Adapting to change

Organizations always have a set of fundamental needs. The organization does something -- it provides a commodity to consumers, it provides services that individuals pay for, it provides charitable services based on foundation funding, it employs specialists to steal credit card information on the Internet. All of these activities consume resources.

For the sake of clarity, let's have two organizations in mind: a mid-size company that produces cigarette lighters and a non-profit organization that provides adult literacy education in a high-poverty environment.

Key to an organization's "metabolism" is its regular access to resources, including especially revenue and people. Generally an organization has an existing model for satisfying these needs. It generates revenues through sale of goods and services or through gifts from foundations, corporations, and individuals who have a commitment to the organization's purposes. It acquires a talent base by hiring talented individuals and by attracting motivated volunteers. Call this a business plan--keeping in mind that profit-based and non-profit organizations alike need a business plan. If the business plan is a good one, the revenues match the expenditure needs of the organization, the talented members of the organization use their time and budgets to produce the organization's "deliverables", and the cycle begins again. The organization is sustainable.

A particularly bad scenario for a non-profit service provider is to begin its work on the basis of a large initial grant which is spent down until the organization expires. The profit-based equivalent is the new business that starts up with a large infusion of venture capital but never develops a revenue stream to support its activities.

What happens when the organization's business environment changes abruptly? Significant changes might include --

• Abrupt change in demand for the organization's product
• Abrupt change in the consumer's ability or willingness to pay for the product at the current price
• Change in the willingness of donors to provide support for this kind of activity
• Change in the costs of inputs necessary for producing the deliverables
• Appearance of a strong competitor who draws off demand and donors

We can easily think of examples of each of these changes. Gasoline prices spiked in summer 2010 and demand for large vehicles plummeted. Rapid increase in unemployment results in a massive decline to demand for mid-range restaurants. Foundations get frustrated about the slow rate of progress in education reform and cut back on funding for education reform NGOs. Digital photography rapidly undermines film companies. The iPod swamps the market for digital music players and other suppliers fail in the marketplace.

The question I'm raising here is a difficult one: what does an organization need to do in order to perceive and adapt to persistent changes like these? If we were asking this question in the field of ecology, the answer would be simple: many local species facing this kind of change simply will not be able to adapt in time and will go locally extinct. Natural selection is not a rapid-adaptation process, in general. Random variation and selection take time and large populations.

But this doesn't need to be the case for organizations. Organizations are led by intelligent and forward-looking people, after all, so in theory it should be possible for organizations to perceive impending change in their business environments and adjust accordingly. However, we also know that many organizations fail to do so. Think of the newspaper industry, the music publishing industry, the film-based photography industry, and some sectors of charitable providers.

So what are some positive heuristics that support effective adaptation? And what are some common sources of failure?

On the positive side:

• Be fact-driven and honest in assessing current conditions in the operating environment. Don't permit wishful thinking to cloud the assessment.
• Be rigorous in analyzing the consequences of these changes. If you are the leader of a non-profit with a great mission in an environment where funders have decisively turned away from this issue, consider the alternatives: downsize the delivery plan, reduce the cost of delivery, change the priorities of the organization, find new revenue partners, or find new sources of funding.
• Be innovative; search carefully for new ways of accomplishing the organization's goals at lower overall cost. A labor union might consider whether its army of organizers might be made more efficient (lower resource cost) by making use of social media.

On the negative side, we can think of a number of psychological and institutional factors that impede successful adaptation. Wishful thinking is at the top of the list. It is very easy for decision makers to persuade themselves that observed trends will quickly reverse -- "the foundations will soon return to a focus on poverty," "digital photography will never achieve the resolution and color fidelity of film," "the state's support for poverty programs will return after the next election."

Second, decision makers may reason that careful but painful adaptation in the near term may be more painful for them individually than the consequences of eventual failure of the organization in the long term. This may be worsened by CEO compensation packages that create perverse incentives for them. The CEO of our fictional cigarette lighter manufacturer may reason that another 10 years of gradually declining sales, leading to bankruptcy, may be preferable to the turbulence and conflict associated with downsizing, shifting to another product, or introducing a lot of new technology.

Third, institutions have an enormous amount of inertia when it comes to change. Consolidating services within an organization, for example, is almost always met with a great deal of resistance from the various divisions that will need to "share" their IT person, their budget specialist, or their web designer.  And rethinking the "deliverable" of the organization, or the way that it is provided, is also often met with a lot of internal resistance.  A poverty-focused organization like the United Way may decide that its old model of distributing charitable funds needs to be more focused on a few central priorities; and this shift of delivery is likely to be met with resistance both internally (from existing staff) and externally (from powerful beneficiaries of the earlier system).

Fourth, there are very real limits on our ability to project current information onto future realities. What was called wishful thinking above might well be accurate in some situations: the current dire circumstances do sometimes get better and the existing business plan turns out to be sustainable after all. So there is always a degree of uncertainty associated with efforts to assess the current and future business environment.

No organization wants to be classified as a "dinosaur" -- the perfect embodiment of an "organization" (species) trapped in a period of change that moves more rapidly than its ability to adapt. But many do in fact find themselves in the contemporary equivalent of the tarpits when they run into unfamiliar and rapid periods of change. I have to hope that universities don't allow themselves to slip into that kind of endgame as they face the difficult and changing environment that currently confronts them.

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Posted in: CAT_institutions,organization

More on meso causation

A recent post considered the question, do organizations have causal powers? There I argued that they do, in a number of ways. Here I'd like to return to these claims and see how they disaggregate onto subvening circumstances, including especially patterns of individual and group activity. The italicized phrases are extracted from the earlier post.

• First, the rules and procedures of the organization may themselves have behavioral consequences that lead consistently to a certain kind of outcome.

How do rules and procedures causally affect the behavior of the actors who participate in them? (a) Through training and inculcation. The new participant is exposed to training processes designed to lead him/her to internalize the procedures and norms governing his/her function. (b) Through formal enforcement. Supervisors are institutionally charged to enforce the rules through direct observation and feedback. (c) Through the normative example of other participants, including informal sanctions by non-supervisors for "wrong" behavior. (d) Through positive incentives administered by supervisors and mid-level functionaries. Each of these avenues for influencing the behavior of an actor within an organization depends on the actions and motivations of other actors within the organization. So we have the recursive question, what factors influence the behavior of those actors? And the answer seems to be: all actors find themselves within a dynamic system of behavior by other actors, frequently maintaining an equilibrium of reproduction of the rules and roles.

• Second, different organizational forms may be more or less efficient at performing their tasks, leading to consequences for the people and higher-level organizations that are depending on them.

Institutions designed to do similar work may differ in their functioning because of specific differences in the implementation of roles and processes within the organization. This is a system characteristic of the particular features and interactions of the rules and processes of the organization, along with the expected behaviors of the participants. It is also a causal characteristic: implementing system A results in greater efficiency at X than implementing B. The underlying causal reality that needs explanation is how it comes to pass that participants carry out their roles as prescribed--which takes us back to the first thesis.

• Third, the discrepancy between what the rules require of participants and what the participants actually do may have consequences for the outputs of the organization.

This causal claim highlights the difference between formal and informal procedures and practices within an organization. Informal practices can be highly regular and reproducible. In order to incorporate their implications into our analysis of the workings of the organization we need to accurately understand them; so we need to do some organizational ethnography to identify the practices of the organization. But in principle, the logic of explanation we provide on the basis of informal practices is exactly the same as those offered on the basis of the formal rules of the organization.

