Designing Complex Organizations Computationally

Designing Complex Organizations Computationally

Carl L. Oros (Naval Postgraduate School, USA) and Mark E. Nissen (Naval Postgraduate School, USA)
DOI: 10.4018/978-1-60566-669-3.ch025
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Abstract

Business process management is recognized increasingly as a critical factor in organizational success, leaders and managers seek to cope with increasingly complex and dynamic environments, and traditional approaches to process management become increasingly inadequate due to their lack of flexibility and adaptability. Alternatively, an organizational form receiving considerable current focus is the Edge, which distributes knowledge and power to the “edges” of organizations, and which enables organizational members and units to self-organize and self-synchronize their activities. The dynamics of such self-organization and self-synchronization, however, are extremely complex, and balancing the flexibility and adaptability inherent in the Edge with sufficient control to avoid chaos is very challenging. We employ the state-of-the-art POWer environment for dynamic organizational representation and emulation to develop and experiment with models of competing organizational forms, and to inform our understanding of complex organizational design and management—thereby making an important contribution to theory, research methodology, and practice.
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Introduction

Business process management is recognized increasingly as a critical factor in organizational success: a factor that helps to improve organizational processes, to reduce operational costs, and to promote real-time visibility into performance (Al-Mudimigh, 2007; Shaw, Holland, Kawalek, Snowdon, & Warboys, 2007). In recent years, organizational processes have been becoming increasingly complex and dynamic, as leaders and managers seek to cope with increasingly complex and dynamic environments (Chen, Zhang, & Zhou, 2007; J. E. Scott, 2007).

Indeed, Nissen and Leweling (Nissen & Leweling, 2008) explain how numerous organizational scholars (Chaharbaghi & Nugent, 1994; Donaldson, 1987; Tung, 1979) note widely that the contingency contexts of many modern organizations can change rapidly and unpredictably (Romanelli & Tushman, 1994), due to multiple factors such as globalization (Raynor & Bower, 2001), technology (Adner & Levinthal, 2002; Rahrami, 1992), hypercompetition (D'Aveni, 1994; Hanssen-Bauer & Snow, 1996), knowledge-based innovation (Jelinek & Schoonhoven, 1990), explicit linking of organizational structures to strategies (Sabherwal, Hirschheim, & Goles, 2001; Venkatraman & Prescott, 1990; Zajac, Kraatz, & Bresser, 2000), mounting competition from co-evolutionary firms (Barnett & Sorenson, 2002), high-velocity environments that are in perpetual flux, and the kinds of nonlinear, dynamic environmental patterns that never establish equilibrium (Eisenhardt & Tabrizi, 1995). Traditional approaches to process management are becoming increasingly inadequate in such dynamic environments due to their lack of flexibility and adaptability (Küng & Hagen, 2007; Ramesh, Jain, Nissen, & Xu, 2005; Vanderhaeghen & Loos, 2007).

Alternatively, an increasing number of scholars are viewing organizations as complex adaptive systems, which are designed, managed and redesigned iteratively to fit and adapt to complex, unpredictable and constantly shifting environments (Brown & Eisenhardt, 1997; Burgelman & Grove, 2007). One such organization receiving considerable current focus is the Edge (Alberts & Hayes, 2003), which distributes knowledge and power to the “edges” of organizations (e.g., where they interact directly with their environments and other players in the corresponding organizational field (W. R. Scott, 1995)), and which enables organizational members and units to self-organize and self-synchronize their activities. Key to Edge performance is decentralization, empowerment, shared awareness and freely flowing knowledge required to push power for informed decision making and competent action to the edges.

As an organizational form, the Edge shares almost no similarities with the Hierarchy, the latter of which represents the predominant form today (Nissen, 2007), and which is notably rigid, inflexible and slow to adapt to change. Indeed, well over a hundred, diverse organizational forms (e.g., M-Forms, see (Chandler, 1962); Clans, see (Ouchi, 1980); Virtual, see (Davidow & Malone, 1992)) have been proposed over the past several decades as contrasts to the Hierarchy (Nissen, 2005). We focus here on the Edge, because it is designed explicitly to be flexible and adaptable, and to address the kinds of unpredictable, dynamic environments noted above. Also, the Edge provides a vivid contrast with the predominant Hierarchy. Additional examination of other organizational forms via the approach described in this chapter is certainly merited, and represents a useful avenue for future research along these lines.

Key Terms in this Chapter

Close air support: Air action by fixed- and rotary-wing aircraft against hostile targets that are in close proximity to friendly forces and that require detailed integration of each air mission with the fire and movement of those forces. Also called CAS. (JP 1-02)

Edge organization: A relatively novel organizational form that distributes knowledge and power to the “edges” of organizations, and that enables organizational members and units to self-organize and self-synchronize their activities.

Doctrine: Explicit articulations and teachings pertaining to military organizations and processes.

Organizational design: A rational view of organizing, through which managers purposefully consider and effect changes to organizational structure in order to improve fit with changing environmental, technological, strategic and like characteristics.

Validation: An activity focused on ensuring that the structures and behaviors of computational models match those of the real-world entities represented by such models.

Computational experimentation: The use of computational models—combined with experimentation protocols for controls, manipulations and measurements—to conduct experiments on virtual representations of entities.

Power: A state-of-the-art environment for dynamic organizational representation and emulation, which is used to develop and experiment with models of alternate organizational forms.

Fires: The effects of lethal or nonlethal weapons in a military combat context. (JP 1-02)

Computational organization theory: A multidisciplinary field that integrates aspects of artificial intelligence, organization studies and system dynamics/simulation.

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