous article, CDA is applied to discourses. Instead of analysing written documents, in this article analyses media discourse – specifically, one section of  the late-night political discussion and analysis programme which was broadcast during the 1992 general election in Britain. Fairclough argues that the discourse practice of the programme effects a restructuring between the orders of discourse of politics, private life, and entertainment, through a mixing of some of their constituent genres and discourses. ‘Chat’ is an emergent television genre that is an institutionalized simulation of ordinary conversation as a form of entertainment and humour. Humour takes an important role as it is taken as a ground-rule that requires any serious political talk to be lightened by humour.. The domain of politics is then restructured through redrawing of its boundaries with leisure and the media and the everyday life. The complex discourse practice is realized in heterogeneities of meaning and form in the text. The complexity of the discourse practice gives rise to a high level of ambivalence du to the mix of genres. The complexity appears also to place heavy demands upon participants and cause difficulties for them which are manifest in disfluencies and in failures to observe the humoristic rule, which are treated as sanctionable behaviour by other participants. The paper concludes with a discussion of the ideological effects of these changes in political discourse.


Section C: Textual analysis in social research


8.- Discourse and text: linguistic and intertextual analysis within discourse analysis


CDA claims that close analysis of texts should be a significant part of social scientific analysis of a whole range of social and cultural practices and processes. Some discourse analysts try to reduce all of social life to discourse, and all of social science to discourse analysis. This is not the right approach. Discourse analysis has to take into consideration the social and the cultural aspects and also the linguistic-discursive forms of domination and exploitation. Critical awareness as a factor of domination should be developed and spread.

CDA has to establish itself as a method in social scientific research and must move beyond a situation of multidisciplinarity and pluralism towards interdisciplinarity, which implies a higher level of debate from different approaches, methods and theories. Furthermore, Fairclough claims that CDA papers should reproduce and analyse textual samples in the original samples in the original language, despite the added difficulty for readers.

Even though the author observes a ‘linguistic turn’ in social science, he exposes the four reasons why textual analysis ought to have a more widely recognition as part of the methodologies of social science:

The theoretical reason is that texts constitute one important form of social action (linking the ‘macro’ level with the ‘micro’ level). An important point is also that language is widely misperceived as transparent, so that the ideological effects of language are overlooked.

The methodological reason is that texts constitute a major evidence for grounding claims about social structures

The historical reason is that texts are sensitive barometers of social processes, movement and diversity, and texts can provide a good indicator of social change.

The political reason is that through texts the social control and the social domination is exercised (and indeed negociated and resisted).

CDA see texts as a powerful basis for analysis but what is also important for the analysis is what is absent or omitted from texts. “Choice entails exclusion as well as inclusion” argues Fairclough (p.210).

Structures and relations have become more unstable, and practices more diverse and open to negotiation, such that there are many hybridizations of traditional medical, counselling, conversational, managerial and marketing genres and discourses.

CDA needs a developed sense of and systematic approach to both context and text. The signifier (form) and signified (content) constitute a dialectical and hence inseparable unity of the sign, so that one-sided attention to the signified is blind to the essential material side and vice versa.


Section D: Critical language awareness


9. – Critical language awareness and self-identity in education


Power is predominantly exercised through the generation of consent rather than through coercion, through ideology rather than through physical force. Change and instability make that forms of power and domination are being radically reshaped, i.e. general processes of institutional marketization and discursive facets of sociocultural processes of detraditionalization and informalization and the technologization of discourse as a peculiarly contemporary form of intervention in discursive practices to the sociocultural change.

Educational institutions are heavily involved in these general developments affecting language. First, educational practices themselves constitute a core domain of linguistic and discursive power. Second, many domains are mediated and transmitted by educational institutions. Third, educational institutions are involved in educating people about sociolinguistics order.

The author claims that CDA has an important role in the ‘critical language awareness’ – programmes to develop the capacities of people for language critique, including their capacities for reflexive analysis of the educational process itself. There are several reasons for the implementation of these programmes. The poor record of British schools in foreign language learning is part of the rationale; there is an emphasis upon developing ‘insight into pattern’ and ‘learning to listen’ as conditions for success in foreign language learning.

Some official educational reports claim that is vital for schools to teach pupils standard English. There is an assumption that schools can help iron out the effects of social class and equalize the ‘cultural capital’ of access to prestigious varieties of English but standard English is promoted without developing a critical awareness of it. It also creates a socially legitimized stigmatization of English varieties.

The author concludes that the founding motivation for CDA is the emancipation and the building of emancipated forms of social life.


10. – The appropriacy of “appropriateness”


This article deals with the concept of ‘appropriateness’ in language, and the commonplace view that varieties of a language differ in being appropriate for different purposes and different situations. Fairclough argues that appropriateness provides an apparent resolution of the paradox that se of standard English is to be taught, while use of other varieties is to be respected; that an appropriateness model of variation is the acceptable face of prescriptivism; and that giving an appropriateness view of language variation the status of knowledge inn language awareness teaching serves an ideological role. He also suggests that the attempt to contain ethnicity- and gender-related variation within the appropriacy model shows the need to go beyond it.

Language standardization is a matter of hegemony – the hegemony of a particular class extended to the linguistic sector of the cultural domain, manifested as the hegemony of a dialect.

According to Fairclough, learners should be encouraged to develop the ability to use standard English in conventional ways when they judge it to be necessary to do so, because they will be disadvantaged if they do not develop that ability. At the same time, they should be encouraged to see their own relationships and struggles as members of various communities and to contribute to the shaping and reshaping of the sociolinguistic order. CDA should not push learners to disadvantage and marginalization but it should equip them with the capacities of critical, creative and emancipatory practice.


How Institutions Think (Mary Douglas, 1986)

How Institutions Think
by Mary Douglas
1986, Syracuse University Press

This book is based on five lectures presented by Mary Douglas at Syracuse University during the last two weeks of March 1985.
Mary Douglas
Dame Mary Douglas, Order of British Empire, Fellow of the British Academy (25 March 1921 – 16 May 2007) was a British anthropologist, known for her writings on human culture and symbolism.
Her area was social anthropology; she was considered a follower of Émile Durkheim and a proponent of structuralist analysis, with a strong interest in comparative religion.
Mary Douglas is best known for her interpretation of the book of Leviticus, and for her role in creating the cultural theory of risk.
Douglas’ book “Purity and Danger” is considered a key text in social anthropology.
The line of enquiry in “Purity and Danger“ traces the words and meaning of dirt in different contexts. What is regarded as dirt in a given society is any matter considered out of place (Douglas takes this lead from William James). She attempts to clarify the differences between the sacred, the clean and the unclean in different societies and times. Through a complex and sophisticated reading of ritual, religion and lifestyle she challenges Western ideas of pollution, making clear how the context and social history is essential. (Source: Wikipedia)
Cultural Theory of risk
The Cultural Theory of risk, often referred to simply as Cultural Theory (with capital letters; not to be confused with culture theory), consists of a conceptual framework and an associated body of empirical studies that seek to explain societal conflict over risk. Whereas other theories of risk perception stress economic and cognitive influences, Cultural Theory asserts that structures of social organization endow individuals with perceptions that reinforce those structures in competition against alternative ones. Originating in the work of anthropologist Mary Douglas and political scientist Aaron Wildavsky, Cultural Theory has given rise to a diverse set of research programs that span multiple social science disciplines and that have in recent years been used to analyze policymaking conflicts generally. (Source: Wikipedia)
Interesting findings:

• Institutions Cannot Have Minds of Their Own
• “In sum, thinking and feeling are for individual persons. However, can a social group think or feel? This is the central, repugnant paradox.”
• “The program of Durkheim and Fleck can answer the functionalist criticism and the rational choice criticism only by developing a double stranded view of social behavior. One strand is cognitive: the individual demand for order and coherence and control of uncertainty. The other strand is transactional: the individual utility is maximizing activity described in a cost-benefit calculus.”

• Smallness of Scale Discounted
• “Smallness of scale gives scope to interpersonal effects.”
• “The current, more sophisticated, anthropological record shows these small-scale societies as never static, nor self-stabilizing,, but being built continuously by a process of rational bargaining and negotiating.”

• How Latent Groups Survive
• “Both science or religion are equally joint products of a thought world; both are improbable achievements unless we can explain how individual thinkers combine to create a collective good.”
• “The only initial assumption necessary was the minimal one that they would like to see the community survive without giving up their individual autonomy. The constraints in the situation only afford certain solutions. By adopting the easiest strategy, they start to move together along a path that ends in their joint construction of a thought style.”

• Institutions Are Founded on Analogy
• “To acquire legitimacy, every kind of institution needs a formula that founds its rightness in reason and in nature.”
• “For a convention to turn into a legitimate social institution it needs a parallel cognitive convention to sustain it.”
• “The favorite analogy generalizes everyone’s preferred convention.”
• “Thus the institutions survive the stage of being fragile conventions: they are founded in nature and therefore, in reason. Being naturalized, they are part of the order of the universe and so are ready to stand as the grounds of arguments”

• Institutions Confer Identity
• ”How does one constructed analogy win over another?”
• “It is naive to treat the quality of sameness […] as if it were a quality inherent in things or as a power of recognition in the mind”
• “We can start to trace the effects of turning individual thought over to an automatic pilot. First, there is a saving of energy from institutional coding and inertia”
• “But when an analogy matches a structure of authority or precedence, then the social pattern reinforces the logical patterns and gives it prominence”

• Institutions Remember and Forget
• “When we look closely at the construction of past time, we find the process has very little to do with the past at all and everything with the present.”
• “Public memory is the storage system for the social order.”
• “For them [anthropologists], remembering is the peculiar thing that needs to be explained.”
• “It is merely that there is no special reason for remembering certain names, there is even strong pressure against it.”
• “The competitive society celebrates its heroes, the hierarchy celebrates its patriarchs, and the sect its martyrs.”

• Institutions Do the Classifying
• “When the institutions make classifications for us, we seem to lose some independence that we might conceivably have otherwise had.”
• “For us, the hope of intellectual independence is to resist, and the necessary first step in resistance is to discover how institutional grip is laid upon our mind”
• “[…] life outside of human society transforms itself away from the labels in self-defense, while that within human society transforms itself towards them in hope of relief or expecting advantage.”
• “First the people are tempted out of their niches by new possibilities of exercising or evading control. Then they make new kinds of institutions, and the institutions make new labels, and the label makes new kinds of people.”

