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Module 2 ,, Tht’ee Lcÿzses em Orgaÿlizatiolml A mll),sis aÿld ActioH

Applying the Three Lenses

M2-83
Z

Academic researchers have the luxury of i-‘ocusing
on one of the three lenses and becoming all expert
oll it: strategic design, political, or cultural. One
expert ilia), analyze the organization chart prima-
rily as a map of information flows and l:ormal roles
and responsibilities, [br example, and assess it in
terms of how well its formal structure meets tile
strategic needs of the organization. Another may
regard it as one piece of data ill analyzing the polit-
ical system o1″ the organization, as a map o[” who
has formal authority over whom. Another may see
it as a cultural artiÿhct, viewing its siglfificance in
terms of how often the chart is reproduced and ill
what contexts, and whether nlembers of the
organization refer to the “org chart” when they
try to explain their organization to outsiders or
whether they assert that no one can understand
the organization by looking at the chart.

Taking effective action in organizations, how-
ever, requires an ability to see the organization
through all three lenses, not just one, and to inte-
grate the insights derived fi’om each into action
steps that will work oll all three dimensions. This
part of the module asks you to practice your skills
in the context of a single case, which follows up
the case on Dynacorp presented earlier in the
strategic design section of the module. In order to
prepare tim” tile class discussion on integrating the
perspectives, you should go back and review each
of the three lenses: the strategic design, political,
and cultural lenses. Please also read tilt additional
background material on the Dynacorp organiza-
tion that begins on page 85. This material also
includes a transcript of the Dynacorp video that
you will see in class. The video itself provides much
richer inÿbrmation than the transcript alone, but
you might want to read through the written ver-
sion before class to enable you to focus more
attention on the nonverbal cues in tile video.

• What arc important interdependencies across
tile t:ormal units represented by the “boxes” ill
the organization design (i.e., with what other
t111its does any one tulit need to interact on a
regular basis to carry out its assigned activi-
ties)? Are adequate linking mechanisnls in
place? What are they, and how well are tile.,,,
worldng?

• How is the perl-brmance of tile organization
and its members being measured? What is the
incentive system and is it recognizing and
,’ewarding strategically \’aluable behaviors and
activities? Are there “perverse incentives” that
are rewarding dysl’uncdonal behavior (i.e.,
behavior that is impeding tile achievenlent oF
desired goals)?

° Do people in the organization have the
resources and tile motivation the}, need ill
order to carry out tile tasks assigned to them?
If not, why not? What are the barriers that are
getting ill tile way?

Political Leÿls

To help you prepare to do the analysis, here are
a few questions posed fi’om each of the three per-
spectives, that can guide your thinldng. This list is
suggestive, not exhaustive. Try to think oi: addi-
tional questions to consider under each category.

Strategic Dcsiglÿ Lc1,ÿs

° What is the strategy of the organization as a
whole? How well is it understood and imple-
mented by the members o£ the organization at
various levels?

” What is the basis l-br the iÿbt’nlal grouping
structure? Are roles and responsibilities clearly
defined and understood? On what activities
does the structure l-ÿlcus attention?

• Who has power and status in the organization?
What is the basis of their influence? Is power
concentrated (at the top, or elsewhere), or are
there multiple power centers?

o’ What are the key arenas of conflict? Who are
the key actors in this conflict (individuals,
groups, subunits), and what are the basic
causes of the disagreements? What are tile
interests of the key actors?

• What, if any mechanisnls of conflict resolu-
tion exist, and how effectively are they work-
ing? If they are not working effectively, why
not?

° Who benefits most fi’om the current patterns
in tile organization, and why?

° Who gets credit in the organization when
thillgs arc going well and perl:ormance goals
are met? Who gets blamed when tile organiza-
tiondoes not meet its goals? Do those who
get blamed have the power to make changes
that will improve perf’ormance?

° How well do inl:ormation about problems and
requests fbt’ help move up the hierarchy? How
open are those in positions offbrmal authority
to suggestions and initiatives fi’om below?

CulturM Le,ÿs

° What artifÿtcts, stories, symbols, and observed
behaviors provide important clues to the cul-
ture oi-” the organization? How much unifor-
mity or variety do you observe?

VI2-84 ANALYTICS ° TEAMS • ORGANIZATIONS ” SKILLS

1,

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What are tile espoused values of the organiza-
tion and how are tile), transmitted? How

widely are these shared?
Are there any inconsistencies bem,een the
behavior observed and the espoused values?
What basic assumptions do these reveal? What
other basic assumptions can you uncover in
the language and stories people repeat?
Do those at the top of the organization have
the same perceptions and beliefs about die
organization as those at the bottom? Do differ-
ent units or groups share these beliefÿ and per-
ceptions, or are there significant differences?
What messages are those at the top of the
organization hearing fi’om those in positions
of authority? How are tile)’ interpreting them?
Are they hearing the message that the senders
intend?
What individuals are held up as exemplars?
Who is identified as a good manager or a good
worker? What does this reveal about the basic
cultural assumptions?
What is the emotional atnlosphere in the organ-
izatiou (confident, anxious, contentious, etc.)?

