Introduction




If we accept that businesses today operate increasingly in a knowledge economy, and knowledge is their most significant resource, what type of organisational structure should be adopted by businesses to prosper in this environment?
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Gerard Fairtlough’s book The Three Ways of Getting Things Done: Hierarchy, Heterarchy and Responsible Autonomy in Organisations (2005) provides some useful thoughts that might help us to answer this question. In this page, I review this book and investigate how its ideas help us to think about the management of organisations in the knowledge economy.

Gerard Fairtlough


Whilst the author of what would be generally described as an ‘academic’ book on organisational theory, Fairtlough himself was far from being a traditional academic. He was initially trained as a biochemist and spent the first 25 years of his career working for the Royal Dutch Shell, where he rose to the post of Chief Executive for one of its main UK subsidiaries. In the 1980s he left Shell and branched out into more entrepreneurial activities, setting up and running several small businesses in the biotechnological and pharmaceutical sectors. He also acted as a ‘business angel,’ provided venture capital to promising and innovative businesses. He served as an advisor to various government bodies and academic institutions and was involved in the management of science and engineering research.

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It was only late in life that he turned his attention to the more explicitly theoretical and abstract themes that are addressed in The Three Ways of Getting Things Done, thereby engaging with more academic debates about the nature of organisations. (He died in 2007 at the age of 77 and the book was only published two years before his death.) However, his personal experiences as a manager and an entrepreneur throughout his earlier life infuse all of these theoretical reflections and the practical problems of managing organisations large and small are never far from his thinking. In this sense, he is different from university-based researchers, whose connections with real organisations are frequently tenuous and indirect.

The book’s quirky and novel feel is, thus, largely due to Fairtlough’s ability to keep his feet firmly rooted on the ground and close to the realities of organisations, compounded with his distance from the academic community and its petty and unimportant squabbles.

The Problem of Coordination


Fairtlough’s book is largely a novel and illuminating attempt to address what is referred to in the academic literature as the ‘problem of coordination’. But what is this?

Whilst there are many things we can easily achieve by ourselves – say, cooking a meal or going for a jog – many other goals can only be accomplished if we cooperate with other people and therefore coordinate our activities with them – say, building a car or teaching a class. Once we have to work with other people in order to achieve specific goals, then we face the tricky problem of determining just how we should cooperate with each other. We therefore need to address these issues

  • Who (if anybody) is going to tell other people what to do
  • How people are going to be grouped together in an efficient manner
  • How tasks should be completed
  • Who has to communicate with whom
  • How resources should be allocated between activities
  • What rules should govern people’s behaviour

All these issues are frequently classified as aspects of the ‘problem of coordination’, or what Fairtlough prefers to call the problem of determining the best way of ‘getting things done’.

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Fairtlough suggests that there are just three solutions to this problem of coordination – his three ways of getting things done of hierarchy, heterarchy and responsible autonomy. But all of these solutions, he argues, involve a combining together of only four dimensions.

  • System: Any solution to this problem of coordination – or any viable way of getting things done – needs to establish procedures, routines, rules and common operating practices, or what might be referred to as a system. For example, health and safety procedures and HRM practices are examples of an organisation’s system.
  • Organisational Culture: A viable way of getting things done within a cooperative enterprise also needs an appropriate culture – a set of largely tacit and informal beliefs, knowledge and values – that aids effective communication and cooperation between all participants.
  • Leadership: For Fairtlough, leadership involves the capacity of a person (or a group of people) to make sense of what is happening around them, to have the vision of what needs to be done and the ability to persuade others to pursue this vision. Leadership – categorised in this way – is an essential component of any viable way of getting things done.
  • Power: The capacity to coordinate the affairs of a number of different people and their collective activities requires the effective use of power. It generally derives from people’s control over scarce resources, which are then employed to bring about certain preferred outcomes. For example, when a group of people have control over an organisation’s budget they are then well placed to ensure that it is spent on resources that reflect their specific goals and aspirations

The Three Ways


Of course, these four different dimensions of getting things done can be realised in many different ways. For example, leadership can be either democratic or authoritarian in nature, whilst it is possible for power to be held either widely by a large group of people, or concentrated exclusively in the hands of the few. Once we acknowledge these possibilities, we’ve gone a long way to understanding what is behind Fairtlough’s three ways of getting things done, since in each one of them these four different dimensions are realised and assembled together according to different principles. So, what are these three ways?

