The document discusses the transition from an economy based on physical goods to one based on information, and the challenges this poses for organizational design. It outlines four main design challenges for new organizational forms: (1) managing increased interdependence between organizations, (2) dealing with the "disembodiment" of performance from asset ownership, (3) adapting to greater velocity in all aspects of organizational functioning, and (4) addressing new asymmetries of power derived from knowledge rather than tangible assets. The document also examines conventional bureaucratic perspectives versus emerging perspectives on organizational activities like goal-setting, maintaining boundaries, and defining roles. It suggests future research should take a configurational, co-evolutionary approach to understanding how organizational

2. Economy based
on flows of
information
Considerable
challenges for
organization design
Transition
Many
organizational
aspects from
physical
constraints.
by
unfettering
Created
Economy based
on materials
2

3. DisembodimentInterdependence
Velocity Power
3

4. The new organizational paradigms that has
identified new organizing principles in broad terms
PostmodernPost-bureaucratic
Post-entrepreneurial
organization
Flexible firm
4

5. The new organizational form that focus
on more specific aspects
Network
organization
Federalism Virtual corporation
Reengineered
corporation
Knowledge-creating
company
Ambidextrous
organization
High performance
High- commitment
work system
Boundaryless
company
Hybrid organization
Transnational
solution
5

6. They still represent the dominant form for major institutions
Religious
organizations
GovernmentThe military
6

7. Bureaucracy's familiar forms
Hierarchical control and
authority relations
Top-down authority
Relatively fixed
boundaries
Many have argued that these
attributes are maladaptive when
massive change, environmental
dynamism, and considerable
uncertainty are the norm.
The challenge for scholars to offer
more than the conventional
theory of bureaucracy.
7

8. InformationIntensity :
8
A conventional theory of organizational design emerged
alongside modernist principles of production and
manufacture.
Modernists assumed that the primary function of
economic organization was production, usually meaning
the efficient creation of physical things.
In the postmodern world, however, production of
physical things is gradually being surpassed by production
of information goods and services in economic importance.
This increasing information intensity is the fundamental
challenge to which new organizational design theories must
respond, because it challenges the very premises upon
which bureaucratic organization's claim to economic
performance rests namely, the harnessing of efficient
combinations of resources in an economy.

9. 9
In an economy based on physical objects, an organization
can then reap returns from deploying its knowledge to offer
new and better products or more efficiently manufacture
existing products. Economic rents (where the term implies
supernormal profitability relative to an industry) can thus be
gained by the firm that creates new knowledge and keeps it
to itself, enjoying a pseudo monopoly.
The problem for bureaucracy is that such a hoarding
strategy for knowledge is impractical in the case of
knowledge-based goods. For one thing, the knowledge must
often be given away as part of an economic transaction. For
another, the very act of codifying knowledge to make it
useful also makes it easier to diffuse. It can very quickly
become a public good .
The result is that in many industries one can observe that
regimes of appropriately are largely ineffective at providing
genuine control over knowledge flows.

10. 10
Thus, scholars, managers, and others face a
widespread challenge to bureaucracy's central benefit,
namely, its utility as a vehicle for strong economic
performance. The managerial and scholarly challenge is
to identify alternatives and develop theories that
account for them.
Organizational forms have been characterized as
essential to three sets of activities:
(1) identifying and disseminating the collective aims of
an organization.
(2) regulating the flow of resources into and out the
organization.
(3) identifying and governing duties and rights, as well
as functions and roles of members of the organization.

11. Conventional and
Emerging Perspectives On
Organizational Form
11
We now turn to a discussion of
alternative forms and comment on
how these differ from conventional
forms.

