Garbage Can Model-Organization Theory and Design-Handouts, Lecture notes for Organization Theory and Design. Amity Business School
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Garbage Can Model-Organization Theory and Design-Handouts, Lecture notes for Organization Theory and Design. Amity Business School

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Organization Theory and Design - MGT504 VU

© Copyright Virtual University of Pakistan 123

Lecture 38 GARBAGE CAN MODEL

The garbage can model is one of the most recent and interesting descriptions of organizational decision processes. It is not directly comparable to the earlier models, because the garbage can model deals with the pattern or flow of multiple decisions within organizations, whereas the incremental and Carnegie models focus on how a single decision is made. The garbage can model helps you think of the whole organization and the frequent decision being made by managers throughout. Organized Anarchy: The garbage can model was developed to explain the pattern of decision making in organizations that experience extremely high uncertainty, such as the growth and change required in a learning organization. Michael Cohen, James March, and Johan Olsen, the originator, of the models, called the highly uncertain conditions an organized anarchy, which is an extremely organic organization. Organized anarchies do not rely on the normal vertical hierarchy of authority and bureaucratic decision rules. They are caused by three characteristics; 1. Problematic preferences, Goals, problems, alternatives, and solutions are ill defined. Ambiguity characterizes each step of a decision process. 2. Unclear, poorly understood technology. Cause – and effect relationships within the organization are difficult to identify. An explicit database that applies to decisions is not available. 3. Turnover, organizational positions experience turnover of participants, in additions, employees are busy and have only limited time to allocate to any one problem or decision. Participation in any give decision will be fluid and limited. The organized anarchy describes organizations characterized by rapid change and a collegial, non-bureaucratic environment. No organization fits this extremely organic circumstance all the time, although learning organizations and today’s internet – based companies may experience it much of the time. Many organizations will occasionally find themselves in positions of making decision under unclear, problematic circumstances. The garbage can model can is useful for understanding the pattern of these decisions. Streams of Events: The unique characteristic of the garbage can model is that the decision process is not seen as a sequence of steps that begins with a problem and ends with a solution. Indeed, problem identification and problem solution may not be connected to each other. An idea may be proposed as a solution when no problem is specified. As problem may exist and never generate a solution. Decisions are the outcome of independent streams of events within the organization. The four streams relevant to organizational decision making are as follows; 1. Problems. Problems are points of dissatisfaction with current activities and performance. They represent a gap between desired performance and current activities. Problems are perceived to require attention. However, they are distinct from solutions and choices. A problem may lead to a proposed solution or it may not. Problem may not be solved when solutions are adopted. 2. Potential solutions. A solution is an idea somebody proposes for adoption. Such ideas may be brought into the organization by new personnel or may be invented by existing personnel. Participants may simply be attracted to certain ideas and push them as logical choices regardless of problems. Attraction to an idea may cause an employee to look for a problem to which the idea can be attached and, hence, justified. The point is that solutions exist independent of problems. 3. Participants. Organization participants are employees who come and go throughout the organization. People are hired, resigned, and fired. Participants vary widely in their ideas, perception of problems, experience, values, and training. The problems and solutions recognized by one manger will differ fro m those recognized by another manager. 4. Choice opportunities. Choice opportunities are occasions when an organization usually makes a decision. They occur when contracts are signed, people are hired, or a new product is authorized. They also occur when the right mix of participants, solutions, and problems exists. Thus, mangers that happened to learn of a good idea may suddenly become aware of a problem to which it applies and, hence can provide the organization with a choice opportunity. Match – ups of problems and solution often result in decisions. docsity.com

