Multi-rational Management

Mastering Conflicting Demands in a Pluralistic Environment

K. Schedler, J. Rüegg-Stürm, K. Schedler, J. Rüegg-Stürm

• Publisher: Palgrave Macmillan
• Year: 2014
• Print ISBN:
  9781137444400
• eBook ISBN:
  9781137444424
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Multi-rational Management explains the concept of multirational management and illustrates it with many practical examples. It has primarily been written for 'reflective practitioners', i.e. those executives who continually think about their organisation and their own roles in that organisation.

1

Introduction

Kuno Schedler and Johannes Rüegg-Stürm

This book addresses the question as to what practices have been developed in management for organisations to be able to successfully exist in a heterogeneous, pluralist environment on a permanent basis. We create a conceptual and terminological foundation for reflections on the challenge of multiple rationalities. At the same time, we provide an overview of possible responses to, and strategies for dealing with, contradictory demands made on an organisation by its environment and by various communities of meaning within the organisation.

In the introductory chapter we reveal the context in which we embed the approach of “multirational management”, what we understand by management and how the book is structured. It serves as a readers’ guide and as an explanation of the structure.

1.1 The context of the approach

Today, management is a ubiquitous societal function and is, at its core, about a form of exerting a specific influence in contexts based on the division of labour. This influence aims to achieve effects described as promising beforehand and as successful afterwards. The success and legitimacy of management are measured against the yardstick of an organisation’s performance.

Curiously, the literature often behaves as if it were perfectly clear what performance is. However, the criteria of meaning and the notions of success that exist in practice are not self-evident givens but the result of complex processes of clarification and constitution. These are often not easy to recognise but take place implicitly in valuation processes of actions, decisions, achieved results and effects. They leave a considerable amount of leeway as regards the concrete application, relevance and bindingness of the criteria of meaning and notions of success.

This book is based on observation and addresses the management challenge that the criteria of meaning and the notions of success of an organisation are increasingly diverse in the long run, are unclear, need to be interpreted and are heterogeneous for the following reasons:

•More and more tasks are completed and problems solved by a division of labour, that is, with the help of organisations. This is the case as a consequence of the general innovation and efficiency pressure that is brought about by our liberal (competitive) social system and by technological progress. Connected with this is the increasing utilisation of demanding technological aids and artefacts. Trades such as that of shoemaker hardly exist today. Even the family doctor is regarded as an end-of-range model. Many products and services, for instance in modern consumer electronics and in communication technology, can only be utilised with the help of an elaborate division of labour and by a many-faceted use of technology in the first place.

•The increasing number of organisations with value creation based on the division of labour is, in turn, characterised by an advancing differentiation and specialisation of individual organisations. If an organisation wants to have a clear-cut profile and positioning today, it requires uniqueness by means of smart differentiation. It must concentrate on, and specialise in, what it can do particularly well in comparison with others in good time. Organisations are subject to innovation and specialisation pressure, which they counter with interior differentiation (creation of “specialists” within the organisation: functions or divisions, business areas, branches, strategic business fields, etc.) or with a narrowing concentration of core value creation (focus on core competencies, outsourcing, strategic partnerships).

•This growing division of labour, not only within organisations but also between them, leads to an increase in the scope and intensity of dependencies and effects of organisational action. The activities of big enterprises such as a nuclear power plant operator, or public administration organisations such as a financial market authority, result in effects which impinge on a great number of people and organisations – often unexpectedly and inadvertently. Accordingly, enterprises increasingly become quasi-public institutions (Ulrich 2001). The relevant dynamic impact pathways arising from this must be seen as multifariously interconnected loose couplings rather than clearly recognisable, objectifiable “hard” causal chains. From the perspective of complexity theory, this explains why the resulting effects cannot be anticipated, let alone determined, by individual organisations or people at all. With reference to von Hayek (1972), we can say that such effects may well be the result of organisational action, but not of an organisational, and certainly not of an individual, master plan. This increasing scope and intensity of unpredictable effects arising from organisational action, as well as the criteria of meaning and the notions of success relevant to this, are subject to growing controversies.

•Differentiation processes can also be observed at the level of society as a whole. They manifest themselves in the creation of idiosyncratic societal functional systems (worlds of action) such as politics, the law, science and the economy. Idiosyncratic means that each of these societal functional systems is also a discourse and action system which takes its bearings from its own criteria of meaning and notions of success. In the functional system that is the economy, for instance, a central role is played by an increase in financial value and liquidity, as well as by efficiency; in politics, this part is played by the preservation of power, and related to this, the ability of ideas and people to secure a majority in concrete decision-making situations.

A fundamental challenge from an individual organisation’s point of view consists in the fact that the differentiation of organisations does not develop in congruence with the differentiation of societal functional systems. In other words, this differentiation process does not follow a hierarchical path since increasingly more specialised functional systems emerge within individual societal functional systems such as politics and the economy. Rather, a growing number of organisations come into being which interact with several societal functional systems, that is are simultaneously “engaged” in several societal functional systems and therefore have to cope with a considerable heterogeneity of criteria of meaning, notions of success and expectations of success in their relevant environments.

