1. Mintzberg: The three last configurations
23 April, 2017
Mintzberg: The three last configurations
Pål Sørgaard, Telenor R&D and IfI
INF 5250
September 26, 2005

2. Curriculum covered The more modern configurations Chapters 10-12
professional bureaucracy
divisionalised form
adhocracy
Chapters 10-12
Material that deserves a recapitulation
Read the book again when you have been working for a year
26 September, 2005
Pål Sørgaard, R&D

3. The professional bureaucracy (ch 10)
Characteristics
prime coordinating mechanism: standardisation of skills
key part: operating core
main design parameters: training, horizontal job specialisation, vertical and horizontal decentralisation
situational factors: complex, stable environment; nonregulating, nonsophisticated technical system; fashionable
Examples
universities, general hospitals, social-work agencies, craft production firms, law firms, courts, accounting firms
Core condition: complex enough to require professionals, stable enough to use standardised skills
26 September, 2005
Pål Sørgaard, R&D

4. A different kind of bureaucracy
Bureaucratic in the sense that coordination is achieved by standards, by design
The standards are set by the professions involved
e.g. medical faculties and Lægeforeningen
not by the technostructure
Classification, pigeonholing as a core process
clients and cases are put in neat, predetermined categories (diagnosis)
programs of action for each category are then applied
schools build and maintain categories
Pigeonholing creates equivalence between functional and market bases for grouping
26 September, 2005
Pål Sørgaard, R&D

5. Focus on operating core
Professional autonomy
little behaviour formalisation
little use of planning and control systems
responsible to whom?
Support staff developed
In order to serve the professionals
IT may be used heavily by the operating core (e.g. X-ray)
Little or weak use of IT in order to run the business
not highly regulating, not sophisticated, not automated technical system
26 September, 2005
Pål Sørgaard, R&D

6. The administrative structure
The professionals try to control the administrative structure
Sometimes two hierarchies
one bottom-up for the professionals
one top-down for the support staff
just like the University of Oslo!
The administrators have limited power
26 September, 2005
Pål Sørgaard, R&D

7. Some issues Relatively weak at coordination
standardisation of skills is a loose mechanism
need for more coordination may require other configurations
Pigeonholing is not perfect
Hard to deal with incompetent or unconscientious professionals
some ignore the needs of the clients
Inflexible structure
little innovation, hard to change
sometimes good at learning from its practice, but not always
26 September, 2005
Pål Sørgaard, R&D

8. Can professional bureaucracies be better managed?
Direct supervision by managers not in the profession is hard
Other kinds of standardisation do not apply well
Measuring performance may result in trouble
Complex work must be under the control of those who do it
More control has negative impact on innovation and dialogue with clients
Change comes mainly with new professionals, through their schools and associations
26 September, 2005
Pål Sørgaard, R&D

9. The divisionalised form (ch 11)
Characteristics
prime coordinating mechanism: standardisation of outputs
key part: middle line
main design parameters: market grouping, performance control system, limited vertical decentralisation
situational factors: diversified markets (particularly products or services); old, large; power needs of middle managers; fashionable
Examples
common among large industrial corporations: Hydro, Orkla
other kinds of examples are Helse Øst, Høgskolen i Oslo
Not a complete structure, an aggregate
26 September, 2005
Pål Sørgaard, R&D

10. Typically The divisions are fairly autonomous
There is little interdependence between divisions
Divisions address separate markets
Divisional leaders are very strong
Headquarters focus on performance (economic result)
Divisions are driven towards machine bureaucracy
Comes as a result of diversification or acquisitions
Split in separate organisations is a realistic alternative
26 September, 2005
Pål Sørgaard, R&D

11. Powers of the headquarters
Decisions on what divisions there should be
Allocation of overall financial resources
Definition of the performance control system
Appointment of divisional managers
Monitoring of the divisions on a personal basis
Provision of certain common support services
26 September, 2005
Pål Sørgaard, R&D

12. Conditions First of all: market (esp. product) diversity
and divisionalisation encourages further diversification
Divisionalisation based only on client or regional diversification often turns out to be incomplete
hybrid: carbon-copy bureaucracy
Technical system split in segments, one per division
Environment: preferably simple and stable
other environments often lead to hybrids
Large and old (except federations)
Power games and aggregation of power important factors
26 September, 2005
Pål Sørgaard, R&D

13. Stages of divisionalisation (fig 11-3)
Integrated form (pure functional)
By-product form
Related product form
Conglomerate form (pure divisional)
26 September, 2005
Pål Sørgaard, R&D