Taldng Effective Action Steps

I •

In order to help you practice using the analytical
skills that you are developing by using the three
lenses, the class discussion will ask you to recom-
mend action steps for one of the key actors in the
case, based on your analysis. Here are some of the
features of a good action step.

• Spat{tic al, d cotÿcretc: It is an action that you
can take and that will have an observable out-
come, not a general prescription such as,
“Show confidence in your team.” An action
step spells how what you could actually do to
show confidence in your team.

• Comprche,tsive: It demonstrates an ability to
think through the immediate action step to
include subsequent action steps that will be
needed if the first is to have any positive
impact. For example, you might start with a
recommendation snch as, “Conduct a survey
of employees.” This step would not only need
more detail to make it specific and co,lcrcte
(e.g., what topics would it cover? how would
you administer it?), but would also address the
necessary [bllow-up steps (e.g., what will yon
do with the data when you get it? with whom
will you share it?

• EJfectivc ol* all three lerases: You need to think
through whether an action that might seem

appealing using one lens is cousistent with
what you are trying to accolnplish using the
other lenses, For example, to pursue the
example of the employee survey, it might be
tempting, using a political lens, to have a cover
letter or introductory message fi’om the CEO
on the survey, in order to show that it has sig-
nificant support in the company and to
increase the eagerness of people to respond. If
the survey is part of an effort to get employees

• to take more responsibility for improving tile
organization, however, the cover letter may
send a signal of top-down “ownership” of tile
improvement prog,’am that contradicts tile
goals of the initiative.

• ColMslcÿlO, with your aÿ,alysis: Make sure that
your recommended action steps actually build
on your analysis. Many of us have “recipes” to
which we resort in times of pressure, especially
if those recipes have worked in the past (e.g.,
“change the incentive system” or “ensure that
you have the snpport of top lnanagclnent’).
Many of the failures in organizations occur
because a manager comes into an organization
and applies recipes that worked for him or her
in tile past, but are not justified by the context
in which they arc now operating.

R_entember that in making recommendations,
as in real life, it is ranch better to have a small num-
ber of specific, comprehensive, well-thought-otÿt
action steps that tbrm a coherent sequence than it
is to have a large nulnber of steps that take you, in
the immortal words of Stephen Leacock, riding
madly oft” in all directions.

M2-8 ANALYTICS * TEAMS o ORGANIZATIONS * SI(ILLS

introduction

In order to solve an organizational problem or
take advantage of an organizational opportunity, it
is help[\fl to have a rich understanding of tile
organization and the issues. A good picture of an
organization is usefill for probing more thor-
oughly into the possible nature and sources of the
issues and the range of approaches. It is easy to
sldp this analysis in favor of f5miliar approaches.
People o{‘ren summarize an organizational prob-
lem in a way that suggests a singular source, such
as, “The main problem we have here is a delay in
mamtFacturing.” They leap into that line of
inquiry: “OK, let’s see what we can do to speed tip
the manuthcturing process.” In lVact, if they had a
richer picture of the organization, they might learn
that the p,’oblem is elsewhere, perhaps to do with
the design-manufacturing intern:ace, or the rela-
tionship with suppliers, or the way that overtime
compensation is handled. It is helpfill to under-
stalld that one can look at an organization in many
ways and many illuminating features that can be
observed. Different individuals will tend to focus
on one set of problems or issues over others.

An often-told parable about three blind men
and an elephant reminds us of the importance of
an individual’s viewpoint:

a distinctive view of the organization. Bet’orc read-
ing about how these three perspectives have devel-
oped, it is helpful to think about how each of us
brings our own personal views to organizations,

Our Personal “Schemas”

Each of us has certain ways of looking at the world.
We have what social psychologists call schenza,ÿ;
which \\,e use every day to navigate through con>
plex situations. “A schema is a cognitive structure
that represents organized knowledge about a given
concept or type of stimuhÿs. A schema contains
both the attributes of the concept and the relation-
ship among the attributes” (Fiske and Taylor,
1984, p. 140). Social psychologists developed this
idea upon observing that individuals construct
their own maps of the social world.

Our informal diagnoses oÿ” organizations, based
on bits and pieces of our experiences, are often
partly right but somewhat incomplete and mis-
guided, This mod, ule presents some more formal
and complete models tbr looking at organizations
that have been developed in the social sciences, Of
course, none of these models is a complete theory
of the world either. Rather, the challenge is for you
to understand whether you tend to adopt certain
approaches to organizations more naturally,
whether you tend to overlook certain potentially
usefifl approaches, and whether these two tenden-
cies can be balanced and integrated to provide a
more complete analysis.

This module introduces three classic perspec-
tives on organizations. These three perspectives
can be thought of as lenses, each of which presents

Three blhzd mcJÿ were mkÿd to describe what a,a
elepham i’ÿ” like. One Mind ma,/ f!’lt the elephant’s
tail amt obserÿ,cd, “Aÿl elqham is very much like
a piece ÿ¢’ropc.” The second bli**d ma,afelt the ele-
phant’s side mid observed, “AJl eleplmm is vel7
ml.lch like a wall.” The third blind man felt the
e/epham’s trunk mÿd obsem,ed, “A11 elephant is
veÿ7 mm’h like a pipe.” Each was right° AÿJd each
vm” iÿcomplete mtd partly mi,ÿ,tuided.