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With the concept of four streams, the overall pattern of organizational decisions making takes on a random quality. Problems, solution, participants, and choices all flow through the organization. When a problem, solution and participant happen to connect at one point, a decision may be made and the problem may be solved; but if the solution does not fit the problem, the problem may not be solved. Thus, when viewing the organization as a whole and considering its high level of uncertainty, one sees problems arise that are not solved and solutions tired that do not work. Organization decision is disorderly and not the result of a logical, step – by step sequence. Events may be so ill defined and complex that decision, problems, and solutions act as independent events. When they connect, some problems are solved, but many are not. Consequences: Four consequences of the garbage can decision process for organizational decision making are as follow. 1. Solutions may be proposed even when problems do not exist. An employee may be sold on an idea and may try to sell it to the rest of the organization. An example was the adoption of computers by many organizations during the 1970s. The computer was an exciting solution and was pushed by both computer manufactures and systems analysts within organizations. The computer did not solve any problems in those initial applications. Indeed, some computers caused more problems that they solved. 2. Choices are made without solving problems. A choice such as creating a new department may be made with the intention of solving a problem; but, under conditions of high uncertainty the choice may be incorrect, moreover, many choices just seem to happen, People decide to quit, the organization’s budget is cut, or a new policy bulletin is issued. These choices may be oriented toward problems but do not necessarily solve them. 3. Problems may persist without being solved, Organizations participants get used to certain problems and give up trying to solve them; or participants may not know how to solve certain problem because the technology is unclear. A university in Canada was placed on probation by the American Association of university Professors because a professor had been denied tenure without due process. The probation was a nagging annoyance that the administrators wanted to remove. Fifteen years later, the non-tenured professor died. The probation continues because the university did not acquiesce to the demands of the heirs of the association to reevaluate the case. The university would like to solve the problem, but administrators are not sure how, and they do not have the resources to allocate to it. The probation problem persists without a solution. 4. A few problems are solved. The decision process does work in the aggregate. In computer simulation models of the garbage can model, important problems were often resolved. Solutions do connect with appropriate problems and participants so that a good choice is made. Of course, not all problems are resolved when choices are made, but the organization does move in the directions of problem reduction. The effects of independent streams and the rather chaotic decision processes of the garbage can model can be seen in the production of the classic film Casablanca. Casablanca The public flocked to see Casablanca when it opened in 1942 the film won Academy Awards for best picture. Best screenplay. And best director, and is recognized today by film historians and the public alike as a classic. But up until the filming of the final scene, no one involved in the production of the now –famous story even knew how it was going to end. Everybody comes to Rick’s wasn’t a very good play. But when it landed on Hal Wallis’s desk at Warner Brothers, Wallis spotted some hot- from-the – headlines potential, purchased the rights, and changed the name to Casablanca to capitalize on the geographical mystique that story offered. As series of negotiations led to casting Humphrey Bogart as Rick.., even though studio chief Jack Warner questioned his romantic appeal. The casting of Ingrid Bergman as llsa was largely by accident. A fluke had left an opening in her usually booked schedule. The screenplay still wasn’t written. Filming was chaotic Writers made script changes and plot revisions daily. Actors were unsure of how to develop their characterizations. So they just did whatever seemed right at the time. For example, when Ingrid Bergman wanted to know which man should get most of her on- screen attention, she was told. “We don’t know yet –just play it. Well in between,” Scenes were often filmed blindly with no idea of how they were supposed to fit in the overall story. Amazingly, even when it came time to shoot the climactic final scene, no one involved in the production seemed to know who would get the girl” a legend still persists that two versions were written. During filming, Bogart disagreed with director Michael Curtiz’s view that Rick should kiss llsa good –bye, and Hal Wallis docsity.com

