Chapter 2 Evolution of Management Thought

Figure 2.4

Basic Structure of Systems

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Inputs Transformation Process Outputs

Feedback

models, game theory, inventory models, and statistical decision theory.

SYSTEMS PERSPECTIVE
An approach to problem solving that is closely aligned with the quantitative perspective is systems analysis. Because many of the wartime problems reflected exceedingly complex systems, the operations research teams often found it necessary to analyze them by breaking them into their constituent elements. Since any system is merely a collection of interrelated parts, identifying each of these parts and the nature of their interrelationships should simplify the modelbuilding process. Systems can be viewed as a combination of three building blocks: inputs, outputs, and transformation processes. These blocks are connected by material and information flows.45 Figure 2.4 illustrates the interaction of these blocks and flows. Although a more thorough discussion of inputs, outputs, and transformation processes can be found in Chapters 15 and 16, the basic components of the systems model can be briefly introduced here. Inputs can vary greatly depending upon the nature of the system. Such diverse items as materials, workers, capital, land, equipment, customers, and information are potential inputs. Outputs typically consist of some physical commodity or some intangible service or information that is desired by the customers or users of the system. The transformation process is the mechanism by which inputs are converted to outputs. We usually think in terms of a physical transformation process in which material inputs are reconfigured into some desired output. This scenario would be typical of a manufacturing system. Several other types of transformation processes are found in nonmanufacturing types of systems, however.46 For example, in a transportation or distribution system such as Delta Air Lines or United Parcel Service, the transformation process merely alters the location of the inputs, not their form. In storage systems such

as a U-Haul storage facility or a Bank of LEARNING America safety deposit box, the inputs OBJECTIVE change in the time dimension, but not in form or location. Feedback represents information about the status and performance of the system. Describe the Systems are often further distinguished systems by whether they interact with the external perspective environment. Open systems must interact building blocks and with the external environment to survive. their interactions. The interactions can be reflected in the exchange of material, energy, information, and so forth. Closed systems do not interact with the environment. In both the classical and early behavioral perspectives, systems were often thought of as closed. In fact, the quantitative perspective often uses a closed-system assumption to simplify problem structures. Nevertheless, the difficulty of totally eliminating environmental interactions KEY TERMS makes it hard to defend the Systems analysis concepts of open and closed An approach to problem systems in the absolute. Persolving that attacks complex haps more appropriately, we systems by breaking them might view systems as reladown into their constituent tively open or relatively elements. closed.47 Thus, we might think Input of the production department A diverse item such as mateof an organization as a relarial, worker, capital, land, tively closed system. It can equipment, customer, and manufacture products in a information used in creating continuous fashion while products and services. maintaining little interaction

with the external environment. Meanwhile, the marketing department would be more appropriately viewed as an open system because it must constantly interact with external

Output The physical commodity, or intangible service or information, that is desired by the customers or users of the system.

Part 1 Meeting the Challenges of the 21st Century

customers to assess their wishes and desires. Long-run organizational survival requires that all organizations have some interaction with the external environment; 44 therefore, it is appropriate to think of contemporary business organizations as open systems. Most complex systems are often LEARNING viewed as a collection of interrelated subOBJECTIVE systems. Because changes in any subsystem can affect other parts of the organization, it is crucial that the organization be managed as a coordinated entity. If decisions are made independently at the subsystem Discuss the nature of the contingency level, the organization as a whole will ofperspective of ten achieve less-than-optimal performanagement. mance. But when all organizational subsystems work together, the organization can accomplish more than when the subsystems are working alone. This property, in which the whole is greater than the sum of its parts, is KEY TERMS referred to as synergy. Another important propTransformation process erty of systems is entropy, The mechanism by which inwhich refers to their tendency puts are converted to outputs. to decay over time. As is the Feedback case with living systems, orgaInformation about the status nizations must continuously and performance of a given monitor their environments effort or system. and adjust to economic, soOpen system cial, political, technological, A system that must interact and global changes. Survival with the external environment and prosperity often require to survive. that new inputs be sought. A system that does not continuClosed system ally receive inputs from its enA system that does not intervironment will eventually die. act with the environment.

Synergy A phenomenon whereby an organization can accomplish more when its subsystems work together than it can accomplish when they work independently. Entropy The tendency for systems to decay over time. Contingency perspective Perspective on management proposing that the best managerial approach is contingent on key variables in a given organizational situation.