What Is Helpful About Schemas?

Schemas help people function in cognitively effi-
cient ways. As certain kinds of situations or data
become [:amiliar, it is easier to rely on a tried and
true model of how to react than to rethink the sit-
uation anew, For example, someone who drives a
crowded fi’eeway to work every morniilg may
ahvays jump into the leftmost lane on approaching
the toll plaza; it is her schema fbr dealing with traf
tic. She hardly has to think about it–she just does
it. When she started driving that route, she may
have taken diff’:rent approaches and arrived at this
one aÿYer trial and error. Even if it isn’t the fastest
lane each morning, overall it may reduce stress to
have this taken-R)r-granted strateg),, leaving her
mind a little fi’eer to }bcus on the radio news.
Schemas gÿve us an approach to repeated situations
and fi’ee up our minds for other more complex and
highly varying activities.

It is particularly helpfifl to develop schemas
about organizations in which we work. It is the
essence of becoming an “old hand.” The value of
employees with seniority is that they have worked
out a number of their own unwritten schemas fbr

. how to get things done. (In more formal terms,
they have developed specialized human capital or
tacit knowledge that makes the. nl particularly valu-
able and difficult to replace.) Without schemas,
every task would be a monumental new project.

Most o,ÿJlmlizadom provide comph:v mad ÿloisÿ,
il,gbrmatio**al cmdromncm.v i*t IJ,hid, olÿjanizÿ-
tional ptrrtic&ams gather iJJfiÿrmatioÿ abo,ÿt
other individuals at*d releva**t Ivork tasks, which

Module E , 77.wcc l,¢nscs on O&anizational Analysis and/lotion M2-9

tho’ must then in.tcqratc with thdr own thoujfl:n:b
.f?cliTÿqs, tÿnd work bchtzviors. To n.uÿmÿgT¢ thesc
nHtltiph’ inJbrrmÿtion-processin]l dcmtÿnds,, people
ttccomplish mtÿ10, ccLsnixivc activities mithout con-
sciotts tÿwarcncs6 attentiouÿ or srHÿCh forethotqÿht.
bt other mords peopk” rely on hiÿqhO, structnred,
prc-r;v#tit& I’nomlcdgle .Wtems to interpret their
mÿlÿnizntiom.ÿl ii,orht and ]lore’rate nppropritttc
bchal,imw. Such a knolvlcdglc O,stÿ’m . . . # q’tcn
ctÿlled tÿ schema. (Lord tÿnd Foti, 1986, pp. 20-21)

This cognitive processing is helpt’ul because it
helps indMduals find recurring patterns in com-
plex everyday data. But schelnas are not meant to
be hard and f’ast rules. Without some conscious
examination of them, wc nlight be led astray.

How Do Our Schemas Lead Us Astray?

People may especially need to change their
sdaemas in times of’organizational change, but may
be reluctant to do so. Resistance to organizational
change usually does not come [i’onl a thilure to
come up with the right blueprint IBr fimn’e prac-
tices. It more of’ten comes fi’Oln people’s reluctance
to give up their comtbrtable old approaches. A
fhmiliar refi’ain in organizaticms is “But we’\’e
almtoJs done it that way.” People may not simply’ be,
saying that the old way was wonderful. They may
be saying that they had come up with ways of cop-
ing with the old system—some schemas fbr getting
around the bugs, the red tape, and the obstacles …..
so that they could fimction in the old system with-
out ha\’ilÿg to reinvent c\’erything every day and get
a headache fi’om the stress. A new system requires
building new schemas; it takes a lot of energy and
thoughd:uhmss to update old schemas.

Schemas Become Outdated Although our per-
sonal schemas may initially seem efficient, they can
become outdated. People can be stubbornly at-
tached to their schemas. Schemas need updating.
Our schelnas derive from our experiences, but
over time they can also come to shape our experi-
ences in self-fulfilling ways.

For example, in the past, textbooks included
mostly examples of men in prol;essional roles. On
the one hand, these pictures were a fhirly accurate
representation, statistically, of who was most likely
to occupy protÿ:ssional roles s0mc years ago. A per-
son with a schema that “you should ask tbr Mister
so-and-so if phoning the manager” may have had
an accurate, tilne-saving schema. On the other
hand, schemas do not just reflect organizational
life, they help to shape it. It has been difficult fbr
women to move into traditionally male professional
roles precisely because most people’s schemas have
not included a picture ofwolrmn in those roles.

The entrance of “WOlllel] into prol?ssional roles
may help some people change these particular
schemas. At the salne timcÿ changing schemas may
make it easier for women to enter professional
roles. People who do not update their schemas
may find themselves in embarrassing situations,
such as the students who asked the woman stand-
ing in the department office fbr some help with
photocopying, thinking she must be the secretary,
only to discover they had just asked the chair of the
department to photocopy their assignlnents.

Schemas Are Resistant to Change It is both a
beauty and a weakness of schemas that they become
Familiar and difficult to change, Even if we know
our old schemas are not perfÿct–dae leffmost lane
is not ahvays the |hstest moving in ‘the morning
commute–sometimes it is easier to stay \\’ith them
than to experiment;’ it may be enough to have a
schema that works out pretty well on average.