• Institutions Make Life and Death Decisions
• “Thus, no single element of justice has innate rightness: for being right it depends upon its generality, its schematic coherence, and its fit with other accepted principles.”
• “When the analogy with nature has been changed, the system of justice also needs revision.”
• “The most profound decisions about justice are not made by individuals as such, but by individuals thinking within and o behalf of institutions. The only way that a system of justice exists is by its everyday fulfillment of institutional needs.”
• “For better or worse, individuals really do share their thoughts and they do to some extent harmonize their preferences, and they have no other way to make the big decisions except within the scope of institutions they build.”

70 – The Essence of Decision: Explaining the Cuban Missile Crisis (Allison, 1971)


Allison, Graham T.
The Essence of Decision: Explaining the Cuban Missile Crisis
Little, Brown, Boston, 1971 (Ch. 1, 3, 4 and 5)


Summary and citations:

o Treating national governments as if they were centrally coordinated, purposive individuals provides a useful shorthand for understanding problems of policy. But this simplification –like all simplifications- obscures as well as reveals. –p3
o 1-Professional analysts of foreign affairs (as well as ordinary laymen) think about problems of foreign and military policy in terms of largely implicit conceptual models that have significant consequences for the content of their thought … 2- Most analysts explain (and predict) the behaviour of national governments in terms of one basic conceptual model, here entitled Rational actor or “classical” Model (Model I). …3) two alternative conceptual models, here labelled on Organizational Process model (Model II) and a Governmental (Bureaucratic) Politics Model (Model III), provide a base for improved explanations and predictions. – p5

1.- Model I: The Rational Actor
o Thomas Schelling: In a situation of mutual deterrence the probability of nuclear war is reduced not by the “balance” (the sheer equality of the situation) but rather by the stability of the balance, i.e. the fact that neither opponent in striking first can destroy the other’s ability to strike back. –p12
o For every analyst, enemy reactions constitute a critical but elusive factor. … the analyst think about what he would do if he were the enemy – p19
o Sovietology: the inference is from a physical fact –the Soviet failure to acquire a substantial first-generation or second-generation ICBM force-to what they “must have believed”.-p21
o …assumption of rational decision making. This assumption is central to the classical model. –p22
o Most analysts attempt to understand a nation’s force posture as the chosen means of implementing strategic objectives and military doctrine. –p24
o The less the information about the internal, affairs of a nation or government, the greater the tendency to rely on the classical model. –p24
o Lack of strategic doctrine and a coherent military policy as the cause of the deterioration of our position in the world –p25
o The Theory explores 1) the sociological influences on the “stakes of the conflicts among states, and the goals which the participants choose, 2) the international systems or diplomatic constellations in which states pursue these goals, and 3) the historical characteristics of the present international system
o What rationality adds to the concept of purpose is consistency: consistency among goals and objectives relative to a particular action; consistency in the application of principles in order to select the optimal alternative. – p29
o In economics, to choose rationality is to select the most efficient alternative, that is, the alternative that maximizes output for a given input or minimizes input for a given output. –p29
o The basic concepts of these models of rational action are: 1) goals and objectives; 2) alternatives; 3) consequences; 4) choice. –p30
o Rationality refers to consistent, value-maximizing choice within specified constraints. –p30
o Comprehensive rationality, limited rationality , “optimal choice”…-p31
o The likelihood of any particular action results from a combination of the nation’s 1) relevant values and objectives, 2) perceived alternative courses of action, 3) estimates of various sets of consequences (which will follow from each alternative) and 4) net valuation of each set of consequences .. Two propositions: A. An increase in eh costs of an alternative…. reduces the likelihood of that action’s being chosen; B. A decrease in the costs of an alternative… increases the likelihood of that action’s being chosen.
o Specific propositions: A. Deterrence: 1. A stable nuclear balance reduces the likelihood of nuclear attack. 2. A stable nuclear balance increases the probability of limited war. –p34
o A second type of analysis focuses not upon nations in general, but rather upon a nation or national government with a particular character – p36

3.- Model II: Organizational Process
o A government consists of a conglomerate of semi-feudal, loosely allied organizations, each with a substantial life of its own. –p67
o At any given time, a government consists of existing organizations, each with a fixed set of standard operating procedures and programs.
o This approach… relation between the Organizational Process Paradigm for international politics and models of other types of organizations. –p69
o Organizational theory: march and Simon, Simon, “comprehensive rationality”; ‘Bounded rationality” –p71
o Simon: 1) factored problems; 2) satisficing; 3) search; 4) uncertainty avoidance; 5) repertoires
o Cyert and March: 1) Quasi-resolution of conflict; 2) problemistic search; 3) organizational learning
o Organizational Process Paradigm:
1. Basic units of analysis: governmental action as organizational output.
2. Organizing concepts: A) Organizational Actors; B) Factored Problems and fractionated power; C) Parochial priorities and perceptions; D) Action as Organizational Output; 1) Goals: constraints defining acceptable performance; 2) sequential attention to goals; 3) standard operating procedures; 4) programs and repertoires; 5) uncertainty avoidance; 6) problem-directed search; 7) organizational learning and change: a) budgetary feast; b) prolonged budgetary famine; c) dramatic performance failures; E) Central coordination and control; F) Decisions of Government Leaders;
3. Dominant Inference Pattern
4. General propositions: A) Organizational implementation; 1) SOPs; 2) programs; 3) repertoires; B) Organization options; 1) Alternatives built into existing organizational goals; 2) alternatives requiring coordination of several organizations; 3) alternatives in areas between organizations; C) Limited flexibility and incremental change; D) Long-range planning; E) Goals and tradeoffs; F) Imperialism; G) Options and Organization; H) Administrative feasibility
o Model II thus brings into question the traditional (Model I) conception of an “arms race” between the USA and the Soviet Union… Military organizations tend to keep doing what they are doing… at least until a catastrophe in war occurs. – p98

4. – Cuba II: A second Cut
o 22.000 Russians. There can be no doubt that the Soviets were engaged not only in a provocative, but also in a really massive, military build-up in Cuba.-p106
o Why the Soviets were so insensitive to the possibility of U2 observance of their operational
o Why the soviets failed to coordinate the timing are still inexplicable p 106. Behaviour of the Soviet military personnel in Cuba seems mildly schizophrenic. Though they made considerable effort to disguise their identity…indelible signals… p109
o That there was a deep split between the Party, especially Party boss Khrushchev, and the military, is no secret. –p112
o At 7pm on October 22, 1962, President Kennedy delivered the major foreign policy address of his career. –p117
o The ten-day delay constitutes some form of “failure”. –p123
o “Pearl Harbor in reverse” : surgical air strike
o Organizations defined what the President believed US military equipment and personnel were capable of performing in the Cuban missile crisis. – p124
o Interesting meeting of McNamara and Anderson (“It’s all in here”)
o As the climax of the crisis drew near, developments were, in the American phrase, “approaching a point where events could have become unmanageable” –p132
o The soviet decision to place missiles in Cuba must have been taken within a very narrow circle and implemented with utmost secrecy. –p135
o President Kennedy had initiated the course of events, but he no longer had control over them. –p137
o Established, rather boring, organizational routines determined hundreds of additional, seemingly unimportant details –any one of which might have served as a fuse for disaster. –p139
o …strike against a single SAM site. But now that the time had come to implement that decision, killing Russians in the process, and possibly leading to war, the President reconsidered…”wait one more day… –p140
o At this point …murmuring about American “fold-in” –p140
o Was he, the President of the United States, in charge of this incredible machine called the US government or not? –p142
o The Turkish missiles had “stickability”.
o Soviet leaders announced that they were withdrawing their missiles in Cuba, without reference to eh Turkish missiles.

5. – Model III: Governmental Politics
o Men share power. Men differ about what must be done. The differences matter. This milieu necessitates that government decisions and actions result from a political process. – p 145
o …is that you can no more divorce government from politics than you can separate sex from creation. (James Forrestal, Secretary of Defense)– p147
o Presidential power is the power to persuade – p148
o This model directs attention to intra-national games, the overlap of which constitutes international relations. –p149
o Almond and Lindblom: American foreign policy as pluralist politics… character of bargaining…incremental muddling as opposed to comprehensive choice.
o A Governmental (Bureaucratic) Politics Paradigm
1. Basic Unit of Analysis: Governmental Action as Political Resultant
2. Organizing Concepts: A) Who plays 1) Players in Positions; B) What determines each player’s stand? 1) Parochial Priorities and Perceptions; 2) Goals and Interests; 3) Stakes and Stands; 4) Deadlines and Faces of Issues; C) What determines each players’ impact on results? 1) Power; D) What is the game? 1) Action-channels; 2) Rules of the game; 3) Action as Political Resultant
3. Dominant Inference Pattern
4. General Propositions: A) Political Resultants ; B) Action and Intention; C) Problems and Solutions; D) Where you stand depends on where you sit; E) Chiefs and Indians; F) The 51-49 Principle; G) Inter- and Intra-national Relations; H) The face of the issue differs from seat to seat; I) Misperception; J) Misexpectation; K) Miscommunication; L) Reticence; M) Styles of Play
5. Specific Propositions: A) Nuclear Crises; B) Military Action
6. Evidence
o Nuclear Strategy: Rather than the Model I’s focus on balance and stability, or Model II’s focus on organizational routines, a Model III analyst is concerned with the features of the internal politics of a government that might produce this decision. –p183
o The “kings” are partners in the game against nuclear disaster. Both will be interested in private communication with each other. If channels can be arranged, such communication offers the most promising prospect of resolution of a crisis. –p184

Personal comments, interesting issues and findings:

o This book makes us think about many fields, not only management and decision making but also US foreign politics, international relations…
o Model II does not justify the “arms race” but the routine of the militarisation. In fact, after the communism debacle, the US has been looking for other enemies in order to avoid stopping the militarization and the decrease of the weapon industry.
o The story is only from the US side. It would be interesting to hear the Cubans’ and the Russians’ versions of the crisis. But we can imagine that it was also chaotic: the Russian “forgot” to claim the Turkish missiles when withdrawing their missiles for Cuba!
o What is amazing is the big amount of failures on both sides (did Russians want to keep the secret with 22,000 soldiers in Cuba? Bases with the same shape as the missile bases in URSS? Without hiding the bases? What about the story of the Castro’s drunk pilot? Truth is stranger than fiction). The American failures are also inexplicable (concentration of the planes on the US military bases, the pilot flying over the URSS).
o It is frightening the separation between the politicians and the militaries. On both sides, in URSS and USA. Do really politicians have the control on the military staff? I.e. Kennedy’s order about the Turkish missiles was ignored.

