Strategy Formation in an Adhocracy Henry Mintzberg and Alexandra McHugh

Strategy Formation in an Adhocracy

Henry Mintzberg and Alexandra McHugh

The widely accepted view equates strategy making with planning, assuming that strategies are "formulated" before they are "implemented." Based on the detailed tracking overtime of the actions of a single project organization, strongly resemblant of an ideal type called "adhocracy," this paper shows that strategies can "form" in a variety of different ways: from the precedents set by individual operators, from thin streams of activity that eventually pervade an organization, from spontaneous convergence in the behavior of a variety of actors, and so on. The paper first identifies and tracks the strategies pursued by this organization across almost four decades of its history and then presents the history of the organization in terms of strategic periods. These findings are then interpreted in conceptual terms, focusing on three themes*, the emergent nature of the organization's strategies and the difficulties of identifying intention in a collective context; the cycles of behavior that resulted from attempts to reconcile the concurrent needs for convergence and divergence; and the organization's quest for adhocracy and the problems this posed forthe exercise of formal leadership. The paper concludes with a "grass roots" model of strategy formation.*

"One best way" thinking has pervaded the field of management since Frederick W. Taylor (1947) coined the term early in this century. It has been particularly InfluerMial in two spheres -- the designing of organizational structures and the making of organizational strategies.

At least until recently, the underlying assumptions of organizational design have been that organizations require articulated objectives, sharp divisions of labor, clearly defined tasks, welldeveloped hierarchies, and formalized systems of control. In fact, this configuration of elements -- close to the ideal-type, machine-like bureaucracy Weber (1958) first described -- appears to remain the predominant conception among practitioners in government, mass production, and the consulting profession: to many of them, "machine bureaucracy" is not just one alternate form of structure, it is structure.

? 1985byComenUnrversity. 0001-8392/85/3002-0160/$1.00.

The authors are deeply indebted to William Litwack, who initiated tfie cdfection of the data and established the basic framework in which it was analyzed, and to the Social Science and Humanrties Research Councit, which funded the study.

Strategy making still tends to be equated with planning -- with the systematic "formulation" and articulation of deliberate, premeditated strategies, which are then "implemented." The traditionai precepts of "making strategy explicit" (Tilles, 1963), formulating before implementing (Andrews, 1980), and designing structure to "follow" strategy (Chandler, 1962) remain intact in almost all of the literature. This view of strategy making, however, is unnecessarily restrictive; it is inconsistent with more contemporary forms of structure and sometimes with the conventional forms as well.

One important contemporary form is project structure, or "adhocracy," (Bennis and Slater. 1964; Toffler, 1970). As described by Mintzberg (1979), this configuration includes the following elements: (11 The organization operates in an environment that is both dynamic and complex, demanding innovation of a fairly sophisticated nature. Each output tends to be unique (e.g., a film, the prototype for a new product). (2) The

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production of complex, unique outputs forces the organization to engage highly trained experts and to combine their talents in multidisciplinary teams. (3) These experts are housed m specialized units, for administrative and housekeeping purposes, but are deptoyed in temporar/ teams to work on their projects; the structure thus takes on the form of a matrix. (4) Because of the complex and unpredictable nature of its work, the organization relies largely on mutual adjustment for coordination, which is encouraged by semiformal structural parameters such as liaison personnel and standing committees. Coordination by direct supervision and standardization are discouraged, as are the more formalized aspects of structure that support them, such as hierarchy, performance controls, and rules. And (5) the organization is decentralized "selectively"; power over different decisions is diffused in uneven ways, subject to the availability of information and expertise needed to deal with the issue at hand.

While adhocracy is here characterized as an ideal type, most or all of these elements have, in fact, been described in a number of empirical studies -- in Woodward's (1965) description of the process producers,"" Burns and Stalker's (1966) description of electronics firms, Galbraith's (1973) study of the Boeing Company, Lawrence and Lorsch's (1967) study of plastics firms, and in Chandler and Sayles' (1971) study of NASA. In fact, consistent with Stinchcombe's (1965) proposition that structures tend to reflect the age of founding of their industry, all of these organizations function in industries that developed only well into this century. Adhocracy seems to be the structure of the industries of our age.