Schemas Become Universal Rules Schemas
encourage us to react tO types of situations or types
of people in certain ways. Because it is difficult to
collect additional, thorough data as each situation
or person comes along, the Ulfi\,ersal rules embod-
ied in our schemas save time. They arc helpfifl to
overworked people. However, much of organiza-
tional (it;e is not universal (“always do X to make a
business travel reservation”), but instead is contin-
gent (“do X to make domestic travel arrangements
and Tto make international travel arrangements”).
What you do depends on some more specific, dis-
tinguislaing intbrmation about the situation.

Consider a busy manager who was stressed
about writing perl-brlnance evaluations [br his
employees and documenting aspects of their per
tbrmancc. He came up with a simplilÿ,ing schenla
to determine who his strongest employees were, a
rule of thumb that he thought had been lhirly
accurate: “The people who ate here the latest at
night arc the best workers.” He began to wÿ)rry,
however, that his pertbrmance cvahmtions were
demoralizing some excellent workers and praising
some less productive workers, His schema was
leading him astray. Employees who worl

Schemas Are Incomplete We develop schemas in
line with our ongoing experiences, but wc may
miss some important features. Consider the new
engineer who obscv\’cd that the other engineers
always spol

M2-10 ANALYTICS • TEAMS o ORGANIZATIONS ” SKILLS

down to the production floor. It became his
schema too–always speak loudly and slowly to
prlÿduction. He inferred that the reason was
because the people in production were not too
bright. “l’his assumption got him into trouble
when be bumped into production people in the
hallways and spoke to them loudly and slowly. The
infbrmation that he was missing was that the engi-
neers spoke loudly and slowly on the phone
because the machinery running in the background
was noisy.

As is or’ten the case with schemas, his schema
included some implicit causal reasoning about why
something was done. Lacking complete informa-
tion, his schema had £mlty causal reasoning and
encoded a stereotypical bias that was misguided
and left him embarrassed, Schemas can be helpÿifl
to us, but it is useful also to be aware of our
assmnptions and to seek additional richer informa-
tion about organizational life. Understanding
multiple perspectives on organizations helps us
become better organizational melnbers, decision

nmkers, and change agents.

into different types. The approaches in economics,
psycholog}q anthropolog)q sociology and political
science are each distinctive.

This module focuses on three classic perspec-
tives-strategic design, political, cultural–that
weave together colorÿifl strands fi’om different
social science disciplines. Each perspective embod-
ies certain assumptions about human nature,
about the meaning of organizing, about the rela-
tire power of different actors, and about how to
collect and analyze data. Each perspective devel-
oped fi’om its own array of studies and models, like
the preceding simple example of a study of market
innovation. This research history makes the per-
spective a distinctive whole.

Three Classic Lenses on
Organizations

Building More Complete Models

Despite their shortcomings, our personal schemas
are pretty good as inÿ’ormal starting points for
understanding and coping with how the world
works. However, sometimes we would like to look
at more t’ormal models and data about how the
world works, in order to check our own under-
standings. Social scientists look for patterns and
insights about the social world, drawing on previ-
ous research, adding their own hypotheses, and
collecting data that challenge, test, or expand their
ideas in a systematic way. This wealth of social sci-
entific data can expand our infbrmal schemas.

For example, a marketing manager’s schema may
be to check and see what her major competitor is
doing in the market as a convenient way of assessing
her options, However, a more ÿbrmal model built
by a researcher with a large database could be used

,, to assess \there innovation in the market comes
ti’om. Perhaps the data show that it col>es fi’om
small immvators on the margin, not fi’Oln central
competitors. The findings fi’om a more formal
model might help this manager to update her
schema. She may read about networks to under-
stand her company’s environment better and how
ideas travel among researchers of this environment.

Of course, social scientists have their own
fÿ\,orite personal schemas for how to study the
social world and how to construct a research proj-
ect. Theretbre, the insights and tindings that we
gain fi’om social scientitlc research can be clustered

Three Class Notes follow that describe the three
classic perspectives. Think of each perspective as a
different lens through which you can view the
organization. These approaches re[lect years of
studies, interviews, observations, and participation
in organizations. The Class Notes highlight the
important features of each lens, the history of the
development of that lens, and the kinds of ques-
tions about organizational processes that each lens
might guide you to ask in order to get a richer pic-
ture of an organization or to conduct an organiza-
tional analysis. The three lenses are:

• The Strategic Design Lens
• ‘ The Political Lens
• The Cultural Lens

The Strategic Design Lens
People who take this perspective look at how the
flow of tasks and information is designed, how
people are sorted into roles, how these roles are
related, and how the organization can be rationally
optimized to achieve its goals. What if you consid-
ered the problem mentioned in the opening para-
graph of this introduction, about delays in
manufacturing, fi’om this perspective? Just one
possibility is that you might decide that looking at
the designqnanuFacturing interface is a good place
to start to chart the flow of information and detect
any disconnections between roles.

