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Enterprise Organisational Management Model has always been one of the kernel problems to modern management science. In this field, the fundamental question the researcher needs to solve is how to establish an enterprise organisation structure to cope with change of the economic environment development. With the advent of information society and knowledge-based economy, the modern enterprises are facing unprecedented environmental change and fierce competition. Therefore, to select an appropriate organisational model is vitally important to a company. In this essay, I will focus on both organisational perspectives: mechanistic and learning perspective and analyse two perspectives on the basis of my experience. The purpose of the essay is to present theories of mechanistic and learning in relation to applying multiple companies' case. I agree with the statement that the mechanistic organisational model can be highly efficient, but it is not always effective. However, I have my doubt about the statement that the primary challenge for modern organisations are to replenish new approach and ideas to mechanistic principles. In my opinion, the major challenge is how the organisation changes their structure rather than mere present fresh ideas based on mechanistic structure. In the following first part of essay, I will explain the strengths and weakness of mechanistic perspective and why it cannot fit the development of society on the basis of cases. The second part is to introduce a new perspective-learning perspective and applying some theories to illustrate how companies become learning organisation, such as five discipline and double loop learning. Finally, I will conclude how these models will help me in the future.
Mechanistic Perspective of Organisation
In the industrial age, the traditional mechanistic model in enterprise organisation is quite effective organisation form. In those days, competition was not very strong, transformation of technology was slowly and information resource was scarce. Therefore, production efficiency is the only one they need and mechanistic model satisfied their needs. Greenberg and Baron(2000) note the mechanistic organisation is an internal organisational structure in which people specialized jobs, rigid rules are impose, and authority is vested in a few high-class official. Based on the definition of it, many of us probably think of the country tax office, the post office, banks or perhaps university registrar's offices as examples of mechanistic organisation.
Two representative theories in mechanistic organisation are Weber's ideal bureaucracy and Taylor's Principles of scientific management. Morgan (1943) mentioned that Taylorism had greatly increase production efficiency; promoted the transition of capitalist society and accordingly achieved maximum profit. Some organisations have had spectacular success using the Taylor's scientific management. Panasonic Corporation(2006), it is the earliest company that adopted divisional structure and can better make a clear distinction between responsibilities and authorities of departments, in the meantime bring employees' enthusiasm and creativity into full play and further specialization. But due to divisional structure is easier to free from head office's control, Panasonic had concentrated main four functions to balance the impacts of decentralization (Mclnerney,2007). Firstly, set up rigorous finance system and accounting system. Next, establishing company's own banks and regulated subsidiary company must borrow capital from company. Thirdly, carrying out concentration policy of personnel administrative, and finally taking intensive training program. Consequently, Panasonic possessed successfully a combination of decentralization and centralization structure and quickly become one of the 500 fortune companies in the world. However, in my opinion, mechanistic organisation's success is due to the precondition, which the external environment is stable and unchanging.
In fact, the environmental conditions are likely to be changing all the time. For example, I believe everyone experienced trains, buses and airplanes cannot run on time. But why the public transport (mechanistic organisation) cannot departure or arrival punctually? It is obvious that changes in external environment impacts them, such as weather, traffic jam and unpredictable situations.
Actually, Drummond (2000) note Taylor did not invent time management and just focus on productivity, thus he ignored the importance of external environment. In addition, Gerloff (1985) said that if a company was too heavily focused on labor productivity, it might be bring opposite effect and limited company's development. Faxconn Company is the best proof of this.
Foxconn is the world's largest contract electronics manufacture. By the end of 2009 it possessed US$59.3 billion in revenue. But in the management style of company, it has greatly imperfection, the management approach is too bureaucracy and military (Jenny and Ngai, 2010). Based on Jason (2007)¼ŒTerry Gou, the CEO of Faxconn, thinks democracy is the most inefficient management approach of company, which means decision-making should be decide on a responsible individual leader, rather than waste time and energy on democratic discussion.
For pursue the labor productivity and maximum profits, works and managers are limited in the time of eating and times of visiting toilet. It can be proved by Terry Gou, he likens his workforce to animals in one of public interviews. There is an extreme example:
"Foxconn workers who made emergency calls to the police through in-factory telephones were automatically transferred to Foxconn's own private security department!"(Jenny and Ngai,2010).
Consequently, subsidiary company of Foxconn happened suicide incident of employees (BBC News, 2010).
From my perspective, the failure of Foxconnn is up to a martial leadership style and neglected the wishes of employees. I admit that Foxconn might be an extremely example of drawbacks of mechanistic organisation, but it may offer a reference for companies, which adopted mechanistic management as the primary method of management. I think mechanistic perspective is no longer suitable for the development of modern enterprises. Now think about high-tech industries, such as those dedicated to computers, aerospace products, and biotechnology. Their environmental conditions are likely to be changing all the time. Therefore, company needs a new organisation structure to adapt a dynamic world, such as learning perspective.
Learning Perspective of Organisation
In my opinion, a major challenge of modern enterprise is not only to supplement mechanistic principles with fresh ideas and approach, but also to transform management thinking. In addition, I think mechanistic principles belong to the classic management style and cannot suitable for the development of modern society. Morgan (1943) said one of the major challenges facing many modern organisations are to replace this kind thinking with fresh ideas and approaches, not only to supplement this. In the light of this circumstance, Senge (1990) introduced learning organisation, which is the most successful corporation of the 1990s called by Fortune Magazine. Learning organisation emphasize system thinking technology should replace traditional mechanistic thinking and static thinking, and taking advantage of fifth discipline to cope with complex dynamic situation. Based on my research, IBM Company is a quite successful company for transformation on the basis of learning organisation.