• Fourth, the specific ways in which incentives, sanctions, and supervision are implemented differentiate across organizations.

This is one of the key insights of the "new institutionalism." The specific design of the institution in terms of opportunities and incentives presented to participants makes a large difference in actors' behavior, and consequently a large difference to the system-level performance of the institution. Tweaking the variable of the level in the organization's hierarchy that needs to sign off on expenditures at a given level has significant effects on behavior and system properties. On the one hand, higher-level sign-off may serve to restrain spending. On the other hand, it may make the organization more unwieldy in responding to opportunities and threats.

• Fifth, the organization has causal powers with respect to the behavior of the individuals involved in the organization.

This factor parallels thesis 1 but is meant to refer to longterm effects on behavior and personality. The idea here is that immersion in a particular organization and its culture creates a distinctive social psychology in the people who experience it. They may acquire habits of thought, ways of responding to new circumstances, higher or lower levels of trust of others, and so forth, in ways that influence their behavior in the broader society. The idea of an "organization man" falls in this category of influence. The organization influences the individual's behavior, not just through the immediate system of rewards and punishments, but through its ability to shape his/her more permanent social psychology.

There are only two fundamental causal paths identified here. The causal properties of the organization are embodied in the patterns of coordinated actions undertaken by the actors who are involved; and these orderly patterns create system effects for the organization as a whole that can be analyzed in abstraction from the individuals whose actions constitute the micro-level of the social entity.

The most obvious causal property of an organization is bound up in the function of the organization. An organization is developed in order to bring about certain social effects: reduce pollution or crime, distribute goods throughout a population, provide services to individuals, seize and hold territory, disseminate information. These effects occur as a result of the coordinated activities of people within the organization. When organizations work correctly they bring about one set of effects; when they break down they bring about another set of effects. Here we can think about organizations in analogy with technology components like amplifiers, thermostats, stabilizers, or surge protectors. This analogy suggests we think about the causal powers of an organization at two levels: what they do (their meso-level effects) and how they do it (their micro-level sub-mechanisms).

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Posted in: CAT_institutions,causal mechanism,methodological individualism,microfoundations,organization

Do organizations have causal powers?

An organization is a meso-level social structure. It is a structured group of individuals, often hierarchically organized, pursuing a relatively clearly defined set of tasks.  In the abstract, it is a set of rules and procedures that regulate and motive the behavior of the individuals who function within the organization.  There are also a set of informal practices within an organization that are not codified that have significant effects on the functioning of the organization (for example, the coffee room as a medium of informal communication).  Some of those individuals have responsibilities of oversight, which is a primary way in which the abstract rules of the organization are transformed into concrete patterns of activity by other individuals. Another behavioral characteristic of an organization is the set of incentives and rewards that it creates for participants in the organization. Often the incentives that exist were planned and designed to have specific effects on behavior of participants; by offering rewards for behaviors X, Y, Z, the organization is expected to produce a lot of X, Y, and Z. Sometimes, though, the incentives are unintended, created perhaps by the intersection of two rules of operation that lead to a perverse incentive leading to W. For example: a farm supervisor may ask peach pickers to discard the bruised peaches rather than placing them in the basket to be weighed. But if the laborers' salaries are determined solely by the weight of the baskets they present for weighing, they will have an incentive to include the bruised peaches (at the bottom!).

Examples of organizations include things like these:

• the Atlanta police department
• a collective farm in Sichuan in 1965
• the maintenance and operations staff of a nuclear power plant
• a large investment bank on Wall Street
• Certus Corporation (discoverer of the PCR process)
• the land value assessment process in late Imperial China

The organization consists of a number of things:

• a set of procedures for how to handle specific kinds of tasks
• a set of people with skills and specific roles
• a set of incentives and rewards to induce participants to carry out their roles effectively and diligently
• a set of accountability processes permitting supervision and assessment of performance by individuals within the organization
• an "executive" function with the power to refine / revise / improve the rules so as to bring about overall better performance

Let's take the nuclear power plant staff as an example. The tasks of the organization are to control the complex technology and its instruments over an extended time; to conduct inspections of the physical infrastructure of the plant to discover failures before they occur; to conduct routine maintenance of machines and other physical systems; to respond quickly to failures, both large and small; and to sometimes conduct major upgrades on the hardware of the system. We may imagine that there are detailed, written procedures for each of these activities, as well as procedures for action during times of malfunction or breakdown. The people of the plant represent a range of specialized skills and specialized tasks. Wainwrights maintain and repair machinery; computer technicians maintain computer systems; nuclear technicians oversee the measured functioning of the system (pressures, temperatures, power production); safety workers inspect various system; and supervisors assign tasks and monitor performance.

Failures of the system arise for several different kinds of reasons: technical failure (a device fails for unexpected technical reasons, such as a faulty weld); operator failure (an operator disregards or misinterprets a pressure warning, and a pipe explodes before corrective action is taken); training failure (staff are technically or operationally unprepared for performing their tasks routinely or in exceptional circumstances); system failure (two or more sub-systems function as designed, but in an unusual circumstance may interact in such a way as to bring about an explosion, a computer crash, or a release of energy or heat); supervisory failure (procedures were good but supervisors permitted deviation from the procedures); venality failure (individuals in a position to control purchasing decisions authorize bad contracts for faulty materials for their personal profit).

The idea of a principal-agent problem is highly relevant within organizations, at every level. The executive expects the supervisor to faithfully perform his/her tasks of supervision. But since the executive does not directly monitor the performance of the supervisor, it is possible for the supervisor to shirk his/her duties and permit faulty performance by those he supervises. Likewise, the supervisor expects that the operator will continue to monitor and control the machine throughout the day; but it is possible for the operator to keep a solitaire window open on the screen. Each level of accountability, then, requires both formal expectations and a basis for trust in the good faith of the participants in the organization.

Now we are in a position to address the central question here: do organizations have causal powers? It seems to me that the answer is yes, in fairly specific ways. First, the rules and procedures of the organization may themselves have behavioral consequences that lead consistently to a certain kind of outcome.

Second, different organizational forms may be more or less efficient at performing their tasks, leading to consequences for the people and higher-level organizations that are depending on them. For example, two tax-collection systems may be designed for the same goal -- to collect 10% of the grain produced everywhere in the kingdom. If one system is 75% successful in this task and the other is 50% successful, the state depending on the second system will be starved for resources.

Third, the discrepancy between what the rules require of participants and what the participants actually do may have consequences for the outputs of the organization. Police department regulations may require that each piece of physical evidence is separately bagged and catalogued with appropriate information about its collection. If police operatives are careless in the cataloguing of evidence it may be more difficult to convict the accused; this may lead to a rising disregard for the likelihood of conviction and a rise in the crime rate. Corruption (venal failure to perform one's tasks faithfully) may lead to large consequences: the company is less profitable, the city is discredited to its citizens, the Church is delegitimated by the self-interested behavior of its clergy.

Fourth, the specific ways in which incentives, sanctions, and supervision are implemented differentiate across organizations. We may find that organizations with supervision system X are on average more productive or more effective than those with system Y.

