An online monthly research publication by the Ivey Business School 

Volume 14, Number 11: Faculty Focus
November 2008

Click to listen to a 4-minute interview with Professor Mary Crossan on the elements of organizational collapse

In 2009, Mary Crossan, Director of the Leading Cross-Enterprise Research Centre will join corporate leaders, government regulators, and Cynthia Cooper -author of Extraordinary Circumstances: The Journey of a Corporate Whistleblower. Together they will bring new insights and answers to undercover intelligence at the Ivey Idea Forum.

Q. The theory of practical drift is quite central to this idea organizational collapse. Can you explain this idea for us?

A. The theory of practical drift is that we keep adapting within our sub-unit, within our group; [another way to put it is that] you do things that work for you. You’ve got this organization to which you’re connected, but if you’re loosely coupled, nobody ever notices [what you do]! So, for example, if there are three different units within the business and we’re all doing our own thing and we’re doing it quite effectively, I just assume that you’re following the rules that were put in place at the outset, and you’re not, and in turn you’re assuming I am. The rules are our means to coordinate but they’re not there anymore.

So here’s the catch-22. The cycle from the initial design, fit, and then the error tends to be long. You get this practical drift that occurs that happens over a period of time, circumstances conspire, and boom –you get this big explosion. Yet correction tends to be swift and extreme, and this is the problem. Left unchecked, such organizational knee-jerks provide the system with the necessary energy to kick off subsequent cycles of disaster because there is this immediate response.

The work that Karl Weick does –he’s a management theorist at the University of Michigan –he does a lot of work in improvisation, which is the area that I work in. Improvisation is essentially practical drift. It’s creative, in the moment, changing –hopefully for the better. He says the one thing you always have to be mindful of is, “what are the basic rules that are non-negotiable.” We call them the minimal constraints. Those are the pieces that are going to tie people together like an umbilical cord. And so, in organizations we’re trying to find, what are those things? Typically, values of an organization are the kinds of things that should. If well done, those values that we hold deeply are the kinds of things that should be the ties that bind. But there might be other kinds of mechanisms that become your things that you’re always checking to see that there is no deviation from.

Q. What can organizations do avoid practical drift?

A. I think hugely, just having a mind-set shift. Just to get a wakeup call that this can happen in any organization. And the more complex the organization, the more likely it is to occur, because you get these loosely coupled systems.

What would you look for as a leader in that organization? I think one of the key things to look for is what are the seams in an organization? The actual units themselves, the business units, the organizations, they’ll often take care of themselves. The seam would be easily seen from an organization chart, the seam is the space between those boxes. For example, between marketing and R&D, it could be a functional seam, it could be a geographic seam, or it could be a seam between the supplier and the company itself.

Another way to think about this is with the notion of identity, because ultimately, these seams get created by who people identify with. Who do they see as the group that they have allegiance to, who will they align to, who will they drift with?

Even when we had Nick Leeson, the rogue trader who brought down Barings Bank, the initial story was not a guy taking an unethical point of view; he was actually trying to cover up for one of his employees that made a mistake. His identify was with the local operation. He felt allegiance to those individuals as opposed to the larger organization.

That was Professor Mary Crossan, Director of the Leading Cross-Enterprise Research Centre at the Richard Ivey School of Business