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The Org: The Underlying Logic of the Office
We create organizations because we need to get a job done--something we couldn't do alone--and join them because we're inspired by their missions (and our paycheck). But once we're inside, these organizations rarely feel inspirational. Instead, we're often baffled by what we encounter: clueless managers, a lack of clear objectives, a seeming disregard for data, and the vast gulf between HR proclamations and our experience in the cubicle.So where did it all go wrong?In THE ORG, Ray Fisman and Tim Sullivan explain the tradeoffs that every organization faces, arguing that this everyday dysfunction is actually inherent to the very nature of orgs. THE ORG diagnoses the root causes of that malfunction, beginning with the economic logic of why organizations exist in the first place, then working its way up through the org's structure from the lowly cubicle to the CEO's office.
Woven throughout with fascinating case studies-including McDonald's, al Qaeda, the Baltimore City Police Department, Procter and Gamble, the island nation of Samoa, and Google--THE ORG reveals why the give-and-take nature of organizations, while infuriating, nonetheless provides the best way to get the job done.
You'll learn:
The purpose of meetings and why they will never go away
Why even members of al Qaeda are required to submit Travel & Expense reports
What managers are good for
How the army and other orgs balance marching in lockstep with fostering innovation
Why it's the hospital administration-not the heart surgeon-who is more likely to save your life
That CEOs often spend over 80% of their time in meetings-and why that's exactly where they should be (and why they get paid so much)
Looking at life behind the red tape, THE ORG shows why the path from workshop to corporate behemoth is pockmarked with tradeoffs and competing incentives, but above all, demonstrates why organizations are central to human achievement.
Woven throughout with fascinating case studies-including McDonald's, al Qaeda, the Baltimore City Police Department, Procter and Gamble, the island nation of Samoa, and Google--THE ORG reveals why the give-and-take nature of organizations, while infuriating, nonetheless provides the best way to get the job done.
You'll learn:
The purpose of meetings and why they will never go away
Why even members of al Qaeda are required to submit Travel & Expense reports
What managers are good for
How the army and other orgs balance marching in lockstep with fostering innovation
Why it's the hospital administration-not the heart surgeon-who is more likely to save your life
That CEOs often spend over 80% of their time in meetings-and why that's exactly where they should be (and why they get paid so much)
Looking at life behind the red tape, THE ORG shows why the path from workshop to corporate behemoth is pockmarked with tradeoffs and competing incentives, but above all, demonstrates why organizations are central to human achievement.
320 pages, Hardcover
First published January 1, 2013
49 people are currently reading
898 people want to read
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Displaying 1 - 30 of 61 reviews
February 19, 2023
Tries to do for management economics what Ariely did for behavioral economics. Ends up reading as a sprawling defense of MBA programs.
Three takeaways:
1 - Organizations are valuable because they lower market transaction costs (cost of search, cost of contracting, cost of marketing). Organizations are dangerous because they reduce market-based information mechanisms, stifle innovation, and tend towards costly bureaucratic growth.
2 - The two poles of successful organizations are good management - Taylorist tinkering with incentives and design to maximize efficiency - and good culture - interpersonal trust, leadership and purpose necessary to grease the wheels. Failures of one are often traceable to attempts to achieve the other.
3 - A lot of corporate things that look bad on face - lots of middle management/consultants, high ceo pay, bureaucratic blocks on in-house innovation - are much more debatable than I thought.
Three takeaways:
1 - Organizations are valuable because they lower market transaction costs (cost of search, cost of contracting, cost of marketing). Organizations are dangerous because they reduce market-based information mechanisms, stifle innovation, and tend towards costly bureaucratic growth.
2 - The two poles of successful organizations are good management - Taylorist tinkering with incentives and design to maximize efficiency - and good culture - interpersonal trust, leadership and purpose necessary to grease the wheels. Failures of one are often traceable to attempts to achieve the other.
3 - A lot of corporate things that look bad on face - lots of middle management/consultants, high ceo pay, bureaucratic blocks on in-house innovation - are much more debatable than I thought.
May 25, 2013
I struggled between a 2 and a 3 for this book. Ultimately, it was well written. It was not the book that I thought I was picking up though. Had it just been named "The Org" and dropped "The Underlying Logic of the Office", that would have been much better. They do case studies, it's true, but it was primarily on organizations that weren't your normal office like the FBI, the Baltimore Police Department, McDonald's. It was obviously written by academics who'd never worked in a cube farm before. I felt like I was reading a really long treatise that was sponsored by the Harvard Business Review.
I didn't feel like I learned anything new, I didn't get any interesting perspective on the office nor did I feel inclined to rethink my views. Yes, they researched and yes, they could write but that's not what I was looking for which is ultimately why this got a 2.
I didn't feel like I learned anything new, I didn't get any interesting perspective on the office nor did I feel inclined to rethink my views. Yes, they researched and yes, they could write but that's not what I was looking for which is ultimately why this got a 2.
March 18, 2017
Illuminating view into why organisations have evolved into the way they are. Why do meetings exist? Read and find out.
___
As companies boost production or expand across product lines, work stays in the org up to the point where escalating costs of management and coordination outstrip the costs and headaches of dealing with outside suppliers. Then the market takes over.
Jobs that stay inside the org are the hard ones: hard to measure, hard to define, hard to do. If they were easy, we would hire contractors to do them for us.
And so the architects of the org face a monumental set of challenges: to ensure that jobs that are neither observable nor rewardable nonetheless get done. This begins before we even gain entry into the org, at the point of hiring. The org has to define the job, pick the right person, and figure out how to get that person to do the work.
If what gets measured get managed, then what get measured is what gets done. But it’s hard to measure what never happens.
There lies a distinction between “star” and “guardian” tasks. Guardians are regulators, audit and compliance departments, like the brakes on a car. They have the unglamorous job of guarding against the catastrophic decisions of others.
Star performers, in contrast, do their jobs best when they’re swinging for the fences, not worrying about risk. If you’re hiring R&D scientists, better to have gamblers than worrywarts. The billions in profit from one blockbuster drug will cover the cost of thousands lost from failures. The last thing you want is researchers obsessing over every disappointment.