Perscott and Miller(2001) note during the period of 1991-1993, IBM Company had showed deficits for three years running and the amount of loss up to $8 billion; In addition, the process of decision-making in company is too complex and managers pay too much attention to the internal procedure, to neglect changes of the market. What is more, they obdurately resist transformation (Perscott and Miller, 2001). However, Gerstner (the CEO of IBM) saves in deadly danger of IBM by using learning organisation mode.
Firstly, Gerstner (2002) organized a new team: rapid response team through adjusting organisation structure and organisation form. This team successfully overcomes several problems: bureaucracy, slowly in development circle, unresponsive to market and expensive operating cost.
Secondly, he finally adopted shock therapy management via system thinking, which reduced the management levels from 7 to 4. He succeeded in persuading the board to restructuring and completely destroyed traditional bureaucratic management mode and immensely cuts the cost of management. In addition, for building a shared vision, he breaks a strict hierarchy system and directly communicated with his employees via e-mail; What is more, for changing mental models of workforce, wherever he goes, he always arranged an hour for meeting all employees and listening carefully their voice and ensures every employee has a chance to express their own ideas.
Finally, he also employed a combined approach of stock option and money incentive to improve managers' personal mastery. After a series of turnaround, IBM mounted up from $8.1 billion in 1993 to a $7.7 billion profit in 2001.
Therefore, as far as I am concerned, Gerstner takes full advantage of fifth discipline of learning organisation to transform from a manufacturer to technology integrators within e-commerce and services industries.
In addition, Senge(1990) also points that system thinking is quite important to a learning organisation. If a company has comprehensive system thinking, it will more successful than other companies.
Novo Nordisk (NN) is an insulin producing company of Danish. Before 1985, many of diabetics need to inject insulin several times a day by carrying syringes and vials everywhere, it was too inconvenient for patients. For solving this problem, many insulin production enterprises pay their attention to doctors, just opposite, NN focused on patients through system thinking of learning organisation. Soon afterwards Novo Nordisk Company introduced the NovoPen, which is a new injection method of providing more convenience for the users. Since NovoPen was introduced, NN occupied approximately 60% of insulin market in Europe (Henrik,2001).
From this case I can know system thinking of learning organisation will definitely be important in the development of a company.
Up till the present moment, I have already known in the development of modern enterprises, possessing learning perspective is vital to a company. But how they can keep this perspective and have able to learn in an ongoing way?
Here, I need to introduce a new learning approach: Double-loop learning (DLL), which is coined by Chris(1977). DLL means that an individual or organisation has able to achieve a goal on different occasions, to change the goal on the basis of their own experience or potentially refuse the goal. As for single-loop learning, is just repeat the same problem without changing the method they used and ever querying the goal.
Morgan (1943) note that many organisations have become proficient at single-loop learning , developing an ability to scan the environment, set objectives, and monitor the general performance of the system in relation to these objectives. However, in double-loop learning, almost all companies have not achieved proficiency as bureaucratization system exists and hierarchical and horizontal divisions have hindered the learning process.
But General Electric (GE) Company succeeded in doing double-loop learning and how do they do that? In my opinion, the primary reason for GE's success is the innovation of Jack Welch, the CEO of GE in 1981.
Tichy and Sherman (1995) mentioned that Welch introduced two kinds of new management strategies: Workout and Boundaryless. Workout is a new change program for teaching the skills. The workout strategy aims to help all GE's managers have knowledge and wisdom about the change process itself and creating an ability of thinking and solve problem. For example, how to initiate change, why needs to change, and how to accelerate it?
Boundaryless meant just what the words implied: eliminating all of barriers among each department, such as engineering, manufacturing and marketing. In this way, each department can communicate and learn each other. Welch emphasized when occurs problems or new goals in this company, we have to do is not only to handle problems or finish new goals, but also to think why the problem happened and whether the new goal is right? (Michael,2002). In a word, all of this revolution Welch did is just for making a continuing learning atmosphere and permeates every mind in this company.
Therefore, in my opinion, in such a way, a company will be in a state of continuing learning and will be increasingly energetic.
Overall, in my opinion, a mechanistic mode of organisation is highly efficient indeed, especially in a stable environment. Because of a hierarchical approach is efficient for routine operations, such as Weber's bureaucracy and Taylor's scientific management. But it is not always effective, particularly in a dynamic environment. Therefore, a major challenge for modern organisations are not only to provide some fresh ideas and approach on the basis of mechanistic principles, but more important to keep up with the development of society within a new mode, such as learning mode. It enables the modern organisations to keep learning, surmounting and progressing. But I have to admit that mechanistic mode still has great directive significance to the modern organisations.
Consequently, to conclude the multiple perspective frameworks has helped me tremendously and it taught me how to use different perspectives to analyse an individual or organisation. In my opinion, when organisations select their structure, it cannot imitate or copy blindly the structure of successful business and it still needs to clearly analysis on the basis of internal and external situations. Just like the contingency theory, it originated with the work of Woodward (1958) and was development by Fiedler (1987). They think that there is no best and perfect mode to organisational design or lead a company, but the most suitable for modern organisations with existing external conditions.