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A mathematical organization theory
292
Book Reviews
packages such as GLIM, BMD-P and MULTISCAL where appropriate. If not, then the book is not as helpful as it could easily have been. With perhaps further references to e.g.N.A.G, routines (available in FORTRAN, PASCAL, Ada) and a more detailed description of each computational algorithm, step by step in English, competent programmers would be very well placed to implement and apply the optimizing techniques discussed in the language of their choice. The book is an introductory text, as its name implies, and not so surprisingly there are some omissions (e.g. techniques involving numerical differentiation). Nevertheless the book is attractive and worthy of consideration, by virtue of its clarity and conciseness. In addition, operational research workers may find the book helpful in introducing them to some relatively recent statistical models (e.g. Generalised Linear Models). Alan M. S Y K E S University College of Swansea Swansea, UK
R.F. D R E N I C K
A Mathematical Organization Theory Volume 6 in: Publications in Operations Research Series, North-Holland, New York, 1986, xi + 261 pages, $45.00 Professor Drenick has written a very important and unique book. It is the culmination of an extended effort to develop a mathematical approach to the theory of organizations. His presentation is clear and comprehensive. He begins with axioms, assumptions and definitions. The main results are stated as theorems and collaries. Implications and interpretations help provide insight and understanding. The book is a major contribution and deserves careful reading. Although quite different in detail, it is in the tradition of Marschak and Radner's (1972) theory of teams. The primary task of an organization and its individual members is to process information to accomplish a reasonably well-defined task. The designer of the organization establishes protocols, or decision rules, which are the input-output relations for the individual members. These protocols are conditional probabilities. The designer is then to choose a set of protocols for the organizational
members, which maximizes the mean utility for the organization. The constraint set includes overload and budget constraints. The resulting design problem is a multilinear mathematical program, where the protocols are the decision variables. The rigorous development of the protocols under varying conditions comprise a major portion of the book. Professor Drenick begins in Chapter 1 with Simon's succinct statement on the reason for organizing "it is only because human beings are limited in knowledge, foresight, skill, and time, that organizations are useful instruments for the achievement of human purpose" (Simon, 1957). Chapter 2 outlines the problem and notation. The organization member is described in Chapter 3. An individual's characteristics of 'efficiency', 'fallibility', and 'resistance to change' are given mathematical precision. Motivational characteristics, such as 'loyalty' are similarly stated. Simon's 'human being' is described and modeled which provides a foundation for the rest of book. The line of a centralized organization is modeled in Chapter 4. The line is to reduce the work load of the executive, i.e., to cope with the executive's limited time. Two related computer science strategies of 'alternate processing' and 'distributed processing' are devised. However, it may not be feasible to eliminate the overload completely. The centralized organization is the base situation. Chapter 5 adds a staff to the organization to further reduce the executive's workload through preprocessing. The optimal design is not unique. Private information and executive autonomy complicate the model without changing its basic structure. Decentralization in Chapter 6 is precisely defined and introduces additional realism. The executive is bypassed and the staff and line can communicate directly. The line can also devise its own protocols, within limits. The designer's motivations, for decentralization are: to reduce the executive's workload, to obtain greater performance reliability, and to utilize private information effectively. The executive must be the designer, at least in part. Further, the staff and line are also designers. A rationale for some aspects of the real world organization has become clearer: e.g., conflict is a natural consequence of the structure. Chapter 7 discusses organizational control. The problem is that the designer must keep the design up to date.
Book Reviews
Professor Drenick begins with a simplified model and systematically adds realism, which necessitates complication: yet the primary structure remains. Pedagogically, it is a masterful job. Chapter 8 reviews the development and looks ahead. There are a number of ways to read Professor Drenick's book. One can read this review and stop. This is the zero level. I urge you to move on to the first level, at least. Professor Drenick has written his own summary, review, and critique within the book itself. Each chapter begins with an overview, then presents the mathematical development, and finally ends with "comments and critique". These critique sections are excellent. The chapter is explained and interpreted. There is an extended and clear development of the relationship to other literature in organization theory from psychology, sociology and economics. The links enhance our understanding a good deal. They provide a far better critical review of the book than this review. The second level is to read the book, including the mathematical development. At a third level, one can consume the book by proving theorems and completing the problems at the end of the chapter. The last approach would be an excellent graduate course in mathematical organization theory. Professor Drenick's motivation for this research grew out of his "state of exasperation caused by organizational practices". How could a firm be so badly managed? Can we obtain better understanding? It is the best tradition of operational research to begin with a real problem and bring understanding through the rigor of mathematics and logical reasoning. Professor Drenick has succeeded admirably. Yet, there is more to do. Simon, et al. (1987) summarize the opportunity in organization theory as "theory development, formal modeling, laboratory experiments, and analysis of historical cases are all going forward in this important area of inquiry". Professor Drenick has contributed to theory development and formal modeling. He has returned to the operational research basics, which could provide a new beginning.