Any org has to have both stars and guardians, carefully balanced. When the guardians become too powerful, innovation grinds to a bureaucratic halt. When stars hold sway, sooner or later we end up with something like the financial crisis. That’s why we’ll always have oppressive bureaucrats, and free-thinking entrepreneurs oppressed by them. And that’s okay.
“Practical drift” – the idea that we keep adapting and changing practices within our own group at the expense of coordination with others. E.g. in-group slang which boosts the efficiency of internal communication, but is unintelligible to outsiders.
The idea of skunkworks fell into disrepute when it came to be seen as just another cost center, albeit one full of inventive scientists thinking lofty thoughts. The problem was that these deep thoughts often were disconnected from the real world. In its more contemporary incarnation, the skunkworks model meets the McDonald’s R&D lab at least halfway. Managers make sure that scientists and engineers maintain regular contact with marketing and sales to ensure that lofty scientific thinking ultimately finds application in a product that consumers want to pay for.
Colonel Pearson has come to believe that army bureaucracy isn’t going to find a way to come up with better orders, so everyone, from the top of the chain to the lowliest infantryman, will need to learn to think for himself.
Management
The alternative to dependable relatives would be to put in place systems for tracking inventory, monitoring performance, and generally keeping tabs on the goings-on in each factory: management.
Not everyone needs to know the last detail of what’s happening in the factory. Too much detail would be overwhelming. So not only does effective management require efficient information gathering, but also the facts and figures need to be distributed to those who need them.
Top managers should occupy themselves with the larger strategic questions facing their companies. If management systems are working properly, it’s possible to keep tabs on whether everything is getting done, and also to figure out what to do next.
Senior executives don’t do much routine work with details. The details never get up to them. They work fairly hard, but on exceptions. (Alfred P. Sloan)
The only way the CEO can truly commit to giving his editors autonomy is to adhere to a rule of communicating to lower-level subordinates only through their supervisors. If not the supervisor would be looking over their back, worried that their boss will overrule their decision based on input from their own subordinate, leading to halfhearted effort.
The fundamental role of managers is in large part the gathering and processing of information to be passed up and down the org chart, to extend the control of the owners and to filter and sort employee intelligence.
“Peter’s Parry” – Self-sabotage to appear less competent so as to avoid promotion. Creative incompetence like painting your personal life as morally questionable or slipping a few deadlines make one appear less desirable for a place in the ranks above. This strategy comes with a caveat, though: don’t be so incompetent that you get fired. (From The Peter Principle)
The problem is that managerial talent is hard to glean from performance as a salesman or engineer.
Large organisations need to impose some degree of uniformity for quality control over the inputs of production, including information. Meetings and memos and reports, the essential tools of management, serve this function, even though they may resemble nothing but disruption to the work lives of those who feel they are the ones actually producing something.
Ethan Mollick of Wharton studied the manufacturers of 854 computer games to determine which role had the biggest impact on the project’s success. The verdict? “Variation among middle managers has a particularly large impact on firm performance, much larger than those individuals assigned innovative roles”.
Meetings and CEOs
Despite its imperfections, the meeting (rather than spreadsheets, reports or MIS printouts) remains the most effective way of gathering details on what’s really going on around the org, and for spreading the CEO’s vision, unadulterated by garbled retelling, to their many minions.
The backstory for CEOs’ generous severance packages (golden parachutes): One of the best ways for corporate leaders to create value is to make the company a target for merger or acquisition, therefore creating incentives to motivate CEOs to seek out merger opportunities turned out to matter a lot. Companies are usually acquired at a premium, but the combined firm only needs one CEO, so odds are one of the two is out of a job. Ironically one of the most value-enhancing ways a CEO can spend his time also results in him getting fired. Hence the shareholders’ provision of the golden parachute. However this clause doesn’t trigger only for competent CEOs, so when incompetent leaders get rewarded for mismanagement, absurdity results.
The compensating wage differential (the amount of money that compensates for taking a less satisfying job) between profits and non-profits range anywhere from 20-50%.
The Heisenberg Principle of Incentive Design: A performance metric is only useful as such when it is not being used as a performance metric. Once it is perverse incentives start appearing (e.g. paying for centipedes in colonial Singapore led to people farming the critters).
Centralisation is a trade-off between increased comprehensiveness and coordination at the expense of slower responsiveness, more yes-men, and possible over-filtering/censoring of critical information.
If there’s one conclusion to take away from this book, it is that a glass half full may be the best one can hope for. If either intelligence gatherers or crime fighters had been fully satisfied, it would probably indicate that FBI leadership wasn’t making the right trade-offs between the two. You can’t please all of the people all of the time, nor should the director have such aspirations. As with the post 9/11 postmortem, the FBI will likely find that doing its best simply isn’t good enough to prevent some loss of American lives. And once again, the organisation will be blamed for failure by a public that refuses to acknowledge the imperfections of any org in a world full of trade-offs and compromise.
The increase in number of direct reports due to a flattening of an organisation translates directly into more time spent meeting with them.
Related reading: “On the folly of rewarding A while hoping for B” - Dry, witty observations on how poorly set incentives can go wrong.
___
As companies boost production or expand across product lines, work stays in the org up to the point where escalating costs of management and coordination outstrip the costs and headaches of dealing with outside suppliers. Then the market takes over.
Jobs that stay inside the org are the hard ones: hard to measure, hard to define, hard to do. If they were easy, we would hire contractors to do them for us.
And so the architects of the org face a monumental set of challenges: to ensure that jobs that are neither observable nor rewardable nonetheless get done. This begins before we even gain entry into the org, at the point of hiring. The org has to define the job, pick the right person, and figure out how to get that person to do the work.
If what gets measured get managed, then what get measured is what gets done. But it’s hard to measure what never happens.
There lies a distinction between “star” and “guardian” tasks. Guardians are regulators, audit and compliance departments, like the brakes on a car. They have the unglamorous job of guarding against the catastrophic decisions of others.
Star performers, in contrast, do their jobs best when they’re swinging for the fences, not worrying about risk. If you’re hiring R&D scientists, better to have gamblers than worrywarts. The billions in profit from one blockbuster drug will cover the cost of thousands lost from failures. The last thing you want is researchers obsessing over every disappointment.
Any org has to have both stars and guardians, carefully balanced. When the guardians become too powerful, innovation grinds to a bureaucratic halt. When stars hold sway, sooner or later we end up with something like the financial crisis. That’s why we’ll always have oppressive bureaucrats, and free-thinking entrepreneurs oppressed by them. And that’s okay.