The Political Lens
People who take this perspective look at how
power and influence are distributed and wielded,
how multiple stakeholders express their different
pret?rences and get involved in (or excluded fi’om)
decisions, and how conflicts can be resolved, What
if you considered delays in manufacturing fi’om

Module 2 * Three Lenses on Owauizationa/ A Jtalysis aJÿd Action M2-11

:dais perspective? Just one possibility is that you
might decide that suppliers are critical stakelaolders
who must be considered, and you might explore
wllether they are influencing the delays to display
their control over a crucial resource and gain influ-

ence in pricing.

are taldng place–or being thwarted–in organiza-
tions today.

Analyzing Organizations

F5

What Lens Do You Favor?

As you read about these lenses, try to surtaace your
own implicit views of organizations. You might see
whether you instinctively align with one of these
three lenses. Compare and contrast what they say
about organizational processes with what you have
come to believe about organizational processes
based on your own experiences.

The Three Lenses in Action

Think about how you might use the three lenses
differently to understand some of” the changes that

The Cultural Lens
People who take this perspective look at how his-
tory has shaped the assumptions and meanings of
different people, how certain practices take on spe-
cial meaningfulness and even become rituals, and
how stories and other artitCacts shape the fi:el of an
organization. What if you considered delays in
manufacturing fi’om this perspective? Just one pos-
sibility is that you might decide that overtime pay
has a symbolic meaning to workers, that norlns
about who gets how much overtime have devel-
oped over the ),ears, and that what look like delays
might be attempts to spread out the overtime in
ways that are valued as being more fair.

An organizational analysis often begins with an
intuitive sense of where to look to understand an
organization and describe its character to others.
An organizational analysis is guided by an idea of
how organizations work. Each of us has schemas
that affect what we pay attention to and what we
ignore. The three lenses provide a number of pos-
sible ways to expand your views of organizations
and enrich your organizational analysis.

Balancing Multiple Perspectives

You will have a chance to use all three lenses as you
conduct the organizational analysis that is de-
scribed in the last Class Note in this module,
which begins on page 83. At the same time, it is
important to understand that SOlnetimes these
lenses suggest contradictory, not complementary,
approaches or actions.

Througlmut the term, you will have opportuni-
ties to work with other people who look at organ-
izations differently or prefer a different perspective
than you do, based on their dift’erent organiza-
tional experiences and standpoints.

We emphasize that problems don’t have a single
clear, correct, optimal solution. It does not mean
that any analysis is a good analysis. Some analyses
are better than others—more thoughtful, more
complete, more attentive to contingencies and
trade-oftiq or more able to balance and integrate
multiple perspectives. A failure to consider multi-
pie perspectives represents all incomplete analysis.

References

Fiske, Susan T., and Shelley E. Taylor. 1984. SociM CogMtiom New York: Random House.

Lord, Robert G., and Roseannc I. Foti. 1986. “Schema Theories, infbrmatioll Processing, and Organi-
zational Behavior.” In H. P. Sims, Jr., and D. A. Gioia (eds.), The Thiukiltg OrjTaÿzizatio*l (pp. 20-48). San
Francisco: Jossey-Bass.

M2-28 ANALYTICS ” TEAMS • ORGANIZATIONS , SKILLS

Strategic Design at Oynacorp

“We Yc too slonÿ, too um,e.ÿjÿousivc to the market, and
too uÿtdiscipliued abot, tt costs. Aÿtd the ntaiÿz reaÿvn
is how lye”re owaÿizcd–it just isÿr’t toothing any
more. Wc”vc outgrowJ.z the old desÿflÿ M so many
ways, bttt weS’e still to,itÿg to mtrÿ¢ÿ¢ with the same
strltctztre n,e had whet1 wc st tÿrtcd the cotÿqÿaÿ),. ÿ’

–Dyÿacorp prodÿtct maÿlager

aThcre’s a lot of’ tMk ÿJow about chtrngiÿq our
o&alJizatio7l desigÿl, BI,tt m,” should bc carcfitl that
we’re trot throwiÿlg the bÿb), out with the bath-
watt1: We’re fixatMg o3z what’s wrol,ÿj with the
orqaÿdzatioTt itÿstetrd of” thinking aboÿtt how to
make it work bcttcÿ:”

–Dyÿacorp rÿ(qiÿzeeriÿzg ÿJÿaÿzageÿ,

The Dyna Corporation, known in the industry as
Dynacorp, is a major global information systems
and communications company. Originating in an
of’rice equipment company that moved into high-
technolo%, applications in the 1960s and 1970s,
Dynacorp had, by the 1980s, established a position
as an industry leader, known tbr its technological
innovation. Dynacorp was first to the market with
innovative and high-quality products that were sig-
nificant advances on anyflaing its competitors were
offering. Customers would gladly wait months, and
even a year or so, to take delivery of’products bear-
ing the Dynacorp logo. The customers were typi-
cally sophisticated users who were willing to do
some of flaeir own applications work and to ligure
out how to integrate Dynacorp’s new products with
the rest of’their operations. During this period, the
company grew at a very fhst rate, and expanded its
market to Europe, Asia, and Latin America.