Richard M. B U R T O N Duke University Durham, USA
293
References
Marschak. J. and Radner, R. (1972). Economic Theory of Teams, Yale University Press, New Haven, CT. Simon, H.A. (1957), Models"of Man, Wiley, New York. Simon, tt.A. et al. (1987), "Decision making and problem solving". Interfaces 17/5, 11-31.
Thomas G, G U N N
Manufacturing for Competitive Advantage: Becoming a World Class Manufacturer Ballinger, Cambridge, MA, 1987, xvi + 221 pages Careers in manufacturing have not been very glamorous over the past decades. Thomas Gunn's book might well be a warning to marketeers and financial experts that their governing period will soon be over. Gunn portrays a gloomy future for America and, in its wake, for European manufacturers as a result of lagging behind in integrated manufacturing technology. As far as G u n n is concerned a drastic effort has to be made in order to keep pace with the Asian countries, who have understood the power of looking at manufacturing as ' a total system" as well as the need for global manufacturing approach. The book describes the art of the game as creating a framework that encompasses all modern technology in such a way that competitive advantage through manufacturing is achieved. This framework is based on three fundamental concepts in modern manufacturing: Computer Integrated Manufacturing (CIM), Total Quality Control (TQC) and Just in Time (JIT). The separate strategic impacts of the three concepts are basically: extremely short lifecycles for new products (CIM), decrease of the total workforce by strong reduction of indirect labour, resuiting in shallow organisations with less hierarchy and low-level decision making (TQC), and integration of the whole process ' f r o m clay to customer' (JIT). The super-strategic factor emerges when these three concepts are combined in the right way. The company that is able to do this, is creating a 'fixed-cost, variable-output' manufacturing operation (page 201), in contrast with the conventional variable-cost, variable-output plant. According to
Book Reviews
packages such as GLIM, BMD-P and MULTISCAL where appropriate. If not, then the book is not as helpful as it could easily have been. With perhaps further references to e.g.N.A.G, routines (available in FORTRAN, PASCAL, Ada) and a more detailed description of each computational algorithm, step by step in English, competent programmers would be very well placed to implement and apply the optimizing techniques discussed in the language of their choice. The book is an introductory text, as its name implies, and not so surprisingly there are some omissions (e.g. techniques involving numerical differentiation). Nevertheless the book is attractive and worthy of consideration, by virtue of its clarity and conciseness. In addition, operational research workers may find the book helpful in introducing them to some relatively recent statistical models (e.g. Generalised Linear Models). Alan M. S Y K E S University College of Swansea Swansea, UK
R.F. D R E N I C K
A Mathematical Organization Theory Volume 6 in: Publications in Operations Research Series, North-Holland, New York, 1986, xi + 261 pages, $45.00 Professor Drenick has written a very important and unique book. It is the culmination of an extended effort to develop a mathematical approach to the theory of organizations. His presentation is clear and comprehensive. He begins with axioms, assumptions and definitions. The main results are stated as theorems and collaries. Implications and interpretations help provide insight and understanding. The book is a major contribution and deserves careful reading. Although quite different in detail, it is in the tradition of Marschak and Radner's (1972) theory of teams. The primary task of an organization and its individual members is to process information to accomplish a reasonably well-defined task. The designer of the organization establishes protocols, or decision rules, which are the input-output relations for the individual members. These protocols are conditional probabilities. The designer is then to choose a set of protocols for the organizational
members, which maximizes the mean utility for the organization. The constraint set includes overload and budget constraints. The resulting design problem is a multilinear mathematical program, where the protocols are the decision variables. The rigorous development of the protocols under varying conditions comprise a major portion of the book. Professor Drenick begins in Chapter 1 with Simon's succinct statement on the reason for organizing "it is only because human beings are limited in knowledge, foresight, skill, and time, that organizations are useful instruments for the achievement of human purpose" (Simon, 1957). Chapter 2 outlines the problem and notation. The organization member is described in Chapter 3. An individual's characteristics of 'efficiency', 'fallibility', and 'resistance to change' are given mathematical precision. Motivational characteristics, such as 'loyalty' are similarly stated. Simon's 'human being' is described and modeled which provides a foundation for the rest of book. The line of a centralized organization is modeled in Chapter 4. The line is to reduce the work load of the executive, i.e., to cope with the executive's limited time. Two related computer science strategies of 'alternate processing' and 'distributed processing' are devised. However, it may not be feasible to eliminate the overload completely. The centralized organization is the base situation. Chapter 5 adds a staff to the organization to further reduce the executive's workload through preprocessing. The optimal design is not unique. Private information and executive autonomy complicate the model without changing its basic structure. Decentralization in Chapter 6 is precisely defined and introduces additional realism. The executive is bypassed and the staff and line can communicate directly. The line can also devise its own protocols, within limits. The designer's motivations, for decentralization are: to reduce the executive's workload, to obtain greater performance reliability, and to utilize private information effectively. The executive must be the designer, at least in part. Further, the staff and line are also designers. A rationale for some aspects of the real world organization has become clearer: e.g., conflict is a natural consequence of the structure. Chapter 7 discusses organizational control. The problem is that the designer must keep the design up to date.
