There’s a fascinating concept in sociology and institutional economics I’ve been reading about for the last few days. It’s an attempt to explain why, in the face of competitive pressure, firms typically tend to look the same as each other. It’s called institutional isomorphism.
The idea behind it is this; it is fundamentally odd that different companies within the same industry experiment with organisational structure so rarely. Given the fineness of margins in various industries across the world we should expect to see more variance in the structure of organisations — particularly, I think, in cross-sectoral work, like media agencies working with clients.
But we don’t. Instead businesses look remarkably similar to one another, even in the face of evidence that varying one’s structure can have implications for productivity, wellbeing, or profitability.
An example — in a lot of advertising and media agencies, there’s a perceptible mirroring that happens when agencies take on clients for a long time. Imagine a very cool advertising agency in Shoreditch has been given a really long term contract with a soft drink manufacturer. At the start what appeals to the manufacturer is the unorthodox nature of the agency; they might have a non-hierarchical structure, open-plan office, no specifically defined roles, etc. Their work process might be very different from the manufacturers, with an emphasis on risk and testing new things and innovation. The agency might sell themselves on how this enables them to be exceptionally creative, or particularly quick and productive. They look a bit like this, with the client on the left and the agency on the right:
All of these things might be true. They really might be a productive, agile, creative and innovative company.
The interesting thing is over time these things become less and less true. In order to more closely serve the needs of the manufacturer, possibly related to client demand or possibly in pre-empting it, the agency will slowly restructure itself around the organisational design of the client — management will layer itself the same way as the client organisation.
In place of the blob of people who do basically everything at once, the agency will begin to structure itself more othodoxically, with several layers of management and communication, mirrored senior positions, and similar working time schedules.
I’m not sure yet what all this means — I think to one extent it’s probably an explanation for how ideologies reproduce over time as functions of power exercise (here the power is almost entirely with the client, who can at a whim remove significant amounts of business from the agency if certain demands aren’t met). This isn’t to say that this is explicitly coercive (along the lines of “we demand you have a Client Services Director or we’re out!”), but it could be pre-emptive (“we’d better have a Client Services Director to speak to the boss of the client company otherwise they might think we don’t take them seriously!”).
Other explanations emerge from reactions to uncertainty — not knowing the optimal solution leads to imitation of basically-effective modes of organisation, even when they aren’t as productive as possible. If you were to start a company tomorrow, probably you’d pick a fairly ordinary hierarchy if only because you don’t really know anything else. Every other structure is obscured or hidden.
The final explanation is normative — that is, organisations act according to rules set on a broader scale. These might be procurement rules in public sector organisations (“in order for us to buy from your company you must be set up as a PLC and have 15 staff in comms and 15 in evaluation and 15 in metalworking all of whom must be British citizens…”) or through inter-industrial hiring (“well back at my old company we would structure projects like this…”).
Overall I think this is one of the more obvious ways power relationships function at scale. On an individual level we find it very easy to understand when somebody uses their power to change the behaviour or beliefs of other people — on a broader scale it becomes harder to see.
DiMaggio & Powell (who popularised the concept in sociology) give these organisational- and field-level predictors for institutional isomorphism (and incidentally ways to escape it):
Organizational level predictors
A-1: The more dependent on another organization, the more alike it will become
A-2: The greather the centralization of resource supply, the more it will change to resemble the organizations it is dependent upon
A-3: The more uncertainty the more an organization will model it’s structure after successful firms
A-4: The more ambiguous the goals, the more an organization will mimic a successful one to establish legitimacy
A-5: The greater the reliance in using academic credentials to choose staff, the greater will be similiar to other organizations. Also the greater the participation of members in professional organizations, to more allike the ogranizations will be.
Field Level Predictors
B-1: The greater the extent the field is dependent upon a single source, the higher level of isomophism.
B-2: The more interaction of the field with the state, the more isomorphism.
B-3: The fewer the number of organizational models, the quicker the isomorphism
B-4: The more technological uncertainty or goal ambiguity, the greater the rate of isomorphism
B-5: More professionalism in the field, more isomorphism
I suppose the question that’s left is how useful this process is.
If you have a lot of power as or within an organisation already I’d imagine it’s pretty great. People, almost by default, begin to copy how you do things without them necessarily knowing how or why you do them, acting as an ineffective facsimile purely because you’re already doing it and not failing.
If you don’t have any power, it seems pretty crippling.