Commonalities of Bower and Allison:

o Bower, as well as Allison (in first part of his book), consider the organization (the country in the case of Allison, the company for Bower) as monolithic. Bower says:”in almost all financial theory, the firm is considered to be a unitary monolith managed in the interests of its ownership”. They both later consider the organization ruled in a big extend by “Bureaucratic politics”

74 – Managing the Resource Allocation Process: A Study of Corporate Planning and Investment (Bower, 1972)


Bower, Joseph
Managing the Resource Allocation Process: A Study of Corporate Planning and Investment
Irwin, Homewood, Illinois, 1972 (Ch.1-3, 6, and 8-10)

Topic: The business and the investment planning systems.

Summary and citations:

Ch.1: Capital budgeting as a general management problem
o The corporate setting: The scope of the problem is relevant because clearly no one manager can be assumed to have the knowledge or the time to generate detailed programs to use these funds. – p9
o The value of quantitative measures: a project can be described as the net present value of all cash flows associated with a proposed investment.
o The kind of project: estimates of the benefits from cost reductions are far more accurate and less variable than those firm sales expansions, and these estimates in turn are more reliable than the estimates of the return from new products. –p12
o The Kind of Business: the objections to a quantitative summary extend beyond the kind of project to projects within a class, for it is certainly true that different businesses involve different levels of risk. – p13
o The Kind of manager
o The role of top management choice: the objective of management of a large corporation … are not in any way a sufficient description of the objectives which direct and motivate action at the critical, resource allocating levels of the organization. Hence, a model which prescribes procedure for resource allocation based on the maximization satisfaction of “management objectives” is not a complete picture. – p17
o The problem rephrased formally: 1) business planning process, 2) investment process; 3) these two processes as critical ; the principal observed change in a firm may be explained by a sequence of planning and investment decision. 4) a Business planning system; 5) An investment planning system; 6) Decentralization – p19
o New strategic ideas are developed at the business level. Such an idea is shaped as it proceeds up managerial levels until it emerges fully packaged as a request for capital or a business plan for consideration for corporate management. –p20

Ch 2: Findings
o The forms of specialization: raw material site/ Facility / Process / Product / Industry Market / Customer / Customer Location / The functions /
o The Business Plan is intended to present a condensed but critical review of the division’s current business position problems, and opportunities, its updated longer-term market and earnings objectives, and its plans for achieving them, the specific program and expected financial results for the ensuing year -1966:and a forecast for 1967
o Investment planning: Goals. 1) Plans should meet the demands for capacity, 2) Plant costs should not rise; 3) Product quality should be competitive or better
o Exhibit 2-2 p53
o The forces influencing definition –p54
o Impetus: the definer must get his project approved by his division general manager…. The source of a project’s impetus is the power of a general manager at the officer level of the division. The general manager must sponsor the project and shepherd it successfully
o The forces influencing Impetus. Quality of the project; …technical aspects are accepted to be technically qualified….during the definition process – p58
o Structural variables may be manipulated by top management – p59
o When managers that have taken the corporation into exciting new but unprofitable fields are promoted, it is clear that “creativity and imagination” are important bases for reward. – p59
o In short, both the group management committees and the executive provided a review of all CARs.

Ch 3: A process model of a project
o Definition: Definition is the process by which the basic technical and economic characteristics of a proposed investment project are determined. –p67
o The cycle of discrepancy, analysis, and choice, of course, is the basic format of all problems. -p67
o Impetus: Impetus, the force that moves project toward funding, has been defined as the willingness of a general manager at the division president’s level, or one level below, to commit himself to sponsor a project in the counsel of division officers and before the division general manager. In making the decision, he puts his reputation for good judgment on the line. – p68
o Context: Context has been defined as the set of organizational forces that influence the processes of definition and impetus… corporate structure; situational context; … structural context. –p71
o The purposive manager: … then is a manager to be pursuing corporate and personal goals guided by a structure that helps him relate the two. His personal goals are assumed to be: 1) economic wealth, and 2) power to influence affairs. –p73
o The phases of definition: … because the information requires for strategic planning is spread widely throughout a large organization, indeed because in some instances it cannot be comprehended centrally, the planning activity usually has to be delegated to product / market organized sub-units of the corporation. –p74
o Whereas financial planning implies measurement in terms of return on investment, strategic measurements may focus on market size and share, price, margins, operating efficiencies, technological competitiveness, and other qualitative as well as quantitative measures. – p75
o The phases of impetus: exhibit 3-2 p77
o The phases of determination of context –p78
o exhibit 3-4 p80 ; exhibit 3-6 p82

Ch. 6: Fireguard

Ch. 8: The projects compared
o The development of a proposal for a new facility:
o Exhibit 8-1: The four cases compared –p245
o In a world where uncertainty is great and men are judged by results rather than plans, a definer is in a better position to elicit impetus when the pressure of the market reinforces whatever problem he perceives from a technical point of view. – p254
o The process of developing impetus: the willingness of a general manager, performing the integrating level task, to provide impetus for a project was described as depending upon the measure which that manager perceived were being applied to his judgment and management skills. –p254
o The role of context. In discussing the way in which projects were defined and acquired impetus, it has already been necessary to consider the influence of the organization, the measurement and information systems, and the reward and punishment system – what has been called structural context. – p261
o Exhibit 8-3 p 262: It is evident that context often has negative effects on the projects. What does it mean? –p262
o One of the most significant aspects of structural context observed was the provision –or lack of provision. It made for interaction across levels of hierarchy and thereby for the bringing to bear on the capital budgeting problem of well-developed generalist skills. –p264
o A critical aspect of the information and control system, the capital appropriations procedure, seems to have had a minimum degree of influence. – p264
o Where systems of measurement and reward are not integrated with the planning and investment process, problems result: projects serve the needs of functions rather than businesses; their timing reflects politics rather than the market; and coordination among projects is lost. – p269
o The business planning and investment planning processes are closely interrelated. The degree to which they are coordinated in their delegation is critical to their usefulness. Where traditional financial techniques focuses attention on individual project plans separate from the businesses they are meant to serve, severe distortions in focus and timing can result, and coordination of business sub-units with the corporation is often list. The Planning and investment process are continuing and are substantially affected by a range of structural phenomena, two which are planning and capital budgeting procedures. – p279
o There are two components to the investment process: 1) definition, having to do with how the content of projects is determined, and 2) impetus, involving which projects are funded. – p280

Ch. 9: Implications for researchers
o The goal is to help management improve resource allocation by identifying components of the process – p281
o Two approaches…. One is to observe, in a clinical setting….A second approach, generally less successful, though potentially more powerful, is to begin with the construction of an abstract version of the problem which in turn permits one to prescribe the route to improved performance. – p281
o The financial model and the corporate phases of resource allocation: in almost all financial theory, the firm is considered to be a unitary monolith managed in the interests of its ownership – p282
o In the face of real-world uncertainties, there are difficulties in estimating both returns and costs. – p283
o The strategic model and the initiating phases of resource allocation: the concept conceives the task of general management to be a problem-solving process involving the direction of corporate competence toward opportunity in the environment by the vehicles of organization, measurement, and reward. – p285
o “What is the planning unit in the large decentralized company?”….most important idea. It is the notion that strategy should be developed in increasing detail at descending levels of organizational hierarchy…. Deductive cascade. –p286
o Moreover, the lines of today’s structural form also determine the rules by which managers will compete. – p287
o The integrating phases of resource allocation: It is the responsibility of those managers performing the task of “man in the middle” to use their understanding of the qualitative elements of product-market strategic considerations to evaluate long-range programs in a way that will ensure consistency between the initial definitions by product-market sub-units and the objectives of the corporate whole along the multiple dimensions of strategy. – p288
o The choice of organization, measurement, and reward play a role of central importance in the development of corporate strategy by shaping both the allocation of corporate resources through their influence on definition and impetus – and the future perceptions of those who initiate new business plans and projects. –p289
o Exhibit 9.1. p291
o The integrated company: … all three phases of task are preformed in the president’s office: this implies that the same individuals are responsible for perceiving environmental trends and defining responses in product-market terms, and for measuring their own performance critically in financial terms. – p291
o Exhibit 9.2. p295
o Structural shifts can be used to broaden the concept of the opportunity for useful influence among managers at the division and process levels of the company. –p296
o The manager in the middle must be sensitive to the inevitable imperfections in the strategy. –p297
o In a sense, life in the large organization has aspects of a “zero-sum” game….”winner” and ….”losers”
o “bureaucratic politics” by Graham Allison (Cuban missile crisis): Bureaucratic politics is the explanation or the content of the process of impetus. –p303
o …The two interrelated systems involved in the organizational process of resource allocation in these terms: the process of definition is technical-economic in content; impetus is political. – p303
o In a systematic attempt to have resource allocation serve strategy, top management should d use structure to influence those organizational forces that shape the technical and political processes at lower levels of the organization. – p304
o “Politics” is not a pathology, it is a fact of large organization. Top management must manage its influence on “political” processes and then monitor the results of its performance. – p305
o The integrating level must have the information necessary to transform strategic measures into financial ones. It must have and be able to use strategic measurements to qualify potentially misleading financial summaries. –p307
o Exhibit 9-6 p308; Exhibit 9-7 p311
o The problem is that virtually all measurement systems compare a process’s or product’s attributes against historical or other kinds of internal standards, Instead, what is needed is an external measure of the present and potential quality of an internal capability. –p315
o Use of context: There must be enough stability… but…rotation across functional and divisional lines helps to build a cooperative climate and contributes to the development of a generalist viewpoint. – p317
o Using structure to influence behaviour. … The hypothesis is that managements can manipulate those same structural forces in order to influence behaviour in desired directions. – p318
o While rotation prepares a manager to accept a generalist viewpoint, it does not directly train him for general management. –p319