Fifth, the organization has causal powers with respect to the behavior of the individuals involved in the organization. By presenting its rules, sanctions, and rewards to its participants, it changes their behavior in specific ways. Google and Apple have organized their internal procedures and rewards in such a way as to encourage creativeness, teamwork, and confidentiality. These organizations look quite different in their functioning and their products from a steel company or a shoe company.

This means two things. First, we can say with some confidence that the way an organization is structured makes a difference to its performance; this is a causal power all by itself. And second, we may be able to discover that there are broad characteristics that differentiate organizational types, and it may turn out that these distinct types also have different performance characteristics. We might discover, for example, that one system of oversight and employee motivation is significantly more likely to permit theft and corrupt behavior by its agents than another. In that case, we might say that these two systems differ in their propensities for generating corrupt behavior. (This is an argument that Robert Klitgaard makes in Controlling Corruption.)

So far we haven't mentioned the familiar subject of "microfoundations" at all; we have considered an organization as a complex social entity. It is easy to specify the microfoundations of the causal powers we have identified. The organization's performance is determined by the behaviors of the individuals who fall within it, and the aggregate individual behaviors are explained by the rules and procedures embodied in the organization. So the causal powers having to do with efficiency, effectiveness, and corruptibility can be disaggregated into the incentives and behaviors of typical individuals. But here is the key point: we don't need to carry out this disaggregation when we want to invoke statements about the causal characteristics of organizations in explanations of more complex social processes. This is a case illustrating the point of relative explanatory autonomy developed in a prior post, and it also illustrates the point that David Elder-Vass makes in The Causal Power of Social Structures: Emergence, Structure and Agency.

These observations lay a basis for concluding that meso-level social entities have causal powers that can legitimately be invoked in social explanations.  Significantly, there are clear and convincing examples of sociological explanations that take the causal powers of organizations as fundamental to their explanations of important social outcomes -- for example, technology failure (Charles Perrow, Normal Accidents: Living with High-Risk Technologies; link), corruption (Robert Klitgaard, Controlling Corruption), and the use of common property resources (Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action).

 

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Posted in: CAT_institutions,organization

Thinking about disaster

Charles Perrow is a very talented sociologist who has put his finger on some of the central weaknesses of the American social-economic-political system.  He has written about corporations (Organizing America: Wealth, Power, and the Origins of Corporate Capitalism), technology failure (Normal Accidents: Living with High-Risk Technologies), and organizations (Complex Organizations: A Critical Essay).  (Here is an earlier post on his historical account of the corporation in America; link.) These sound like very different topics -- but they're not, really.  Organizations, power, the conflict between private interests and the public good, and the social and technical causes of great public harms have been the organizing themes of his research for a very long time.

His current book is truly scary.  In The Next Catastrophe: Reducing Our Vulnerabilities to Natural, Industrial, and Terrorist Disasters he carefully surveys the conjunction of factors that make 21st-century America almost uniquely vulnerable to major disasters -- actual and possible.  Hurricane Katrina is one place to start -- a concentration of habitation, dangerous infrastructure, vulnerable toxic storage, and wholly inadequate policies of water and land use led to a horrific loss of life and a permanent crippling of a great American city.  The disaster was foreseeable and foreseen, and yet few effective steps were taken to protect the city and river system from catastrophic flooding.  And even more alarming -- government and the private sector have taken almost none of the prudent steps after the disaster that would mitigate future flooding.

Perrow's analysis includes natural disasters (floods, hurricanes, earthquakes), nuclear power plants, chemical plants, the electric power transmission infrastructure, and the Internet -- as well as the threat of deliberate attacks by terrorists against high-risk targets.   In each case he documents the extreme risks that our society faces from a combination of factors: concentration of industry and population, lax regulation, ineffective organizations of management and oversight, and an inability on the part of Congress to enact legislation that seriously interferes with the business interests of major corporations even for the purpose of protecting the public.

His point is a simple one: we can't change the weather, the physics of nuclear power, or the destructive energy contained in an LNG farm; but we can take precautions today that significantly reduce the possible effects of accidents caused by these factors in the future. His general conclusion is a very worrisome one: our society is essentially unprotected from major natural disasters and industrial accidents, and we have only very slightly increased our safety when it comes to preventing deliberate terrorist attacks.

This book has been about the inevitable inadequacy of our efforts to protect us from major disasters. It locates the inevitable inadequacy in the limitations of formal organizations. We cannot expect them to do an adequate job in protecting us from mounting natural, industrial, and terrorist disasters.  It locates the avoidable inadequacy of our efforts in our failure to reduce the size of the targets, and thus minimize the extent of harm these disasters can do. (chapter 9)

A specific failure in our current political system is the failure to construct an adequate and safety-enhancing system of regulation:

Stepping outside of the organization itself, we come to a third source of organizational failure, that of regulation. Every chapter on disasters in this book has ended with a call for better regulation and re-regulation, since we need both new regulations in the face of new technologies and threats and the restoration of past regulations that had disappeared or been weakened since the 1960s and 1970s. (chapter 9)

The central vulnerabilities that Perrow points to are systemic and virtually ubiquitous across the United States -- concentration and centralization.  He is very concerned about the concentration of people in high-risk areas (flood and earthquake zones, for example); he is concerned about the centralized power wielded by mega-organizations and corporations in our society; and he is concerned about the concentration of highly dangerous infrastructure in places where it puts large populations at risk.  He refers repeatedly to the risk posed by the transport by rail of huge quantities of chlorine gas through densely populated areas -- 90 tons at a time; the risk presented by LNG and propane storage farms in areas vulnerable to flooding and consequent release or explosion; the lethal consequences that would ensue from a winter-time massive failure of the electric power grid.

Perrow is an organizational expert; and he recognizes the deep implications that follow from the inherent obstacles that confront large organizations, both public or private.  Co-optation by powerful private interests, failure of coordination among agencies, lack of effective communication in the preparation of policies and emergency responses -- these organizational tendencies can reduce organizations like FEMA or the NRC to almost complete inability to perform their public functions.

Organizations, as I have often noted, are tools that can be used by those within and without them for purposes that have little to do with their announced goals. (Kindle loc, 1686)

Throughout the book Perrow offers careful, detailed reviews of the effectiveness and consistency of the government agencies and the regulatory legislation that have been deployed to contain these risks.  Why was FEMA such an organizational failure?  What's wrong with the Department of Homeland Security?  Why are chronic issues of system safety in nuclear power plants and chemical plants not adequately addressed by the corresponding regulatory agencies?  Perrow goes through these examples in great detail and demonstrates the very ordinary social mechanisms through which organizations lose effectiveness.  The book serves as a case-study review of organizational failures.

Perrow's central point is stark: the American political system lacks the strength to take the long-term steps it needs to in order to mitigate the worst effects of natural (or intentional) disasters that are inevitable in our future.  We need consistent investment for long-term benefits; we need effective regulation of powerful actors; and we need long-term policies that mitigate future disasters.  But so far we have failed in each of these areas.  Private interests are too strong, an ideology of free choice and virtually unrestrained use of property leads to dangerous residential and business development, and Federal and state agencies lack the political will to enact the effective regulations that would be necessary to raise the safety threshold in dangerous industries and developments. And, of course, the determined attack on "government regulations" that has been underway from the right since the Reagan years just further worsens the ability of agencies to regulate these powerful businesses -- the nuclear power industry, the chemical industry, the oil and gas industry, ...

