FUTURES RESEARCH

7271 Management Decision – Organisational Futures

ORGANISATIONAL FUTURES: Unprepared for the Surprises to Come

David Mercer

Senior Lecturer

Futures Observatory

Open University Business School

Walton Hall

Milton Keynes

MK7 6AA

United Kingdom

Telephone: 044(0)1908 655878

Fax: 044(0)1908 655898

Email: d.s.mercer@open.ac.uk

ABSTRACT

Quantitative research, with a thousand organisations over four years, is the basis for an exploration of their views of future issues affecting them and, in particular, of changes in their structures and working patterns. The main impression, though, is one of widespread conservatism, where they give a relatively low level of importance to the key issues which other research indicates may have the greatest impact on their long-term survival. Thus, they report that the current form of structure is still overwhelmingly that of the traditional hierarchy. Although they show one indication of a more radical approach, in expecting hierarchical organisation to halve its share by 2020AD, they do not look to major changes in stakeholder power (currently dominated, as might be expected, by shareholders and senior managers) or in the work activities that are undertaken; though the most prevalent form of activity is already that of 'communication' in some form or other.

KEYWORDS

Organisation, futures, structures, work, stakeholders

ORGANISATIONAL FUTURES: Unprepared for the Surprises to Come

INTRODUCTION

Over the past three years we, in the Open University's Futures Observatory, have been quantifying (Mercer, 1998 a & b) important trends we saw emerging in our earlier qualitative work (Mercer, 1995, 1996 a & b, 1997) which will shape all our futures. These trends cover the spectrum from the global impact of regional groupings (Mercer, 1997b), especially the European Union, down to the very personal effects of individual empowerment (Mercer, 1999), in particular that of women. We have found that, caught between these two extremes, organisations in general are having to develop new ways of working, and new structures to match them, in order to reconcile the forces impinging upon them from above and below. Our most recent research has, therefore, explored how organisations are reacting to these forces.

One part of this research has been a longitudinal study, over three years, extending our original work on 162 global factors (Mercer, 1997a); in part to test the validity of our results and in part to track any changes over time. In the context of this paper, some 40 issues were directly relevant to organisational change; of which about half showed changes in their probability of occurrence over the period - and this was a higher rate than for other (non-organisational) factors. This supported anecdotal reports that the rate of change was higher in this area.

We then extended the research horizontally to a wider sample (Mercer, 1998c, 1996c), but restricted it to the most important 48 issues. We took the opportunity to introduce questions specifically directed at developments in organisational structures and patterns of working. This paper reports the results of these investigations.

RESEARCH METHODS

Using traditional marketing research techniques, in our longitudinal research took the form of three mail-surveys, over the three years from 1996 to 1998, each conducted with 300 Open University Business School's (OUBS) students. Despite the complexity of the questionnaire, responses  were received from more than half the students in each survey - in line with our normal response rate. Less than ten percent of these were completed incorrectly. 

Each of the 162 factors (questions) was presented in terms of two semantic differentials. The first of these asked for a date (from AD 2000 to 2050) when this factor would become a reality; or, if thought less likely, the percentage chance (10-50% or <10% chance). The second asked for rating of its importance to the manager’s organisation (on a scale from 1, unimportant, to 7, very important). Although the result may look like an early stage of a conventional Delphi study (Twiss, 1980), and might even be used as such, the dimensions were already derived from the wider population rather than being in the process of being sought from expert opinion.

The survey providing the horizontal extension generated responses from 500 OUBS MBA alumni. In this case only a sub-set of 48 factors were investigated and three semantic differentials were used; importance as before, but date and probability were split out separately. In addition a range of specific questions, including those about organisational change reported here, were asked.

RESULTS - OVERALL TRENDS

IMPORTANCE

In the context of this paper, a quarter of the 162 factors had direct relevance in terms of their perceived importance to organisational change. These fall into three main groups:

As can be seen from Table 1 above, the issues judged most important were those relating to important global 'threats'. This reflected the pattern seen in the overall results, where the most important issues were 'disasters'; with the highest rating overall (at 6.3) being a 'global water shortage' (Mercer, 1998a).

As can also be seen above, closely following these 'threats', however, were a group of driving forces arising from globalisation. In all cases, however, the results changed little over the three years period - which might be expected where the questions asked about changes 25 years ahead. More important, perhaps, this indicated a level of stability in the measures used.

The next group, with lower levels of importance (see Table 2 below), were those reflecting the changing role of government; in particular the growing power of the European Union.

Finally, with the lowest importance ratings of all, were the factors which our previous qualitative research (Mercer, 1997c) indicated would probably lead to the greatest changes in the shape of organisations over the next quarter of a century.

