Chapter 5
Repeal the Industrial Revolution

Selecting building blocks
Legacy of industrial revolution
Skill hierarchies
Fighting fragmentation


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Chapter 5

Repeal the Industrial Revolution

Excerpt from Rethinking the Corporation

By Robert M. Tomasko



Thinking about an organization structure brings to mind several attributes. How tall or flat, pyramidal or rectangular is it? Is its orientation inward toward it operating procedures, or outward toward it customers? Is it tightly centralized, or a collection of semi-autonomous fiefdoms?

These are important concerns, but they are not the first issues to address when reshaping a corporation. Decisions about what is being structured need to come first. What is the nature of the boxes that the lines are to connect? Are we using structure to organize people, jobs, departments, or something else? Just what should be the basic building block of the corporation? What are its most needed characteristics, and how must it behave in an era of turbulence and change?

Unfortunately, these questions seldom receive close attention during organization restructuring. What is being structured is frequently taken for granted. Where the lines go on an organization chart usually gets more attention than what the boxes consist of. Too often debate about the type of structure clouds consideration of how much its choice depends on what it is made from.

This linkage, though, that cannot be as easily ignored when building an office tower, bridge or other physical structure. Serious mistakes in the choice of construction material can result in either collapse with the first strong wind, or the bankruptcy of its owner as he struggles to cover the costs of an overbuilt building. Let's look closely at how these choices are made in architecture to find parallels that can help guide this, too-frequently glossed-over, aspect of organization design.

Material choice limits shape
What are the initial choices an architect must make when starting to design a building? After consideration have been given to the site and its preparation, the designer selects an appropriate building material. Will the structure be made of stone or brick, wood or glass, concrete or steel - or some combination of these? These decisions come early in the structural design process because the characteristics of the material chosen will, to a great extent, determine the kinds of structures possible to build.

During Greece's Golden Age builders were acutely aware of the limitations of stone. The size of their door or window openings were limited to about ten feet, the size of the stone that could be placed a top two columns, without breaking in the center and crashing down. To get around this restriction, the Romans invented concrete enabling the construction of massive aqueducts and the famous Colosseum. But finding an alternative to the "heavy look" and large sites required by these concrete and stone structures, however, had to wait almost two thousand years until engineers such as Gustave Eiffel and John Roebling perfected the use of structural steel. Today, use of combinations of concrete and steel make commonplace spans many times wider and taller than these classical structures.

Every building material has certain inherent properties, some helpful, others constraining. Because architects rely on materials to help distribute the weight of the loads they bear, they provide special attention to the ways the material under consideration deals with the pushes and pulls the structure is likely to encounter.

Materials distribute weight
When a material is pulled, it is in tension, and it tends to lengthen over time. The opposite occurs when something is pushed. It is in compression, and eventually shortens.

Brick is a material whose nature makes it strong when compressed, but weak when in tension. It makes strong columns, arches and load bearing walls, but is dangerous to use as a beam where the pressures on it will pull it apart.

Concrete is a much better choice for a horizontal beam, when reinforced, and can also provide great strength in vertical columns. It is usually reinforced with steel - a material able to deal well with tension. Steel alone, however, can dangerously distort in fires. But surrounding it with concrete provides protection from the heat. When bars of steel are embetted in concrete a very versatile building material, reinforced concrete, is created. It combines the pull-resistance of the metal with the pressure-handling of the stone in the concrete. This combination of qualities has made reinforced concrete one of the most popular building materials.

Materials cope with change
Good construction materials need more than raw strength to be useful. Strength is fine when coping with the day-to-day forces a building must face: its own weight and that of its occupants. But at times the pressures on a building are less predictable and more extreme - hurricane force winds, an over-capacity crowd, mountains of snow deposited by a once-in-a-century blizzard, or the motion trauma induced by an unexpected earthquake. The quality of a material that allows these dynamic forces to be managed is its elasticity.

Most materials change shape when under pressure. The ability of the material to return to its original appearance when the pressure stops is called elasticity. Most materials, within limits, are elastic. But when these limits are exceeded, the material become permanently deformed. They are then said to behave plastically.

