Chapter 2: The Timeless Behaviours of Corporate Bureaucracies

Overview

The business use of technology must undergo a significant change in how technology is ultimately applied to business processes in order to create a condition that enables a fundamental rethinking of how a business works. How organizations apply technology is a trait inherited from the firm’s knowledge of the limits of the previous generations of technology. This inherited understanding of the use of technology within an organization is called ‘the organization’s technology culture’. The relationship between people and technology is sometimes counterintuitive to our perception of progress when viewed holistically in the context of an organizational culture steeped in bureaucracy, as observed by Sean Cooney. In his words:

Bureaucracy, whether as an arm of government, or of big industry, became wedded to this paradigm of promoting the growth of the trading economy and the expansion of wealth. The revenues of government and industry which provide bureaucracy with its power and social relevance depend on the generation of more and more monetary ‘value added’. Given a means of promoting such growth, which appeared to be available through new technology, bureaucracy promises much and encourages people to become dependent on it.^[47]

Once established within an organization, any technology becomes part of the bureaucracy, and people become attached to it as the physical manifestation of the command and control structure of the social hierarchy. In the late 1990s, long-standing firms were surprised by the nimbleness of start-ups and their ability to bring products and services to market rapidly and efficiently. Not surprisingly, the start-up firms did not inherit a corporate culture; they were the recipients of many cultures that were brought to the organization by individuals determined to introduce new business models. In many cases, individuals who came from large, established firms simply employed the best traits of their previous employer and consciously jettisoned bureaucratic, corporate behaviour. This blending of the best traits from many companies created a dynamic culture within the new organization that was the catalyst for firms to become new market entrants. These start-up organizations gained additional momentum by using technology in new ways that would have been stifled in traditional organizations.

In contrast to the start-ups, traditional organizations continued – as many still do today – simply to apply technology to existing business processes and employ technology as the mechanism for ensuring a standard behaviour within the organization. As Doz et al. put it:

To carry out complex, interrelated tasks, large firms develop formal structures which fragment these tasks into elements that can be performed by individuals, and integrate these elements through formal hierarchies and rules. The bureaucracy that results, the power plays that surround the rules, and the often fragile authority of key managers discourage innovation and risk-taking. This has been variously described as ‘segmentalist’ behaviour and bureaucratic ‘resistance to change.’^[48]

In many cases, this type of technology implementation effectively restricts the capability of the organization to the lowest common denominator within the firm. That is not to say that this stops innovation, process improvement or other corporate initiatives; it simply means that it reduces the speed at which the firm is able to mobilize resources when business conditions change. Metaphorically, it is easier to turn a powerboat than a battleship.

^[47]S. Cooney, ‘Maximizing the Benefits from New Technology’. In L. Yngstr m, R. Sizer, J. Berleur and R. Laufer (eds) Can Information Technology Result in Benevolent Bureaucracies? (Amsterdam: Elsevier Science, 1991) p. 133.

^[48]Y. Doz, R. Angelmar and C. K. Prahalad, ‘Technological Innovation and Interdependence. A Challenge for the Large, Complex Firm’. In M. Horwitch (ed.) Technology in the Modern Corporation: A Strategic Perspective (Oxford: Pergamon Press, 1986) p. 15.