CONTINGENCY PERSPECTIVE
In the 1960s, managers were becoming increasingly aware that the effectiveness of different management styles varied according to the situation. With this awareness came the emergence of the contingency perspective, which proposes that there is no one best approach to management. This perspective recog-

ASSOCIATED PRESS/AP

A manufacturing system represents the transformation process in which inputs are converted to outputs.

nizes that any of the four previously discussed management perspectives might be used alone or in combination for different situations.48 In the contingency perspective, managers are faced with the task of determining which managerial approach is likely to be most effective in a given situation. This requires managers to first identify the key contingencies, or variables, in the given organizational situation. For example, the approach used to manage a group of teenagers working in a fast-food restaurant would be quite different from the approach used to manage a medical research team trying to discover a cure for AIDS. The young fast-food worker might best be managed in a classical, authoritative style. Bureaucratic rules and regulations might be put in place to guide all worker actions and behaviors. Scientific management principles would probably be used to define the best way to perform each work task. Variation from the prescribed method would not and probably should not be tolerated in this situation. This is not the time or place to experiment with different ways to fry the burgers or mix the shakes! It is doubtful that the medical research team would succeed under this approach to management. The team is faced with a very complex, unstructured endeavor that will require the team members to bring together all of their unique problem-solving skills. Such a situation requires that the team be given the autonomy to try out different solutions, pursue different avenues, and take risks that would simply be out of the question for the teenaged burger flippers.

Chapter 2 Evolution of Management Thought

Table 2.4
Production Technology Small-batch technology

Production Technology Examples

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Examples Custom-fabrication machine shop, manufacturer of neon advertising signs, print shop specializing in personal business cards, trophy-engraving shop Manufacturer of automobiles, manufacturer of refrigerators, manufacturer of hair dryers, manufacturer of pencils Oil refinery, flour mill, soft-drink bottler, chemical processor

Mass-production technology

Continuous-process technology

Because the contingency perspective proposes that managerial style is situation specific, it has not yet developed to the point where it can dictate the preferred way to manage in all situations. A particularly important factor to consider in the contingency approach is the type of technology being used by the organization. In pioneering contingency studies conducted in the 1960s, Joan Woodward discovered that a particular managerial style was affected by the organizations technology. Woodward identified and described three different types of technology:
1.

2.

3.

Small-batch technology. Organizations of this type exhibit job-shop characteristics in which workers produce custom-made products in relatively small quantities. Mass-production technology. Organizations of this type exhibit assembly-line characteristics in which standardized parts and components are used to produce large volumes of standardized products. Continuous-process technology. Organizations of this type have a process in which the product flows continuously through the various stages of conversion.

The level of human interaction varies with each of these technology types. Small-batch technology tends to have the most human involvement (that is, it is the most labor intensive) due to the customized outputs. Massproduction technology tends to have less human involvement due to the automated and robotic equipment that typifies assembly-line operations. Continuous-process technology has the lowest level of human involvement as the product flows through the stages of conversion. Consider, for example, how little hands-on human involvement is needed in an ExxonMobil oil refinery as crude oil flows through the various processing stages on its way to becoming gasoline. Examples of each of these production technologies appear in Table 2.4, and all three are discussed more thoroughly in Chapter 16.49

Some of Woodwards findings showed that bureaucratic management methods were most effective in organizations using mass-production technology. Conversely, organizations using small-batch and continuous-process technologies had little need for the formalized rules and communication systems of the bureaucratic style.50 Continued studies of this type will fill in all the gaps and eventually provide more definitive guidelines as to which managerial style is desirable for a particular situation. Other important factors to consider in defining the contingencies for each situation include environment, organizational size, and organizational culture.51 For example, large organizations may find it necessary to use more structured and rigid rules, regulations, and policies to control organizational activities. On the other hand, smaller organizations may find that they can rely less on the formal structure and allow workers the autonomy to make decisions for the situations and problems that they encounter. In this example, the larger organization would undoubtedly tend toward a more bureaucratic management style, while the smaller organization would display a more behavioral orientation. As Figure 2.5 shows, parts of all of the management perspectives that we have examined might be combined to form a contingency approach.

Information Technology and Management Style

In recent years, we have all been witness to the tremendous advances that have occurred in the systems and devices that can process, disseminate, and transfer information. Each of our lives has been affected by cell phones, micro-