“Practical drift” – the idea that we keep adapting and changing practices within our own group at the expense of coordination with others. E.g. in-group slang which boosts the efficiency of internal communication, but is unintelligible to outsiders.
The idea of skunkworks fell into disrepute when it came to be seen as just another cost center, albeit one full of inventive scientists thinking lofty thoughts. The problem was that these deep thoughts often were disconnected from the real world. In its more contemporary incarnation, the skunkworks model meets the McDonald’s R&D lab at least halfway. Managers make sure that scientists and engineers maintain regular contact with marketing and sales to ensure that lofty scientific thinking ultimately finds application in a product that consumers want to pay for.
Colonel Pearson has come to believe that army bureaucracy isn’t going to find a way to come up with better orders, so everyone, from the top of the chain to the lowliest infantryman, will need to learn to think for himself.
Management
The alternative to dependable relatives would be to put in place systems for tracking inventory, monitoring performance, and generally keeping tabs on the goings-on in each factory: management.
Not everyone needs to know the last detail of what’s happening in the factory. Too much detail would be overwhelming. So not only does effective management require efficient information gathering, but also the facts and figures need to be distributed to those who need them.
Top managers should occupy themselves with the larger strategic questions facing their companies. If management systems are working properly, it’s possible to keep tabs on whether everything is getting done, and also to figure out what to do next.
Senior executives don’t do much routine work with details. The details never get up to them. They work fairly hard, but on exceptions. (Alfred P. Sloan)
The only way the CEO can truly commit to giving his editors autonomy is to adhere to a rule of communicating to lower-level subordinates only through their supervisors. If not the supervisor would be looking over their back, worried that their boss will overrule their decision based on input from their own subordinate, leading to halfhearted effort.
The fundamental role of managers is in large part the gathering and processing of information to be passed up and down the org chart, to extend the control of the owners and to filter and sort employee intelligence.
“Peter’s Parry” – Self-sabotage to appear less competent so as to avoid promotion. Creative incompetence like painting your personal life as morally questionable or slipping a few deadlines make one appear less desirable for a place in the ranks above. This strategy comes with a caveat, though: don’t be so incompetent that you get fired. (From The Peter Principle)
The problem is that managerial talent is hard to glean from performance as a salesman or engineer.
Large organisations need to impose some degree of uniformity for quality control over the inputs of production, including information. Meetings and memos and reports, the essential tools of management, serve this function, even though they may resemble nothing but disruption to the work lives of those who feel they are the ones actually producing something.
Ethan Mollick of Wharton studied the manufacturers of 854 computer games to determine which role had the biggest impact on the project’s success. The verdict? “Variation among middle managers has a particularly large impact on firm performance, much larger than those individuals assigned innovative roles”.
Meetings and CEOs
Despite its imperfections, the meeting (rather than spreadsheets, reports or MIS printouts) remains the most effective way of gathering details on what’s really going on around the org, and for spreading the CEO’s vision, unadulterated by garbled retelling, to their many minions.
The backstory for CEOs’ generous severance packages (golden parachutes): One of the best ways for corporate leaders to create value is to make the company a target for merger or acquisition, therefore creating incentives to motivate CEOs to seek out merger opportunities turned out to matter a lot. Companies are usually acquired at a premium, but the combined firm only needs one CEO, so odds are one of the two is out of a job. Ironically one of the most value-enhancing ways a CEO can spend his time also results in him getting fired. Hence the shareholders’ provision of the golden parachute. However this clause doesn’t trigger only for competent CEOs, so when incompetent leaders get rewarded for mismanagement, absurdity results.
The compensating wage differential (the amount of money that compensates for taking a less satisfying job) between profits and non-profits range anywhere from 20-50%.
The Heisenberg Principle of Incentive Design: A performance metric is only useful as such when it is not being used as a performance metric. Once it is perverse incentives start appearing (e.g. paying for centipedes in colonial Singapore led to people farming the critters).
Centralisation is a trade-off between increased comprehensiveness and coordination at the expense of slower responsiveness, more yes-men, and possible over-filtering/censoring of critical information.
If there’s one conclusion to take away from this book, it is that a glass half full may be the best one can hope for. If either intelligence gatherers or crime fighters had been fully satisfied, it would probably indicate that FBI leadership wasn’t making the right trade-offs between the two. You can’t please all of the people all of the time, nor should the director have such aspirations. As with the post 9/11 postmortem, the FBI will likely find that doing its best simply isn’t good enough to prevent some loss of American lives. And once again, the organisation will be blamed for failure by a public that refuses to acknowledge the imperfections of any org in a world full of trade-offs and compromise.
The increase in number of direct reports due to a flattening of an organisation translates directly into more time spent meeting with them.
Related reading: “On the folly of rewarding A while hoping for B” - Dry, witty observations on how poorly set incentives can go wrong.
June 22, 2017
Here goes 90 days of my life fighting with myself to finish this book. I feel bad coz that averages out to about 3-4 pages everyday. But this just further strengthens my point how bad this book is. The book tries to cook multiple stories around 4-5 key points (only) that are there in the book, but fails miserably to prove them through the same . It does not tell anything new that a person working in an office environment may not know. But authors do a wonderful job making everything sound sinfully long and sadistically complex.
P.S - This is my first review and I don't want people to go through this hard journey at all !
P.S - This is my first review and I don't want people to go through this hard journey at all !
April 3, 2018
Brief, clear, well organised, accessible and not only instructive, but also amusing in places. Recommended.
March 6, 2013
It started off really well with a solid introduction of Ronald Coase’s work, which led him to win the Nobel Prize in economics for his invaluable insight into the “nature of the firm.” The anecdotes and examples of principle agent problems were fascinating, ranging from large corporations like P&G to the Methodist Church and even the military. They went on to analyze why innovation is at odds with organization, and discussed several ways to deal with this trade-off.
Things got more boring in the middle with attempts to explain “what management is good for,” and it sort of continued with what seems like an apologist reckoning of upper management and the executive office. In the later chapters, the research taken to illustrate the authors’ points was pretty much a protracted PR junket through the work of various HBS professors.