Hierarchy


The first way to bring together these four different dimensions is by means of a hierarchy. According to Fairtlough, in this way of getting things done there is a single ruler at the apex of the organisation who has total control over all of it. This ruler then delegates some authority onto a series of lesser rulers, and so on down the pyramid of the organisation. The consequence is, of course, that those at the base of a hierarchical structure lack any meaningful access to power and authority.

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Today, hierarchy is to be found in all organisations that have broadly bureaucratic and 'mechanistic' structures. This is because in such these organisations there are tall structures with many managerial levels, clear chains of command and explicit rules and procedures governing how employees must undertake their work. The flow of communication is generally vertical – exclusively down and up the structure. Their managers generally adopt an authoritarian leadership style and power is overwhelmingly concentrated in their hands.

An important component of Fairtlough’s argument is that hierarchy is generally perceived as being the only viable way of getting things done. I think he’s attempting to convey the idea that it is generally taken for granted by most of us that, if we have to organise any activity involving a reasonable number of people, then the use of hierarchical arrangements is really the only way to do it. To us this seems a commonsense, obvious and rarely questioned assumption that is, thus, what Fairtlough refers to as ‘hegemonic’. A significant – and perhaps perverse – consequence is that we generally discount and ignore the possibility that there are frequently other – perhaps more effective – ways of getting things done (which brings us neatly to heterarchy and responsible autonomy.)

Heterarchy


The second way of coordinating work of several people is via a heterarchy. Whereas hierarchy is as based around a single ruler, heterarchy is founded on multiple rulers. Thus, any viable social arrangement must involve a sharing of power between these different rulers and achieving an appropriate and workable balance of power between them.

The character of this way of getting things should become easier for you to grasp once we examine couple of examples of heterarchies provided by Fairtlough:

Partnerships: In a law firm all partners are of roughly equal status and, thus, there’s a balance of power between all of them. In theory at least, no one partner is in a dominant position. An important consequence is that all partners are involved in all key decision making and the management of the organisation.

Strategic alliances: Here businesses decide to cooperate together in order to achieve their joint objectives. For example, a small business, having developed a new product, may lack the necessary resources to develop it further and to market it successfully. It may then form alliance with another business that would undertake these activities on its behalf. Here the relationship is heterarchical, since neither business dominates the other and both are involved in all decision making about the future development of the product.

Responsible Autonomy


The third way of getting things done is via what Fairtlough refers to as responsible autonomy. Here there is no external control over the activities of a unit and the participants within it can determine – as they see fit – just how best to manage and coordinate their own activities. Thus, the unit is autonomous. However, at the same time the unit is externally accountable for what it achieves and it is likely to face some form of sanction or punishment if it fails to accomplish whatever goals it has. Thus, the unit is responsible.

As with heterarchy, some pertinent examples might make it easier for you to get your heads around this notion of responsible autonomy:

Grants to voluntary organisations and NGOs: the government might provide a grant for a project to a voluntary organisation or a NGO. It is then for that organisation to determine for itself how best to employ these resources in order to achieve its objectives – in this sense, it is autonomous. However, it is also held accountable by the grant giving body and it will suffer some kind of penalty – such as the withdrawal of further funding – if it fails to achieve its objectives.

Semco: This is a Brazilian company with an extraordinary management philosophy and where responsible autonomy is practised (Semler, 1993). Individual employees and business units are given enormous amounts of autonomy and discretion in determining what they should be doing. Yet the nasty sting in the tail for all of Semco’s employees is that they are at the same time held responsible for their results and, if they fail to deliver, then the business is liable to deal with them very severely and harshly.

Ourselves: We might judge that this practice of responsible autonomy best characterises how we coordinate our work in this module. This is because all participants have the maximum amount of discretion in deciding what themes should be covered by the module and how it should be managed. Yet this increased autonomy comes at a cost and it has, so to speak, a ‘dark side.’ This is because all of us will be held directly accountable for how we use this increased autonomy – students through the assessment process and staff through feedback from students at the end of the year. If we fail to deliver things for which we have taken responsibility, then we’ll have to have to face the largely negative consequences.