Book Reviews
Professor Drenick begins with a simplified model and systematically adds realism, which necessitates complication: yet the primary structure remains. Pedagogically, it is a masterful job. Chapter 8 reviews the development and looks ahead. There are a number of ways to read Professor Drenick's book. One can read this review and stop. This is the zero level. I urge you to move on to the first level, at least. Professor Drenick has written his own summary, review, and critique within the book itself. Each chapter begins with an overview, then presents the mathematical development, and finally ends with "comments and critique". These critique sections are excellent. The chapter is explained and interpreted. There is an extended and clear development of the relationship to other literature in organization theory from psychology, sociology and economics. The links enhance our understanding a good deal. They provide a far better critical review of the book than this review. The second level is to read the book, including the mathematical development. At a third level, one can consume the book by proving theorems and completing the problems at the end of the chapter. The last approach would be an excellent graduate course in mathematical organization theory. Professor Drenick's motivation for this research grew out of his "state of exasperation caused by organizational practices". How could a firm be so badly managed? Can we obtain better understanding? It is the best tradition of operational research to begin with a real problem and bring understanding through the rigor of mathematics and logical reasoning. Professor Drenick has succeeded admirably. Yet, there is more to do. Simon, et al. (1987) summarize the opportunity in organization theory as "theory development, formal modeling, laboratory experiments, and analysis of historical cases are all going forward in this important area of inquiry". Professor Drenick has contributed to theory development and formal modeling. He has returned to the operational research basics, which could provide a new beginning.
Richard M. B U R T O N Duke University Durham, USA
293
References
Marschak. J. and Radner, R. (1972). Economic Theory of Teams, Yale University Press, New Haven, CT. Simon, H.A. (1957), Models"of Man, Wiley, New York. Simon, tt.A. et al. (1987), "Decision making and problem solving". Interfaces 17/5, 11-31.
Thomas G, G U N N
Manufacturing for Competitive Advantage: Becoming a World Class Manufacturer Ballinger, Cambridge, MA, 1987, xvi + 221 pages Careers in manufacturing have not been very glamorous over the past decades. Thomas Gunn's book might well be a warning to marketeers and financial experts that their governing period will soon be over. Gunn portrays a gloomy future for America and, in its wake, for European manufacturers as a result of lagging behind in integrated manufacturing technology. As far as G u n n is concerned a drastic effort has to be made in order to keep pace with the Asian countries, who have understood the power of looking at manufacturing as ' a total system" as well as the need for global manufacturing approach. The book describes the art of the game as creating a framework that encompasses all modern technology in such a way that competitive advantage through manufacturing is achieved. This framework is based on three fundamental concepts in modern manufacturing: Computer Integrated Manufacturing (CIM), Total Quality Control (TQC) and Just in Time (JIT). The separate strategic impacts of the three concepts are basically: extremely short lifecycles for new products (CIM), decrease of the total workforce by strong reduction of indirect labour, resuiting in shallow organisations with less hierarchy and low-level decision making (TQC), and integration of the whole process ' f r o m clay to customer' (JIT). The super-strategic factor emerges when these three concepts are combined in the right way. The company that is able to do this, is creating a 'fixed-cost, variable-output' manufacturing operation (page 201), in contrast with the conventional variable-cost, variable-output plant. According to