12. Conventional Perspective Emerging Perspective
 Top-down goal setting.
 Concentrated power.
 Preference for larger units.
 Leaders control, monitor,
and set specific and
concrete objectives through
the use of formal authority.
 Vision dictated Hierarchy.
 Decentralized goal setting.
 Distributed power.
 Preference for smaller units.
 Leaders provide guidance,
manage conflict and provide
general guidance.
 Vision emergent.
 Teams and work groups.
Organizational Activity
Setting goals: Identifying and disseminating collective aims,
making decisions, exercising power.
12

13. Conventional Perspective Emerging Perspective
 Firm as unit of analysis.
 Boundaries clearly
specified and durable.
 Reliability and
replicability.
 Vertical.
 Rule-based.
 Assets linked to
organizational units.
 Production system or network
as primary unit of analysis.
 Boundaries permeable and
fuzzy.
 Flexibility.
 Horizontal.
 Relationship-based.
 Structure independent of
assets.
Organizational Activity
Maintaining integrity: Regulating the flow of resources into
and out of the organization and establishing boundaries.
13

14. Conventional Perspective Emerging Perspective
 Specialized roles.
 Clear role definitions.
 Uncertainty absorption.
 Relative permanence.
 Efficiency oriented.
 General roles.
 Fuzzy role definitions.
 Adaptation.
 Impermanence.
 Innovation oriented.
Organizational Activity
Differentiating rights and duties: Differentiation of functions
and roles, establishment of duties and rights, including
governance.
14

15. • The key paradox in administration was aligning
organizational components while preserving
flexibility.
• The authors suggest four distinct design
challenges, or problems, that the dialectic of new
organizational forms must address. Each reflects
an issue created by the unfettered nature of
operations that is possible when information is the
good that is bought, sold, and utilized.
(1) interdependence,
(2) disembodiment,
(3) velocity,
(4) power.
15

16. Interdependence
Interdependence:
Traditionally, the extent to which an organization
could operate interdependently with other
organizations was constrained by limits imposed by
information-processing capacity and physical distance.
As information and communications technologies
have advanced, interdependent operations are a
much more cost-effective possibility than they were
formerly. This development, combined with changes
in regulatory regimes and capital flows, has made
interdependent operations desirable. Although any
social system exhibits interdependence, the level of
interdependence prevalent today is widely agreed to
be unprecedented.
16

17. Disembodiment:
Traditional organization presumed tight links
between the outputs, ownership, and control of
assets. Performance had to do with how
efficiently assets were deployed, relative to
those of other firms. The major shift that has
taken place in the information economy is to
disembody performance from asset ownership.
In information-intensive businesses, it is not
necessary to physically own an asset to utilize it.
This shifts the traditional definition of the core
activities of a corporation as linked to its
production mission toward other criteria.
17

18. Velocity:
Greater velocity has come to characterize
virtually all aspects of organizational functioning,
from internal communications to product
development to competitive interchange. Aside
from the enabling effects of new communication
technologies, increased velocity can also be
attributed to the liberalization of trade and of
capital movements and to decreases in the cost
of travel and transportation. Informal barriers to
market entry are also lowered by the growing
ease of long-distance communication. 18

19. Power:
One of the most profound shifts in the economy is
the shift from power derived from possession of
tangible assets and inputs to power derived from
possession of knowledge and information.
A longstanding practical concern with
concentration of power at the top of bureaucracies is
now exacerbated by the increasing scope of these
organizations.
Whitman, for instance, observed that "the number of
banking institutions in the United States has declined
by 36 percent since 1984" (1999: 27), at the same
time that financial activity has enjoyed significant
growth.
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20. Although mega global firms often
compete fiercely among
themselves, there is nonetheless a
growing asymmetry of power
between the managerial agents in
charge of them and most other
groups in society, including
consumers, employees, and
members of the local communities in which the
firms' operations are located. Addressing new
power asymmetries is thus a key challenge for
new organizational forms. 20