Ch. 10: Implications for management
o In a large organization the same force that led the decentralization of product-market strategic planning – primarily the dispersion of specialized knowledge –in principal ought to lead to a similar decentralization do the investment planning that results in capital commitments in product-market sub-units. – p321
o Exhibit 10-1 p323
o There seemed to be important lessons to be learned concerning 1) the timing of the different phases of the processes; 2) the role of procedure in the processes; 3) the design of the structure, and 4) the use of the elements of structure by the several managers observed. –p323
o Diagnosis: general manager must look at a resource allocation in his company in the same way a doctor looks at circulation in a patient – as part of a complex system interacting in a whole variety of ways with an even more complex environment. – p324
o Like the body, an organization is a constantly changing mechanism…. The manager must constantly act is if he were a research scientists, testing his understanding of how the system operates. – p325
o The question of location: The first diagnostic question is “where in the organization are the initiating, integrating, and corporate phases of definition, impetus, determination of context, and measurement, being carried out?” – p236
o The question of quality: Standards are often lacking –p327. It is hard to evaluate anything that is not well understood. – p327
o The question of coordination: 1) The linkages across functions and levels; 2) the consistency of focus among those performing parts of the process, and 3) the timing of different phases. – p331
o The quality and timing of the planning processes: the use of formal procedure: … attacking the usefulness of traditional, formal procedure as a way of improving the content and pace of the resource allocation process. – p335
o Bottom-up is not enough… “bottom-up” is not necessarily correct. – p336
o But procedure is not the only useful tool for improving the quality, coordination, and timing of the definition process. It can also improve the relationship between the planning of investment projects and the planning of businesses. – p338
o The purpose of capital budgeting procedure is not a “go, no-go” decision on a project, bust instead 1) a review of the strategic assumptions on which a business is being conducted, and 2) an early scanning of the corporate information network to provide all relevant inputs for the project definition. – p 339
o The relationship between planning and the measurement of managerial performance emerges as soon as the issue of “results” is introduced. – p341
o Problems of rotation: 1) …boss wants a talented specialist, not a developing manager; 2) no one of whom really knows the details knows the details of the business; 3) … if a man is rotated every two or three years, he never has to live with the consequences of his own action…..On the other hand, without rotation, men become narrow and parochial in terms of product, division and function. – p343
o The general manager… must be able to diagnose complex systems of markets, facilities, and men….also able to use tools of the complex firm-the formal organization, the information system, and the reward system- to influence organizational behaviour. … balancing short and long-run opportunity, … and must take into account … requirements of the individuals….-p345

Personal comments, interesting issues and findings:

o “The principal observed change in a firm may be explained by a sequence of planning and investment decision” and also Bower underlines the trend towards decentralisation (p19): Bower might be referring to firms that base their activity by managing projects. There is a relatively new field of management called “management by projects” (see article “Management by projects’: the management approach for the future » R Gareis, (2002)). It seems a very interesting approach, mixing networks theory and project management.
o “New strategic ideas are developed at the business level” (p20): my experience in the industry (automotive sector suppliers) is that strategic ideas and new projects were mainly driven by actors external to the company, mainly by the customer (automobile brands) or by competitive pressure. It was not an idea from the business level.
o Can the definition / impetus / approval model be generalised? Many times, impetus come from the upper level (i.e. M&A), sometimes, from lower levels (i.e. projects to improve work conditions).
o Impetus is to take risk. If the project is not beneficial for the manager (see Bower’s “purposive manager”), he might be reluctant to promote it. Impetus will be reinforced in companies fostering creativity, as creativity and innovation is related to experimenting and experimenting involves a high risk of failure.
o I believe in the concepts expressed by Bower as “man in the middle” and integrated company. I think that if the project is initiated by the top management team or very near it (trust plays a major role), the approval will be easier and quicker. Initiatives from low levels of the structure will be difficult to reach top management. This case needs 1) a “man in the middle” able to coordinate all the process or 2) a very perseverant impetus (that is difficult to have).
o As Bower says, “bottom-up is not enough”. I think that each project has different origins and definition and impetus come from different sub-units, depending on the project, not the organization.
o Interesting video from Bower about the concept of “inside outsider” as a CEO that has learned inside the company but still has maintained his objectivity:

90 – Organization in Action: Social Science Bases of Administrative Theory (Thompson, 1967)


Thompson, James D.
« Organization in Action: Social Science Bases of Administrative Theory » (1967)
Transaction Publishers, 2003, 192 p., ISBN: 0-7658-0991-5

Topic: Uncertainty avoidance in complex organizations.

Summary and citations:

Proposition 2.1: Under norms of rationality, organizations seek to seal off their core technologies from environmental influences

Organizational Rationality

“At a minimum, then, organizational rationality involves three major component activities: (1) input
activities, (2) technological activities, and (3) output activities” (Chapter 2, p. 19)

Proposition 2.2: Under norms of rationality, organizations seek to buffer environmental influences by surrounding their technical cores with input and output components

Proposition 2.3: Under norms of rationality, organizations seek to smooth out input and output Transactions

Proposition 2.4: Under norms of rationality, organizations seek to anticipate and adapt to environmental changes which cannot be buffered or levelled

“Organizational rationality therefore is some result of (1) constraints which the organization must face, (2) contingencies which the organization must meet, and (3) variables which the organization can control” (Chapter 2, p. 24)


Proposition 2.5: When buffering, leveling, and forecasting do not protect their technical cores from environmental fluctuations, organizations under norms of rationality resort to rationing

Management of Interdependence

Proposition 3.1: Under norms of rationality, organizations seek to minimize the power of task- environment elements over them by maintaining alternatives

Proposition 3.2: Organizations subject to rationality norms and competing for support seek prestige

Proposition 3.3: When support capacity is concentrated in one or a few elements of the task environment, organizations under norms of rationality seek power relative to those on whom they are dependent

The Acquisition of Power
Cooperative strategies

Proposition 3.3a: When support capacity is concentrated and balanced against concentrated demands the organizations involved will attempt to handle their dependence through contracting

Proposition 3.3b: When support capacity is concentrated but demand dispersed, the weaker organization will attempt to handle its dependence through coopting

Proposition 3.3c: When support capacity is concentrated and balanced against concentrated demands, but the power achieved through contracting is inadequate, the organizations involved will attempt to coalesce

Defense of Domain

Proposition 3.4: The more sectors in which the organization subject to rationality norms is constrained, the more power the organization will seek over remaining sectors of its task environment

Proposition 3.5: The organization facing many constraints and unable to achieve power in other sectors of its task environment will seek to enlarge the task environment

Organizational Design

Proposition 4.1: Organizations under norms of rationality seek to place their boundaries around those activities which if left to the task environment would be crucial contingencies

Proposition 4.1a: Organizations employing long-linked technologies and subject to rationality norms seek to expand their domains through vertical integration

Proposition 4.1b: Organizations employing mediating technologies, and subject to rationality norms seek to expand their domains by increasing the populations served

Proposition 4.1c: Organizations employing intensive technologies, and subject to rationality norms seek to expand their domains by incorporating the object worked on.

Balancing of Components

Proposition 4.2: Multicomponent organizations subject to rationality norms will seek to grow until the least-reducible component is approximately fully occupied

Proposition 4.3: Organizations with capacity in excess of what the task environment supports will seek to enlarge their domains


Proposition 5.1: Under norms of rationality, organizations group positions to minimize coordination costs

Proposition 5.1a: Organizations seek to place reciprocally interdependent positions tangent to one another, in a common group which is (a) local and (b) conditionally autonomous

Proposition 5.1b: In the absence of reciprocal interdependence, organizations subject to rationality norms seek to place sequentially interdependent positions tangent to one another, in a common group which is (a) localized and (b) conditionally autonomous

Proposition 5.1c: In the absence of reciprocal and sequential interdependence, organizations subject to norms of rationality seek to group positions homogeneously to facilitate coordination by standardization


Proposition 5.2: When reciprocal interdependence cannot be confined to intragroup activities, organizations subject to rationality norms seek to link the groups involved into a second-order group, as localized and conditionally autonomous as possible

Proposition 5.3: After grouping units to minimize coordination by mutual adjustment, organizationscunder rationality norms seek to place sequentially interdependent groups tangent to one another, in a cluster which is localized and conditionally autonomous

Proposition 5.4: After grouping units to solve problems of reciprocal and sequential interdependence, organizations under norms of rationality seek to cluster groups into homogeneous units to facilitate coordination by standardization

Proposition 5.4a: When higher-priority coordination requirements prevent the clustering of similarcpositions or groups, organizations seek to blanket homogeneous positions under rules which cut across group boundaries, and to blanket similar groups under rules which cross divisional lines

Proposition 5.4b: When organizations employ standardization which cuts across multiple groupings, they also develop liaison positions linking the several groups and the rule-making agency

Proposition 5.4c: Organizations with sequential interdependence not contained by departmentalization rely on committees to accomplish the remaining coordination

Proposition 5.4d: Organizations with reciprocal interdependence not contained by departmentalization rely on task-force or project groupings to accomplish the remaining coordination

Environmental Constraints

Boundary-Spanning Structures

Proposition 6.1: Under norms of rationality, organizations facing heterogeneous task environments seek to identify homogeneous segments and establish structural units to deal with each

Proposition 6.2: Under norms of rationality, boundary-spanning components facing homogeneous segments of the task environment are further subdivided to match surveillance capacity with environmental action

Proposition 6.2a: The organization component facing a stable task environment will rely on rules to achieve its adaptation to that environment

Proposition 6.2b: When the range of variation presented by the task-environment segment is known, the organization component will treat this as a constraint and adapt by standardizing sets of rules

Proposition 6.2c: When the range of task-environment variations is large or unpredictable, the responsible organization component must achieve the necessary adaptation by monitoring that environment and planning responses, and this calls for localized units

The Organization as a Joint Result

Proposition 6.3: When technical-core and boundary-spanning activities can be isolated from one another except for scheduling, organizations under norms of rationality will be centralized with an overarching layer composed of functional divisions