Overall, I definitely learned some things about org theory, org psychology/ culture and really interesting facets about why companies are the way they are. Definitely worth reading, though you might want to skim some pages toward the end.
Things got more boring in the middle with attempts to explain “what management is good for,” and it sort of continued with what seems like an apologist reckoning of upper management and the executive office. In the later chapters, the research taken to illustrate the authors’ points was pretty much a protracted PR junket through the work of various HBS professors.
Overall, I definitely learned some things about org theory, org psychology/ culture and really interesting facets about why companies are the way they are. Definitely worth reading, though you might want to skim some pages toward the end.
November 25, 2013
This book was terrible. I was excited to buy this on my Kindle...eager to get some theory, models, and insights into the function and dysfunction of the generic office. I sought a vessel for transference of my own frustrations into a useful image of "well yeah, that's how they all are unless XXX." The prescriptions for XXX though are useless, unpersuasive, poorly supported and overwrought with anecdote.
This really was one of the most disappointing books I've ever read.
This really was one of the most disappointing books I've ever read.
September 5, 2018
Made me more sympathetic to bosses.
August 17, 2018
Essentially, Freakonomics for management and organizational economics. Combines interesting counterintuitive insights with a wide sampling of academic literature. Entertaining for sure, and well written. My complaint is the same as when I took management, which is that much of the book seems to focus on simple casual stories that purport to teach lessons but some of those alleged causations seem questionable (but to the authors' credit, they admit that occasionally in the book).
Much of the book is a review of your typical management class (from the dreaded product, function, and matrix structure to the importance of corporate culture [the informal rules that govern when no one is watching] and the difficulty of compensating unmeasurable products of teamwork), but it's useful to have it in one place. I liked the book's opening discussion of Coase's paper on the existence of firms, which justifies the entire project of corporate structures in the first place. I've never read the paper fully myself, so it was gratifying to see it explained somewhere (firms are formed because there's transaction costs to acquiring goods and services on the open market, but once the firm grows to a certain size, there's counter balancing costs of coordination/monitoring). Much of the book's thesis is that the firm represents a "second best" solution to tradeoffs and frictions in reality. For example, the book had an interesting justification for golden parachutes (to encourage management to make the firm a desirable acquisition target). Or how the chain of management filters information upwards for specialized decision makers at the cost of lost information. The tension between performance and risk control. Or that where standardization/coordination is especially important, sometimes innovation needs to take a backseat.
I liked in particular the chapter on CEOs, which is the section I learned the most from. While I had heard of some of the explanations for their pay before (from a famous article by Jensen on performance pay to the natural positive feedback consequences of using comparable salaries), the chapter included a lot of interesting explanations and studies. For one, the chapter discusses the added value of CEOs (a small percentage of billions is still hundreds of millions), and the nature of competition for good management. I found the study tracking the use of CEO time fascinating (turns out they spend most of their time in meetings to get a feeling of the outside environment). I laughed at the study that looked at market price reactions to the sudden death of CEOs (some companies fell 10% in response, while another rose 20%!). I also enjoyed the studies that looked at the impact of interlocked boards (where CEOs are sitting on each other's boards) and strategic use of comps in setting CEO salaries. Unsurprisingly, interlocked boards paid their CEOs more and there was some minor strategic choice of comps to increase CEO salaries.
The portions I found satisfying throughout the book were the somewhat tangential studies measuring interesting intuitions. For example, there was an interesting study measuring the cut in salary people were willing to take to work for a job they "believed in" (20%-50%) by comparing salaries of those who were skilled enough to make large salaries in private sector jobs but took lower paying non-profit or governmental jobs. There was a long chapter on an interesting experiment introducing modern management principles to indian textile mills, which showed the added value of management in keeping monitoring/coordination costs low (a bit self-serving and probably won't convince those who really dislike management). I was not surprised but still impressed by a study that showed that even for churches, there arose sophisticated incentive design which compensated pastors by measurable targets (converts) and even seemed to account for less desirable stealing of other co-denominational church members (sheep stealing). Finally, I enjoyed the last chapter on reforming the FBI post 9/11, which tried to apply some of principles discussed in the book to a complicated real life situation (to split the crime fighting/intelligence functions or not [synergy or loss of focus?], to centralize or de-centralize information flow [lack of information sharing v. encouraging groupthink?]).
Much of the book is a review of your typical management class (from the dreaded product, function, and matrix structure to the importance of corporate culture [the informal rules that govern when no one is watching] and the difficulty of compensating unmeasurable products of teamwork), but it's useful to have it in one place. I liked the book's opening discussion of Coase's paper on the existence of firms, which justifies the entire project of corporate structures in the first place. I've never read the paper fully myself, so it was gratifying to see it explained somewhere (firms are formed because there's transaction costs to acquiring goods and services on the open market, but once the firm grows to a certain size, there's counter balancing costs of coordination/monitoring). Much of the book's thesis is that the firm represents a "second best" solution to tradeoffs and frictions in reality. For example, the book had an interesting justification for golden parachutes (to encourage management to make the firm a desirable acquisition target). Or how the chain of management filters information upwards for specialized decision makers at the cost of lost information. The tension between performance and risk control. Or that where standardization/coordination is especially important, sometimes innovation needs to take a backseat.
I liked in particular the chapter on CEOs, which is the section I learned the most from. While I had heard of some of the explanations for their pay before (from a famous article by Jensen on performance pay to the natural positive feedback consequences of using comparable salaries), the chapter included a lot of interesting explanations and studies. For one, the chapter discusses the added value of CEOs (a small percentage of billions is still hundreds of millions), and the nature of competition for good management. I found the study tracking the use of CEO time fascinating (turns out they spend most of their time in meetings to get a feeling of the outside environment). I laughed at the study that looked at market price reactions to the sudden death of CEOs (some companies fell 10% in response, while another rose 20%!). I also enjoyed the studies that looked at the impact of interlocked boards (where CEOs are sitting on each other's boards) and strategic use of comps in setting CEO salaries. Unsurprisingly, interlocked boards paid their CEOs more and there was some minor strategic choice of comps to increase CEO salaries.