The 1990s were a much more difficult period
for the company. It continued to grow, but at a
slower rate, and experienced pcriods of significantly
reduced earnings. Critics both inside and outside
the company attributed Dynacorp’s difficulties to a
loss of’leadership in getting new products to mar-
ket, costs that were tOO high, and changes in the
marketplace that Dynacorp was slow to recognize.
Competitors were closing the technology gap, and
were often tÿster getting products to market. In a
gro\\,ing number of product areas, Dynacorp had
been surprised by competitors who, although they
had started working on a new product much later
than Dynacorp, were t:aster at getting the product
to the custorner at an attractive price, in addition, a
growing number or” infi)rmation technology and

communications (ITC) consulting firms were cap-
turing the relationship with the large customer by
offering “value-added services and solutions.” The
consulting firms acted as intermediaries, supervis-
ing the purchase of ITC hardware and sot:tware,
providing integration services, and capturing much
of the high-margin business.

A growing number or” executives in Dynacorp
were coming to believe that the problems could not
be addressed ettÿ’cti\.ely with Dynacorp’s current
organizational structure. Like most companies,
Dynacorp had been established \\,ith a fimctional
organization. As the company’ expanded its actMties
across five continents and greatly increased its prod-
uct range, top management began to ask whether
Dynacorp needed a major redesign.

,ÿ a first step, the CEO appointed a small internal
task three to make preliminary recommendations on
organization design to the top management team.
The CEO personally launched the task [brcc with a
company-wide communication listing the challenges
Dynacorp was tÿ\cing: high costs, being too slow to
get new products to the market, and a need to
increase the value created fbr customers. The CEO
emphasized that the current task tbrce’s mandate
was driven by Dynacorp’s commitment to maintain-
ing its leadership position in its industry, and asked
all Dynacorp employees to cooperate fifily and
frankly with the task [brcc’s inquiries,

A number of” the task three members traveled
around the company conducting interviews with
managers at multiple levels across the three major
divisions of the company, while others embarked on
an “external benchmarking” exercise to look at how
other companies in the industry were organized.
As they consolidated their findings, they [bund
themselves in agreement that Dynacorp’s current
organization had serious’ shortcomings, but they
disagreed vehemently on what the best design solu-
tion might be. The CEO had made it clear, how-
ever, that he did not want a simple listing of
alternatives; he wanted the task Ii?rce, at the very
least, to provide a ranking of the alternative choices.

Dynacorp’s Design: The Functional
Organization

Since its earliest days or” operation, Dyuacorp had
been organized [‘unctionally. The three line di\’i-

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M2-30 ANALYTICS • TEAMS ÿ ORGANIZATIONS ” SKILLS

ever, nitre and illO1″e companies were taking system
purchasing out of tile hands o[” their technical
enthusiasts, and Dynacorp’s marketing people
increasingly fbund themseh:es selling to business
unit purchasing groups–of’ten backed up by, or
e\’en represented by, consulting firms with special
practices in ITC. This shift meant a high demand
fbr technical support, lower customer tolerance of”
early stage problems with new product lines, the
need to integrate Dynacorp products with other
systems to provide solutions, and more polished
marketing pitches. It also meant that it became
more difficult to cultivate the close personal reD-
tiÿmships with buyers that had been a long-stand-
ing element ol: D vnacorp’s marketing strategy.

Dynacorp’s top management was justifiably
proud of” what their f’unctional organization had
accomplished. Its engineering division had an
excellent technical reputation and was able to
attract top technical talent and to develop the close
working relationships with leading scientists and
engineers at major research universities that
enabled it to stay on the cutting edge of new tech-
nology. Its manufacturing division had built
strong capabilities in quality manufacturing at a
time when U.S. industry overall was widely criti-
cized for [hlling behind in production systems. It
could also boast of a dedicated and knowledgeable
marketing [‘unction whose people had built close
working relationships with ‘customers who were
fiercely loyal to Dynacorp products.

Top managelnent recognized that the comped-
tire environment was changing, and that Dyna-
corp’s high costs, slow pace of getting new
products to market, and the need to generate
value-added services for customers made the con>
pany \,ulnerable. Dynacorp was not facing an
immediate crisis–it was still profitable, growing,
and highly respected in its industry. But the indus-
try was changing, and Dynacorp’s top manage-
ment believed that rlÿe), had a window of a year or
two to address the problems before the current
trends I,,}d to really serious problems.

Internal Investigation: Diagnosing
the Organizational Problems

The task force [‘ound widespread agreement on the
importance of the problems that Dynacorp was
facing, but considerable variation of opinion on
what was causing them or on how to fix them. The
engineering division’s managers were convinced
that the primary responsibility ÿbr high costs and
delays in getting prod ucts to market lay with man-
tffhcturing. One senior engineering manager said
that even though his people tried to hand the
manul’acturing site a detailed and complete set of

specifications, the manuf:acturing manager kept
coming back with questions or objections; he
wanted to substitute standard parts that would
mean reconfiguring the design or lowering the
product functionality, or to change elements of’the
design to make it easier to. produce, or to clarify
things simply because his.people didn’t understand
something about the design. Each iteration took
time, because the engineers on the project had by
that time gone on to other activities and had to be
hauled back “kicking and screaming” to work on
something they thought they’d finished.

