The Underlying Logic of the Office
By Ray Fisman and Tim Sullivan
Twelve. 320 pp. $26.99
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Reviewed by Jane Von Bergen
Delta Air Lines president Edward H. Bastian had good news for analysts gathered for a recent industry conference sponsored by JPMorgan.
The airline, he told them, had a profitable quarter, the first in a decade. Why? In part because of savings from an oil refinery in Delaware County it bought from Conoco Phillips in 2012.
An oil refinery? What's an airline doing running an oil refinery? Seems like a big leap from its core mission of ferrying passengers through the skies.
Delta's foray into the oil business happened too late to be included in The Org: The Underlying Logic of the Office, but it would have been a great illustration for the authors as they successfully untangle the competing forces that push and pull the modern business organization.
Why are there bureaucracies? Why is there a new management initiative of the month? Why do companies buy businesses and then spin them off? Why do we have to bother with managers? Isn't innovation squelched daily by so many procedures and rules? What, another meeting? Sigh.
Authors Ray Fisman, a Columbia University business professor, and Tim Sullivan, editorial director of the Harvard Business Review, pull together an impressive array of examples and research to explain how almost every seemingly illogical aspect of our daily work is actually the effort - sometimes more successful, sometimes less so - to balance opposing, yet equally valuable, forces in a business.
The organizations Fisman and Sullivan discuss include the Army, Proctor & Gamble, Lockheed Martin, textile factories in India, the Methodist church, and al-Qaeda.
We may have a mental image of corporate monoliths, with dictators, perhaps dynamic, perhaps evil, at the top, flanked by creativity-stifling bureaucratic minions. But the "org" the authors describe is more of a quivering mass of yin and yang, always striving to maintain equilibrium between competing forces.
Early on in The Org, the authors, in their typically accessible way, use peanut butter and jelly to illustrate Adam Smith's famous idea that many individual decisions by consumers ultimately create pricing and supply for an entire economy.
If supplies of peanut butter and jelly became mismatched, lunch-packers would pay more for the missing ingredient to make their sandwiches and the surplus ingredient would be sold cheap.
The logic holds for peanut butter and airplane fuel, but the oil to make fuel is more complicated to buy, given geopolitics. These complications and the hassles of dealing with brokers, insurance, and price-shopping interrupt the smooth peanut-butter-and-jelly functioning of the market.
So, in the case of Delta, the management decided to skip the complications and just buy a refinery already. That's great, as long as they can handle managing a completely different business. If, after a while, they decide they can't, they'll sell it.
The yin and yang? The equilibrium between smoothing complications by controlling the supply chain and management's ability to manage.
Fisman and Sullivan unravel other yin-and-yang mysteries. Ever notice the oh-so-regular memos announcing yet another director, coordinator, vice president? What happens next? Most of them get laid off as the top executives hail their new, flatter management structure.
No wonder, the authors explain. It's impossible for top executives to absorb all the information they need to run a big organization, so they rely on the pyramid structure of underlings to inform - until they feel they are too far from the source material. Then, here come the pink slips.
Except for the irritating habit of calling organizations "orgs," the book does a great job of explaining business forces. It's even possible, after reading The Org, to muster sympathy for the top executives.
The book's only misstep is in the last chapter, when it fails to offer better advice on how to cope with these competing forces in our daily work lives.
Ordinarily, this would be a fatal flaw in a book, but not in this one. Understanding is everything, especially for those of us who love our work, and even love our "orgs," in spite of the illogic we see.