The portions I found satisfying throughout the book were the somewhat tangential studies measuring interesting intuitions. For example, there was an interesting study measuring the cut in salary people were willing to take to work for a job they "believed in" (20%-50%) by comparing salaries of those who were skilled enough to make large salaries in private sector jobs but took lower paying non-profit or governmental jobs. There was a long chapter on an interesting experiment introducing modern management principles to indian textile mills, which showed the added value of management in keeping monitoring/coordination costs low (a bit self-serving and probably won't convince those who really dislike management). I was not surprised but still impressed by a study that showed that even for churches, there arose sophisticated incentive design which compensated pastors by measurable targets (converts) and even seemed to account for less desirable stealing of other co-denominational church members (sheep stealing). Finally, I enjoyed the last chapter on reforming the FBI post 9/11, which tried to apply some of principles discussed in the book to a complicated real life situation (to split the crime fighting/intelligence functions or not [synergy or loss of focus?], to centralize or de-centralize information flow [lack of information sharing v. encouraging groupthink?]).
July 7, 2019
Nice storytelling with an emphasis on how to motivate (measurement system). There are no concrete practices on what one could or should do and what not. Is is just a book with some stories of diverse orgs from police to parishes, the FBI, BP and others that illustrate the advantages and drawbacks of motivational measurements, centralization versus decentralization and a small bit of culture in the last chapter.
The conclusion is that there isn't anything like a perfect org. Every org has its areas of conflict. Centralization versus decentralization; Motivational measurement versus no measurement (and therefore no performance evaluation and control); High security standards versus high profits and so on. So whenever a new management fad emerges with the promise to save all the management problems at hand so far one has to be aware that it might alleviate some problems but it surely will not solve all. There are always drawbacks diluting the achievements.
The conclusion is that there isn't anything like a perfect org. Every org has its areas of conflict. Centralization versus decentralization; Motivational measurement versus no measurement (and therefore no performance evaluation and control); High security standards versus high profits and so on. So whenever a new management fad emerges with the promise to save all the management problems at hand so far one has to be aware that it might alleviate some problems but it surely will not solve all. There are always drawbacks diluting the achievements.
August 17, 2020
Fisman and Sullivan discuss the importance of the organisational space of a business and how it has come to be what it is by using interesting examples such as Mcdonald’s, Google, and even al Qaeda. They explore why organisations exist in the first place and the role and origin of the various areas of the office space from the cubicle to the CEO’s office. This book is fascinating in its exploration of the shared workspace and is highly recommended for those who work in one of these spaces! Georgia, Book Grocer
Purchase this classic here for just $12.00
Purchase this classic here for just $12.00
May 19, 2017
Oh god. Glad that I am not, at the time of reading, working in an office!
Great insights. Organisational benefits and trade-offs. Interesting to go inside the black box of the 'firm' and it's implications for the wider economy. I love the examination of transactions costs and how it determines whether a firm outsources a task or gathering of supplies - or does it in-house.
I like to make my own sauerkraut these days but it does take time that is probably greater than the cost of buying it from the open market.
Great insights. Organisational benefits and trade-offs. Interesting to go inside the black box of the 'firm' and it's implications for the wider economy. I love the examination of transactions costs and how it determines whether a firm outsources a task or gathering of supplies - or does it in-house.
I like to make my own sauerkraut these days but it does take time that is probably greater than the cost of buying it from the open market.
March 12, 2017
Bullshit. Topics are not matching the contain. Like, the title of the book.
February 12, 2018
A deep dive into how Organizations are structured the way they are structured, how small changes in metrics can have huge consequences
July 27, 2018
It's interesting but very winded and drags a bit.
October 7, 2018
A few interesting passages but, overall, not the book I had hoped it would be.
October 18, 2018
Well enough written book but didn't really feel to have much of an argument to make or point beyond reciting anecdotes about points of interest for the authors.
June 27, 2015
A compelling, deflating, look inside corporate organizations
Disclaimer: I work for a Fortune 1000 financial services company with a national presence and about 3,000 employees corporation. Comparatively speaking, it’s pretty small but still oversees billions of dollars in assets, answers to anonymous shareholders and its leaders constantly fret about the market, our financial returns and how to make sure employees are incented precisely well enough to do what’s needed and not a penny more. In other words, it’s like any other company in the country, and probably the free world, and the challenges of getting the balance between incentive and output, between individual habits and shared culture just right are emblematic of the challenges facing most organizations.
The authors of The Org provide a strong but somewhat deflating argument that hierarchical organizational structures, layers of bureaucracy and overpaid CEOs — though often frustrating and occasionally distasteful — actually work. It’s like the argument long associated with capitalism: it’s the worst of all economic systems, except for all the others we’ve come up with so far.
Orgs need individual employees who bristle against the constraints of managers and the inaccessibility of distant leaders, and they need middle managers who makes sure shifty and underperforming employees meet seemingly arbitrary goals and align team metrics with seemingly arbitrary strategic directives from on high, and they need leaders who set draconian pay and incentives for anonymous employees and bark at managers to drive innovation within a static, often oppressive system.
It’s a glorious, inefficient, chaotic swirl of misguided mistrust, and yet it works. Employees complain, and then do what’s asked of them. Managers chafe and then enforce apparently random directives. Leaders set strategic direction and wonder why mistrust arises from the rank and file. And along the way, organizations tend to lurch from pole to pole — from innovative to rote, from too much oversight to not enough — pressured on the one side by markets and competition and on the other by human nature.
The authors use case studies to bring this to life, capturing the constant challenge to balance individual output against desired results, innovation against risk of failure and more.
Some of the examples are, at just two years out, are already dated. The Baltimore police department, for example, is singled out for analysis of how an org aligns incentives against reward and how the metrics you choose become the driving impetus of professional behavior. For police, it’s proven impossible to incent “less crime,” because how could something that doesn’t happen ever be linked to performance. Perversely, incenting arrests can lead to short cuts and a sour culture. It’s pretty clear, given the riots and possible malfeasance, that the Baltimore PD org has some blind spots related to culture.
The same sense of doomed foreboding exists at the heart of other examples such as for the Methodist church, and how it incents pastors to draw in new members. At a time when religiosity seems to be on the decline, the example now seems a little melancholy now. Another deep analysis was for McDonald’s and the challenges of maintaining cheap, consistent products across a vast food empire. Their latest earnings results show mold at the core of their approach now that consumers are demanding higher quality, more nutritionally beneficial offerings. It will be interesting to see how those three orgs, specifically, deal with the challenges ahead.