Proposition 6.4: Under conditions of complexity, when the major components of an organization are reciprocally interdependent, these components will be segmented and arranged in self-sufficient clusters, each cluster having its own domain

Complexity and Change

Proposition 6.5: Organizations designed to handle unique or custom tasks, and subject to rationality norms, base specialists in homogeneous groups for “housekeeping” purposes, but deploy them into task forces for operational purposes

The Variables of Assessment

Proposition 7.1: Under norms of rationality, assessors prefer efficiency tests over instrumental tests, and instrumental tests over social tests

Proposition 7.2: At the institutional level, organizations subject to norms of rationality measure their fitness for the future in satisficing terms

Proposition 7.2a: Under norms of rationality, organizations facing relatively stable task environments seek to demonstrate fitness for future action by demonstrating historical improvement

Proposition 7.2b: Under norms of rationality, organizations facing dynamic task environments seek to score favorably in relation to comparable organizations

Proposition 7.3: When the organization cannot hope to show improvement on all relevant dimensions, it seeks to hold constant on some and show improvement on those of interest to task-environment elements on which the organization is most dependent

Proposition 7.4: Under norms of rationality, complex organizations are most alert to and emphasize scoring well on those criteria which are most visible to important task-environment elements

Proposition 7.5: When organizations find it difficult to score on intrinsic criteria, they seek extrinsic measures of fitness for the future

Proposition 7.5a: When task-environment elements lack technical ability to assess performance, organizations seek extrinsic measures of fitness for future action

Proposition 7.5b: When cause/effect knowledge is believed incomplete, organizations seek extrinsic measures of fitness for future action

Organizational Assessments of Components

Proposition 7.6: When technologies are instrumentally perfected, and task environments stable or well buffered, organizations under rationality norms measure components in terms of (past) efficiency

Proposition 7.7: Where task environments are relatively stable or well buffered and knowledge of cause and effect believed reasonably complete, organizations under rationality norms seek to account for interdependence and to assess each unit in efficiency terms

Proposition 7.8: When knowledge of cause/effect relationships is known to be complete, organizations under rationality norms evaluate component units in terms of organizational (rather than technical) rationality

Proposition 7.8a: Where interdependence is controlled through rules, such units are measured in terms of adherence to or deviation from rules

Proposition 7.8b: Where interdependence is controlled through scheduling, such units are measured in terms of quota filling

Proposition 7.8c: Where interdependence is controlled through mutual adjustment, units are measured in terms of the confidence expressed in them by coordinate units

Proposition 7.9: When units operating imperfect technologies are conditionally autonomous, they are measured by extrinsic standards

Proposition 7.10: As the organization’s posture with respect to the task environment fluctuates, the organization adjusts relative weightings of the multiple criteria by which it evaluates component units

Inducements/Contributions Contracts

Technologies and Negotiation Strategies

Proposition 8.2: Inducements/contributions contracts for jobs in routinized technologies are determined through collective bargaining

Proposition 8.2a: In collective bargaining, both parties have strong interests in governmental processes which establish the boundaries and rules for collective bargaining

Proposition 8.3: Inducements/contributions contracts at contingent boundaries of the organization are determined by (a) the power of a task-environment element and (b) the individual’s ability to handle the organization’s dependence on that element

Proposition 8.3a: To the extent that the organization gains power over task-environment elements, it reduces its dependence on the boundary-spanning jobs which deal with those elements

Proposition 8.4: Individuals in early-ceiling occupations in intensive technologies seek leverage in the negotiation process through collective action to upgrade the occupation relative to others

Proposition 8.5: Where the intensive technology employs late-ceiling occupations (professions), the
Inducements / contributions bargain rests on the individual’s visibility among occupational colleagues

Proposition 8.6: In the managerial technology, the inducements/contributions negotiation process rests on the individual’s reputation for scarce abilities to solve organizational-rationality problems

Proposition 9.1: When the individual believes that his cause/effect resources are inadequate to the uncertainty, he will seek to evade discretion

Proposition 9.1a: Organizations can thwart the exercise of discretion by establishing inappropriate Structures

Proposition 9.2: The more serious the individual believes the consequences of error to be, the more he will seek to evade discretion

Proposition 9.2a: Organizations can thwart the exercise of discretion by establishing inappropriate assessment criteria as bases for rewards and penalties

Proposition 9.2a: Organizations can produce systematic bias in the exercise of discretion by assessing performance on multiple, incompatible criteria

Proposition 9.3: Complex organizations and their supporting social structures encourage some individuals to exercise organizational discretion at considerable personal sacrifice

Multiple Consequences of Discretion

Proposition 9.4: Organizations seek to guard against deviant discretion by policing methods

Proposition 9.5: When work loads exceed capacity and the individual has options, he is tempted to select tasks which promise to enhance his scores on assessment criteria

Proposition 9.6: Where work loads or resource supplies fluctuate, the individual is tempted to stockpile

Proposition 9.7: Where alternatives are present, the individual is tempted to report successes and suppress evidence of failures

Proposition 9.8: Individuals in highly discretionary jobs seek to maintain power equal to or greater than their dependence on others in the organization

Proposition 9.8a: When the power of an individual in a highly discretionary job is less than his dependence, he will seek a coalition

Proposition 9.8b: Individuals representing precarious values in the organization become junior partners in organizational coalitions

Proposition 9.8c: To increase their power in organizations, individuals in highly discretionary jobs may form coalitions with essential elements of the task environment

Proposition 9.9: Changes in organizational dependencies threaten some coalitions and make new ones possible

Power Structure Variations

Proposition 9.10: The more sources of uncertainty or contingency for the organization, the more bases there are for power and the larger the number of political positions in the organization

Proposition 9.10a: Decentralization dilutes the power structure by creating more power positions but limiting the organization’s dependence on each one

Proposition 9.11: The more dynamic the technology and task environment, the more rapid the political processes in the organization and the more frequent the changes in organizational goals

Proposition 9.12: When organizations commit future control over resources in exchange for present solutions to contingencies, they create limitations on their abilities to adapt to future change of technologies or task environments

Control of Decision Premises

Proposition 10.1: The more numerous the areas in which the organization must rely on the judgmental decision strategy, the larger the dominant coalition

Proposition 10.1a: The less perfect the core technology, the more likely it will be represented in the dominant coalition

Proposition 10.1b: The more heterogeneous the task environment, the larger the number of task- environment specialists in the dominant coalition

Proposition 10.2: As areas within the organization shift from characteristically computational to characteristically judgmental decision strategies, the dominant coalition will expand to include their representatives, and vice versa

Dynamics of Organizational Control

Proposition 10.3: Potential for conflict within the dominant coalition increases with interdependence of the members (and the areas they represent or control)

Proposition 10.4: Potential for conflict within the dominant coalition increases as external forces require internal compromise on outcome preferences

Proposition 10.5: Potential for conflict within the dominant coalition increases with the variety of professions incorporated

Coalition Management
Proposition 10.6: When power is widely distributed, an inner circle emerges to conduct coalition business

Proposition 10.7: The organization with dispersed bases of power is immobilized unless there exists an effective inner circle

Proposition 10.8: When power is widely dispersed, compromise issues can be ratified but cannot be decided by the dominant coalition in toto

Proposition 10.9: In the organization with dispersed power, the central power figure is the individual who can manage the coalition

Personal comments, interesting issues and findings:

In closed systems, uncertainty can be controlled with planing and control and the goal can be focused on maximization. On the other hand, in the current world, organizations are complex and are open-systems and according to Thompson, their goal is satisficing. In both organizations, it is a quest to avoid uncerainty.

Thompson writes that organizaations with similar technological and environmental problems should exhibit similar behavior. So this leads us to think that he believes in organizations’ convergence. Convergence theory argues that the advent of technology makes a trend towards convergence, that means that the different systems (organizations, countries’ institutions, etc) trend to be similar. In a way, convergence, by creating standards, could be said to reduce uncertainty because the effects of the same technology in other organizations and systems could be forecasted. But Thompson argues that tecnologies and environments are basic sources of uncertainty for organizations.
Thompson also refers to convergence when he writes “the basic functino of administration appears to be co-alignmet, not merely ofpeople (in coalitions) but of institutionlaized action –of technoloy and task environment into a viable domain, and of organizational design and strcture appropiate to it. “ p 157. This leads us to what Thompson calls the “Paradox of Administration”: organizations look simultaneously for a reduction of uncertainty and a search for flexibility. For me, there is no such paradox as flexibility is a reaction to uncertainty. Flexibility (in structure, in strategy) is what allows an organization to cope with an uncertain and ever-changing environment. As Thompson writes in his conclusion: “Uncertainty appears as the fundamental problem for complex organizations, and coping with uncertainty, as the essence of the administrative process” p159

75 – A Strategy of Decision: Policy Evaluation as a Social Process (Braybrooke and Lindblom, 1963)


Braybrooke, David and Charles Lindblom
“A Strategy of Decision: Policy Evaluation as a Social Process”
The Free Press, Macmillan, New York, 1963
(Ch.4-6 and Chapters 9-10)

Topic: The theory of “disjointed incrementalism” in policy decisions.