One might think that the risks that Perrow describes are fairly universal across modern societies.  But Perrow notes that these problems seem more difficult and fundamental in the United States than in Europe.  The Netherlands has centuries of experience in investing in and regulating developments having to do with the control of water; European countries have managed to cooperate on the management of rivers and flood plains; and most have much stronger regulatory regimes for the high risk technologies and infrastructure sectors.

The book is scary, and we need to pay attention to the social and natural risks that Perrow documents so vividly.  And we need collectively to take steps to realistically address these risks.  We need to improve the organizations we create, both public and private, aimed at mitigating large risks.  And we need to substantially improve upon the reach and effectiveness of the regulatory systems that govern these activities.  But Perrow insists that improving organizations and leadership, and creating better regulations, can only take us so far.  So we also need to reduce the scope of damage that will occur when disaster strikes.  We need to design our social system for "soft landings" when disasters occur.  Fundamentally, his advice is to decentralize dangerous infrastructure and to be much more cautious about development in high-risk zones.

Given the limited success we can expect from organizational, executive, and regulatory reform, we should attend to reducing the damage that organizations can do by reducing their size.  Smaller organizations have a smaller potential for harm, just as smaller concentrations of populations in areas vulnerable to natural, industrial, and terrorist disasters present smaller targets. (chapter 9)

If owners assume more responsibility for decisions about design and location -- for example, by being required to purchase realistically priced flood or earthquake insurance -- then there would be less new construction in hurricane alleyways or high-risk earthquake areas.  Rather than integrated mega-organizations and corporations providing goods and services, Perrow argues for the effectiveness of networks of small firms.  And he argues that regulations and law can be designed that give the right incentives to developers and home buyers about where to locate their businesses and homes, reflecting the true costs associated with risky locations. Realistically priced mandatory flood insurance would significantly alter the population density in hurricane alleys.  And our policies and regulations should make a systematic effort to disperse dangerous concentrations of industrial and nuclear materials wherever possible.

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Posted in: CAT_institutions,organization,technology

Why the corporation?

image: Diego Rivera mural of Rouge Plant, Detroit Institute of the Arts

Recently I posted about C. Wright Mills and his analysis of power elites in America (post). A major theme in Mills's book is the new power associated with the American corporation following World War II. Charles Perrow's Organizing America: Wealth, Power, and the Origins of Corporate Capitalism (2002) offers an historical account of how this system of power came into being. Perrow is a historical sociologist, and he focuses his analysis on the structural features of the organizations he considers; the historical and social factors that favored the emergence of these kinds of organizations; and the role that they now play within the complex social and political system of modern America.

The topic is particularly relevant today, when the Supreme Court is considering whether "corporations have a right to free speech", and therefore a right to further deepen their influence on political directions and policies through their funding of political messages.

Perrow gives close empirical attention to the evolution of the institutions through which the American economy functioned from the mid-nineteenth century into the twentieth century. Textiles and railroads play key roles in this early history. Perrow tells the story of how the American economy came to feature the large corporation as its central business organization -- an outcome that was far from inevitable. He argues that the large corporation is a historically contingent creation; other forms of enterprise activity could have emerged. And he teases out of this account a pretty compelling set of conclusions that are very supportive of Mills's basic line of thought concerning the disproportionate power that is wielded by corporations and their officers. Here's his summary statement:

Our economic organizations -- business and industry -- concentrate wealth and power; socialize employees and customers alike to meet their needs; and pass off to the rest of society the cost of their pollution, crowding, accidents, and encouragement of destructive life styles. In the vaunted "free market" economy of the United States, regulation of business and industry to prevent or mitigate this market failure is relatively ineffective, as compared to that enacted by other industrialized countries. (1-2)

Perrow notes that organizations do not have to be large to be effective and efficient; along with Charles Sabel and Jonathan Zeitlin (World of Possibilities: Flexibility and Mass Production in Western Industrialization) and Philip Scranton (Endless Novelty), he argues that "networks of small firms can drive innovation and distribute wealth and power more equitably" (2). So large, hierarchical organizations are not mandated by the technical demands of modern economic life. In fact, innovation, flexibility, and community responsiveness are more likely to be associated with networks of small organizations rather than solitary large organizations, and these types of organizations were abundant in our economic history. "Many conditions were in place to grow a society of well-regulated and moderate-sized firms focused upon regional economic development; at various points in the century many citizens argued for this" (19). But that is not what we got; instead, the large organization and the corporation became the central unit of economic activity.

So why did large organizations and corporations come to have the central and dominating role that they have had in economic and social life since the early twentieth century in the United States? Perrow's answer to this represents a synthesis of the best thinking to date on the role that corporations play. He refers to his approach as a "society of organizations" approach, involving these key elements:

• History is path-dependent, accidental, only partially developmental
• structure and environment rather than entrepreneurship explain success / failure
• technologies are chosen to fit preferred structure / ideology
• culture shapes and is shaped by organization; the latter is emphasized
• labor process is shaped in part by workers' resistance and can occasionally be a key factor, but acquiescence in dependency, and tradeoffs in benefits, are more often the common lot of employees
• bureaucracy (formalization, standardization, centralization, hierarchy) is the best unobtrusive control device that elites ever had (19)

The point about labor process is an important one. Perrow notes that the central challenge of how to discipline and regularize a labor force in textiles or other mass-production industries itself led to the early development of bureaucratic and hierarchical rules within emerging organizations. For example, "uniform work rules for all mills in Philadelphia including Manayunk were established at meetings of the owners in the early 1830s" (55). (Michael Burawoy explores this role of the corporation throughout his work; Manufacturing Consent: Changes in the Labor Process Under Monopoly Capitalism.)

Perrow also gives quite a bit of attention to the legal and policy environment in the United States as a key variable in the specific pathway that American business took. The enactment of legislation permitting incorporation was an important step, in that it provided significant rights and powers to corporations (36 ff.). And Perrow notices that the development of railroads and their business organizations in the United States took a very different course than counterparts in Europe because of significant differences in political values and culture in the United States (a point that leads Perrow to intersect with Frank Dobbin's analysis in Forging Industrial Policy: The United States, Britain, and France in the Railway Age, discussed here.)

What is the upshot? Perrow argues that in the United States the national political economy was led to create a system that gave enormous and very lightly regulated power to large organizations and corporations; that, once established, these organizations were very capable of defending their rights and freedom of action; and that the corporations exercise power at every level in American society. Corporations and large organizations wield micro-power over the tens of millions of Americans who work within them, meso-power over the environmental status of communities and regions and the consumption patterns of individuals, and macro-power over the direction that legislation and policy takes. And this degree of power is now deeply entrenched:

Belatedly, the Progressive movement of the early twentieth century sought to redress the power imbalances and the costly externalities for workers and communities. But the organizational infrastructure of the nation was not to be seriously disturbed or even ideologically challenged, up to the present. A society with small- and modest-sized firms, regional rather than national markets, and with civic welfare provisions that are a right of citizenship rather than a benefit of employment--a society with wealth and power distributed widely--is now out of the question. Large bureaucratic organizations, public and private, will be our fate for the foreseeable future. It might have been otherwise. (228)

And finally, Perrow argues that this system was not economically or technologically inevitable. Networks of smaller firms and organizations could satisfy the needs for efficient production and innovation that a robust and dynamic economy presents. And a substantially less centralized political economy would be favorable to democracy and modern quality of life.

