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Two necessary conditions for individual & system welfare: technostructure + obliquity August 28, 2011

Posted by larry (Hobbes) in Uncategorized.
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The two necessary, but not sufficient, conditions I have in mind are technostructure decision-making apparati and obliquitous problem solving strategies.  These two concepts were introduced by John Kenneth Galbraith in The New Industrial State and by John Kay in his article, ‘Obliquity’ (mentioned in a previous post), respectively.  I would argue that both are necessary for an institution to be successful in its welfare promotion in a changing environment.  Both were introduced in the context of organizations, although individuals play a role.  For the sake of simplicity, I will restrict my comments to organizations.

For Galbraith, a corporation’s technostructure is its decision-making component, comprised ideally of individuals from throughout the company.  In his view, when a corporation gets so large that the entrepreneur can no longer keep track of all its activities, then for  the corporation to continue to be viable, power must pass from the entrepreneur to the technostructure.  One prominent example he gives is that of TWA.  When TWA was a relatively small airline, Hughes could effectively control its operations.  However, once the organization had reached a certain size, one individual brain could no longer effectively track all the organization’s activities and the quality of his decision-making declined.  By the time, power had passed from Hughes to TWA’s technostructure, Hughes had almost bankrupted the company.

Power passing from the entrepreneur to the technostructure in large corporations is not the only factor to take into consideration of a company’s viability.  The nature of the decision-making procedures of the organization need to be taken into account as well.  Kay argues that for the most effective and long-term results to obtain, decision-making is best carried out in indirect ways with attention being paid to high-level considerations, such as making the best airline, the best bread, &c.  In particular, if the bulk of a company’s efforts go into the bottom line and not into providing the best for the company and its customers, then the company isn’t acting either in its best interests or that of its customers or investors.  In fact, when a company does this, its profits decline and bankruptcy threatens.  This can happen even when power has passed from the entrepreneur to the technostructure.  Kay provides myriad examples to support his thesis that goals are best pursued indirectly.

When a company’s decision-procedures are directed to the well-being or welfare* of the company, its employees, and its customers, the company will also be doing the best for its investors in the long run as well.  In order for this to be achieved, the decision-making procedures must be indirect and thus not constrained by some sort of procedural straight-jacket.

As can be seen, neither condition by itself can account for the successful well-being of a company. If a company is sufficiently large and power hasn’t passed from the entrepreneur to the technostructure, company decisions will begin to deteriorate.  Similarly, if a company’s decision-making is not geared to its highest goals and implemented in an indirect manner (Kay shows how these fit together), company decision-making begins to deteriorate.  IN other words, if either one of these factors is absent, the company’s decision-making procedures are seriously faulty.  They are individually necessary to the success of the organization.

But are both of them together sufficient for individual and corporate well-being?  It would appear so.  When an organization is small and the technostructure is not needed and the entrepreneur’s decision-making is sufficiently obliquitous, ceteris paribus all should be well.  If the organization is large and power has passed to the technostructure and the technostructure’s decision-making procedures are sufficiently obliquitous, then again all should be well.

Upshot: if a company and its employees exhibit a high degree of well-being, then the decision-making apparatus is appropriately structured and is operating obliquitously.

* The notion of welfare Kay has in mind is that of Aristotle’s conception of Eudaimonia, designating a high degree of fulfillment.

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