Paul Adler, Marshall School of Business, University of Southern California

Managing for shared purpose: How business enterprises scale up value rationality from collegiality to collaboration
Paul Adler, Marshall School of Business, University of Southern California

Description

Semester: 
Winter 2016
Lecture Time: 
Friday, March 18, 2016 - 1:30pm to 3:00pm
Lecture Location: 

Room R1240, Ross School of Business

Abstract

This paper attempts to characterize the organizational form (or design) that can support a shared commitment to the business enterprise’s “purpose.” Purpose here refers to the organization’s fundamental raison d’ȇtre – what it contributes to society. A considerable body of organizational theory teaches us that (a) in contexts where tasks are relatively knowledge-intensive, interdependent, and non-routine, organizational performance will depend (ceteris paribus) on the discretionary effort, cooperation, and creativity of a relatively wide swathe of employees, and (b) these behaviors will be encouraged by a sense of shared purpose. Notwithstanding the considerable difficulties involved, many enterprises attempt to instill such a sense of purpose. Current theory provides little guidance as to the organizational form that would sustain this commitment. To characterize that form, we build on Max Weber’s analysis of the four basic types of social action and the corresponding types of organization. Our argument proceeds in two steps. First, we argue that creating and sustaining purpose requires an organizational form that institutionalizes the value-rational type of action. However, this proposition must overcome a strong objection: Weber and many since him have countered that value-rationality cannot be sustained in larger, more heterogeneous, capitalist enterprises under performance pressure. In such settings, these skeptics assert, value-rationality and its corresponding “collegial” type of organization inevitably give way to instrumental-rationality and the corresponding bureaucratic type of organization. Second, in response, we argue that the grounds for this skepticism have been progressively eroded by a succession of management innovations developed over the century that separates us from Weber’s writings. This sustained, albeit dispersed, innovation effort has given rise to a family of new organizational technologies that enable the scaling-up of value-rationality. This cluster of innovations yields a mutation that takes us from collegiality to a distinctive organizational form that we call “collaborative.” This collaborative model sits uneasily within the profitability constraints of the business sector. While those profitability constraints sometimes encourage the emergence of the collaborative form, they sometimes undermine it, by pushing executives to make decisions that reinforce employees’ instrumental orientation or that contradict employees’ understanding of the organization’s purpose. As a result, the implementation of this collaborative model is precarious, even as the model itself has been progressively refined through these various management innovations. This precariousness has rendered almost invisible that progress, and we aim to remedy this invisibility by showing how these various managerial innovations resolve the fundamental challenges involved in scaling-up value-rationality.

Recording & Additional Notes