The defense of middle management and bureaucracy — brought to life by a controlled study in a closed system of Indian textile plants, and by failures of the intelligence agencies leading up to 9/11 — was illuminating, as was the defense of CEO pay. It’s not clear whether they think CEOs are really worth 400 times more than front line employees, but they illustrate how the rise in pay underscores the challenges of getting the incentives right for all employees.
In recent decades, CEOs have seen their pay tied closely to company performance, as measured by the return to shareholders. Naturally, CEOs then manage the company to that end. To change that, Boards of Directors would have to find a metric tied to something far less beneficial to the company — such as employee engagement or job satisfaction, or philanthropic giving to the community — which, in our perfectly flawed but so far unsurpassed economic system, would all but assure the demise of the organization.
It’s a good, disheartening read that unravels the many challenges at the messy core of organizational structures which, it seems, are but a reflection of the messy core of human nature.
Disclaimer: I work for a Fortune 1000 financial services company with a national presence and about 3,000 employees corporation. Comparatively speaking, it’s pretty small but still oversees billions of dollars in assets, answers to anonymous shareholders and its leaders constantly fret about the market, our financial returns and how to make sure employees are incented precisely well enough to do what’s needed and not a penny more. In other words, it’s like any other company in the country, and probably the free world, and the challenges of getting the balance between incentive and output, between individual habits and shared culture just right are emblematic of the challenges facing most organizations.
The authors of The Org provide a strong but somewhat deflating argument that hierarchical organizational structures, layers of bureaucracy and overpaid CEOs — though often frustrating and occasionally distasteful — actually work. It’s like the argument long associated with capitalism: it’s the worst of all economic systems, except for all the others we’ve come up with so far.
Orgs need individual employees who bristle against the constraints of managers and the inaccessibility of distant leaders, and they need middle managers who makes sure shifty and underperforming employees meet seemingly arbitrary goals and align team metrics with seemingly arbitrary strategic directives from on high, and they need leaders who set draconian pay and incentives for anonymous employees and bark at managers to drive innovation within a static, often oppressive system.
It’s a glorious, inefficient, chaotic swirl of misguided mistrust, and yet it works. Employees complain, and then do what’s asked of them. Managers chafe and then enforce apparently random directives. Leaders set strategic direction and wonder why mistrust arises from the rank and file. And along the way, organizations tend to lurch from pole to pole — from innovative to rote, from too much oversight to not enough — pressured on the one side by markets and competition and on the other by human nature.
The authors use case studies to bring this to life, capturing the constant challenge to balance individual output against desired results, innovation against risk of failure and more.
Some of the examples are, at just two years out, are already dated. The Baltimore police department, for example, is singled out for analysis of how an org aligns incentives against reward and how the metrics you choose become the driving impetus of professional behavior. For police, it’s proven impossible to incent “less crime,” because how could something that doesn’t happen ever be linked to performance. Perversely, incenting arrests can lead to short cuts and a sour culture. It’s pretty clear, given the riots and possible malfeasance, that the Baltimore PD org has some blind spots related to culture.
The same sense of doomed foreboding exists at the heart of other examples such as for the Methodist church, and how it incents pastors to draw in new members. At a time when religiosity seems to be on the decline, the example now seems a little melancholy now. Another deep analysis was for McDonald’s and the challenges of maintaining cheap, consistent products across a vast food empire. Their latest earnings results show mold at the core of their approach now that consumers are demanding higher quality, more nutritionally beneficial offerings. It will be interesting to see how those three orgs, specifically, deal with the challenges ahead.
The defense of middle management and bureaucracy — brought to life by a controlled study in a closed system of Indian textile plants, and by failures of the intelligence agencies leading up to 9/11 — was illuminating, as was the defense of CEO pay. It’s not clear whether they think CEOs are really worth 400 times more than front line employees, but they illustrate how the rise in pay underscores the challenges of getting the incentives right for all employees.
In recent decades, CEOs have seen their pay tied closely to company performance, as measured by the return to shareholders. Naturally, CEOs then manage the company to that end. To change that, Boards of Directors would have to find a metric tied to something far less beneficial to the company — such as employee engagement or job satisfaction, or philanthropic giving to the community — which, in our perfectly flawed but so far unsurpassed economic system, would all but assure the demise of the organization.
It’s a good, disheartening read that unravels the many challenges at the messy core of organizational structures which, it seems, are but a reflection of the messy core of human nature.
June 6, 2013
THE MAIN IDEA
Organizations allow us to get stuff done! We need organizations to exist in order to provide structures and processes which enable large groups of people to come together more effectively than they would without these processes and structures in place. While this may not seem like ‘rocket science’ the authors go into great detail exploring a wide range of case studies showing how different organizations have used different structures and processes – from matrix forms of organizing through to the flatter, less-hierarchical forms enabled by modern Information Technology (IT) – to be more effective and efficient in their operations.
Organizations are stuck operating in a middle space between stifling bureaucracy and controlled chaos. The key is to find the ‘sweet spot’ for each organization between these poles that works best for your organization – realizing that what this spot is, will change over time as the external operating environment changes.
INTERESTING TIDBIT
The authors come from a mix of academia and the world of publishing, with Ray Fisman being a Professor at Columbia and Tim Sullivan working at Harvard Business Review Press.
WHAT YOU REALLY NEED TO KNOW
The authors main claim is to show that organizations are a ‘necessary evil’ and that there, unfortunately, is no one size-fits-all solution for how best to structure organization. In their own words:
"If there’s one message to take away from this book, it’s that a glass half full may be the best you can hope for."
Finding the best way forward for structuring an organization is always going to be an ongoing process of exploration and change.
THE GENERAL OVERVIEW
This is an interesting book with lots of intriguing case studies and examples. Unfortunately, besides being a very interesting read, there is probably very little here for someone in an organization to take away in terms of practical action.
The authors use the concept of transaction cost economics to ground their analysis but don’t really move forward with the idea in any concrete way except introducing it at the beginning which is a shame is it may have helped provide a structuring device to link the book together as a whole. As it is, the book reads more as an interesting history of the concept of the organization. This might be exactly what the authors intended but it does limit its utility for those wanting something more concrete to assist in their own work.