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was summoned to mediate because the cast received their scripts only hours before filming began, they couldn’t remember their lines, causing continual delays. Some industry analysts predicted disaster, but the haphazard process worked Ingrid Bergman plays it “in between” just right Bogart’s characterization of Rick is perfect. The tale of love and glory and heartbreaking romance couldn’t have been told better than it was in Casablanca. In addition, fortuitous circumstances outside the studio – contributed to the film’s commercial success. Just eighteen days before the premiere on Thanksgiving Day. 1942, the Allies invaded North Africa and fought the Battle of Casablanca. When the film opened nationwide. President Franklin D. Roosevelt and Prime Minister Winston Churchill presided over the Casablanca Conference a historical coincidence that was clearly a boon to the film, helping to push its initial gross to $ 3.7 million. The production of Casablanca was not a rational process that started with a clear problem and ended with a logical solution. Many events occurred by chance and were intertwined, which characterizes the garbage can model. Everyone from the director to the actors continuously added to the stream of new ideas to the story. Some solutions were connected to emerging problems; the original script arrived just when Hal Wallis was looking for topical stories; and Bergman was surprisingly available to be cast in the role of llsa. The actors (participants) daily made personal choices regarding characterization that proved to be perfect for the story line. Other events that contributed to Casablanca’s success were not even connected to the film --- for example, the invasion of North Africa only eighteen days before the premiere. Overall, the production of Casablanca had a random, chancy flavor that is characteristic of the garbage can model. As evidenced by the film’s huge success and continuing popularity after more than fifty years, the random, garbage can decision process did not hurt the film or the studio. The garbage can model, however, doesn’t always work --- in the movies or in organization. A similar haphazard process during the filming of water world led to the most expensive film in Hollywood history and a decided box- office flop for Universal Pictures. CONTINGENCY DECISION – MAKING FRAME WORK There are several approaches to organizational decision making, including management science, the Carnegie model, the incremental decision process model, and the garbage can model. It has also discussed rational and intuitive decision processes used by individual managers. Each decision approach is a relatively accurate description of the actual decision process, yet all differ from each other. Management science, for example, reflects a different set of decision assumptions and procedures that does the garbage can model. One reason for having different approaches is that they appear in different organizational situations. The use of an approach is contingent on the organization setting. Two characteristics of organization that determine the use of decision approaches are (1) problem consensus and (2) technical knowledge about the means to solve those problems. Analyzing organizations along these two dimensions suggests which approach will be used to make decisions. PROBLEM CONSENSUS Problem Consensus refers to the agreement among managers about the nature of a problem or opportunity and about which goals and outcomes to pursue. This variable ranges complete agreement to complete disagreement. When managers agree, there is little uncertainty – the problems and goals of the organizations are clear, and so are standards of performance. When managers disagree, organization direction and performance expectations are in dispute, creating a situation of high uncertainty. One example of problem uncertainty occurred at Wal –Mart stores regarding the issue of parking – lot patrols. Some managers presented evidence that golf –cart patrols significantly reduced auto theft, assault, and other crimes in the stores’ lots, as well as increased business because they encouraged more night time shopping. While these managers argued that the patrols should be used, others believed the patrols were not needed and were too expensive, emphasizing chat parking – lot crime was a society issue rather than a store issue. Problem consensus tends to be low when organization are differentiated, uncertain environments cause organizational departments to differentiate from one another in goals and attitudes to specialize in specific environmental sectors. This differentiation leads to disagreement and conflict about organizational goals and problem priorities. When differentiation among departments or division is high, managers must make a special effort to build coalitions during decision making. Problem consensus is especially important for the problem identification stage of decision making. When problems are clear and agreed on, they provide clear standards and expectations for performance. When problem are not docsity.com

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agreed on, problem identification is uncertain and management attention must be focused on gaining agreement about goals and priorities. TECHNICAL KNOWLEDGE ABOUT SOLUTIONS Technical Knowledge refers to understanding and agreement about how to solve problems and reach organizational goal. This variable can range from complete agreement and certainty to complete disagreement and uncertainty about cause – effect relationships leading to problem solution. One example of low technical knowledge occurred at PepsiCo’s 7-Up division. Managers agreed on the problem to be solved – they wanted to increase market share from 6 percent to 7 percent. However, the means for achieving this increase in market share were not known or agreed on. A few managers wanted to use discount pricing in supermarkets. Other managers believed they should increase the number of soda fountain outlets in restaurants and fast – food chains. A few other managers insisted that the best approach was to increase advertising through radio and television. Managers did not know what would cause an increase in market share. Eventually, the advertising judgment prevailed at 7 – Up’s low technical knowledge about how to solve the problem. When means are well understood, the appropriate alternatives can be identified and calculated with some degree of certainty. When means are poorly understood, potential solutions are ill defined and uncertain. Intuition, judgment, and trial and error become the basis for decisions. CONTINGENCY FRAME WORK Rational decision procedures are used because problems are agreed on, and cause – effect relationships are well understood so there is little uncertainty. Decisions can be made in a computational manner. Alternatives can be identified and the best solution adopted through analysis and calculations. The rational models both for individual and for the organization are appropriate when problems and the means for solving them are defined. In cell 2, there is high uncertainty about problems and priorities, so bargaining and compromise is used to reach consensus. Tackling one problem might means the organization must postpone action on other issues. The priorities given to respective problems are decided through discussion, debate, and coalition building. Managers in this situation should use broad participation to achieve consensus in the decision process. Opinions should be surfaced and discussed until compromise is reached. The organization will not otherwise move forward as an integrated unit. In the case of Wal-Mart, managers will discuss conflicting opinions about the benefits and costs of parking – lot patrols. The Carnegie model applies when there is dissension about organizational problems. When groups within the organization disagree, or when the organization is in conflict with constituencies (government regulators, suppliers, unions), bar gaining and negotiation are required. The bargaining strategy is especially relevant to the problem identification stage of the decision process. Once bargaining and negotiation are completed, the organization will have support for one direction. Cell 3. In a cell situation, problems and standards of performance are certain, but alternative technical solutions are vague and uncertain. Techniques to solve a problem are ill defined and poorly understood. When an individual manager faces this intuition, intuition will be the decision guideline. The manager will rely on past experience and judgment to make a decision. Rational, analytical approaches are not effective because the alternatives cannot be identified and calculated. Hard facts and accurate information are not available. The incremental decision process model reflects trial and error on the part of the organization. Once a problem is identified, a sequence of small steps enables the organization to learn a solution. As new problems arise, the organization may recycle back to an earlier point and star over. Eventually, over a period of months or years, the organization will acquire sufficient experience to solve the problem in a satisfactory way. Solving the engineering and manufacturing problems for he Mach3 razor, described earlier, is an example of cell 3 situations. Gillette engineers had to use trial and error to develop an efficient manufacturing process. The situation in cell 3, of senior manager agreeing about problems but not knowing how to solve them, occurs frequently in business organization. If managers use incremental decision in such situations, they will eventually acquire the technical knowledge to accomplish goals and solve problem. Cell 4. The situation in cell 4, characterized by high uncertainty about both problems and solutions is difficult for decision making. An individual manager making a decision under this high level of uncertainty can employ docsity.com