(Perrow's most recent book is also very timely and worth reading (The Next Catastrophe: Reducing Our Vulnerabilities to Natural, Industrial, and Terrorist Disasters). Here Perrow returns to the subject of catastrophe and its prevention. He outlines the very significant possibilities of catastrophic failure that are inherent in our current industrial and economic organization, and offers some ideas about how we might reduce these vulnerabilities. There is a connection between the two books; the wide scope of the corporation as the basic unit of economic organization directly implies the concentration of dangerous industrial processes that a more decentralized network of smaller producers would have avoided. Try a sample chapter on the Kindle.)

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Posted in: CAT_policy,CAT_power,economic development,organization,power

Many small causes

When large historical events occur, we often want to know the causes that brought them about. And we often look at the world as if these causes too ought to be large, identifiable historical factors or forces. Big outcomes ought to have big, simple causes.

But what if sometimes the historical reality is significantly different from this picture? What if the causes of some "world-historical events" are themselves small, granular, gradual, and cumulative? What if there is no satisfyingly simple and macro answer to the question, why did Rome fall? Or why did the American civil war take the course it did? Or why did North Africa not develop a major Mediterranean economy and trading system? What if, instead, the best we can do in some of these cases is to identify a swarm of independent, small-scale processes and contingencies that eventually produced the outcome?

Take the fall of Rome. I suppose it is possible that the collapse of the empire resulted from a myriad of very different contingencies and organizational features in different parts of the empire: say, logistical difficulties in supplying armies in the German winter, particularly stubborn local resistance in Palestine, administrative decay in Roman Britain, population pressure in Egypt, and a particularly inept series of commanders in Gaul. Too many moving pieces, too much entropy, and some bad luck in personnel decisions, and administrative and military collapse ensues. Alaric sits in Rome.

What an account like this decidedly lacks, is a story about a few key systemic or environmental factors that made collapse "inevitable". Instead, the account is a dense survey of dozens or hundreds of small factors, separated in time and place, whose cumulative but contingent effect was the observed collapse of Rome. No simple necessity here -- "Rome collapsed because of fatal flaw X or environmental pressure Y" -- but instead a careful, granulated assessment of many small and solvable factors.

But here is a different possible historical account of the fall of Rome. An empire depends upon a few key organizational systems: a system of taxation, a system of effective far-flung military power, and a system of local administration in the various parts of the empire. We can take it as a given that the locals will resent imperial taxation, military presence, and governance. So there is a constant pressure against imperial institutions at each locus -- fiscal, military, and administrative. In order to maintain its grip on imperial power, Rome needed to continually support and revitalize its core functions. If taxation capacity slips, the other functions erode as well; but slippage in military capacity in turn undermines the other two functions. And now we're ready for a satisfyingly simple and systemic explanation of the fall of Rome: there was a gradual erosion of administrative competence that led to increasingly devastating failures in the central functions of taxation, military control, and local administration. Eventually this permitted catastrophic military failure in response to a fairly routine challenge. Administrative decline caused the fall of Rome.

I don't know whether either of these stories -- the "many small causes" story or the "systemic administrative failure" story -- is historically credible. But either could be historically accurate. And this is enough to establish the central point: we should not presuppose what the eventual historical explanation will look like.

I suppose there is no reason to expect apriori that large events will conform to either model. It may be that some great events do in fact result from a small number of large causes, while others do not. So the point here is one about the need to expand our historical imaginations, and not to permit our quest for simplicity and generality to obscure the possibility of complexity, granularity, and specificity when it comes to historical causation.

(Christopher Kelly's The Roman Empire: A Very Short Introduction is a very readable treatment of Rome's functioning as an empire. Kelly hands off the ball to Gibbon when it comes to explaining the fall of Rome, however (History of the Decline and Fall of the Roman Empire -- as Kelly says, decidedly not a "short history"). Michael Mann's The Sources of Social Power: Volume 1, A History of Power from the Beginning to AD 1760 gives something of the flavor of my "administrative decline" musing above. Likewise, the style of reasoning about revenues and coercion is very sympathetic to Charles Tilly's arguments about a somewhat later period in Coercion, Capital and European States: AD 990 - 1992.)

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Posted in: CAT_history,causal mechanism,causal reasoning,logistics,organization

The Franco-Prussian War

The rapid, bloody, and total defeat of the French army by the Prussian army in 1870-71 was an enormous and unexpected shock to France and to Europe. Since the Napoleonic Wars it was taken as given that France's armies were powerful, well-equipped, and well generaled. But the Prussian army quickly defeated French armies across eastern France, from Wissembourg to Sedan, with massive loss of life on the French side. And the collapse of the army was rapidly followed by the siege of Paris and the Paris uprising leading to the establishment of the Commune of Paris and eventually its bloody suppression. So this period of two years was a critical moment in France's history in the nineteenth century.

Michael Howard's 1961 history, Franco-Prussian War: The German Invasion of France 1870-1871, is probably the most comprehensive book in English on the Franco-Prussian War. Here's how Howard expresses the the comprehensiveness and shocking totality of France's defeat:

The collapse at Sedan, like that of the Prussians at Jena sixty-four years earlier, was the result not simply of faulty command but of a faulty military system; and the military system of a nation is not an independent section of the social system but an aspect of it in its totality. The French had good reason to look on their disasters as a judgment. The social and economic developments of the past fifty years had brought about a military as well as an industrial revolution. The Prussians had kept abreast of it and France had not. Therein lay the basic cause of her defeat. (1)

So Howard's judgment of the causes of this massive military failure is ultimately technological and systemic. The technical changes to which he refers are familiar: the role that railroads could play in the logistics of nineteenth-century warfare (opportunities that needed to be recognized and incorporated into military plans and the design of operational systems); the advent of new infantry weapons (breech-loading rifles of greater range and speed of loading); and new advances in artillery. The Prussian army incorporated breech-loading rifles (the needle gun) as early as 1843; whereas the French (as well as the British and Austrian armies) retained the muzzle-loader until the 1860s. And the Prussian generals led major advances in artillery in the decades leading up to the Franco-Prussian war, with greater precision and fire power in their Krup guns.

Railroads played a key role in Prussia's mobilization and logistics. The Prussians were able to maintain coordination and organization of their rail system; whereas the French rail system quickly fell into disorder. Howard describes the military potential of railroads in these terms:

Speed of concentration was only one of the advantages which railways provided. They carried troops rapidly to the theatre of war; and they enabled them to arrive in good physical condition, not wearied and decimated by weeks of marching. Armies needed no longer to consist of hardened regular troops; reservists from civil life could be embodied in the force as well.... Further, the problem of supplying large forces in the field was simplified. (3)

The systemic part of Howard's diagnosis is a failure of government: a failure to coordinate ministries and the bureaucracy of the military in pushing forward the reforms that would lead to effective incorporation of new technological possibilities into the order of battle and mobilization. The Prussian army made intelligent use of the General Staff as a learning organization; the French had no comparable organization.