It’s definitely worth a read – but its more a book someone takes away with them to read when they have some time off, rather than something that you turn to as a useful resource in your day-to-day work.
All in all it’s a good read, and well-written, but it’s light in concrete take away actions for people wanting something concrete to help them increase the effectiveness or efficiency of their organization.
Organizations allow us to get stuff done! We need organizations to exist in order to provide structures and processes which enable large groups of people to come together more effectively than they would without these processes and structures in place. While this may not seem like ‘rocket science’ the authors go into great detail exploring a wide range of case studies showing how different organizations have used different structures and processes – from matrix forms of organizing through to the flatter, less-hierarchical forms enabled by modern Information Technology (IT) – to be more effective and efficient in their operations.
Organizations are stuck operating in a middle space between stifling bureaucracy and controlled chaos. The key is to find the ‘sweet spot’ for each organization between these poles that works best for your organization – realizing that what this spot is, will change over time as the external operating environment changes.
INTERESTING TIDBIT
The authors come from a mix of academia and the world of publishing, with Ray Fisman being a Professor at Columbia and Tim Sullivan working at Harvard Business Review Press.
WHAT YOU REALLY NEED TO KNOW
The authors main claim is to show that organizations are a ‘necessary evil’ and that there, unfortunately, is no one size-fits-all solution for how best to structure organization. In their own words:
"If there’s one message to take away from this book, it’s that a glass half full may be the best you can hope for."
Finding the best way forward for structuring an organization is always going to be an ongoing process of exploration and change.
THE GENERAL OVERVIEW
This is an interesting book with lots of intriguing case studies and examples. Unfortunately, besides being a very interesting read, there is probably very little here for someone in an organization to take away in terms of practical action.
The authors use the concept of transaction cost economics to ground their analysis but don’t really move forward with the idea in any concrete way except introducing it at the beginning which is a shame is it may have helped provide a structuring device to link the book together as a whole. As it is, the book reads more as an interesting history of the concept of the organization. This might be exactly what the authors intended but it does limit its utility for those wanting something more concrete to assist in their own work.
It’s definitely worth a read – but its more a book someone takes away with them to read when they have some time off, rather than something that you turn to as a useful resource in your day-to-day work.
All in all it’s a good read, and well-written, but it’s light in concrete take away actions for people wanting something concrete to help them increase the effectiveness or efficiency of their organization.
April 30, 2013
I'll give you this little nugget from the book: "If there's one message to take away from this book, it's that a glass half full may be the best you can hope for." The reader is treated to this pebble of genius on page 248. Acknowledgements start on page 267. I work at a small non-profit, so knew I'd have to extrapolate and rework the examples to make them applicable. Many of them are readily applicable, as this is as much about human nature as how it operates in an organizational setting. The authors warn you out the gate that they are really just sharing their observations - not providing solutions (because the organization is the solution - not something to be solved, they cleverly note somewhere around or after page 200). I really, REALLY should have taken their warning more seriously. I highlighted info throughout the book and did learn some valuable insights. (But duh - that should be a given with a book of this genre.) It's well researched and as one of those random people whose sociology degree is concentrated on organization studies, I wanted to see what new insights and old knowledge were considered relevant in a field I studied from an academic perspective (and have since lived out through real world experience) some 12 years ago. Alas, there's nothing wrong with this book. It just isn't great. There are fascinating anecdotes mixed with boring analysis and some of it even manages to be offensive, coming from such a standardized academic viewpoint as to read like a snotty shit's dissertation. All that to say there are a LOT of books on organizations. This is an example of one with a perfect title that becomes a disappointment as a read. At least it was for me. (But it's not because I was lied to. They let me know ahead of time - I just didn't realize how right they were about themselves.) I'm sure others find it brilliant, but I couldn't in good conscience recommend it.
January 17, 2013
First, this was a well written book. There were plenty of interesting stories and tidbits, and a lot of pithy sentences. Even the many pages of endnotes had some zingers in them. But ultimately, I didn’t like this book as much as I thought I would. The concept of a book about organization is quite broad, and in effect, this book felt like a survey class (or a “Now That’s What I Call Music” CD with the current hits of the quarter) in organizational behavior and organizational design with a heavy focus on incentives. The authors took the Freakonomics approach of asking a question and providing the research behind the answer, but the questions, like “why are there so many meetings?” weren’t all that hard to figure out without research. Early on the book starts down the promising path of exposing additional costs behind the things that an organization “has always done”, but this path really wasn’t followed through. My test of a good business book is whether it provides guides to change or it causes new thinking in the reader. In this case, the book does no prescribing of change – it is more of a study of what is and why it is, more like a history book. I thought the topics were typical of Organizational Design classes in colleges as well as familiar magazine articles from a broad array of magazines from Wired to Business Week. And maybe that is what limited this book's impact on me – the overbroad focus. Because of this, I'd consider this book more a pop science than a business book.
Most interesting story: the how and why of the Methodist church's organizational design and how their pastors are compensated and incented.
Side note: I’ve worked for 3 orgs in my career and all 3, or their products, are mentioned in this book. Only two as bad examples, as deserved. I think this is the first book that’s hit my trifecta.
Won in First Reads contest.
Most interesting story: the how and why of the Methodist church's organizational design and how their pastors are compensated and incented.
Side note: I’ve worked for 3 orgs in my career and all 3, or their products, are mentioned in this book. Only two as bad examples, as deserved. I think this is the first book that’s hit my trifecta.
Won in First Reads contest.
February 14, 2017
What's the job of a manager? Do we actually need them? What's a CEO do? Do they make a difference?
If you've wondered about those things and other similar questions, then this is the book for you.
Best taken in small bites because even with stories it can be a bit dry.
If you've wondered about those things and other similar questions, then this is the book for you.
Best taken in small bites because even with stories it can be a bit dry.