This paper presents an in-depth description of strategy making in one project organization, to accomplish three objectives: to develop the concept of strategy, to present a very different view of how it can form {without necessarily being formulated) in an organization, and to associate this view especially, but not exclusively, with the configuration we are calling adhocracy.

While Woodward (1965) equates process production with such a configuration, because in her view the automation of ^ e operating core renders the administrative competent of an organization a project structure, there is evidence that process producers with large, nonprofessional woric forces (such as steel connpantes) tend to resemWe nriachine bureaucracies (seeMintzberg, 1979: 257-^261.264-266. 458-45^.

The original definition (Mint^wrg, 1972) included only dectsic?is; for a number of reasons, nottf>eleast being that decisions, too, represent intentions and that we necessarily ended up studying actions, the definition was recerrtiy modified to include actions. This point is ^abwated upon m a note available from the first author.

RESEARCH ON STRATEGY FORMATION

This study is part of a research project that began in 1971 with the intention of opening up the strategy-making process conceptually. Based on the definition of strategy as a pattern in a stream of decisions or actions,^ it has sought to track ar>d study strategies as they form and disappear in organizations over long periods of time.

If strategy is defined only with regard to intention, the researcher is reduced to studying perceptions, devoid of behavior. Defining strategy with respect to realization, however, enables the researcher to track the rise and fall of strategies in empirical terms. Moreover, the most interesting issues seem to revolve around the interplay of these two definitions so that, as shown in Figure 1, deliberate strategies (intentions realized) can be distinguished from emergent strategies (patterns realized despite or in the absence of intentions).

The definition of strategy as pattern in action may appear controversial: the term is almost always defined formally with regard to intention. We would argue, however, that the definition "in use" is often based on observed consistency in behavior, that is, pattern in action, as when a manager infers

Strategy Formation

Deliberate Strategy

Intended

\

Strategy

\

y/^

Realized

/

Strategy

Unreali?d Strategy

Emergent Strategy

Rgura 1. Basic forms of strategy.

the "strategy" of a competitor (to which he or she might, of course, impute intentions).

The concept of emergent strategy may also seem controversial -- the notion that organizations can pursue "strategies" without intending them. After all, the term strategy has always been associated with voluntarism and free wilt, with what Dill (1979: 48) has called "machismo management." Were "deliberate" and "emergent" strategies two distinct phenomena in practice, then there might be merit in applying the label strategy only to the former. We contend, however, that the two represent the end points of a continuum, indeed that there may be no such thing as a purely deliberate strategy (intentions realized precisely) or a purely emergent one (the total absence of intention, despite pattem in action). Moreover, how are we to determine intentions in a collective context, that is, the intentions of an organization? To assume that the intentions of the leadership are the intentions of the organization may not be justified, since others can act contrary to these intentions. Presumably, to be "organizational," intentions must be broadly shared -- truly collective. And yet, stated intentions can belie the real ones -- even the most detailed plans may be fantasies, or simply ptoys to fool the competition. Thus, to the extent that ostensibly deliberate strategies contain emergent elements, the two concepts deserve to share the same label, if only to force practitioners and researchers alike to recognize them as part of the same phenomenon (Mintzberg and Waters, 1985).

The formulation of deliberate strategies would seem to accord well with the configuration of machine bureaucracy, which requires tight coordination in order to mass-produce its products or services. It seems to fit with "simple structure," too, in which an entrepreneurial leader in personal control of an organization guides it according to his or her vision (Mintzberg, 1979), although vision need not be articulated formally and so is less "planned" and more liable to emergent shift. Our findings to date bear this out in part (Mintzberg, 1978; Mintzberg and Waters, 1982,1984; Brunet, Mintzberg, and Waters, 1986), although it would seem to be more accurate to describe machine bureaucracies as elaborating, extrapolating, or copying existing strategies rather than formulating radically new ones. In contrast, the formation of emergent strategies would seem to be most compatible with the adhocracy configuration, in which many people -- operating personnel, experts and advisors of all kinds, managers at all levels -- are potentially involved in the establishment of precedents and, so, the strategies.