To put it differently, the work done by organisations does not respect the borders of societal functional systems and their logics of action at all, which is why more and more organisations are emerging which can be described as hybrid or pluralist (these concepts will be described in detail in Chapter 4). This can be the consequence of a deliberate position drive by the organisation (for example, if a private-sector enterprise decides to take on essential tasks for the government, i.e. a voluntary change), but it can also actually be prescribed from the outside (for example, if a new act places a public administration organisation in competition with third parties, i.e. a coercive change).

Pluralist organisations can be found more frequently in reality than would generally be expected. Zauner et al. (2006: 35ff.), for instance, examine the new forms of control that were introduced for outsourced services provision in the field of social security in the context of new public management. They are primarily interested in the consequences for non-profit organisations (NPOs), who as service providers are no longer recipients of state aid but are contractual partners of the government. NPOs do not only fulfil their ideational mission but are placed under economic pressure by a government principal. The authors come to the conclusion that under this influence, NPOs can suddenly be exposed to a variety of concerns and expectations which substantially increase the complexity of decision-making processes (through heterogeneous criteria of meaning and notions of success) and in effect lead to the emergence of a hybrid organisation.

A similar development is experienced by public-sector enterprises and organisations which owing to an increasing scarcity of resources or as a consequence of a newly introduced control model are exposed to stronger economic pressure. In such situations, the input-oriented deficit-coverage system is replaced by another, performance-oriented funding system (OECD 2007). Hospitals, for instance, are funded through case-based lump sums, universities through the number of students, and many public enterprises are expected to generate an increasingly higher coverage ratio.

The private-sector, too, knows pluralist organisations. They can be observed in big research-intensive corporations (in Switzerland, the IBM Research Lab in Zurich and the Friedrich Miescher Institute on the Novartis campus in Basel are cases in point), which outsource certain activities from the immediate commercial context to reinforce their own innovation capacity – as organisations that are similar and close to academia. Other examples are family businesses, which simultaneously have to assume the rationality (and identity) of the family and the market in order to preserve their legitimacy in both (Zellweger et al. 2013). Simon, for instance, writes that when executives in a family business context need to make a decision, they are inevitably confronted with the paradox that they often (i.e. not always) act irrationally in relation to one system when they act rationally in relation to another system and its valuation criteria (2013: 135).

Hybridisation is thus not a one-sided development by any means as government organisations are increasingly opening up to an economic logic of action. This process can also be observed in reverse. In many economic systems, for instance, the financial industry was a sector which was strongly regulated but whose regulation was informed by an economic logic of action. The banks in the Western world, in particular, were long treated as economic entities sui generis which could not be subjected to political control if they were expected to play a successful part in global competition. As a consequence of this, and owing to the nature of the business itself (money and profit), banks could keep themselves as monorational entities in which economic thinking alone was present. Here, too, there were differing interests and differences of opinion, but they were typically exclusively fought over with economic arguments. The financial crisis transported the banks into a completely new environment: many banks had to be rescued by means of government interventions (bailouts), a number of them were taken over by the government or placed under government control. Thus a political reality found its way into the relevant environment, with which many banks (and along with them experts and academics specialising in banking) were unable to cope at first. Adaptations to a new complexity in an institutional environment can entail painful processes of change in the decision-making and action logic of individual organisations.

Finally, there are a number of organisations which are already configured as pluralist entities when they are founded, not least because the diversity thus created is intended to enhance their creativity and openness in the solution of wicked problems (Roberts 2000). Examples of this include policy networks which have deliberately been made up of actors who originate from very different worlds of action: politicians, entrepreneurs and academics, for example. Under the generic terms of “public–private partnerships”, new hybrid organisations are created in order to be able to exploit the best of both worlds (Ysa 2007; Saz-Carranza and Longo 2012). This is precisely where more recent research has an exciting angle on the fundamental problems of such hybrid forms: a lack of understanding and a failure of communication between differently rational partners lead to mutual accusations of irrationality, which results in the creation of decision-making blockades and casts doubt on the collective and cooperative ability to act (cf. to some extent, Klijn and Teisman 2003: 7).

This book addresses exactly these challenges: the organisations’ answers to the pluralist context and the question as to the consequences that result for the management of such organisations. We agree with Wimmer that existing, albeit successful, management practices will not suffice. As he puts it, such conditions confront the decision-makers concerned with experiences of complexity which cannot be mastered with the usual patterns of thinking and classic ideas of rationality (Wimmer 2012: 19).

1.2 Management

Today, management is spoken about in a wide variety of contexts, with the many-voiced call for “more management” and “good managers” in churches and political parties, hospitals and universities being faced with critical debates about individual “managers” or the “manager caste” as a whole. Management is often confronted with value-judgemental comparisons with more attractive alternatives such as “leadership” and “entrepreneurship” and with the call for more “entrepreneurial personalities” for demanding challenges and new types of tasks.

In other words, management proves to be a topical, important and controversial phenomenon of our society and a practice without which we are unable to understand the genesis, development and transformation of all the many-layered organisations which characterise our time.

When we empirically search for “management”, however, we do not find any actions in the daily stream of experience that bear the label of “management”. Rather, one or the other action or incident is labelled “management” during the situation itself or after the event – and in greatly different forms. The concrete practice that relates to the designation (label) ...

Table of contents

• Cover
• Title
• 1  Introduction
• Part I  Fundamentals
• Part II  Scientific Reports from Practice
• Part III  Multirational Management
• Index