Manufhcturing managers recognized the prob-
lem, but the}, believed it was due to the fact that
engineering cared more about the design than the
product. They complained that engineering liked
to design “from the ground up,” instead of using
standard components that could considerably
lower the product cost. One complained that “ira
few engineers get really good at designing widgets,
then they want to design a better, cooler widget
f’or every product they work on, instead of accept-
ing that some other engineer’s widget would do
the job just fine.” But one manufhcturing manager
put the problem in the context of” Dynacorp’s

growth:

When I first joined the compan3; we were all still
basically in the same town, aÿ’ÿd we got to ktÿow
each othm< So if I had a problem with the design, I'd just walk over to eÿfineeritag and grab o,le of the guys to give me a hand. Of col#'se hHd grl,,mble aboat l.ÿs maÿ,ÿlfactuHÿJg gÿo,s beitÿ a &ÿl,ÿch ÿf idiots, but he'd either sit down with us or fiÿ,ÿd oT,ÿe ofl thc elÿtiÿteering team who would help ot,tt--a1"l.d half the time thcÿ,'d realize that ÿve had a poitat, and we'd work things out. Now I'm iÿ'ÿ a plant that's in a different state and I do**'t real!,y know any of the bench engineers the same way. They hand tÿs a spcc [specificatio,ts] file that's handrcds of pages loÿ{q, and they think their job'vfinished. By the time wdve identified a problem, they're all qff oÿl new projects, aÿl.d fiudiÿg the ones respond- ble for that part of the design, getting their atteJ'>
tiotb convincitÿfl them that we aren’t nÿimbskulls
a,ÿd that there really is a problem–ÿ,ell, that all
takes a lot oflti.me. And changing the specs is a big
deal, becaase everyo,ÿe has signed off on them, so
eve,ÿ a mi,ÿor change becomes a major time sink.

The only thing on which engineering imd man-
ufacturing people unanimously agreed was that
one reason for Falling profits was marketing’s
eagerness to cut prices to make a sale. The view
that “those [marketing] guys are measured on
sales volume, and to make their targets they’ll let
the customer squeeze the margins” was wide-
spread. Several engineers also expressed the view
that marketing also bore some of the responsibility

cts coming late to market, because they
to add features or functions during tile

iOpment process, even ill the late stages, when
es were increasingly difficult and costly.

rding to one engineer, “They come in when
nearly at tile last gate to say, ‘He),, we’ve

d:about tl)is product to one of our best cus-
rs and they think it would be cool if we had a

that would yodel the Star-Spangled Banner
he Fourth of July’ or some other crazy idea.

usually talk them out of it, but it can sure
down while we sort them out. The

em is that those marketing guys have no idea
….. much engineering is needed to change the

1 pore 111 ell t.even by a small ” ”

17To meet the challenge of linldng the fimctions
product developnlent, Dynacorp relied heavily
two linldng nleclaanisms: cro.ÿ:ÿ’:f),tnctional prod-

oment teams, with representatives fi’om
mu[:acturing and marketing as well as engineer-

ing, and the position of product ,naÿtager, who had
le formal responsibility of overseeing the entire

process from initial conception to product launch.

In their interviews inside the company, the
design task three members heard widespread com-
plaints about the cross-fimctional teams, especially
fi’om nÿamffacturing and marketing. One manu-
t:acturing manager put his misgMngs this way:

As one product manager (who was widely
regarded as very successfiH) pointed out, the job
itself was a very difficult one.

>

Another manager pointed out that rile conl-
pany did not have an easy time identiÿ,ing and
developing good product managers:

Ideall); a product tnanwcr woald have some expe-
rience in each function. Btÿt herr at Dynacorp we
all move ÿqÿ within a J)ÿnction, aÿd veo, few peo-
ple move acroa:r the f!ÿnetio,ta/ bontÿdaries in their
careers. So the prodact manÿcrs come to tÿe job
with a fMrly narrow c.vpcrie,ÿce base. Theÿ,”vc all
beeÿ on eross-fuÿtctional tcama; bÿt iÿt a .f)¢nc-
tional }’ole. They have to learn on the job–fiÿst.
The fi’w rcally good prodnct massagers that n,e
have arc itÿ high demaÿM, a,ÿd are too b,Lry ,na,ÿ-

gi,ÿg product teams to traiÿ aÿo,bo,g, else. 1,1&
burn otct a lot of good ÿanetional peWlc who get
promoted to be product ;na,tÿget’s aÿd theft find
they areÿt”t up to the job.

The internal investigation also collected a num-
ber of more general criticisms of Dynacorp’s
organization design. Younger members of the
organization complained that tile organization
had too many layers of managers, and even some
of the older managers who had benefited by the
proliferation of steps in tile career ladder looked
back nostalgically on the fiat, speed), organization
of their earl), ),ears in the company. Information
seemed to take a long time to travel up and down
tile company. Several managers complained of a
growing tendency to push problems up the hierar-
chy for resolution, instead of tackling problems
when and where the), arose. One relatively junior
marketing manager said that he had grown dis-
couraged by the amount of time it took to get a
response to his suggestions for ways of improving
the customer database:

I went to my ÿanager with a prWosal, and she sent
it on to he; manageÿ; and I don”t l’ÿow where it
went fi’om there. !deas and s,qÿestions go t.t,o, aÿd
othiÿ ever seems to come down, or {{” anything

comes down it’s” a rcquest.[br f!ÿrther stÿdy. Iÿ,e
gfi,en ntÿ tÿTing to clsaÿge aÿo,thing aroÿ¢nd herc.

