OR/MS Today - August 2008|
Understanding Organizational Anarchy
Inside the "garbage can": agent-based models help explain well-known dysfunctions in managers' decision-making processes.
By Douglas A. Samuelson
Both real-life managers and teachers of management stand to benefit from recent research in organizational decision-making. What began as a whimsical, almost tongue-in-cheek characterization of how organizations decide or, more often, fail to decide now offers a promising basis for both new theory and improved practice.
Every manager has experienced the problem: deadlock, confusion and bickering, with important items seeming to take forever to get considered, let alone resolved Sometimes when a decision does get made, it seems not to be the one preferred by most of the people who supposedly collaborated in making it.
In turn, experienced managers who have tried to teach management have encountered the difficulty of conveying to students just how much real management typically differs from theory. Managers usually don't optimize, they muddle through, simply trying to stay one jump ahead of the issues that threaten immediate disaster. As C. Northcote Parkinson, renowned both as a historian and as a satirist, explained, "Many of the decisions in real management are like the one a person faces when, while crossing the street, he becomes aware of a runaway truck bearing down on him. It doesn't matter much which way you jump; the important thing is to choose one and do it quickly." Most management textbooks neglect to convey the proportion of the time many organizations spend deciding how to decide, sometimes accomplishing little else.
In a classic 1972 article, Cohen, March and Olsen argued that many organizations' decision process resembles throwing all the problems and all the solutions into a garbage can, where only chance meetings of problems and solutions produce anything of value. While this is a rather pessimistic view of performance and of the potential contribution of management, the predicted level of chaos and confusion appeals to many knowledgeable people as far more accurate than the characterizations most formal theories yield.
In all too many organizations, what we see is:
Management theories taught in business schools generally attribute such effects as these to failures of leadership, but rarely focus on the decision-making structure as the culprit. Thus, the would-be manager often emerges knowing how to recognize some signs of poor decision-making, but without much insight about how to improve it. To students, the ideas embodied in the garbage can model are abstractions that do not connect with their experience. Now, with the model available in a form easy to learn and modify, some teachers may find it easier to engage students, most likely through term projects, in learning how decision-making processes work and how they can be improved.
This simple assumption suffices to account for several common phenomena. A meeting can adopt proposals that are, in fact, not preferred by the majority of those present. Those who get to speak first, or are otherwise favored by a lower cost to enter the discussion, have a disproportionately high rate of success in getting their proposals adopted. The chairperson may deliberately manipulate the cost of entry to move the group toward proposals he or she favors, without being as obvious as direct advocacy would be. By setting a high cost of entry, on the other hand, the chair or another influential person at the meeting can prevent any decision from being made, or ensure that the decision will be simply reached but then widely resisted when the organization attempts to implement it.
Now suppose, in addition, that the chair of the meeting derives some benefit, presumably more or less (but probably not entirely) aligned with the interest of the organization, from each decision made. Each proposal has a cost to consider it again, this may be largely non-monetary, requiring time and political capital, for example. The senior decision-maker seeks, therefore, to maximize the expected total benefit from the decisions made, subject to a constraint on the time, money and other resources consumed by considering the proposals. This is consistent with a well-known observation by cognitive psychologist and Nobel laureate (economics, 1978) Herbert Simon: "The time and attention of senior decision-makers is the scarcest and most valuable resource in most organizations."
OR/MS analysts will readily recognize that the senior decision-maker's choice is a knapsack problem, also known as a bin-packing problem. A reasonable but sub-optimal heuristic is to take the most valuable item first, then the most valuable item that will fit in the remaining space in the knapsack, and so on. Assuming that value is roughly correlated with size, this procedure results in taking a few high-value items, then filling the remaining space with small, low-value items. In the meeting context, this corresponds to solving a few issues of great importance and filling the remaining decision-making time with rather trivial matters. The results could be improved by a formal optimization, which might sacrifice a few large items to deal with a number of slightly less important ones. The predicted behavior seems intuitively accurate, in the view of many experienced managers. Michael Cohen, first author of the famous article mentioned earlier, has stated in a personal communication that this line of reasoning appears to provide a theoretical explanation, previously lacking, for why the garbage can characterization seems to fit real organizations so well.
When the body is overwhelmed by some type of intruder, it begins producing all kinds of these specialized cells. This is why your lymph glands swell, to the point of becoming sore to the touch, when you have an infection. When the threat is sufficiently reduced, the body proceeds to dispatch other cells to kill many of the now-surplus specialized cells. This corresponds nicely to many organizations' tendency to hire more people and/or engage consultants, more or less willy-nilly, when in crisis, then to downsize when times get better a feature not contemplated in the original article.
From this and other evidence, then, the garbage can model has gained considerable credibility as a serious characterization of how organizations decide. The next development, quite recent, is its translation into a form more suitable for experimentation.
For some cases, the rate at which problems arrive is low enough, relative to problem-solving capacity, that the organization solves its problems using any selection rule. For other cases, the organization is overwhelmed no matter which selection rule it uses. In some cases, however, the selection rule is sufficient to make the difference between an organization that can eliminate its backlog of unsolved problems and one that gets a backlog growing indefinitely. The rules that yield best performance maximize alignment of skills and minimize wasted talent, rather than minimizing time to complete the task. Put another way, a problem-solver with lower skill levels, but a mix close to the mix required for the task, is the best choice.
The model is written in NetLogo, which is easy to learn and modify. The code is freely available from Professor Troitzsch or this reporter.
In the somewhat longer term, as researchers work out how to represent interactions among teams, this modeling approach may form the basis for a systematic investigation of the insight that motivates current U.S. combat doctrine: in an information-rich environment, networks out-perform hierarchies. Just how information-rich the environment has to be, and what processes in a hierarchy impede its performance, are among the open questions.
This model is simple enough to be a basis for teaching, as well, combining ease of learning with greater realism. Students can experiment under experienced guidance, of course with different ways of using and transmitting information within a decision structure and gain some understanding of how processes affect outcomes.
Agent-based implementations of the garbage can model, via readily available code, offer a useful tool for research, teaching and practice of management. Modifications emphasizing the role of attention and information should prove most fruitful. Results to date indicate that managers can gain much by more specifically and wisely managing their own time and attention. The ease of learning this model and experimenting with it should prove useful in instruction, as well.
Douglas A. Samuelson (email@example.com) is a principal decision scientist at Serco-North America, a general professional services company in Vienna, Va. He is also president of InfoLogix, Inc., a research and consulting company in Annandale, Va., and a frequent contributor to OR/MS Today.
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