Another Perspective on the ‘Problem of Coordination’


Other researchers, like Fairtclogh, have also addressed this ‘problem of coordination’ and have attempted to identify all of the ways in which people can engage in cooperative enterprises. One popular and influential perspective also suggests that there are three principal modes of coordination, but it goes on to suggest that these modes only bear a superficial and passing resemblance to those identified by Fairtlough. These are markets, hierarchies and networks. (See Grahame Thompson’s Markets, Hierarchies and Networks (1991), which was in turn inspired by a short paper by William Ouchi entitled Markets, Bureaucracies and Clans (1980), which is available in Thompson's book.)

According to this perspective, the three ways of getting things done are:

Market: According to this perspective, a market is a powerful and efficient mechanism of coordination. What is a market and how does it coordinate the activities of many people? Well, all markets involve voluntary exchanges of goods and services between producers and consumers at specific prices. Through this process, the producers are able to identify what goods and services their customers are willing to purchase and at what prices. Armed with this information, they are then able to alter the nature and prices of the goods and services they are producing in order to meet the needs of these customers. Thus, the wonder of markets (that have enchanted economists from Adam Smith onwards) is that they are able to coordinate almost spontaneously via a 'hidden hand' the activities of many manufacturers and consumers, even though they might be widely dispersed and entirely unaware of each other’s existence. When you reflect a little bit on what a market is able to do, then they I think you have to conclude that they are indeed very powerful mechanisms of coordination.

Hierarchy: The second mode of coordination, according to this perspective, is hierarchy. We’ve already discussed it at some length when we were investigating Fairtlough’s model.

Network: The third and final mode of coordination is a network. According to this perspective, the members of a network are more or less equal and, thus, networks are non-hierarchical in terms of their status and powers structures. Communication within a network tends to be horizontal and between people of a similar status. Central to the efficient operations of a network is the fact that all of its members endorse common cultural values and beliefs that therefore prescribe certain appropriate norms of behaviour. High levels of trust between members are also important.

The Three Ways and the Knowledge Economy


Here I want be much briefer than I’ve been so far with the first two sections. In discussing the relationship between the three ways and the knowledge economy, Fairtlough makes two important observations:

Fairtlough argues that the contemporary world of business and work is significantly different from the same world of a couple of decades ago. He highlights several factors as firm indicators of the ways in which the economy has changed – the process of globalisation, the deregulation of different markets, the increased use of IT, new manufacturing technologies, awareness of the impact of the activities of business on the natural environment, changes in the labour market and broader cultural and social changes. These are trends we’ve explored in the pages on the Apple economy and knowledge capitalism.

He goes on to assert that the practice he refers to as responsible autonomy is best suited to this new reality and that businesses need to adopt it in order to thrive and develop within it. Just why this might be case is, unfortunately, not explored with any degree of conviction and clarity by Fairtlough. However, I suspect he’s envisaging (following the contingency theory of Burns, 1994) that the flexibility offered organisations by responsible autonomy enables them to respond rapidly to the new market opportunities generated by a dynamic economy.

Questions


  1. Do you agree with Fairtlough that there are only 'three ways of getting things done'? Can you find examples of each of these different modes of coordination? Is the model too tidy and doesn't clearly explain all of the messy reality of businesses today?
  2. Are they 'ways of getting things done' that haven't been identified by Fairtlough? What are they?
  3. Do you agree with Fairtlough's view (and also mine) that something like 'responsible autonomy' is the most appropriate structure for a business operating in the knowledge economy? What is it about this economy - and knowledge as its principal resource - that lends support to this hypothesis?

References


Burns, T (1994) The Management of Innovation, Oxford: OUP

Fairtlough, G (2005) The Three Ways of Getting Things Done: Hierarchy, Heterarchy and Responsible Autonomy in Organisations, Bridport: Triarchy Press

Semler, R (1993) Marverick!, London: Random House

Thompson, G (1991) Markets, Hierarchies and Networks

Online Resources


Triarchy Press Website: http://www.triarchypress.co.uk