21. Summaryto the four main designchallenges :
• Interdependence challenges the presumption that there is
advantage in controlling resources within the boundaries
of a given firm.
• Disembodiment challenges the presumption that an
organization's assets can be "owned" and that efficient
production is more valuable than inefficient innovation.
• Increased velocity shortens the acceptable lag time
between stimulus and response, placing pressure on
vertical information and decision flows.
• Power, and accountability for its use, which in the
traditional bureaucracy was presumed to be placed in the
control of top executives by their principals, becomes a far
more complex matter in organizations that have multiple
stakeholders and are not organized hierarchically.
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22. CONCLUSION:
WHITHERNEWANDEVOLVINGORGANIZATIONALFORMS?
1) This special research forum arose from a sense that
the time is opportune to reflect on theory aimed at
understanding new and evolving organizational
forms.
2) The authors posited that the underlying
transformation creating the necessity for new ways of
organizing is the shift from a physical economy, which
was served well by the principles of bureaucracy, to
an information-intensive economy, whose structural
implications are not yet clear. 22

23. 3) It suggests that the rigidity that comes with perfect
alignment can be fatal. It also suggests that the
traditional function of organizational form, namely, to
protect organizations from external uncertainties is
no longer its primary task. As buffering becomes less
feasible.
4) Effectively navigating paradox appears to require
conscious, ex-ante attention to structure and process.
In particular, simplifying complex situations appears
to be an essential adaptive skill. This suggests the
need for attention to underlying patterns and the
ability to synthesize them into what called "simple
rules".
23

24. 5) That social processes and interpersonal relationships
are of huge importance. The new forms appear to have
made the long-standing "content versus process"
debate less relevant than it ever was with their
emphasis on fluid reconfiguration as the norm of
organizational evolution and a key determinant of
performance. Carefully designed and maintained
processes and linkages, rather than content.
6) With respect to future methodologies, it seems to us
that a configurational, co-evolutionary approach will be
required. Proponents of configurational analysis assert
that the different aspects of an organization make
sense in relation to the whole and cannot be
adequately understood in isolation This view contrasts
with many of the methods that have been well
regarded by organizational scholars, such as
contingency analysis.
24

25. 7) In the configurational analysis, one instead seeks to
examine developments in organizational or system
configurations in relation to relevant changes in their
environmental configurations, with managerial strategy,
decision making, and learning to provide the action and
behavior that bring the two sets into coevolution.It offers
a particularly promising basis for building upon the
various theories already available.
8) The change in the basic economics of production from
materials - to information-based also changes what
constitutes the organizational core as opposed to the
periphery. Increasingly, the core consists of knowledge
workers and professionals: the designers of soft concepts
and hard technologies, plus key financial and managerial
personnel. Other employees are considered peripheral.
25

26. 9) In the new forms, employment appears to be
differentiating along two dimensions. These are the
knowledge level of the people concerned and their
location within the value-adding system. The
consequences are summarized in this Table:
26
Knowledge Level
Location within the
Value-Adding
System
Operations- or execution-intensive.
Information intermediaries,
processors, customer service and
sales staff. Cleaners, security staff,
caterers, and so forth, on contract.
Employees of other organizations in
the wider network.
Knowledge-intensive—graduate,
professional, and technical.
Top managers; creative experts,
both R&D and "brand" people.
Self-employed experts on contract,
such as consultants.
Core
Periphery
A New Differentiation in Employment

27. 10)The advent of the information economy has
disembodied control over assets, removing it from
the productive use to which those assets might be
put, it has also enabled a shift away from
organizations' links to specific geographical and
cultural roots.
11)Conventional notions of the relationships between
business organizations and the greater society are
strained. Corporations operating through extended
supply chains and diffused networks are being held
to task for all manner of negative social phenomena,
from child labor to lost social cohesion. 27

28. 12)One of the emerging challenges for new
organizational forms is that of governance in the
broadest sense: how to combine the benefits of
scale and global reach with effective accountability
to local interests.
13)The theory of bureaucracy, according to which the
senior executives of a firm make the most important
decisions, control and influence the most significant
resources, and have the power to execute the plans
approved by the firm's board.
14)The responsibility of leading firms and other bodies
with concern for the social consequences of the
organizational developments they initiate is a major
issue of our times.
28