As can be seen, these were rated relatively low in importance. If, however, these results are combined the earlier, qualitative ones obtained from a number of scenario focus groups, it is possible to see that these are emerging issues; ones which are most susceptible management by government - and, as such, most likely to be influential over the next decades. Even so, it is surprising that the managers in our survey placed such low levels of importance on them.

PROBABILITY

If, though, we look (in Tables 4-6 below) at these in terms of probability of occurrence, there is less evidence of this 'neglect'.

Perhaps the most notable feature, and the most depressing one, is that only 22% of respondents thought that 'secure employment' may make a come back; and this level was maintained over the three years, despite reducing levels of unemployment! Again, these results were stable over time.

The results also proved to be relatively stable in terms of the (horizontally) extended survey.

RESULTS - STAKEHOLDERS

When we looked at the results in more detail (in Table7 below), as part of this horizontal extension to 500 alumni, as might be expected the group of stakeholders holding just about the highest level of influence - and maintaining it when the question was posed in terms of later developments (up to 2020AD) - was that of shareholders; though only at a level of 30% of the overall influence. In the short term, however, the highest level was achieved by 'senior managers' (at 32%); though it was expected that their influence would drop significantly over the longer term (down to 24% by 2020AD). Between them, these two groups accounted for almost two thirds of the overall influence; as might be expected on the basis of economic (Strong et al, 1987) and management theories (Cyert & March, 1963).

'Customers', representing the next highest level of influence, are likely to overtake 'senior managers' in the longer term. The joker in the pack, however, is the influence of the 'community'; starting at a low level but growing more rapidly than any of the other categories. Even so, the overall picture is still quite conservative, with power not being redistributed as much as is sometimes claimed.

If we look further (in Table 8), in terms of the two most important splits in the management population - by (industry) sector and department (within the organisation), some interesting divergences do emerge at the extremes:

It is, indeed, surprising that the education sector, along with education/training departments, report the highest levels of influence for managers and staff. What is equally surprising - for the power of 'senior management' at least - is the low level reported by personnel departments; compared, not least by the high level reported by personnel departments for 'banks/stockholders'. It is not surprising, perhaps, that personnel departments rate 'customers' so low, but it is that finance departments are the ones to rate then highest; and almost as surprising that they also giver the highest rating to 'community' influence!

RESULTS - FORM OF ORGANISATION

In view of the academic debates which have taken place over recent years (Minzberg, 1979, Hammer, 1998), it is interesting to see (in Table 9) - if not entirely unexpected - to find that hierarchical structures still dominate; reported by two thirds of organisations. What is more interesting is the expected halving of this level, to just over a third, by 202AD.

As can be seen, the remaining third of organisations are split relatively evenly over a variety of structures. The unexpected one, here, is that of 'organic', which still receives relatively little coverage in the literature. Most of these, though, are expected to show dramatic growth, typically doubling their share by 2020AD; though, surprisingly, two current academic front-runners - 'networking' and peer-to-peer' - can be expected to remain relatively static.

In terms of the sectoral and departmental detail (Table 10 below), Marketing heads up the groups leading the way in terms of 'self-managed teams' and  'organic'; and personnel, rather depressingly - in view of their supposed (HR) influence in this field - record the lowest ratings on these. Although the differences are not great, it is surprising to see 'general management' reporting the lowest ratings for 'networking', where this is supposed to be their forte; and IT rating so low on peer-to-peer and topping the hierarchy ratings!

RESULTS - TIME USAGE

When respondents were asked (Table 11 below) how much of their organisation's time was taken up by various activities, the surprising result was the high level reported for 'servicing clients'; accounting for two fifths of time, even in 2020AA. If 'communication' is added to this the total for communications of one form or another is nearly three-quarters (72%) - even without any IT element being included. The service economy really is upon us, but so is the communications era! Although 'controlling resources' followed this fairly closely in the short term, this was the one area due for a significant drop by 2020AD.

It is not surprising that 'managing knowledge', the current hot subject, is due to rise so steeply by 2020AD, but the overall growth in strategic planning is somewhat unexpected.

In terms of the detailed splits (Table 12 below), it is somewhat surprising - in view of their ivory-tower reputations - that 'education' groups place so much emphasis on 'servicing clients'. At the other end of the scale, the low proportions of time given to 'IT' by 'computer/telecomms' organisations is nothing less than astounding, as is the fact that IT/comms departments rate 'managing knowledge' the lowest!

Most surprising of all, though, is the result that 'strategy and planning' groups devote the least time of all to this activity!

