book spotlight: the org by ray fisman and tim sullivan

Last week, Teppo commented “The Org: The Underlying Logic of the Office,” a book by CBS prof Ray Fisman and editor/writer Tim Sullivan  that brings organization theory to a popular audience. This week, I’ll add a few of my own comments to the discussion. Later, Ray and Tim will be contributing to the blog.

In summary, The Org brings to the educated reader an argument about why organizations are important and how they work. It’s about coordination and routinization. Modern life simply requires big tasks that can’t efficiently be done with managers, bosses, and CEOs. It’s the sort of book that you might give someone who is just starting to think about why the social world is the way it is.

The book covers a lot of basic territory in a crisp and easy to grasp way. The book gives great examples of principal agent problems, superstar markets, and the problems of vertical integration. The examples range from the for-profit world, to the military, to churches.

In particular, I enjoyed the chapter on innovation. The issue is that innovation and organization are at odds with each other. Organizations thrive because they can exploit scale and produce the same product over and over. That requires people to obey. In contrast, innovation requires that people diverge from established routine. Rather than give in to a feel good approach to innovation, Fisman and Sullivan sensible point out that the tension between organization and innovation is natural and that it will be solved in different ways. They give good examples that show the range of solutions. McDonald’s demands conformity from franchisees and innovates in a lab, while Lockheed Martin famously created a separate entity that encourage wildly creative innovation  Yes, that is old school contingency theory, but it remains a good insight.

A few nit picks. Rhetorically, I wish the book had been a little more cognizant of the interdisciplinary nature of organization studies. The book begins with the typical “an economist looks at …” discussion that is in vogue in the post-Levitt era of popular economics writing. But the book itself covers a lot of great material from managerial economics, business school scholarship, sociology, history, and even concludes with a quote with the old man himself, Max Weber. Also, I wish the book had said a little more in the conclusion about the social consequences of management. The world we have today is shaped by management philosophy and management itself has given rise to a new class of people. That deserves some discussion. But overall, these are quibbles, though. The book’s a winner and I’m sure it’ll start appearing in organization studies syllabi.

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