Summary and citations:

Chapters 4-5-6: Lindlom
• “disjointed incrementalism”
• “Decisions effecting small changes:… When is a small change? …“small” depends on the value attached to it…. Distinction between “small” and “large” change is the difference, as it is sometimes put, between structural changes and changes within a given structure…”small” change is a change in a relatively unimportant variable or relatively unimportant change in an important variable. … “Increment of change”…. To be a large or non-incremental change… a small or incremental change…. The difference is one of degree. . – p62-64
• Incremental changes: 1) social change that largely repeats; … the more repetitive the change ,…the more it is incremental; 2) non-repetitive change – p65
• Incremental politics: … an indefinite sequence of policy moves (p70)… moving away from known social ills rather than as moving toward a known and relatively stable goal (p70). … In short, the incremental character of this political pattern is central and fundamental, even if it does not wholly characterize it. (p73)… In incremental politics, political parties and leaders compete for votes by agreeing on fundamentals and offering only incrementally different policies in each policy area in which they wish to compete. (p73)… In addition, policy-making proceeds through a sequence of approximations (p73)…. In short, incremental policies follow one upon the other in the solution to a given problem. (p73)… Just how far the practice of incremental politics permeates the activity of or government can be illustrated even by decisions that, on superficial inspection, appear to be non-incremental *** (p75) i.e.: decision to convert from peacetime to wartime…. Waves of reorganization also characterize the history of other wartime agencies…. Gulick:”sequence of evolution” or “rhythm of growth and adaptation”. (p77)… The incremental character of political policy-making is often disguised,[…] by much talk of plans and planning. (p77)
• p.78: Types of decision-making
• Quadrant 1: high understanding and large change: Revolutionary and utopian decision-making. Analytical method: none.
• Quadrant 2: high understanding and incremental change: Some administrative and “technical” decision-making. Analytical method: Synoptic
• Quadrant 3: low understanding and incremental change: Incremental politics. Analytical method: disjointed incrementalism (among others).
• Quadrant 4: low understanding and large change: Wars, revolutions, crises, and grand opportunities. Analytical method: not formalized or well-understood.
• “As to what the adaptations are, they become familiar as soon as they are named. Our purpose in collecting them together under the label of disjointed incrementalism is only, as we have said before, to show that, taken together as a mutually reinforcing set of adaptations, they constitute a systematic and defensible strategy.” – p82
• The strategy outlined
1. Margin-dependent choice: “… they derive information about alternatives from historical experience, from contemporary experience in other societies or locations, and from imagination stimulated by experience” –p84 – “Incremental evaluation is clearly quite different from the construction of a rational-deductive system.” –p86. “The resolution of a conflict over two values is not expressed by a principle, as in the rational-deductive method, nor by a priorities list –nor is it implicitly embodied in a ranking of social states. IT can best be expressed by stating how much of one value is worth sacrificing, at the margin reached in a given situation, to achieve an increment of another.” P88
2. Restricted variety of policy alternatives considered: “…incremental alternatives… while…an analyst is often without adequate information, theory, or any other organized way if dealing systematically with non-incremental alternatives” – p89
3. Restricted number of consequences considered for any given policy: “… do neglect the unimportant consequences of policies, but among those they concede to be important, they often rule out of bounds the uninteresting (to them), the remote, the imponderable, the intangible, and the poorly understood, no matter how important.” P 90. “One striking feature of disjointed incrementalism: that what is omitted is often quite as important as what is considered” –p93
4. Adjustment of Objectives to policies: “although there is a fundamental sense in which ends govern means, there is an equally fundamental sense in which the proximate ends of public policy are governed by means” –p93 “…characteristics: a) some of the objectives became relevant only after the means was decided upon, and b) the group excluded certain objectives relevant to foreign aid policy only because they were irrelevant to the one means decided upon.” –p97. “The objectives are discarded, not the policy” –p97.
5. Reconstructive treatment of data
6. Serial analysis and evaluation: “…policy-making under the strategy proceeds through long chains of policy steps. This serial procedure is an important feature of the strategy in its own right” – p99. “They do not organize to solve a problem and then disband. Instead, they take it for granted that their problems will rarely be “solved” but only alleviated.” –p100
7. Remedial Orientation of Analysis and evaluation: “Since policy analysis is incremental, exploratory, serial, and marked by adjustment of ends to means, it is to be expected that stable long-term aspirations will not appear as dominant critical values in the eyes of the analyst.” -102. “… Encourage the analyst to identify situations or ills from which to move away rather than goals toward which to move” –p102. “…They are less concerned with pursuing a better world than with avoiding a worse” –p104
8. Social fragmentation of analysis and evaluation: “disjointed: …various aspects of public policy and even various aspects of any one problem or problem area are analyzed at various points, with no apparent co-ordination and without the articulation of parts that ideally characterizes subdivision of topic in synoptic problem solving” –p105. “…advantage of preserving a rich variety of impressions and insights that are liable to be “co-ordinated”…There are circumstances to which no one plan is especially suited.”- p106
• “It is easy to misconceive the strategy as having an indelibly conservative color” –p106. “Strategy specifies nothing about the speed with which change is to be carried on” –p109
• “It is also unquestionable that the strategy accomplishes an enormous simplification of the analytical task, compared to the rational-deductive ideal, the method of the welfare function, or the general synoptic approach” –p111
• “With respect to evaluation and analysis, it was shown to be incremental, restricted (both with respect to variety alternatives and to variety of consequences for each alternative), means-oriented (in a number of complex senses), reconstructive, serial, remedial, and fragmented.
• The synoptic ideal, does not adapt in any specific way to (p113):
• Intellectual capacities, information, and costs of analysis
• Adaptation through incremental and limited analysis: simplification through omission (reducing the demand for intellectual capacity and information); the role of theory (“analyst… can dispense with comprehensive theories..because he limits his analysis to changes in which the variables involved are fewer and less consequential…He does not require full information” –p118)
• Adaptation through means-orientation and fragmentation: “close reciprocity between means and ends…. Unnecessary” p119 – “Values…are seriously reconsidered with each new policy choice because values and policies are chosen simultaneously” p120
• Adaptation trough serial, remedial, and reconstructive features: “…strategy does not try to achieve an optimum or maximum… he does not try to “solve” his problem.. At the most, he attempts comprehension of a suitable remedial next step in a series.” p121 – “He disregards many other possible moves because they are too costly (in time, energy, or money) to examine.” –p123
• The problem of neglected consequences: “…harmful failures in analysis are “corrected” despite the relative narrowness of analysis by any one analyst by any one analyst at any one time” – p124
• Further adaptation through fragmentation: “Organizations, as everyone knows, are often dedicated to interests or values that the members wish to protect. What one center ignores, another does not. Values neglected at one point in the policy-making process are central to the analysis carried on at another point” – p128
• Inadequately formulated values:
o “Strategy makes the most of existing constraints on policy to reduce the areas on which social disagreement is possible” –p134. “because the strategy is remedial and serial, it takes advantage of the frequency with which we find ourselves agreeing on what we are against” –p134. “we agree in large part on a “next step”” –p134. “because the strategy is reconstructive, we add that it discourages intransigence in the defence of values” – p135
o “We are saying that where analysis and policy-making are serial, remedial, and fragmented, political processes can achieve consideration of a wider variety of values than can possibly be grasped and attended to by any one analyst or policy-maker. It is the accomplishment at the political level that makes agreement among analysts less necessary” p138

Chapters 9-10: Braybrooke

o “…on the one hand, the collapse of utilitarism; on the other, the rise of emotivism” p204
o “Utilitarism… insists more strongly …on forcing moral judgments to the test of facts” p206; “…explicate the criteria for intelligible moral judgments” p 206; “…several features of the strategy of disjointed incrementalism make it easy to associate the strategy with utilitarism” p206
o Emotive theory of ethics: “The thesis is that moral locutions are intelligibly used in accordance with the present conventions of ordinary language, if they are used only emotively or imperatively –that is, to do no more than express emotions and convey prescriptions” p210
o Enlightened peremptory objections: “The judgments in question are all peremptory ones” –p213; “…peremptory rules such as these: that one should keep promises, even when the consequences of doing so in a particular instance would be less happy than the consequences of breaking them;…Subscriptions to such rules almost suffices by itself to qualify a person as morally enlightened. A literal application of utilitarianism might nevertheless conflict with them. Some of them are at the root of long-standing objections to utilitarism.” –p213
o The felicific calculus, it will recalled, presumes that the utility of an actions (or policy) can be reduced to the “value of a lot of pleasure or pain” –p214
o “it is supposed that, according to utilitarism, the average or total happiness of the group is to be increased, regardless of how many or how few people are made happy, some perhaps at the expense of making others unhappy and regardless even the continued presence or absence of certain members.” –p216
o Overcoming peremptory objections in alliance with strategy: “Utilitarism can avoid these difficulties and a number of others by abandoning the felicific calculus and allying itself, at least for the present, with the strategy of disjointed incrementalism.” –p217; “the census notion already incorporates in practice some provisions for fair and equal treatment that the felicific calculus, as it is usually interpreted, lacks.” P217
o “…strategy helps to save utilitarism from many conflicts with peremptory rules by insisting on a remedial orientation” –p219
o “When it is allied with the strategy of disjointed incrementalism, utilitarism thus anticipates some peremptory moral judgments that have in the past been made objections to it.” –p219
o “Utilitarism, utilitarism with the strategy better than utilitarism with the calculus thus supplies the demand constituted by the principles of justice” – p222
o “The strategy of disjointed incrementalism is, in ways both morally convincing and philosophically illuminating.” –p223
o The questionable feasibility of the calculus:
o “Possible or not, however, an entirely convincing design for the felicific calculus has not yet emerged from these efforts” p 227.
o “subjective utility”: one person’s satisfaction with a certain policy as against another person’s dissatisfaction”p229
o “the strategy responds to this need in two ways: by redesigning policies so that, as far as possible, they satisfy multiple demands, and by supersession. Supersession in effect establishes an order of priority among different values.” P229
o The problem of consequences:
o “”utilitarism requires that persons evaluating policies consider the consequences of those policies as they affect happiness.” –p230; “there are two things that have to be done in answer to the objection about consequences. First, it must be shown that utilitarism can be associated with reasonably specific ways of selecting the consequences that are to be considered in evaluating actions and policies. Second, it must be shown that utilitarism deals as prudently as possible with the inevitable fact that some important consequences may be overlooked (partly because not all the consequences will have been formulated).” –p233
o “use of strategy does not imply that the analyst ignores information… only that he defines his task so as to leave out information that will have to be dealt with in the course of other tasks.” –p234.
o “The strategy of disjointed incrementalism maximizes the chance, and thus it mitigates fears about undetected consequences. As we have said, it encourages extensive and varied discussion yet provides means of giving the discussion focus” p.238
o “…They are safer because they leave so much more room, in the way of other factors that can be adjusted, for remedying unforeseen consequences.” P239
o Shift or reference groups: “The problem in question is one of identifying suitable reference groups, the consequences for which are to determine the rankings of policies”. p240; “… in the absence of challenges, the references groups should be the ones used in the past” –p242
o Social pluralism and use of information: “….the shift of reference groups would take place between one group and a larger group that wholly includes it, ultimately reaching a group as comprehensive as “society as a whole”” –p243

Personal comments, interesting issues and findings:
• Incrementalism versus synoptic: reminds me of my engineering studies. It is the same difference between, algebra and numeric calculus. Algebra gives you an exact result, through the application of a resolution process and numeric calculus gives an approximate result, following iterative calculations. Numeric calculus can be applied in very complex mathematical problems, because it pretends to trend to the right solution in progressive steps. Algebra finds just the right result or the process is stuck (for example, due to mistakes in concepts, in the applications of rules or due to complex and time-consuming process).
• The comparison of incrementalism versus synoptic also reminds me of the extreme positions of “the paralysis by analysis” and the “extinction by instinct” (see article of Ann Langley about these two extreme strategic approaches). Incrementalism is more agile and allows a quick action (that can be corrected or readapted later). A synoptic approach requires much more previous knowledge before action is taken.
• Both books:
o They both agree on the fact that considerations of consequences are quite simple (p96 in Cyert & March) and that will be faced when the consequences appear (not when forecasted).
o Incrementalism in actions
o Problems fo neglected consequences: harmful failures are corrected after implemented
o Limited analysis disregarding possibilities
o Decisions are taken without adequate information

79 – A Behavioral Theory of the Firm (Cyert and March, 1963)


Cyert, Robert M. and James G. March
“A Behavioral Theory of the Firm”
Prentice Hall, New Jersey, 1963. Second Edition1992

Topic: An explanation of the theory of the firm from a behavioral perspective.