March 27, 2013
"As companies boost production or expand across product lines, work stays in the org up to the point where escalating costs of management and coordination outstrip the costs and headaches of dealing with outside suppliers. Then the market takes over. This balancing act was Coase's big insight." (32)
"If what gets measured is what gets managed, then what gets managed is what gets done." (38)
"Standardization is cheap; customization is expensive." (106)
"'The CEO is the link between the Inside that is 'the organization' and the Outside of society, economy, technology, markets, and customers. Inside there are only costs. Results are only on the outside.'" (quoting A.G. Lafley, 166-7)
"Labor economists have tried to calculate this 'compensating wage differential' (the amount of money that compensates for taking a less satisfying job) between nonprofits and for-profits. The estimates range anywhere from 20 percent to more than 50 percent -- in other words, a lot of free labor and motivation if you can just get the messaging right." (210)
"If what gets measured is what gets managed, then what gets managed is what gets done." (38)
"Standardization is cheap; customization is expensive." (106)
"'The CEO is the link between the Inside that is 'the organization' and the Outside of society, economy, technology, markets, and customers. Inside there are only costs. Results are only on the outside.'" (quoting A.G. Lafley, 166-7)
"Labor economists have tried to calculate this 'compensating wage differential' (the amount of money that compensates for taking a less satisfying job) between nonprofits and for-profits. The estimates range anywhere from 20 percent to more than 50 percent -- in other words, a lot of free labor and motivation if you can just get the messaging right." (210)
August 26, 2013
Fisman and Sullivan provide a highly accessible book that challenges us to think about the big questions about how we organize people and resources to accomplish goals.
The chapters focus on why do we organize, job design, solving the organizational puzzle, the dialectic between innovation and the need for control, the ambiguous role of managers, configuring space (both real and digital), the economic drivers of organizations, and the often serious consequences of ill defined boundaries between organizations.
The authors reach far and wide in their analysis. For example, the chapter on how best to organize systems cites a study on the relationship between salaries for Methodist ministers and the number of new church members brought into the church.
While these examples will engage students, too often the authors clump together organizations of all kinds under one category. This is especially true in the chilling account of failure of government agencies to anticipate the 9-11 terrorist attacks.
The chapters focus on why do we organize, job design, solving the organizational puzzle, the dialectic between innovation and the need for control, the ambiguous role of managers, configuring space (both real and digital), the economic drivers of organizations, and the often serious consequences of ill defined boundaries between organizations.
The authors reach far and wide in their analysis. For example, the chapter on how best to organize systems cites a study on the relationship between salaries for Methodist ministers and the number of new church members brought into the church.
While these examples will engage students, too often the authors clump together organizations of all kinds under one category. This is especially true in the chilling account of failure of government agencies to anticipate the 9-11 terrorist attacks.
August 13, 2013
There are days when just about everyone thinks: why on earth does anyone work for an enterprise? Personal motivations aside, the book opens with a handcrafted eyeglass frame maker who makes custom frames. He's happy with making the best possible product, has no plans to work faster and is content to make things one at a time.
Clearly a larger organization is needed if the enterprise is complex technology, a product or process to be scalable, or a significant societal problem. When they get large and bureaucratic, their nimbleness and efficiency suffers.
Presented as examples of what worked and what didn't in a serious of profiles, what I liked best is being taken inside the organizations - as varied as McDonald's, the U.S. Army, the Baltimore Police Department, the Boston Consulting Group, and the FBI.
The flow of the narrative wasn't the smoothest. Interesting model for the publisher, Twelve Books, that publishes one book a month on a particular topic.
Clearly a larger organization is needed if the enterprise is complex technology, a product or process to be scalable, or a significant societal problem. When they get large and bureaucratic, their nimbleness and efficiency suffers.
Presented as examples of what worked and what didn't in a serious of profiles, what I liked best is being taken inside the organizations - as varied as McDonald's, the U.S. Army, the Baltimore Police Department, the Boston Consulting Group, and the FBI.
The flow of the narrative wasn't the smoothest. Interesting model for the publisher, Twelve Books, that publishes one book a month on a particular topic.
January 20, 2013
Bureaucracy works but beware the trade-offs. The information revolution flattened organisations but also allowed them to expand. CEOs' salaries tend to be disproportionately large because of the outsize influence they create, and golden handshakes exist to incentivise CEOs in considering mergers and acquisitions even at the expense of making themselves and their positions redundant. And meetings are important because they facilitate the transmission of soft data which are nuanced and harder to glean than facts and figures. If you ever wondered about the underlying bases for these sad facts of life, but didn't want to get too bogged down by technical analyses, this book is an altogether leisurely and insightful read into these matters.
February 23, 2013
This must be the first ever book written in defense of beaurocracy. With that said, it is a cogent and well-written defense. This standard B-school looks at military and blue chip structures crossed into four star territory with the tidbit about Al Quaeda at the end.
Mr. Fisman tackles some pretty thorny questions throughout the book, but the result is readable and downright funny at times. If you are interested in B-School, the military, the police force, or the FBI, you should probably read what a bright outsider with a sociological organizational bent has to say about the strengths and weaknesses of each. If you are not in any of those categories, it is still a fascinating and easy to read book you will enjoy.
Mr. Fisman tackles some pretty thorny questions throughout the book, but the result is readable and downright funny at times. If you are interested in B-School, the military, the police force, or the FBI, you should probably read what a bright outsider with a sociological organizational bent has to say about the strengths and weaknesses of each. If you are not in any of those categories, it is still a fascinating and easy to read book you will enjoy.
August 31, 2013
Working in organisations, sometimes it does feel like we are stuck in rot and organisations in general suck. However, this book, has been a timely reminder that organisations maybe a necessary evil. Through historical insights provided by the likes of Coase, Chandler etc. and using case studies from more contemporary organisational functioning, the authors hold the view that the ‘org’ is not a problem, rather a solution, but one that comes with messy realities. An immutable fact of org life is that there are trade-offs. Innovation and initiative have their place in any org, but so do coordination and rules, and the trick is knowing how much of each.
March 15, 2013
If you've worked in an organization this book speaks to you. Those things in your organization that you often complain about without really taking the time to reason or understand why they exist or happen are brought to light by the authors. Knowing the why's/attempts of your organization doesn't eliminate the frustration of certain aspects/policies/performance reviews/etc. of the organization, but this book can help reduce some of that frustration by knowing the why's a little better. Good read!
April 9, 2013
This is an interesting perspective on organizations from an economist's point of view. People who work for large centralized orgs like the University of California will enjoy these insights. The rationale behind our office culture, meetings, internal controls, and bureaucracies are explored. Have you ever wondered why CEOs get paid so much and how they spend most of their time? Other mysteries like why travel and expense reimbursements are necessary evils are also revealed.
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