There are also limits to plasticity. If the pressures continue, materials eventually fail, and the structures they support crumble. This happened to the Oakland Bay Bridge in the 1989 California earthquake. Other, less sudden but equally devastating, changes in plasticity have led to collapses of one of the great Egyptian pyramids in Meidum and of a beautiful, but never-finished Gothic cathedral north of Paris in Beauvais.

Some materials, such as glass, do not provide the observable warning of plastic deformation before they fail. Their inherent brittleness makes them useless in situations where the forces on them can quickly come and go. This is why glass, which actually is stronger than steel in dealing with forces such as tension and compression, is useless for most structural purposes.
Of course architects consider non-structural factors as well as these when choosing materials with which to build. Cost is always a consideration, as is availability. The inherent beauty of a material, and how well it harmonizes with the site and its surroundings, are seldom ignored. But it is these structural properties - strength, elasticity, plasticity and brittleness that most frequently cast a veto over the choice of building block.

Selecting appropriate materials
To cope with these limitations architects use a number of strategies when selecting basic building blocks.

1. They look for materials, such as concrete, that can be reinforced.

Combining two materials into one building block allows them to complement each other, and that block to have greater strength and versatility.

2. They consider composites when possible.

Composites are a mixture of several materials. Unlike the simpler reinforcement process, where each material retains its own identity and properties, making a composite involves the creation of a new material with unique characteristics. Concrete was an early composite, made by combining cement with sand, stone pebbles and water. Some plastics have properties that may make them attractive ingredients in future composite materials that are able to overcome plastic's inherent brittleness. Making a composite frequently requires the expenditure of energy, and careful watch over the proportions of each ingredient.

3. Architects also differentiate load from non-load bearing materials.

They make sure that only materials with appropriate structural qualities are used in situations where they must support the building. Materials whose contribution is primarily aesthetic are not ignored, they are just kept away from these places.

Architects never take the characteristics of their building materials too much for granted. They cannot. The structural integrity of their work depends on their choice of building blocks, and their knowledge of how the blocks cope with change. Organization designers, however, are not always as careful.

Organizational building blocks
Lip service is commonly given to people being the basic unit from which the company is organized. Unfortunately this tends to be more of an aspiration than an accomplishment. Employees are frequently given token acknowledgement as the business' "most important asset," but their characteristics are then felt to vary too much, or be too unstable, to serve as the real basis around which most corporate organizations can be planned.

Designing an organization around the psychological make-up of each member, or around each's wants and needs is a very difficult undertaking. It would be similar to an architect attempting to reengineer the molecules that comprised the steel or concrete to be used in a building. It is not an impossible task, and may lead to some useful innovations, but the skill required is beyond that possessed by the architect. Likewise the organization planner is usually unable to adjust motivations and personalities to the requirements of the organization (not that some have not tried!), but must ensure the organization design realistically reflects individual's potentials and limitations.

Unfortunately few organizations deal well with these. Instead contemporary organizations tend to be built from the pairing of "workers and bosses." What the company needs to have done is usually thought of functionally: design something, make it, sell it, service it, etc. The functions are subdivided by skill level, and individual jobs then defined around the resulting subdivisions. Integral to the job being accomplished, but apart from the work of the accomplisher is the overseer or boss.

All of this may have made good sense at the start of the industrial revolution, as thousands of unskilled farm laborers came to work in the early factories. It even had some appropriateness in the mid-20th century as industries across the world joined a mass production race to satisfy the decades of consumer demand pent up from the preceding world war and depression. But both the practices of functionally dividing labor and separating the supervisor from what is being supervised have become outmoded and counterproductive.

Legacy of the industrial revolution
Some of these difficulties were apparent from the outset. Adam Smith, the economist usually credited with giving the industrial revolution its intellectual justification, also provided a frequently ignored warning in The Wealth of Nations. "The man whose whole life is spent performing a few simple operations has no occasion to exert his understanding.... He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become."

Concerns such as these set the agenda for many political philosophers and social scientists ever since. Karl Marx elaborated on the downside of the industrial revolution in many of his writings, Emile Durkheim, considered the father of modern sociology, took the opposite tack and stressed the need for workers to get help adjusting to the new realities of industrial life. These arguments continued for many decades with many humanistically-oriented psychologists decrying the alienation of the workers, and others - taking minute division of labor as a modern economic necessity - suggesting ways to ameliorate its worst consequences. Frederick Taylor was one such rational reformer, Elton Mayo of Hawthorne experiment-fame, another. A generation of organization development experts later took cues from Chris Argyris and his critique of many industrial environments as places poor at furthering psychological growth and self esteem.