Summary and citations:

1- Introduction
o “The modern firm has some control over the market; it has discretion within the market; it sees the market through an organization filter” p1

2- Antecedents of the behavioral theory of the firm
o Theory of the firm: “asserts that the objective of the firm is to maximize net revenue in the face of given process and a technologically determined production function” p5; “maximization of profit is accomplished by determining the optimal mix of products (products) and inputs (factors), that is, the equilibrium position.” –p5. “Two major difficulties…1) the motivational and cognitive assumptions of the theory appear unrealistic…2 )has few of the characteristics…of actual business” – p8
o Rothschild: “primary motive of the entrepreneur is long-run survival” p9; Baumol: “the firm seek to maximize sales subject to a profit constraint” –p9
o “information is not given to the firm but must be obtained” –p10
o Papandreou: “views the firm as a cooperative system. The executive tasks are accomplished by a “peak coordinator”. The firm’s has certain goals, and it is a peak coordinator’s job to achieve these by allocating resources rationally” –p11
o In defence of orthodoxy: Friedman: “the function of economic theory is to build propositions with which the world can be analyzed and not to reproduce the world” –p13
o “The organization can be viewed as an information-processing and decision-rendering system” – p21; “in order to develop an alternative theory, we need more satisfactory theories of organizational goals, organizational expectations, organizational choice, and organizational control” – p22

3- Organizational Goals
o The problem of collective goals: “1) People (ie individuals) have goals; collectivities of people do not; 2) to define a theory of organizational decision making, we seem to need something analogous –at the organizational level- to individual goals at the individual level.” –p30
o “Let us view the organization as a coalition…some of them organized into subcoalitions” –p31; “any theory of organizational goals must deal successfully with the obvious potential for internal goal conflict inherent in a coalition of diverse individuals and groups” –p31
o Classic devices for defining organization goals: 1) Goals of the entrepreneur; 2) goal of “public interest” or “social welfare” – p32
o The goal formation process: “1) the bargaining process by which the composition and general terms of the coalition are fixed; 2) the internal organizational process of control by which objectives are stabilized and elaborated; 3) the process of adjustment to experience by which coalition agreements are altered in response to environmental changes” –p33
o Organizational slack: “Because of these frictions in the mutual adjustments of payments and demands, there is ordinarily a disparity between the resources available to the organization and the payments required to maintain the coalition. This difference between total resources and total necessary payments is what we have called organizational slack. Slack consist in payments to members of the coalition in excess of what is required to maintain the organization.” –p42 “when environment becomes less favourable …represents a cushion… slack permits firms to survive in the face of adversity” p43. “Slack operates to stabilize the system in two ways:1) by absorbing excess resources, it retards upward adjustment of aspirations during relatively good times; 2) by providing a pool of emergency resources, it permits aspirations to be maintained (and achieved) during relatively bad times” –p44
o “Finally, we have argued that, because of the form of the goals and the way in which they are established, conflict is never fully resolved within an organization, Rather, the decentralization of decision making (and goal attention), the sequential attention to goals, and the adjustment in organizational slack permit the business firm to make decisions with inconsistent goals, under many (and perhaps most) conditions.

4- Organizational Expectations
o Theory of search. “Modern entrepreneurs do not scan all alternatives nor do they have all information about all alternatives. They invest in information only so long as the expected marginal return from the information gained exceeds the expected marginal cost.” –p53
o “We wish to test the proposition the individuals can and do modify their subjective estimates of reality to accommodate their expectations about the kind of payoffs associated with various possible errors” p 80. “cost analysts will tend to overestimate costs and that sales analysts will tend to underestimate sales” –p81
o “The decision making system in the experiment had 4 critical organizational characteristics: 1) subunit interdepence: …the major decision-making units base their actions on estimates formulated at other points in the organization and transmitted to them in the form of communications,. The estimates so received cannot verified directly by the decision-making unit ***; 2) subunits specialization; 3) Subunit discretion; 4) Subunit conflict” –p86
o “An organizational coalition does not require either consistency or completeness in information; “ –p93
o “we do not find anything like a constant level of search” p93
o Resource allocation:
• “decisions considered here arose primarily as responses to “crisis” situations” –p94
• “in every case, once an alternative was evoked, it was accepted if it satisfied the general cost and return constraints…This support in turn came through a rather complex mixture of personal, suborganizational, and general organizational goals.” P94
o Search activity:
• “search became more and more intensive as the decision approached implementation” –p95
• “”search” consists in large part of evoking from various parts of the organization considerations that are important to the individual subunits” –p95
• “search will be much more intensive where organizational slack is small than where it is large” –p95
• Mating theory of search “Not only are organizations looking for alternatives; alternatives are also looking for organizations” –p96
o “Computations of anticipated consequences used by the organizations seem to be quite simple…. awkwardness of developing a single dimension on which all relevant considerations could be measured” –p96
o “Expectations are by no means independent of such things as hopes, wishes, and the internal bargaining needs of subunits in the organization” –p97 “…both conscious and unconscious bias in expectations is introduced” ,-p97 “,…there is some conscious manipulation of expectations” –p97
o “Communication includes considerable biasing, but also considerable bias correction” p97 “…is not passive” p97 “most biases are recognized by other parts of the organization” –p98
5- Organizational Choice
o “1) organizational perceptions are influenced by some characteristics of the organization and its procedures. … 2) Organizations consider only a limited number of decision alternatives. … Finally, organizations vary with respect to the amount of resources they devote to organizational goals on the one hand and suborganizational and individual goals on the other.” P99
o The decision process (p100); 1) forecast competitors’ behaviour; 2) forecast demand; 3) estimate costs; 4) specify objectives; 5) evaluate plan; 6) re-examine costs; 7) re-examine demand; 8) re-examine objectives; 9) select alternative –p102
o The firm as an adaptive institution: “a business form is constrained by the uncertainty of its environment, the problems of maintaining a viable coalition, and the limitations on its capacity as a system for assembling, storing, and utilizing information. … the firm as an adaptively rational system rather than an omnisciently rational system” p117
o “In particular, so long as the environment of the firm is unstable (and predictably unstable), the heart of the theory must be the process of short-run adaptive reactions. The long-run properties o the processes under stable conditions are relevant primarily as indicators of logical properties (and therefore consistency with the general concepts)” p119
o Standard Operating procedures: “we should note that organizations make decisions typically by solving a series of problems” p121 “devote rather little time to long-run planning” –p121. “They move from one crisis to another” p121 “Three basic principles: 1) uncertainty.. 2) maintain the rules… 3) Use simple rules” p121
o Specific standard Operating procedures: 1) task performance rules; 2) Continuing records and reports; 3) Information-handling rules; 4) plans” –p123 “Thus, rules not only transmit past learning: they also control (make predictable) behaviour within the firm” –p124 “good practice … tends to be shared among firms… standardization provides a defense” p125
o Records and reports “two main purposes: control and prediction” p125
o Information handling rules: “there are two aspects to standard operating procedure for information flows. Routing rules and filtering rules” –p129. “The departmental organization defines reasonably well the groups within which sharing of information is needed. Since information needs and task specialization are highly correlated, it is appropriate to process information through the hierarchy defined in terms of task specialization.” –p129
o “Thus, the internal biases in the organization increase the pressure (from external uncertainty) to develop decision methods that do not require reliable information (other than the simplest, most easily checked information). –p130
o “decisions are used as devices for learning about their hidden consequences” –p131
o “The budget in a modem, large-scale corporation plays two basic roles. On the one hand… management control…to check achievement…On the other hand, .. determine feasible programs” –p131
o “1) a plan is a goal,…2) a plan is a schedule,…. 3) a plan is a theory… 4) a plan is a precedent…”p132
o “rules are the focus for control within the form; they are the result of a long-run adaptive process by which the form learns; they are the short-run focus for decision making within the organization” –p134
o “1-Multiple, changing, acceptable-level goals; 2-an approximate sequential consideration of alternatives; 3-the organization seeks to avoid uncertainty by following regular procedures; 4- the organization uses standard operating procedures and rules of thumb to make and implement choices. In the short run these procedures dominate the decision made” –p134

6- A specific price and output model

7- A summary of basic concepts
o “The four major concepts used in the theory are 1) quasi resolution of conflict [goals as independent constraints / local rationality / acceptable-level decision rules / sequential attention to goals]; 2) uncertainty avoidance [feedback-react decision procedures / negotiated environment]; 3) problemistic search [search is motivated / search is simple-minded / search is biased], and 4) organizational learning [adaptation of goals / adaptation in attention rules / adaptation in search rules]” –p164
o “The order in which various alternative solutions to a problem are considered will change as the organization experiences success or failure with alternatives” –p174