Military failure is perhaps best viewed as a single species of organizational failure more generally. Elliot Cohen and John Gooch offer a different analytical basis for trying to understand the military disaster of the Franco-Prussian War in Military Misfortunes: The Anatomy of Failure in War. Bad generals can cause military disasters; but Cohen and Gooch take the position that "human error" is an explanation we turn to too quickly when it comes to large failures. (Likewise, "pilot error" and "surgeon error" are too superficial in aviation and hospital failures.) Rather, it is important to look for the systemic and organizational causes of failure. They treat war as a complex organizational activity, and they attempt to discover the causes of military failures in a variety of kinds of organizational failure. They identify three basic kinds of failure: "failure to learn, failure to anticipate, and failure to adapt" (26). And when these kinds of failure compound in a single period, it is likely enough that the result will be catastrophic failure.

Cohen and Gooch offer a fascinating "matrix of failure", partitioning "command level" (from president down to operating units) and "critical task" (communication of warning, appropriate level of alert, coordination) (55); and they demonstrate how mistakes at various levels of command in the several critical tasks can cascade into "critical failures". The cases they analyze include the failure of American antisubmarine warfare, 1942; Israel Defense Forces on the Suez Front and the Golan Heights, 1973; the British at Gallipoli, 1915; the defeat of the American Eighth Army in Korea, 1950; and the French army and airforce, 1940.

It seems that the Cohen-Gooch framework can be usefully applied to the Franco-Prussian War. Each of the key failures occurred: failure to anticipate (especially, failure to anticipate the possible consequences of Prussia's rapid military modernization in the 1850s and 1860s; failure to anticipate the fatal consequences that would follow from the French declaration of war in July 1870); failure to learn (an almost total lack of ability on the part of the French general staff to make sense of the causes of defeat as they occurred in summer and fall 1870); and, most strikingly, a failure to adapt (essentially the same tactics were used at Sedan as had first been applied at Wissembourg; Howard, 204-08).

Emile Zola's treatment of the war, The Debacle: 1870-71, is not a piece of analytical history; instead, it is a brilliant novelist's best effort to capture the horror and hopelessness of the campaigning in the summer and fall of 1870 from the point of view of the peasant Jean Macquart. The confusion of endless marches in one direction and then the reverse; the misery of driving rain; the hunger of poorly provisioned campaigning; and the seemingly endless terror of artillery and rifle fire put the reader into the shoes of the foot soldier as he approaches his end. The novel presents a textured and grim picture of the confusion of the march and the terrors of the battlefield:

In Remilly there was a dreadful mix-up of men, horses, and vehicles jamming the street which zigzags down the hill to the Meuse. Half way down, in front of the church, some guns had got their wheels locked together and could not be moved in spite of much swearing and banging. At the bottom of the hill, where the Emmane roars down a fall, there was a huge queue of broken-down vans blocking the road, while an ever-growing wave of soldiers was struggling at the Croix de Malte inn (139-40)

And a description of fighting in Bazeilles:

Clearly the attack was going to be terrible. The fusillade from the meadows had died down. The Bavarians were masters of the little stream fringed with poplars and willows, and were now preparing for an assault on the houses defending the church square, and so their snipers had prudently drawn back. The sun shone in golden splendour on the great stretch of grassland, dotted with a few black patches, the bodies of killed soldiers. (190)

Lying on the ground, sheltering behind stones or taking advantage of the slightest projections, the men were firing all out, and along this wide, sunlit and empty street there was a hurricane of lead with streaks of smoke, like a hailstorm blown by a high wind. A young girl was seen running across the road in terror, but she was not hit. But then an old man, a yokel in a smock, was insisting on getting his horse into a stable, and he was struck in the forehead by a bullet with such force that it knocked him into the middle of the road. The roof of the church was blown in by a shell. (191)

And here, the fateful trap of Sedan, where the larger part of the French army was annihilated:

The hundred thousand men and five hundred cannon of the French army were there packed together and hounded into this triangle. And when the King of Prussia turned westwards he saw another plain, that of Donchery, empty fields extending to Briancourt, Marancourt and Vrigne-aux-Bois, a waste of grey earth, powdery-looking under the blue sky, and when he turned to the east there was yet again, opposite the huddled French lines, an immense vista, a crowd of villages..... In all directions the land belonged to him, he could move at will the two hundred and fifty thousand men and the eight hundred guns of his armies, he could take in with one sweeping look their invading march. (197)

It is an interesting question to ask: to what extent do the skills of the novelist complement the theories of the social scientist and the narratives and analysis of the historian, in helping us to come to a better understanding of the reality of the historical moment? Is Zola's novel a genuine addition to our ability to make sense of this period in France's history? Or is it simply -- fiction?

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Posted in: CAT_history,France,logistics,organization

Scientific misconduct as a principal-agent problem

How does an organization assure that its agents perform their duties truthfully and faithfully? We have ample evidence of the other kind of performance -- theft, misappropriation, lies, fraud, diversion of assets for personal use, and a variety of deceptive accounting schemes. And we have whole professions devoted to detecting and punishing these various forms of dishonesty -- accountants, investigative reporters, management consultants, insurance experts, prosecutors and their investigators. And yet dishonest behavior is common, in business, finance, government, and even the food industry. (See several earlier postings for discussions of the issues of corruption and trust in society.)

Here I'm especially interested in a particular kind of activity -- scientific and medical research. Consider a short but sobering list of scientific and medical frauds in the past fifty years: Cyril Burt's intelligence studies, Dr. Hwang Woo-suk's stem cell cloning fraud, the Anjan Kumar Banerjee case in Britain, the MMR vaccine-autism case, a spate of recent cases in China, and numerous other examples. And consider recent reports that a percentage of scientific photos in leading publications had been photoshopped in ways that favored the researcher's findings (link). (Here are some comments by Edward Tufte on the issue of scientific imaging, and here are some journal guidelines from the Council of Science Editors attempting to regulate the issue.) Plainly, fraud and misconduct sometimes occur within the institutions of scientific and medical research. And each case has consequences -- for citizens, for patients, and for the future course of research.

Here is how the editor of Family Practice describes the problem of research misconduct in a review of Fraud and Misconduct in Medical Research (third edition):

Fraud and misconduct are, it seems, endemic in scientific research. Even Galileo, Newton and Mendel appear to have fudged some of their results. From palaeontology to nanotechnology, scientific fraud reappears with alarming regularity. The Office of Research Integrity in the USA investigated 127 serious allegations of scientific fraud last year. The reasons for conducting fraudulent research and misrepresenting research in scientific publications are complex. The pressures to publish and to achieve career progression and promotion and the lure of fame and money may all play a part, but deeper forces often seem to be at work.

How important are fraud and misconduct in primary care research? As far as Family Practice goes, mercifully rare, as I pointed out in a recent editorial. Sadly, however, there are examples, all along the continuum from the beginning of a clinical trial to submission of a final manuscript, of dishonesty and deceit in general practice and primary care research. Patients have been invented to increase numbers (and profits) in clinical trials, ethical guidance on consent and confidentiality have been breached, and ‘salami’ and duplicate publication crop up from time to time.

The problem is particularly acute in the area of scientific and medical research because the public at large has very little ability to independently evaluate the validity of a research finding, let alone validate the integrity of the research. And this extends to science and medicine journalists in large part as well, since they are rarely given access to underlying records and data for a study.