DISCUSSION

One of the striking results of our earlier qualitative work, reviewing scenarios across different industry sectors (Mercer, 1996d), was the finding that organisations are conservative in their approach to the future; not least in terms of short-termism in their decision making. It is not surprising, therefore, that the overall impression of this latest research is also one of considerable conservatism. Only the expected switch from hierarchical management can be described as radical, and even this probably reflects changes - brought about in the form of the flattened management structures which have emerged from the ICT Revolution - already well under way. The result may be even more conservative, when it is realised that the respondents were managers who had recently received, or were studying for, and MBA; and, as such, might be expected to be better able to detect such changes in their organisations.

Even when we look at the sectoral and departmental splits, there are relatively few surprises; with the spread of results generally being quite narrow - those shown in the tables are the atypical extremes. The greatest surprise, even so, is how often the industries, or in particular departments, supposedly with the greatest interest in specific areas came bottom of the list in terms of rating the importance of changes taking place in those fields!

Overall, then, the level of conservatism to be seen suggest that many managements will be unprepared for the surprises which await them; and, paradoxically, may be least prepared - perhaps as  a result of widespread groupthink (Janis, 1971) rather than ignorance - for those coming from the areas which they should understand best!

The answer to this problem can be quite simple. Even the smallest organisations can now make use of scenario planning techniques (Mercer, 1995) as the starting point for producing robust strategies (Mercer 1998d). It is even possible to conduct the whole long-range planning process in a single day (Mercer, 1997d). The major problem, though, seems to be that of integrating these robust strategies with the mainstream corporate strategy. Our advice now is to separate the two and only compare them at the end of the separate processes. The all that is needed is to steer the shorter term corporate strategy to allow for the minor changes typically needed to protect the longer term (Mercer, 1998b).

APPLICATION QUESTIONS

1.      What will be the most important factors affecting the long-term future of your organisation?

2.      How will the move from the traditional hierarchical form of management structure affect your organisation?

3.      What new stakeholders will you have to bring into the decisions of your organisation?

4.      How do you manage the new dominance of communications in your activities?

REFERENCES

Mercer, D, The Future Quantified, Futures, Vol. 30 No. 4 pp 305-322, (1998a)

Mercer, D, Long Range Marketing, pp 178-184 Journal of Marketing Practice, Vol. 4 No. 6 (1998b)

Mercer, D, pp 32-40, Simpler Scenarios, Management Decision, Vol. 33 No 4 (1995)

Mercer, D, The Foreseeable Future, pp 81-86, Management Decision, Vol. 34 No 3 (1996a)

Mercer, D, Predictable Futures - The Drivers for Change, pp 829-838, Futures, Vol. 28 No 9 (November 1996b)

Mercer, D, Determining Expectations of Future Outcomes,  pp 155-164, Technological Forecasting and Social Change, Vol. 55 (1997a)

Mercer, D, Global forces which will shape our economic and political lives, Futures Research Quarterly, Vol. 13 No. 4 (1997b)

Mercer, D, The Future of Education in Europe Until 2010AD - IPTS (Seville, 1999)

Mercer, D, Determining Expectations of Future Outcomes,  pp 155-164, Technological Forecasting and Social Change, Vol. 55 (1997a)

Mercer, D, Techniques in Futures Research - BAM (British Academy of Management) (1998c)

Mercer, D, A New Qualitative Technique for Exploring the Future , Marketing Education Group (MEG), August (1996c)

Twiss, B.C, Managing Technological Innovation, Longman, London (1980)

Mercer, D, The Future Quantified, Futures, Vol. 30 No. 4 pp 305-322, (1998a)

Mercer, D, Global forces which will shape our economic and political lives, Futures Research Quarterly, Vol. 13 No. 4 (1997c)

Strong, N. and Waterson, M. in Clarke, R. and McGuinness, T., The Economics of the Firm, Blackwell, Oxford, (1987)

Cyert, R. M. and March, J. G., A Behavioural Theory of the Firm, Prentice Hall, Englewood Cliffs N.J., (1963)

Minzberg, H., The Structuring of Organisations, Prentice Hall, Englewood Cliffs N.J., 1979

Hammer, M., Beyond the End of Management, in Rethinking the Future ed. Rowan Gibson Nicholas Brealey, (1998)

Mercer, D, Industry Scenarios - Short Termism Revealed, pp 23-27, Industrial Management and Data Systems, Vol. 96 No.8 (1996d)

Janis, I.L., Groupthink, Psychology Today (US), pp 43-5, Nov (1971)

Mercer, D, pp 32-40, Simpler Scenarios, Management Decision,

Vol. 33 No 4 (1995)

Mercer, D, Marketing Strategy: the Challenge of the External Environment, Sage, (1998d)

Mercer, D, Robust Strategies in a Day, pp 219-223, Management Decision, Vol. 35 No. 3 (1997d)

Mercer, D, Long Range Marketing, pp 178-184 Journal of Marketing Practice, Vol. 4 No. 6 (1998b)

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