Design Rules, Volume 2: How Technology Shapes Organizations: Chapter 9 Organizing to Rationalize

The purpose of this chapter is to explain what the technologies of flow production with stochastic bottlenecks require and reward in organizations. I argue that organizations successfully implementing these technologies are likely to have unified governance and exercise direct authority over process design, job definitions, and task assignments. As they come to employ more people, they will create hierarchical management structures as a means of managing information flows and delegating decision rights. Finally from the early 20th Century through the present, most of these organizations saw advantage in being legally organized as corporations, which could own assets, enter into contracts, and employ individuals in their own right. The result was a “paradigm” of mass production—a cluster of concepts that came to define both “big business” and “high technology” in the United States and elsewhere. Throughout the middle years of the 20th Century, many members of society took for granted the fact that successful businesses using advanced technology would be organized as large, vertically integrated corporations, exercise direct authority, and use managerial hierarchies to channel information and delegate responsibility.