The roots of today’s organization can be traced to the industrial era. The industrial organization was above all a rational–functional entity. In order to engage in mass production, structures and processes were designed and
functions created that were based on rational–functional assumptions. As the focus was purely on efficient and effective production, workers’ needs and emotions were disregarded. Of course organizations were at the same time communities of workers, but the latter were not regarded individually as important to the smooth operation of the organization, except in terms of their well-being being a necessary condition for optimal performance in the work process. However, since individuals could easily be replaced, their true emotions and needs could be rationalized. Designing and organizing rational and functional work processes was the core issue, the community of workers a separate and disconnected issue.
Since the mid 1980s there has been a fundamental transformation of the way in which organizations function. Today the majority of the work force in developed countries work in service-oriented organizations using information and communication technology (ICT). Computers, e-mails, mobile phones, intranet and internet are firmly embedded in the working environment. The talents of employees and the social capital they bring with them have gained tremendous importance as creating added value is dependent on these factors. As a result the bureaucratic industrial model of organization is becoming redundant. Many authors argue that organiza- tional design in the new information society is based on the network (Hastings, 1993; Nohria and Ghoshal, 1997; Schoemaker, 1998; Brenters, 1999; Castells, 2000a, 2000b), a summary of which is provided in the following subsection. In this chapter we make a distinction between the organization as (1) a way to organize in order to produce products and services and (2) a (social) bond between people in the community of work.
The first has tangible properties of design, the second has intangible properties of social capital (Schoemaker and Jonker, 2005).
The rise of the network organization
Providing services has become the driving force of Western economies, and in countries such as Canada, Sweden and the Netherlands roughly 80 per cent of workers are engaged in service provision. Over the past 15 years a new concept has emerged in the service section that can be labelled ‘virtual ser- vices’, the product of which is intangible and requires employees to have the ability to manage other people’s needs. Examples of this can be found in banking, insurance, tourism, the media, the entertainment sector and the internet. Thus, countless people now work in organizations where they no longer produce something tangible but provide only intangible services. The nature of work in the service sector tends to be governed by clients’ demands and is therefore dynamic in character as expectations and demands con- stantly change. This is especially true of instant services provided in a virtual environment. It constitutes a striking contrast to labour in industrial organi- zations where clients are anonymous and hard to envisage. Even traditional production organizations, such as manufacturers of consumer electronics or
mobile phones, are concentrating on functions such as R&D, marketing and logistics – all service-related activities – and outsourcing the physical production of goods to low-wage countries around the globe.
The organizational network began to engage in the mid 1980s following technological breakthroughs. With the growing use of PCs, e-mail, mobile phones, and so on the way in which businesses were organized underwent a fundamental change. Since then ICT has enabled the formation of new types of network. For example many consultancy firms, media companies and insurance companies are organizations of professionals using internal and external networks to carry out assignments. Other examples are call centers, which provide a particularly good illustration of standardized mass services via ICT networks. Work for particular clients is not limited to a particular time or place. Thus call centres for European airlines can be found in India and the R&D divisions of multinationals can operate 24 hours a day. The rise of ICT has also resulted more self-regulation in the workplace. Individuals are free to make decisions and to regulate their work processes accordingly, unlike in traditional industrial organizations.
During the last decades of the twentieth century it was often suggested that the traditional hierarchical organization was likely to disappear and be replaced by the network organization, but this is certainly not yet the case.
At present the organizational landscape includes organizations in which both functional and network structures are present. These hybrid organiza- tions have built-in structural dilemmas (Schoemaker, 1998), and dealing with the dualities and dilemmas created by the modern organization is one of the new tasks of contemporary management.
Communities of work
An organization can be seen as a set of processes (founded on economic, social and natural capital) in which the competences and skills of employees are put to use to construct a product or deliver a service to customers. The organizational processes are directed in such a way that they create value in the market place. However, organizations are also communities of work. The latter are value-based groups of individuals who collaborate either inside or outside a formal organization. A community of work can but need not be integrated into the organization. This means that those comprising a com- munity of work may work in separate groups in specific organizational processes.
For two reasons communities of work and organizations may not always correspond. First, with the rise of networks and flexible organizations the use of personnel has become more flexible and can be short term. The tradi- tional nine-to-five working day in which functional groups shape the orga- nization and communities of work are integrated into the organization has been partly replaced by fragmented and flexible organizational designs. The latter often correspond more to business, personal or professional networks
than to actual organizational processes, and many of these processes no longer foster collectivism in the workplace. Second, individuals often shape their own communities. An organization can therefore consist of many communities, resulting in a fragmented organizational identity. Thus some organizations function as a loosely coupled coalition created for a particular project while others are almost like a sect. Most tend to organize their activ- ities somewhere in the middle of this spectrum and are more like a clan (Schoemaker, 2003a).
The interplay and alignment between organizational processes and communities of work have become important factors in the success of the organization and the motivation of its employees. Organizations as commu- nities of work are to a large extent self-organizing entities held together by a common identity based on shared values. The community of work thus ought to be the fundament used for the information society. ‘Ought to be’
since management crises are evident in many organizations. What still needs to be established is a design for organizations as communities of work.
Managing contemporary organizations entails paying attention to the nature of the communities of work. In this regard it is assumed that, due to the ongoing development of the information society, the functional concept of an organization does not necessarily correspond to the community of work. People can organize the tasks at hand in the form of a community of work and the organization more or less becomes a facilitative institution.
This requires management to pay attention to the membership of commu- nities and to make values and norms explicit in order to create a specific organizational identity. The members need to be organized in a deliberate way through a process of socialization. True membership entails under- standing and learning to act according to agreed values and norms. The process of creating membership results in ‘intangible’ common grounds which create the basis for behaviour with common denominators (Schoemaker and Jonker, 2005). This dedicated management behaviour is essential in order to ground organizational processes on the core compe- tences of the organization. Market-driven performance and added value for customers from the perspective of core competences alone is not sufficient.
Value-based management to reinforce the communities of work and the organizational identity is the other side of the coin.