From these efforts have come many prescriptions for improvement. Experiments in workplace democracy, employee involvement, and empowerment have been tried in many companies, but their track record is mixed. Some have had positive results, such as those put in place by Ford Motor Co. and Procter & Gamble in the 1980s. Some have failed and been discarded. Others have been valiant efforts with only limited results, like the Volvo attempt to completely dismantle the assembly line in a new plant in Uddevalla.

Lessons from the middle ages
In this town in southwestern Sweden some Volvo-watchers felt the company was trying to turn its back on the industrial revolution. There a factory was designed to enable a small team of highly skilled workers to assemble an entire car. During this 2-3 hour process the team is aided by a state-of-the-art system for materials handling that allows them to keep their attention on just the task at hand. Each eight-to-ten-employee team works on several cars at once, and each team member receives enough training to be able to do at least half of the jobs required to assemble a Volvo.

Unfortunately the total number of labor hours to build a car this way is more than twice those Volvo requires to produce the same result in its more traditional assembly line plant in Belgium, and almost three times as many as spent by its heavily automated Japanese competitors.

Lest the baby disappear with the dirty bath water, Volvo's experiment at least had a measure of success in dealing with some of the human problems of the traditional assembly line: worker boredom leading to excessive absenteeism and turnover. But for solutions to be lasting they must address economic as well as humanistic concerns.

Volvo was probably on the right track, though. Perhaps returning, conceptually at least, to the middle ages might be useful way to see where things went wrong when the world industrialized.

The skill hierarchy before Adam Smith
While most economic activity in preindustrial revolution Europe centered around agriculture and trading, a formal system of guilds existed for several hundred years to guide the development of skill and knowledge-based products. Though some existed mainly to enforce their monopoly over a particular craft or technique, most also ensured that a system was in place for new entrants to the field, called apprentices, to learn the trade. They started by developing speed and accuracy, and learning good work habits. After a several-year training period, under the direction of an established "master," they were certified as journeyman and able to practice their craft where ever they could find work. At times the journeymen would work with several established masters to get exposure to more facets of their field. Journeymen stone masons, for example, would also often use this period of their career to visit nearby cathedrals, study their construction, and add new building techniques to their repertoire. In addition to rounding-out the individual journeyman's skill base, these exposures to different approaches and customer requirements helped diffuse know-how throughout the craft.

This method of supervised and self-directed experience-gathering ensured that every skill necessary to produce whatever the journeyman made was part of his repertoire (almost all were men at the time these practices developed).6 The seasoned artisan of the middle ages actually had two classes of skill. One was in depth knowledge of the various routines and subroutines required by his particular craft, carpentry, jewelry making, boat building, or whatever. The other was the flexibility necessary to know when to shift from one routine to another as the needs of his end-product dictated. Each journeyman had to do many particular things well.

The master was at the top of this craft hierarchy. He had also acquired several other types of skills, probably by imitating the actions of more successful and established masters. One involved the inventiveness needed to advance the overall development of the craft. Another the teaching ability to develop apprentices. And a third, the merchant-instincts required to sell what he had made. Staying close to the customer was built into the master artisan's job description - the factory was frequently also the store.

This way of organizing work tended to produce small enterprises, more diamond shaped than pyramidal. Often set up as family workshops, they were based in the master's home, with support services provided by members of the master's family. They each employed two or three journeymen, and one or two apprentices. But not all were so small.

A variant on this pattern, useful when the market for the artisan's product was large and the cost of raw materials high, was an interconnected network of small workshops. The work of these would be coordinated by a merchant entrepreneur with access to some capital, who would advance raw material, see that production was coordinated when it involved several workshops working sequentially, and then sell or export the production. These early enterprises were common throughout Europe, and included a 60,000 person textile-producing network centered in Florence in the mid-1300s, and a thriving fifteenth century dispersed metal working group based near Cologne.