On the other hand, many of the employees
expressed some apprehension about the mandate
of the task fi)rce, fearing that a major redesign of
Dynacorp would damage rather than improve the
company. As one engineer said,

1’14” all con.ÿplaiÿt aboÿ,ÿt the otÿla,ÿizat}oÿ, Bÿ,t I
have 3q’icÿMs who llÿork iÿ other high-tech coÿnpa-

M2-32 ANALYTICS • TEAMS • ORGANIZATIONS • SKILLS

nits, grad their problems arc el,en worse than ours.
One fi’iend’s compmO, has a product div#ion
structm’c, and thO, can’t secm to tran.fer ezÿqi-
ricers or mannfiÿcturiJqT capaciU across prodzÿct
lines without hJoc fights about who”s goiÿl to pay
for it and how much, If we’re mmniug late on one
product deÿJelopment project, )be cxample, senior
¢zÿineeritÿg maÿltÿgell,ÿeÿlt ctrÿz .¢/Jlttÿt in good ¢tÿ#i-
neet:r f!,’om other less importam projects at a
moment’s notice. Or if one product is in unexpect-
edly high demand, a plant manÿTer can switch
lines quickly to get the product voh.tmes out the
dool: I woMdn’t wtÿnt to scc us lose that.

A marketing executive who had been hired
fi’om the outside made a similar point:

My old company was olflanized by product divi-
siom; and me were stepping all over each other sdl-
iug di3ÿycrent product liras to the same customers.
Sometimes ÿvc were ore’ omn ficrccst competitor: the
small .9,stems customer representatives were push-
ing one solution, the lmÿqc .9,stems people a di3f!’r-
ent one. That was one reason I left, and I don’t
ll’aÿt tO see Dyuacorp get into the same dih’mma.

External Investigation: Identifying
Alternative Designs

Some members of the task force focused on the
search for alternative organization designs. They
surveyed the leading companies in information
technology and communications (ITC) industry,
talked with executives in some of those companies,
and interviewed a set of consultants who specialized
in organization design (and who were eager to sell
Dynacorp their services). They also talked with
some of Dynacorp’s own managers who had been
hired out of other companies in the industry to get
their views on the strengths and weaknesses of the
organization design at their previous emplwer
compared to Dynacorp’s. From these investiga-
tions, task three lnembers identified five models that
they tÿ:lt were viable alternatives tbr the company.
• Pmdt,tct dil,isiou structure: This design would

divldc Dyn£ÿcorp’s functional divisions into
product-based mtÿlrifunctional product divi-
sions based on the product technology, with a
general manager in charge of the entire value
chain (from technology development through
after-sales service) tbr each major product line.
Related product divisions would be grouped
into business divisions (e.g., large systems)
headed by an executive vice president. Shared
corporate services would include not only the
current set of activities but also advanced tech-
nology developlnent, which would be in effect
a corporate R&D center providing cutting-
edge technology for future product lines.

. Customer dil,ision structure: Dynacorp’s [‘tlnc-
tional divisions would bc divided into multi-
functional divisions, but the criteria for
creating the divisions would be primarily the
customer segment they served (c.g., small
business division), rather than the technology
of the product.

• Fmictional/prodÿ/ct matrix.” This structure
would man’ix the existing fimctional structure
with a product division structure, so that indi-
viduals would report both to a fimctional man-
ager and a product manager. Only one company
in the industry was using this structure success-
fifily, and several companies that had adopted
this structure had abandoned it after a [ÿw ),ears.
However, rather than regarding it as a tSilure,
two or three had employed it as a transitional
structure to develop the people and the systems
to move more easily li’om a functional to a prod-
uct-based organization design.

• Front/back:This newest structure, adopted by. a
very small ntunber of companies, was strongly
advocated by several of the consultants as the
“cutting edge” of organization design in the
ITC field. The structure would keep the mar-
keting division as a separate front-end strtlc-
rare, responsible fbr selling the entire range of
Dynacorp products and systems. However, it
would enhance its technical support capabilities
to enable it to deliver systems and solutions
rnore effectively to customers. Engineering and
manuthcmring would be divided into product-
based business traits that would be responsible
fbr design and production.

• Functional stm.tcture with stronger linki*ÿT
mechauisms: This most conservative alterna-
tive would keep Dynacorp’s fi|nctiolml struc-
ture, but would set up a much stronger array
of cross-functional linking mechanisms and
alignment systems to support cross-fimctional
linkage.

None of the designs seemed to have been suc-
cessful in every company that tried it; eacln had
success and fhilurc cases within the industry. The
fi’ont/back structure was so new that no obvious
“failure” cases had yet a,’isen, but even some of its
strongest advocates in the industry admitted that it
had proved more challenging to implement than
the), had initially expected.

After the task force had digested both the infof
mation on the problems of” Dyna&)rp’s current
structure and the mapping of the five design alter-
natives, the task f’orce began the discussion with a
quick show of hands on each member’s first and
second choice for a new design. The result showed
a wide distribution across the fivÿ alternatives, and
it was clear that no quick consensus would point to
the best way forward for the company.