8- Some implications
o Descriptive analysis: the firm :
• 1) Price and output determination (excess resources, organizational slack, decentralising, reduce uncertainties using standards)
• 2) Internal resource allocation quasi resolution of organizational conflict, search behaviour, uncertainty avoidance, organizational learning): “In general, for an alternative investment opportunity to have a significant chance of being introduced in the system, two conditions have to be met. A problem must be perceived by the organization, and the investment must be visible to that part of the organization in which search is stimulated by the problem” p180
• 3) Innovations (“failure induces search and search ordinarily results in solutions” p188: “firms that have made specific significant technological improvements, we find that they were made by firms with substantial slack (and thus mostly successful firms).” –p189
o Descriptive analysis: non-business organizations: “the behavioural theory of the firm is one the important potential sources of evidence about the validity of this structure and there mechanisms” –p196
o “These implications for descriptive economics, for studies of non-economic organizations, and for normative analysis are not always easy to see at this stage. They are even harder to validate” – p211

9- An Epilogue
o Three related but largely independent ideas:
1. Bounded rationality: “rational actors are significantly constrained by limitations of information and calculation” –p214. “They set targets and look for alternatives…rather than try to find the best imaginable solution; they allocate attention by monitoring performance with respect to targets. They attend to goals sequentially, rather than simultaneously. They follow rules-of-thumb and standard operating procedures.” –p214
2. Imperfect environmental matching: “behavioural theories emphasize the inefficiencies of history” –p215
3. Unresolved conflict: “multiple actors with conflicting interests not entirely resolved by the employment contract” –p215
o Developments in economic theories of the firm:
• Theory of teams
• Control theories of the firm
• Transaction costs economics: “two behavioural assumptions about “contracting”, as opposed to “maximizing”. The first assumption is bounded rationality…. The second, assumption is opportunism, the notion that there is conflict of interest within, as well as between, organizations, that participants in an organization will lie, cheat, and steal in their own self-interest if they can” *** p220; “,…when asset specificity is low, debt financing is likely…where asset specificity is high, costs of debt will have to grow to cover the risk” -p221; “the flexibility of the definition of transaction costs tends to make the concept amore powerful tool for interpreting historical outcomes than for predicting future ones” -p221
• Agency theory: “…bounded rationality has tended to fade into the background, and attention to conflict of interest has become paramount” p222; “In practice, the theory is written from the point of view of one side of the contract. From this perspective, there is a cascade of principal-agent relations” –p222
• Evolutionary theories: “they see firms as being selected upon by virtue of their fit to the environment” –p224
o Developments in behavioural studies of organizational decision making:
Four interrelated visions: (p225)
1. Decisions resulting from intentional, consequential action
2. Decisions by a logic of appropriateness implemented through a structure of organizational rules, roles, and practices
3. Decisions influenced by the interactive ecological character of decision making (“hierarchies but they tend to function as less hierarchical networks of relations” p233: “this ability to learn from others is one of the most powerful of adaptive tools available to individuals and economic organizations. It depends, however, on a structure of linkages among forms… and… capability of learning the lessons” p234
4. Decisions as artifactual rather than as central to understanding decision making. “Individuals fight for the right to participate in decision processes, but then do not exercise the right.” –p236; “very little time spent in making decisions…managers seem to spend time meeting people and executing managerial performances” p236; “choices as artifacts… the focus has shifted from the “substantive” to the “symbolic” components of decisions” p236; “On the one hand, the processes of choice reassure those involved that the choice has been made intelligently, that it reflects planning, thinking, analysis, and the systematic us of information: and that the choice is sensitive to the concerns of relevant people, that the right people are involved.” -p237. Symbolic action: “It is the process that gives meaning to life, and meaning is the core of life” –p237

Personal comments, interesting issues and findings:
• I think the notion of slack is real: salaries and policies are revised in periods of difficulties. This means that there was a cushion to cost reduction. This is also true that negotiation can be more flexible in the presence of evidence of bad times. I.e. a worker would not accept a wage reduction if the bad conditions cannot justify it.
• The influence and applicability of the theory of Cyert & March is very wide. For instance, in International Studies (that I study in Dr Farashahi’s course), the main two streams are OLI theory (based on Transaction cost theory) and Organizational Capabilities theory. Both can be explained using the behavioural theory of the firm.
• The behavioural theory of the firm tries to reflect better the firm’s reality. Let me do an analogy: If the firm is the territory, the classical theory of the firm is the map and the behavioural theory of the firm is a photo from an airplane (with an inclination to see land’s imperfections).
• The behavioural theory of the firm is based on highlighting all firms’ imperfections and explaining how they are faced to coexist with them.

69 – A concept of Corporate Planning (Ackoff, 1970)


Ackoff, Russel L.
“A concept of Corporate Planning”
Wiley, New York, 1970 (Ch.1,2,3,7)

Topic: Corporate Planning: definitions, concepts and framework for its development

Summary and citations:

• Planning is the design of a desired future and of effective ways of bringing it about. It is an instrument that is used by the wse, but not by the wise alone. (p1)
• Planning is one of the most complex and difficult intellectual activities in which man can engage. (p1)
• Nature of planning: 1) canticipatory decision; 2) system of decisions; 3) process (p4)
• Strategic planning is lnog-range corporate plaaning is ends oriented (p5)
• Philosophies of planning: satisficing, optimizing, and adaptizing
• Satisficing : more concerned with survival than with development and growth
• Optimizing: use of mathematical models (p9) Optimizer tries to a) minimize the resources …B) maximize the performance …c) to obtain the best balance of costts and benefits (p12)
• Techniques of optimization have in general been more useful in tactical than in strategic planning (p15)
• Adaptizing: innovative planning (p15); 1) Process is our most important product; *** 2) design an organization that will minimize the future need for retrospective planning 3) knowledge of the future: certainty, uncertainty and ignorance – p17
• Adaptive responses are ppassive or active (p18).
• The more that corporate planning is pushed from satisficign toward adaptizing, the greater the requirement for scientific methods, techniques, and tools.- p21
• Optimizing planning requires more understanding of an organization’s behavior than dies satisficing. Adaptative planning requires even more than does optimizing – p21
• The required understanding of collective and individual beahvior is dconsedeably greater than that currently possessed by many corporate planners and managers – p21
• Desired states or outcomes are objectives. Goals are objectives that are scheduled for attainment during the period planned for. Objectives are of two types, stylistic and performance. P-41
• Performance objectives require operational definition – p41
• Profit maximization is commonly taken to be the most general formulation of a company’s performance objectives. But profit is often ill defined. It can be operationally defined and transformed into goals by constructing gain and loss euqations for each product line… – p41
• One cannot fix goals until at least the means to be employed in pursuing them have been considered. – 41
• It is usually much better to dissolve a problem than it is to solve it. Dissolution of a problem requires innovation, whereas it solution requires only evaluation – p43 ***
• The key to both creating and evaluating courses of action and policies lies in understanding the system involved. – p 43
• A manager is unlikely to be aware of how little understanding he has of some of the operations for which he is responsible – p47 **
• Few companies understand why their products are consumed although they think they do – 51 ***
• Thus there are three attitudes toward the future, which, ordered from the most to the least prevalent are a) wait and see, b) predict and prepare, c) make it happen. P56 ***
• Reinventing the system: understanding a system increases our ability to find innoative and superior courses of action and policies. … Polisy innovation depends critically on our ability to brong these self-imposed constraints into question. P59
• Modeling efforts should be directed at acquiring understanding of the form, its supply system, its distribution and marketing system, its consumers, its competitors, and its environment. – p64
• Creation fo new alternatives can often be facilitated by redesigning (from scratch) the system being planned for, with no constraints. – p64
• The probability of success of a planning effort decreases as the organizational autonomy of the planning activity increases. – 129
• Remember that successful planning cannot be done to or for an organization; it can only be done by the organization itself. – p132
• The value of planning to managers lies more in their participation in the process than in their consumption of its products. – p137

Personal comments, interesting issues and findings:

• Philosophies of planning: Satisfacing might aim eficacity and otimizing maybe efficciency
• I think that in current business (also social and political) world, uncertainty and ignorance are a major trend. From this point of view, contingency planning and rsponsiveness planning are important because they make companies flexible and adaptable to changes (ie crisis management).
• How do we take into consideration individual and collective behavior into planning? Has our knowledge of behavior increased to have a better planning?
• Ackoff affirms that technology (in the 70’s) is the limit to optimizing planning: which is the current state of the art of technology and planning?
• Planning reminds me of the concept of quality: 1) affects all departments in the firm; 2) is an on-going process and can always be improved; 3) quality costs are high but non-quality costs are higher. The same could be said of risk management.
• Ackoff says that the book is not a handbook (it is what should be done, not how it should be done). (Preface) But I think it is quite practical and even says details of how to do it (“The scenarios themselves should be from 10 to 20 (double-spaced) typewritten pages in length…. I have found it convenient to organize each scenario into three sections” p29
• Ackoff is very didactic, step-by-step and with plenty of examples. To explain his theory, many concepts are defined. He had 30 years involvement with universities when he wrote the book and we can feel his interest in pedagogy (see expample p61-63)
• What I liked the most in Ackoff is his effort in transmitting the message that the system has to be reinvented. The importance of what an organization should be like “as a whole and ideally” (p59)
• “Process is our most important product” and “It is usually much better to dissolve a problem than it is to solve it”: the two stronger ideas

Comparative analysis: Ackoff and Drucker

• Both Ackoff and Drucker, uses the same example: the answer of the carpenter “Puttting some pepices of wood together” ot “putting up a door frame” or “bulding a house”. Ackoff to explain different types of objectives (means and ends), Drucker to show the difference between a non-manager and a manager.
• Ackoff and Drucker have a common point: “Maximize profit cannot be a goal”. But for different reasons. Ackoff says that to maximize profit(ability) is a matter of definitions and a matter of financial and accounting policy. Drucker says that this is not the goal, but the sastisfy the customer.
• Ackoff and Drucker both analyze the consumers. Ackoff studies the models of consumers and says “Few companies understand why their products are consumed, although they think they do” (p51). Drucker says that this understanding and serving the customer is the goal of the company.
• Ackoff and Drucker –p61- both consider that objectives have to be reexamined continually
• This requires each manager to develop and set the objectives of his unit himself – p129 says Drucker. Ackoff agrees when he says that an outsourced firm can’t make your planning.