The era of fragmentation
Then came the industrial revolution. Driven by a combination of capital-intensive new technologies, newly emerged mass markets, and global trade based on national competitive advantage, production was organized around the idea of "division-of-labor" instead of "craft specialization." The work formerly done by one artisan was broken down into its component parts, which in turn were mechanized where possible, and semi-skilled workers hired to do part of the job or to tend the machines. New roles, those of supervisor, middle manager and production planner were created to provide the oversight and coordination formerly done by individual journeymen or masters. Or, in brief, authority over the content of jobs was given to people who, themselves, were not actually doing the work. This newly created managerial authority took "from workers the right to define their own job, their own skill level, their own standards of quality..."

This practice, originally intended to create a rapid growth economy based on a low skill work force, did help assimilate nineteenth century agricultural workers into industry. But once there it imprisoned them. Division of labor is an addictive practice. Work breakdown - promoted by those whose authority and careers tend to benefit from it - tends to beget more work breakdown, taking the pressure off the employer or the public school system to continually upgrade employee skills. Once started the practice tends to be self reinforcing, producing a deskilled work force. One American executive echoed Adam Smith during mass production's hay day in the 1950s: "One has the feeling of division of labor having gone wild, far beyond any degree necessary for efficient production." He called this practice "fantastically wasteful" for both industry and society because it does not make use of people's "complex and multiple capacities."

By the mid-twentieth century most corporate organizations were based on the concept of functional specialization. Work that was once whole had became fragmented. The focused skill of an individual was diffused into the skill of an entire factory. And, in the words of one boat builder working in a 20th century shipyard organized around this logic: "... the common view was that mechanics check their brains at the gate when they come to work."

Bucking the trend
This shipbuilder's lament is true in many - but not all - corporations. Excessive division of labor is a problem many of Germany's Mittlestand companies managed to escape They took advantage of a strong national apprenticeship program to ensure their incoming workers are well grounded in the skills most critical to competitiveness. As mentioned earlier, they keep their business focused around a few key capabilities, so they can afford to remain at the state-of-the-art in them. Few medieval goldsmiths attempted to grow revenues by also doing blacksmithing on the side.

Just as the master artisan had regular contact with his customers, many Mittlestand firms avoid isolating employees with customer contact responsibilities into sales or service departments. When customers call with problems, a team with members from the factory and the product development lab may be dispatched along with the customer service technician. In addition to all contributing to the problem's solution, all carry back to their ongoing assignments a greater appreciation for what happens when their company's product leaves the safety of the factory walls. The chief executives of these companies also spend high percentages of their time away from headquarters and with customers. Ideas for product enhancements frequently come from these visits, and more than once the company president has been forced to rely on his detailed product knowledge to perform an on-the-spot repair.

When in-person customer contact is difficult - as is the situation at Claas, a Mittlestand builder of harvesting machines which sells primarily through independent farm equipment distributors - innovation replaces organizational rigidity. They set up several company-run retail outlets, not to compete with their distributors, but to create a forum for direct customer contact. Employees from a variety of Claas' functional units spend time in these stores, directly interacting with farmers and keeping abreast of their harvesting needs. This keeps Claas from relying solely on the "division-of-labor" filtered information that distributors or third party market researchers might provide.

While these German companies never lost their link to the era of guilds and master artisans, some other industries are taking advantage of new technologies to recover some of the "wholeness' that once was in most jobs. The American steel industry is one that is moving full circle on this issue.

The 1890s were a time of great turmoil in the steel industry. New steel-making technologies coupled with strongly increasing demand for relatively uniform products led industry executives to reconsider the craft-like organization of jobs in the steel mills. The labor conflicts that came from this led to many violent work stoppages, but the industry eventually reorganized these jobs in a way that put a management group more in control of the production process. Then started an industrial roller coaster: many decades of compounded growth and prosperity followed by an abrupt decline.