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THE NATIONAL FILM BOARD OF CANADA AS AN ADHOCRACY

The National Film Board of Canada (the NFB) was founded in 1939 as an agency of the federal government of Canada to produce and distribute films that would interpret Canada to Canadians and to people abroad. It has since developed an International reputation for the quality of its documentary filmmaking and for its innovations in film content, process, and technology. In 1975, the NFB had a permanent staff of approximately 950 people, with an annual budget of $23.5 million (Canadian). The NFB is an organization quite unlike any other: it is a film company with full production and marketing functions, concentrating on short, documentary films aimed at predominantly nontheatrical markets, yet it falls under full state ownership.

The NFB seems to fit the description of an adhocracy. Each of its films is unique, and many are distinguished for their sophistication and innovation. Each requires a distinct but temporary project, which draws together experts from a variety of functional departments. This suggests matrix structure, as is indicated in Figure 2, the NFB's organigram {area 1975), in which the filmmakers are shown suspended under a structure of studios and specialized functions, as well as regions, in fact, the absence of connections between the filmmakers and the

Figure 2. Organigram of tiw National Rim Board of Canada (ca. 1975).

Planning & Research

Director of English Programming

1

1

^ministration Distribution

Commissioner

Deputy Commissioner

English Production

French Production

Public Relations

Director of French Programming

Technical Services

Ottawa Bureau

Financial Management

Research Coordinator

{similar to English Production) Production Coordinator

Technical Coordinator

Studio A Animation

Studio B Fiction

Studio C

Studio 0

Documentary Documentary

1

Studio E "Challenge 'or Change"

Studio G Multimedia

Studio H Environment

Regional Program* British Columbia

Regional Program Prairies

Regional Program Maritimes

Filmmakers Filmmakers Filmmakers Filmmakers Filmmakers Filmmakers Filmmakers *No lines shown on original organigrann connecting Regional Programs to Studios or Filmmakers.

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S&ategy Fonnation

Structure indicates the relative weakness of authority and hierarchy in the organization. Controls exist in the NFB and attempts are made at formal planning, but most of the real coordination has to be achieved through mutual adjustment. Selective decentralization is perhaps best illustrated by the process surrounding the approval and funding of film projects.

On average, the NFB has made about 75 films per year. Were it structured as a machine bureaucracy, word would presumably come down from on high, dictating subject matter, length, style, etc., resulting in a stable and rather deliberate filmcontent strategy. The facts here are rather different. Aside from the specific films commissioned, or "sponsored," by other government departments, all the others draw on the general budget of the organization, supplied by the government and supplemented by revenues from the sale and rental of films. Film ideas generally originate with a filmmaker in consultation with an executive producer and are eventually proposed to a standing committee -- the Program Committee -- which consists of representatives elected by the filmmakers, appointees of the Distribution Branch (marketing), the Director of Production, and the Director of Programming. As chief executive officer, the Film Commissioner must approve this committee's choices, and almost inevitably does. Thus, control over film choices is distributed across al! levels of the organization and among various functions.

On first impression, then, this project-by-project working rhythm would seem to epitomize adhocracy. As we probe more deeply into NFB history, we shall elaborate on this conclusion, showing how its structure is in fact an evolved compromise, a balancing act worked out in response to the demands of the individual project, on the one hand, and the need for a certain order, on the other.

RESEARCH METHODOLOGY

To track strategies as we have defined them requires a longitudinal approach; the researcher either has to five with an organization over time (through direct observation or periodic interviews) or has to reconstruct its behavior after the fact. The former approach is discouraged by our finding that strategies can remain stable over very long periods of time (Mintzberg and Waters, 1982). An historical reconstruction is, therefore, more feasible if not, in principle, more desirable. The methodology accordingly proceeded through the following four basic steps:

Step 1: Collectior) of basic data. The study began in the archives, with the search for traces of decisions and actions taken by the organization, sorted into various strategy areas, as well as traces of external trends and events in the environment and indicators of performance. Sources for this data included film catalogs, annual reports, in-house documents, and books and articles on the organization, all supplemented by interviews to fill in gaps.

Step 2: Inference of strategies and periods. The data on decisions and actions were arranged in chronological order, when possible plotted on common time scales, and were analyzed to infer patterns or consistencies over time, i.e., strategies. The strategies were then represented in symbolic

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