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techniques from both cell 2 and cell 3. The manger can attempt to build a coalition to establish goals and priorities and use judgment or trial and error to solve problems. Additional techniques, such as inspiration and imitation, also may be required. Inspiration refers to an innovative, creative solution that is not reached by logical mean imitation means adopting a decision tried elsewhere in the hope that it will work in this situation. For example, in one university, accounting department faculty was unhappy with their current circumstances but could not decide on the direction the department should take. Some faculty members wanted a greater research orientation, whereas other wanted greater orientation toward business firms and accounting applications. The disagreement about goals was compounded because neither group was sure about the best technique for achieving its goals. The ultimate solution was inspirational on the part of the dean. An accounting research center was established with funding from Big Five accounting firms. The funding was used to finance research activities for faculty interested in basic research and to provide contact with business firms for other faculty. The solution provided a common goal and unified people with in the department to work toward that goal. When an entire organization is characterized by high uncertainty regarding both problems and solutions, as in e- corporations and learning organizations, elements of the garbage can model will appear. Managers may first try techniques from both cells 2 and 3, but logical decision sequences starting with problems identification and ending with problem solution will not occur. Potential solutions will precede problems as often as problems precede solutions. In this situation, managers should encourage widespread discussion of problems and idea proposals to facilitate the opportunity to make choices. Eventually, through trial and error, the organization will solve problems. SPECIAL DECISION CIRCUMSTANCES In a highly competitive world beset by global competition and rapid change, decision making seldom fits the traditional rational, analytical model. To cope in today’s world, managers must learn to make decisions fast, especially in high velocity environments, to learn from decision mistakes, and to avoid escalating commitment to an unsatisfactory course of action. HIGH – VELOCITY ENVIRONMENT In some industries today, the rate of competitive and technological change is so extreme that market data is either unavailable or obsolete, strategic windows open and shut quickly, perhaps within a few months, and the cost of decision error is company failure. Recent research has examined how successful companies make decision in these high – velocity environment, especially to understand where organization abandon rational approaches or have time for incremental implementation. Comparing successful with unsuccessful decision in high – velocity environments suggests the following guidelines. • Successful decision makers track information in real time to develop a deep and intuitive grasp of the business. Two to three intense meetings per week with all key players are usual. Decision makers track operating statistics about cash, scrap, backlog, work in process, and shipments to constantly feel the pulse of what is happening, unsuccessful firms were more concerned with future planning and forward – looking information, with only a loose grip on immediate happenings. • During a major decision, successful companies began immediately to build multiple alternatives, implantation may run in parallel before finally settling on a final choice. Slow – decision companies developed only a single alternative, moving to another only after the first one failed. • Fast, successful decision makers sought advice from everyone and depended heavily on one or two savvy, trusted colleagues as counselors. Slow companies were unable to build trust and agreement among the best people. • Fast companies involved everyone in the decision and tried for consensus; but if consensus did not emerge, the top manager made the choice and moved ahead. Waiting for everyone to be on board created more delays than warranted, slow companies delayed decision to achieve a uniform consensus. • Fast, successful choices were well integrated with other decisions and the overall strategic direction of the company. Less successful choices considered the decision in isolation from other decisions; the decision was made in the abstract. When speed matters, a slow decision is as ineffective as the wrong decision. Speed is a crucial competitive weapon in growing number of industries, and companies can learn to make decisions fast. Managers must be plugged into

