Organizing Mr. Sloan: The creation of the modern organization

At every stage in human evolution, from the Greeks and Romans to modern-day CEOs, people have considered the best ways to organize themselves. Some have been more successful than others. For example, at their peak, the Incas controlled six million people spread over a huge area covering parts of modern Peru, Ecuador, Chile, Bolivia and Argentina. They spoke many different languages and dialects. How to manage them and their lands was a little bit more problematical than contemplating how to manage a distant subsidiary.

The Incas had the advantage that force was one possibility. But, interestingly, their more peaceful means of persuasion were preludes to later organizational behavior. The Incas decided on a highly standardized system of administration. This was based on units of ten and was the forerunner of the modern decimal system. To make sense of their land they divided them into four quarters – “suyus” – which met at the Inca capital, Cuzco.

The Incas also invested heavily in infrastructure. Their road system eventually covered over 23,000 km. The road system meant that the army could move quickly to sort out trouble and that goods could move equally speedily. And all this was achieved at a time when the Incas had no vehicles with wheels.

The road system was combined with a highly complex logistical network. This was made up of way stations, imperial centers, forts, ceremonial centers and other meeting and gathering points. Runners were specially trained to pass on messages. The system worked, but briefly: the Inca empire only functioned for one hundred years.

Modern corporations dreams of such longevity. But, their understanding of the intricacies of organization was not helped by the unwillingness of management pioneers to contemplate organization as a serious issue worthy of contemplation. Henry Ford’s view of how to organize his industrial giant was one dimensional – if it existed at all. Ford was a car man with a vision. He chose, therefore, to wrestle with the matters directly connected to delivering his vision into reality — the mechanical intricacies of production, cost control and the product. Ford’s achievement was one of production over management; of ambition rather than organization. He succeeded in building a business empire without management (or so he thought) and without a carefully – or even casually — formulated structure.

Frederick Taylor was similarly purblind to organizational issues. He considered that perfect tasks led to perfect processes which largely provided the structure necessary for a company to thrive.

With Taylor and Ford unhelpfully mute on the subject of the nature of organization, it took a German sociologist, Max Weber (1864-1920), to consider the organizational implications of their theories and practice. Weber looked around and noted the industrial trends, the factories with their supervisors and middle managers; the sheer scale of the new operations. Then, Weber envisaged the future of the organization. If these trends were to continue to develop what would be the best way of organizing a business?

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