14. Advantages compared to machine bureaucracy, but …
Allocation of capital
better done by the capital market?
corporations priced lower than the sum of their parts
Helps training managers
better than a small, independent company?
Spreads risk across markets
conceals failures and bankruptcies too long, may cause others to fall?
Strategically responsive
focus on short term performance and the impact on structure in the division may be negative?
26 September, 2005
Pål Sørgaard, R&D

15. Centralisation and synergies
Tendency to centralise decision at headquarters based on MIS-data (management information system)
“A cornerstone […] is letting heads of business units determine where and when to collaborate. If corporate managers take the lead, they often do not understand the nuances of the business. They naively see synergies that aren’t there. They tend to overestimate the benefits of collaboration and underestimate its costs.” Eisenhardt and Galunic (2000)
26 September, 2005
Pål Sørgaard, R&D

16. Problems with divisionalisation
Centralisation of power
Bureaucratisation
Reliance on MIS
Outside private sector: artificial performance standards
Pure divisionalisation may be a weaker alternative than full split
remember: no environment of its own
Controlled diversity more profitable than conglomerate
by-product or related-product forms the more interesting
26 September, 2005
Pål Sørgaard, R&D

17. No environment of its own
stable
dynamic
Complex
Decentralised
Bureaucratic
(standardisation of skills)
Organic
(mutual adjustment)
Simple
Centralised
(standardisation of work processes)
(direct supervision)
Professional bureaucracy
Adhocracy
Simple structure
Machine bureaucracy
26 September, 2005
Pål Sørgaard, R&D

18. The adhocracy (ch 12) Characteristics
prime coordinating mechanism: mutual adjustment
key part: support staff (together with the operating core in the operating adhocracy)
main design parameters: liaison devices, organic structure, selective decentralisation, horizontal job specialisation, training, functional and market grouping concurrently
situational factors: complex, dynamic (sometimes disparate) environment; young (especially operating adhocracy); sophisticated and often automated technical system (in the administrative adhocracy); fashionable
26 September, 2005
Pål Sørgaard, R&D

19. Design Focus on innovation, cannot rely on standardisation
Goes away from the principle of unity of command
Gives power to experts, but cannot rely on their standardised skills to achieve coordination
Mutual adjustment in and between project teams
project coordinators, meetings, etc
Matrix structure common
experts formally in functional units
project teams based on (market) needs
26 September, 2005
Pål Sørgaard, R&D

20. The operating adhocracy
Solves problems on behalf of its clients
think-tanks
applied R&D institutes
creative advertising companies
manufacturer of prototypes
experimenting theatre company
May easily turn into a professional bureaucracy if more focused and with standardised methods
e.g. from NR to Accenture
26 September, 2005
Pål Sørgaard, R&D

21. The administrative adhocracy
Solves problems, runs projects, on behalf of itself
Typically a company where the operating core is truncated
done in a separate organisation
contracted out (outsourcing)
by full automation (c.f. discussion of machine bureaucracy)
Tricky issue of combining efficient production with high degree of innovation
machine bureaucracy with a venture team is not an adhocracy
26 September, 2005
Pål Sørgaard, R&D

22. Administration and support
A lot of coordination needed
Managers participate in project teams
Ensuring proper management and anchoring of projects often demanding
Need to monitor and redirect projects
Distinction between line and staff becomes unclear
26 September, 2005
Pål Sørgaard, R&D

23. Strategy in adhocracies
Hard to split strategy formulation and strategy implementation
Strategy tends to evolve
formed implicitly by decisions made
strategy formation, emergent strategy, strategising
26 September, 2005
Pål Sørgaard, R&D

24. Conditions Dynamic and complex environment
Interdependencies that need to be handled
Frequent product changes
Often young (esp. operating adhocracies)
Sophisticated and sometimes automated technical system
An element of fashion
all the right words: dynamic, expertise, projects, etc.
26 September, 2005
Pål Sørgaard, R&D

25. Some issues Ambiguities The most politicised configuration
Unclear, multiple and changing lines of authority
The most politicised configuration
Not very efficient
Danger of inappropriate transition
26 September, 2005
Pål Sørgaard, R&D

26. Summary Five main configurations (ch 7-12)
Five parts of organisation (ch 1)
Five kinds of coordinating mechanisms (ch 1)
Five types of decentralisation (ch 5)
Nine design parameters (ch 2-5)
Four groups of situational or contingency factors (ch 6)
environment especially important
Above all. An extended configuration hypothesis: Effective structuring requires a consistency among the design parameters and contingency factors
26 September, 2005
Pål Sørgaard, R&D