Self-Managing Organizations

Michael Y. Lee; Amy C. Edmondson

Article | Research in Organizational Behavior | 2017

Self-Managing Organizations: Exploring the Limits of Less-Hierarchical Organizing

Abstract

Fascination with organizations that eschew the conventional managerial hierarchy and instead radically decentralize authority has been longstanding, albeit at the margins of scholarly and practitioner attention. Recently, however, organizational experiments in radical decentralization have gained mainstream consideration, giving rise to a need for new theory and new research. This paper reviews the literature on less hierarchical organizing and identifies three categories of research: post-bureaucratic organizations, humanistic management, and organizational democracy. Despite this extensive prior work, scholarly understanding of radical decentralization remains limited. Using the term self-managing organizations to capture efforts that radically decentralize authority in a formal and systematic way throughout the organization, we set forth a research agenda to better understand less-hierarchical organizing at its limits.

Keywords: Self-Managed Organizations; Self-Managed Teams; self-organizing systems; self-managing organizations; Flat Organization; Decentralization; organization design; non-hierarchical organizations; less-hierarchical organizing; Organizational Structure; Organizational Design; Research;

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Lee, Michael Y., and Amy C. Edmondson. "Self-Managing Organizations: Exploring the Limits of Less-Hierarchical Organizing." Research in Organizational Behavior 37 (2017): 35–58.

Case | HBS Case Collection | December 2018

Corporate Transformation at Merck KGaA, Darmstadt, Germany

Joseph B. Fuller, Amy C. Edmondson, Daniela Beyersdorfer and Tonia Labruyere

When Stefan Oschmann became CEO and Chairman of the Executive Board of Merck KGaA, Darmstadt, Germany, in 2016, the company had started its transformation from a mid-tier traditional German industry player to a global modern science and technology player. The restructuring and portfolio overhaul led by Oschmann’s predecessor Karl-Ludwig Kley since 2007 had been approved by the Merck founding family in its 13th generation, which still owned the majority of the shares. Its intermediate results had been encouraging. After three large acquisitions (Serono, Millipore, and Sigma-Aldrich) that broadened its reach from healthcare and pharmaceuticals into life sciences and performance materials and an internal optimization program, revenues and profitability had doubled in the decade leading up to 2016. But more needed to be done. Preparing for the company’s 350-year anniversary in 2018, Oschmann had kept up the pace of change, and announced further divestments and restructurings, sparking reactions from employees who expressed increasing exasperation about the new measures. In the fall of 2017 Oschmann and his Executive Board had to decide on the best strategic option for the company’s consumer health division. Should they divest a division that lacked scale but that with its consumer brands in pain and cold remedies was viewed as a symbol of the company’s origins? Was more change too much change in such a short time?

Keywords: Transformation, Change Management, Corporate governance with Family Ownership;

Citation:

Fuller, Joseph B., Amy C. Edmondson, Daniela Beyersdorfer, and Tonia Labruyere. "Corporate Transformation at Merck KGaA, Darmstadt, Germany." Harvard Business School Case 319-072, December 2018. View Details

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This paper complements the manager-centered analysis of dynamic capabilities with a team-based approach focused on team learning. We argue that team learning capabilities intertwine with managerial cognitive capabilities to support the processes of sensing, seizing, and reconfiguring. We draw from the literature on team learning to develop four categories based on the orientation (exploration/exploitation) and locus (internal/external) of learning in teams: reflexive, experimental, contextual, and vicarious learning. We integrate these categories into the dynamic capabilities framework to show their particular relevance at different points along the sensing-seizing-reconfiguring pathway and assess their potential impact on innovation and strategic change. The framework contributes by adding a meso lens to research on dynamic capabilities to help scholars better understand how learning that occurs in teams may support entrepreneurial managers in enacting their cognitive capabilities in service of sustained innovation and superior firm performance.

Cross-boundary teaming, within and across organizations, is an increasingly popular strategy for innovation. Knowledge diversity is seen to expand the range of views and ideas that teams can draw upon to innovate. Yet, case studies reveal that teaming across knowledge boundaries can be difficult in practice, and innovation is not always realized. Two streams of research are particularly relevant for understanding the challenges inherent in cross-boundary teaming: research on team effectiveness and research on knowledge in organizations. They offer complementary insights: the former stream focuses on group dynamics and measures team inputs, processes, emergent states, and outcomes, while the latter closely investigates dialog and objects in recurrent social practices. Drawing from both streams, this paper seeks to shed light on the complexity of cross-boundary teaming, while highlighting factors that may enhance its effectiveness. We develop an integrative model to provide greater explanatory power than previous approaches to assess cross-boundary teaming efforts and their innovation performance.

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Self-Managing Organizations: Exploring the Limits of Less-Hierarchical Organizing

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