Currently this industry, in a much weaker position as the market for steel has globalized, is using modern mini-mill technology to rebuild its competitiveness. One of the leading mini-mill producers, Texas-based Chaparral Steel, has become the world's lowest-cost steel maker, in part, by eliminating the now dysfunctional organizational principals of the industrial revolution. Distinctions between workers and managers are difficult to find. All dress the same, are paid salaries, and drink free company-provided coffee. All are expected to keep customers happy and keep the technology current. All are part of a continuing education program that stresses the core technical and business disciplines Chaparral's operations are based on. New mills are built with heavy employee input into their design; recently two maintenance workers invented a $60,000 machine that tied bundles of steel rods together, and replaced a slower quarter million dollar device that used to do this job. 14
This company, like many of the Mittlestand firms, minimizes the functional split between those who make and those who sell. Everyone of its 900 employees is required to make sales calls.

Efforts, such as these, to combat these harmful effects of the industrial revolution needs to be ones that fight fragmentation of work and jobs. Eliminating excessive work fragmentation requires rethinking the way work has been packaged into jobs or, in other words, reconsidering the nature of the basic building blocks of our companies.

These, we have observed, are too often taken for granted to be the individual worker and the worker's boss. As the primary "raw materials" from which the company's structure is fashioned, they need to be examined closely to ensure they can respond adequately to the wide range of pressures facing the new corporation. While companies preparing for the twenty-first century cannot mechanistically revert to the middle ages to find organization structures to imitate, they can adapt its practice of job wholeness to create new ways to get work done in the post-industrial revolution era.

Static and dynamic forces
This period includes forces that are ever-present parts of the business landscape. They include pressures to continually get more done for less, a "push" with an effect similar in some ways to the compressive force on materials used in building construction. As the world's economies become less local, more interconnected, the globalizing labor market will work to the severe disadvantage of any business with less than world class productivity. This results in an ongoing requirement, for many companies, to maximize resources, to squeeze more out of what they have. This is not a pressure that will come and go with fluctuations of the business cycle, but an ongoing fact-of-life during the next several decades as an integrated global economy emerges.

Corporate structures are increasing expected to deal with tension-producing forces, as well as compressive. Among them is the tendency for companies to become increasingly "strung out" as they respond to an expanding multitude of masters. If the 1980s was a decade of shareholder's demanding special attention, the nineties have started with the customer's wishes being place on a high pedestal. And before this decade closes its likely that both employees and their governments will demand greater focus on their needs and requirements. On top of these whiplash-inducing pressures are the ongoing operational tensions arising from the continuing use of speed as a competitive weapon.

As if these ongoing pushes and pulls are not enough of a challenge, most businesses also face the requirement to be more flexible than ever in deploying - and redeploying - resources to match the moving targets provided by customers' requirements and competitors' advances. The globalizing marketplace tends to be unforgiving when corporate inertia or bureaucracy limits flexibility. This degree of organizational elasticity - stretching to accommodate special situations, then returning to the original shape to meet regular demands - is already a necessity in many industries. Soon it will be mandatory in most.

A measure of plasticity is needed as well. The ability to change an organization's shape, to adapt to new markets or to reconfigure around emerging capabilities, is another dynamic quality in the repertoire of the new corporation. This attribute - the ability to completely reorganize every several years without succumbing to terminal brittleness - is a rarity in most companies today. But it will be common among those that thrive into the coming century.
What material is best at handling this combination of static and dynamic forces? How should a company package its jobs to have the strength to deal with tension and compression? How can the qualities of elasticity and plasticity be maximized, and that of brittleness avoided?

No one best building block
Just as architects have never found a single, always appropriate, building block for every structure, organization designers are also unlikely to find one But the old building blocks of narrowly defined jobs used in tandem with traditional supervision are not working. Perhaps the lead of the architect can be followed to select organizational building blocks that can be adjusted to cope with the forces a particular firm faces at a particular time. In keeping with what has worked for the architect, organization planners can:

- reinforce jobs to ensure they have the strength to resist the tensions and compressions they must increasingly cope with;

- use the organizational equivalent of composites - teams - when job reinforcement alone is insufficient to provide the company with an appropriate degree of flexibility; and

- make sure that the company's managers are in load-bearing roles - one's vital to the organization's structural integrity and drivers of the business' ongoing adaptability, not mere definers of unneeded internal walls.

Reinforced jobs, composite teams, and load bearing managers - these may well be the most useful raw materials from which the structure of the new corporation is shaped. Let's examine how each differs from the building blocks currently in place in many businesses.



© Robert M. Tomasko 2002

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