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the pulse of the company, must seek consensus and advice, and then by ready to take the risk and move ahead. When Deborah Triant, CEO and president of Check Point Software Technologies, has to make a fast decision about a complex problem, she asks everyone she knows for an opinion, but then she trusts her intuition and experience to make the decision and move forward. DECISION MISTAKES AND LEARNING Organizational decisions produce many errors, especially when made under high uncertainty. Managers simply cannot determine or predict which alternative will solve a problem. In these cases, the organization must make the decision - and take the risk --- often in the spirit of trial and error. If an alternative fails, the organizational can learn from it and try another alternative that better fits the situation. Each failure provides new information and learning. The point for managers is to move ahead with the decision process despite the potential for mistakes. “Chaotic action is preferable to orderly inaction.” In many cases, managers have been encouraged to install a climate of experimentation, even foolishness, to facilitate creative decision making if on idea fails, anther ideas should be tried. Failure often lays the groundwork for success, as when technician at 3M developed Post – it Notes based on failed product --- a not – very – sticky glue. Companies such as PepsiCo believe that if all their new products succeed, they’re doing s something wrong, not taking the necessary risks to develop new markets. Only by making mistakes can managers and organizations go through the process of decision learning and acquire sufficient experience and knowledge to perform more effectively in the future. Robert Townsend, who was president at Avis Corporation, gives the following advice. Admit your mistakes openly, maybe even joyfully. Encourage your associates to do likewise by commiserating with them. Never castigate. Babies learn to walk by failing down. If you beat a baby every time he falls down, he’ll never care much for walking. My batting average on decisions at Avis was no better than a 333. Two out of every three decision 1 made were wrong. But my mistakes were discussed openly and most of them corrected with a little help from my friends. ESCALATING COMMITMENT A much more dangerous mistake is to persist in a course of action when it is failing. Research suggests that organizations often continue to invest time and money in a solution despite strong evidence that it is not working. Two explanations are given for why manager escalate commitment to a failing decision. The first is that manager s block or distort negative information when they are personally responsible for a negative decision. They simply don’t’ know when to pull the plug. In some cases, they continue to throw good money after bad even when a strategy seems incorrect and goals are not being met. An example of this distortion is the reaction at Borden when the company began losing customers following its refusal to lower prices on dairy products. When the cost of raw milk dropped, Borden hoped to boost the profit margins of its dairy products, convinced that customer would pay a premium for the brand name. Borden’s sales plummeted as low –priced competitor’s mopped up, but top executives stuck with their premium pricing policy for almost a year, by then, the company’s dairy division was operating at a serve loss. As another example, consider the increasing investment of the Canadian imperial Bank of Commerce in the ill-fated Canary Wharf Project, an $8 billion development in London’s remote Docklands area. CIBC had already lent over $ 1 billion for Canary Wharf to the now – failed Olympia & York Developments Ltd. and its subsidiaries. Despite loads of negative information that led CEO Al Flood to pronounce Canary Wharf a project that “would not meet our lending criteria today,” CIBC turned around and invested an additional $ 36million in the project. Flood said the move was designed to “protect our investment… and try to make the project work,” these additional millions now seem like a terrible choice. A second explanation for escalating commitment to a failing decision is that consistency and persistence are valued in contemporary society. Consistent managers are considered better leaders than those who switch around from one course of action to another. Even though organizations learn through trial and error, organizational norms value consistency. These norms may result in a course of action being maintained, resources being squandered, and learning being inhibited. Emphasis on consistent leadership was partly responsible for the Long Island lighting Company’s refusal to change course in the construction of Shoreham Nuclear Power Plant, which was eventually abandoned – after an investment of more than $ 5 billion --- without ever having begun operation Shoreham’s cost was estimated at $ 75 million when the project was announced in 1966, but by the time a construction permit was docsity.com

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granted, LILCO had had already spent $ 77 million. Opposition to nuclear power was growing. Critics continued to decry the huge sums of money being pumped into Shoreham. Customers complained that LILCO was cutting back on customer service and maintenance of current operations. Shoreham officials, however, seemed convinced that they would triumph in the end; their responses to criticism were,” if people will just wait until the end, they are going to realize that this is a hell of an investment.” The end came in 1989, when a negotiated agreement with New York led LILCO to abandon the $ 5.5 billion plant in return for rate increases and a $ 2.5 billion tax write-off. By the time remained firmly committed to a losing course of action for more than twenty – three years. Failure to admit a mistake and adopt a new course of action is far worse than an attitude that encourages mistake and learning. Based on what has been said about decision making, one can expect companies to be ultimately successful in their decision making by adopting a learning approach toward solutions. They will make mistakes along the way. But they will resolve uncertainty through the trial – and – error process.

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