The stakes are high -- dishonest research can cost lives or delay legitimate research, not to speak of the cost of supporting the fraudulent research in the first place. The temptations for researchers are large as well -- funding from drug and device makers, the incentives and pressures of career advancement, and pure vanity, to name several. And we know that instances of fraud and other forms of serious scientific misconduct continue to occur.

So, thinking of this topic as an organizational problem -- what measures can be taken to minimize the incidence of fraud and misconduct in scientific research?

One way of describing the situation is as a gigantic principal-agent problem. (Khalid Abdalla provides a simple explanation of the principal-agent problem here.) It falls within the scope of the more general challenge of motivating, managing, and supervising highly skilled and independent professionals. The "agent" is the individual researcher and research team. And the "principal" may be construed at a range of levels: society at large, the Federal government, the NIH, the research institute, or the department chair. But it seems likely that the problem is most tractable if we focus attention on the more proximate relationships -- the NIH, the research institute, and the researcher.

So this is a good problem to consider from the point of view of institutional design and complex interactive social behavior. We know what kind of behavior we want; the problem is to create the institutional settings and motivational processes through which the desired behavior is encouraged and the undesired behavior is detected and punished.

One response from the research institutions (research universities, institutes, and medical schools) is to emphasize training programs in scientific professional ethics, to more deeply instill the values of strict scientific integrity in each researcher and each institution. The hope here is that pervasive attention to the importance of scientific integrity will have the effect of reducing the incidence of misconduct. A second approach, from universities, research organizations, and journals, is to increase oversight and internal controls surrounding scientific fraud. One example -- some journals require that the statistical analysis of results be performed by a qualified, independent, academic statistician. Strict requirements governing conflicts of interest are another institutional response. And a third approach from institutions such as the NIH and NSF is to ratchet up the consequences of misconduct. The United States Office of Research Integrity (link) has a number of training and enforcement programs designed to minimize scientific misconduct. The British government has set up a similar organization to combat research fraud, the UK Research Integrity Office (link). Individuals found culpable will be denied access to research funds -- effectively halting their scientific careers, and criminal prosecution is possible as well. So the sanctions for misconduct are significant. (Here's an egregious example leading to criminal prosecution).

And, of course, the first and last line of defense against scientific misconduct is the fundamental requirement of peer review. Scientific journals use expert peers to evaluate the research to be considered for publication, and universities turn to expert peers when they consider scientists for promotion and tenure. Both processes create a strong likelihood of detecting fraud if it exists. Who is better qualified to detect a potentially fraudulent research finding than a researcher in the same field?

But is all of this sufficient? It's unclear. The most favorable interpretation would be the judgment that this combination of motivational factors and local and global institutional constraints will contain the problem to an acceptable level. But is there empirical evidence for this optimism? Or is misconduct becoming more widespread over time? The efforts to deepen researchers' attachment to a code of research integrity are certainly positive -- but what about the small percentage of people who are not motivated by an internal compass? Greater internal controls are certainly a good idea -- but they are surely less effective in the area of research than accounting controls are in the financial arena. Oversight is just more difficult to achieve in the area of scientific research. (And of course we all know how porous those controls are in the financial sector -- witness Enron and other accounting frauds. ) And if the likelihood of detection is low, then the threat of punishment is weakened. So the measures mentioned here have serious limitations in likely effectiveness.

Brian Deer is one of Britain's leading journalists covering medical research (website). His work in the Sunday Times of London established the medical fraud underlying the spurious claim that MMR vaccine causes autism mentioned above. Following a recent public lecture to a medical audience he was asked the question, how can we get a handle on frauds like these? And his answer was blunt: with snap inspections, investigative policing, and serious penalties. In his perception, the stakes are too high to leave the matter to professional ethics.

It perhaps goes without saying that the vast majority of scientific researchers are honest investigators who are guided by the advancement of science and medicine. But it is also apparent that there are a small number of researchers of whom these statements are not true. And the problem confronting the organizations of scientific research is a hard one: how to create the institutional structures where misconduct is unlikely to occur and where misconduct is most likely to be detected when it does.

There is one other connection that strikes me as important, and it is a connection to the philosophy of science. It is an item of faith for philosophers of science that the scientific enterprise is truth-enhancing, in this sense: the community of researchers follows a set of institutionally embodied processes that are well designed to enhancing the comprehensiveness and veridicality of our theories and weeding out the false theories. Our theories get better through the empirical and logical testing that occurs as a result of these socially embodied procedures of science. But if the corrupting influences mentioned above are indeed common, then the confidence we have in the epistemic value of the procedures of science takes a big hit. And this is worrisome news indeed.

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Posted in: CAT_institutions,corruption,institutions,organization

Leaders within complex organizations

Complex organizations depend on an extended group of leaders who have the responsibility of articulating and carrying out the missions of the organization. Leadership groups within complex organizations should be expected to be a factor that influences the performance of the organization, for better or worse. Here I am thinking of medium-sized organizations -- 500-2500 employees -- with some degree of functional specialization -- for example, a manufacturing company with divisions of manufacturing, marketing and sales, product design, finance and accounting, human resources, and government relations or a university with divisions of academic affairs, student recruitment, business and finance, student affairs, and external relations.

The complexity of an organization stems from the fact that a number of different kinds of activities are being carried out simultaneously by different groups of people, and there is no authoritative single "master bureaucrat" who sets tasks and oversees results for all agents of the organization. Inevitably there is some degree of decentralization of activity, with decision-makers at a variety of levels who are empowered to set the agendas of their units in such a way as to best achieve the overall goals of the organization. And higher-level leaders have a responsibility for attempting to achieve a suitable degree of collaboration and communication among lower-level leaders to make it likely that the activities of the units will contribute to a coherent and effective effort to achieve the organization's goals. And complex organizations that fail to achieve a sufficient degree of coordination of effort internally wind up being pretty unsuccessful; their product is often one that reflects the specific needs of each of the units, but fails to satisfy the overall goals of the organization. (This is the point of the joke that a camel is a horse designed by committee.)

Here are some of the central tasks of an organization's leaders. Leaders help set the strategic direction for the organization; they implement actions and processes at unit-levels within the organization; they collaborate with each other in efforts to achieve higher effectiveness within and across units; they seek out opportunities for new activities or initiatives that will further one or more priorities for the organization. And, as anyone knows who has worked within a variety of organizations -- both organizations and leadership groups function at a very wide range of effectiveness, from the dysfunctional to the superb.

Why are leaders important to the effectiveness of the organization? Because they serve to articulate the goals of the organization and the sub-units; they work with others to articulate strategies and activities for achieving these goals; they motivate staff within their units to carry out strategies; and they have the organizational resources needed to arrive at collaborative efforts across units. Persons who are good at these various activities will make the organization more effective; and persons who are less good at them will pull the organization down. The leader who tends to demoralize his/her staff is unlikely to be able to stimulate high-quality work within the unit; persons who defend their turf rather than looking for opportunities for cross-unit collaboration will interfere with the organization's ability to achieve coherence of effort and synergies of collaboration.

So what are some of the features of good leadership skills and a good leadership team? Here is the list I would offer as an observer of several organizations. Good leaders are cognitively and emotionally ready for collaboration; they are ready to see the gains that can come from honest and sustained efforts at solving problems that cut across the scope of several units. Second, good leaders are attuned to the shared mission and values that the organization has adopted. They don't excessively favor the particular interests of their unit over the larger priorities of the organization; instead, they attempt to align the activities of the unit with the priorities of the organization. Third, good leaders are committed to effective management of their own areas. They attempt to bring best practices into all the activities for which they are responsible. Fourth, they have the ability to motivate the members of their teams, building trust among team members and a degree of unity about the goals to which the unit is oriented. Fifth, they possess a willingness to innovate. They are problem-solvers who are actively seeking out new solutions to the problems their units face and the problems faced by the organization more generally. Finally, they have a fundamental willingness to think broadly about the organization's needs and priorities beyond their own specific areas of responsibility.

The defects that a leader or team can demonstrate are also fairly obvious. Lack of communication is a common fault within organizations, leading to circumstances in which other leaders and team members are in the dark about current plans and strategies. When Larry Bird stole the inbounds pass from Isiah Thomas in Game Six of the NBA Eastern finals in 1987, it was crucial that Dennis Johnson was already streaking to the basket. Second, bad leaders engage in gamesmanship and bureaucratic rivalries, aiming to achieve their ends in opposition to their peers. This obviously undermines trust, and it makes collaboration all but impossible. Third, bad leaders are largely driven by narrow unit-based interests, or even their own personal interests, rather than the organizations priorities and goals. And finally, bad leaders may display poor skills in motivating and managing the staff of the unit.

These are a few speculative hypotheses about what makes one leadership group more effective than another. But the hard question is this: what empirical methods exist for evaluating these hypotheses about effective leadership and management? Are there credible methods of investigation that would permit organizational researchers to evaluate the causal importance of some of these features of leadership? Or is "leadership" just one of those topics that has to be left to the "management theory" books that one finds in airport bookshops?

This topic is relevant for understanding society, because much of the action in contemporary society is carried out by the complex organizations described here. So having a better idea of how priorities and goals are linked up with concrete activities within an organization is a very important part of understanding the large social processes that jointly determine social change in the twenty-first century: economic development, social movements, educational progress, health care systems, and the like.

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Posted in: CAT_institutions,leadership,organization

Safety as a social effect

Some organizations pose large safety issues for the public because of the technologies and processes they encompass. Industrial factories, chemical and nuclear plants, farms, mines, and aviation all represent sectors where safety issues are critically important because of the inherent risks of the processes they involve. However, "safety" is not primarily a technological characteristic; instead, it is an aggregate outcome that depends as much on the social organization and management of the processes involved as it does on the technologies they employ. (See an earlier posting on technology failure.)

We can define safety by relating it to the concept of "harmful incident". A harmful incident is an occurrence that leads to injury or death of one or more persons. Safety is a relative concept, in that it involves analysis and comparison of the frequencies of harmful incidents relative to some measure of the volume of activity. If the claim is made that interstate highways are safer than county roads, this amounts to the assertion that there are fewer accidents per vehicle-mile on the former than the latter. If it is held that commercial aviation is safer than automobile transportation, this amounts to the claim that there are fewer harms per passenger-mile in air travel than auto travel. And if it is observed that the computer assembly industry is safer than the mining industry, this can be understood to mean that there are fewer harms per person-day in the one sector than the other. (We might give a parallel analysis of the concept of a healthy workplace.)

This analysis highlights two dimensions of industrial safety: the inherent capacity for creating harms associated with the technology and processes in use (heavy machinery, blasting, and uncertain tunnel stability in mining, in contrast to a computer and a red pencil on the editorial offices of a newspaper), and the processes and systems that are in place to guard against harm. The first set of factors is roughly "technological," while the second set is social and organizational.

Variations in safety records across industries and across sites within a given industry provide an excellent tool for analyzing the effects of various institutional arrangements. It is often possible to pinpoint a crucial difference in organization -- supervision, training, internal procedures, inspection protocols, etc. -- that can account for a high accident rate in one factory and a low rate in an otherwise similar factory in a different state.

One of the most important findings of safety engineering is that organization and culture play critical roles in enhancing the safety characteristics of a given activity -- that is to say, safety is strongly influenced by social factors that define and organize the behaviors of workers, users, or managers. (See Charles Perrow, Normal Accidents: Living with High-Risk Technologies and Nancy Leveson, Safeware: System Safety and Computers, for a couple of excellent treatments of the sociological dimensions of safety.)

This isn't to say that only social factors can influence safety performance within an activity or industry. In fact, a central effort by safety engineers involves modifying the technology or process so as to remove the source of harm completely -- what we might call "passive" safety. So, for example, if it is possible to design a nuclear reactor in such a way that a loss of coolant leads automatically to shutdown of the fission reaction, then we have designed out of the system the possibility of catastrophic meltdown and escape of radioactive material. This might be called "design for soft landings".

However, most safety experts agree that the social and organizational characteristics of the dangerous activity are the most common causes of bad safety performance. Poor supervision and inspection of maintenance operations leads to mechanical failures, potentially harming workers or the public. A workplace culture that discourages disclosure of unsafe conditions makes the likelihood of accidental harm much greater. A communications system that permits ambiguous or unclear messages to occur can lead to air crashes and wrong-site surgeries.

This brings us at last to the point of this posting: the observation that safety data in a variety of industries and locations permit us to probe organizational features and their effects with quite a bit of precision. This is a place where institutions and organizations make a big difference in observable outcomes; safety is a consequence of a specific combination of technology, behaviors, and organizational practices. This is a good opportunity for combining comparative and statistical research methods in support of causal inquiry, and it invites us to probe for the social mechanisms that underlie the patterns of high or low safety performance that we discover.

Consider one example. Suppose we are interested in discovering some of the determinants of safety records in deep mining operations. We might approach the question from several points of view.

• We might select five mines with "best in class" safety records and compare them in detail with five "worst in class" mines. Are there organizational or techology features that distinguish the cases?
• We might do the large-N version of this study: examine a sample of mines from "best in class" and "worst in class" and test whether there are observed features that explain the differences in safety records. (For example, we may find that 75% of the former group but only 10% of the latter group are subject to frequent unannounced safety inspection. This supports the notion that inspections enhance safety.)
• We might compare national records for mine safety--say, Poland and Britain. We might then attempt to identify the general characteristics that describe mines in the two countries and attempt to explain observed differences in safety records on the basis of these characteristics. Possible candidates might include degree of regulatory authority, capital investment per mine, workers per mine, ...
• We might form a hypothesis about a factor that should be expected to enhance safety -- a company-endorsed safety education program, let's say -- and then randomly assign a group of mines to "treated" and "untreated" groups and compare safety records. (This is a quasi-experiment; see an earlier posting for a discussion of this mode of reasoning.) If we find that the treated group differs significantly in average safety performance, this supports the claim that the treatment is causally relevant to the safety outcome.

Investigations along these lines can establish an empirical basis for judging that one or more organizational features A, B, C have consequences for safety performance. In order to be confident in these judgments, however, we need to supplement the empirical analysis with a theory of the mechanisms through which features like A, B, C influence behavior in such a way as to make accidents more or less likely.

Safety, then, seems to be a good area of investigation for researchers within the general framework of the new institutionalism, because the effects of institutional and organizational differences emerge as observable differences in the rates of accidents in comparable industrial settings. (See Mary Brinton and Victor Nee, The New Institutionalism in Sociology, for a collection of essays on this approach.)

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Posted in: CAT_mechanisms,causal mechanism,failure,organization,safety,technology