Organizational routines

Fredrik Tell

Structure of presentation
1. What are routines? 2. Questions regarding the nature of routines 3. The role of routines in organizations 4. Routines and innovation

2009-09-09

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Linkpings universitet

What are routines (i)?

Analogy to skills, (Nelson and Winter, 1982):
Skills as programs
Function as a unit Serial function Automatic Considerable speed and accuracy

Tacit, problem of articulation

Limited time available Limited causal understanding Routines inherently holistic and coherent

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What are routines (i)?

Difficulty of understanding routines (Cohen and Bacdayan, 1994)
Routines are multi-actor phenomena Routines are emergent phenomena Routines are often inarticulate

Routines as procedural memory (in contrast to declarative memory)

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Starting point: Repetition

Nothing can be a routine without repetition Pattern Routines occupy 'the crucial nexus between structure and action, between the organization as an object and organizing as a process' (Pentland and Rueter 1994: 484)

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Question 1: Collective or individual?

organizational routines, individual habits Stene (1940), Dosi, Nelson & Winter (2000) Nested hierarchy: routines build on habits Unit of analysis: interaction, interacting communities (communities of practice) Helps recognize that routines are distributed (parallel to distributed knowledge) Empirical insights: routines can be disrupted when participants in a routine start 'acting in a manner that is more individual than collective' (Weick 1990: 579) coordination requires a balance between individual habits and organizational routines
(Adapted from Becker, Markus, Routines, change and innovation , presentation at BETA, Universit Louis Pasteur, France, 21 March, 2007)
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Question 2: Behavior patterns, cognitive regularities, or dispositions?

behavior patterns
This interpretation can increasingly be found in the recent empirical literature

cognitive regularities
which give rise to recurrent interaction patterns

dispositions
to engage in previously adopted or acquired behavior, triggered by an appropriate stimulus or context

(Becker, 2007)

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Question 3: Mindless behavior or effortful accomplishment?

mindlessness:
without devoting attention to execution agents do not draw on substantial cognitive resources from the realm of consciousness

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Effortful accomplishment
Observation: in a variety of organizations, routines are characterized by being changeable and open to variation possible resolution of the apparent contradiction between routines as mindless or effortful (Feldman 2002, 2003, Feldmann and Pentland 2003): ostensive (label, referring to) vs. performative (carrying out) neglect of performative aspect leads to neglect of role of actor (agency): Organizational routines are not simply followed or reproduced rather, people have a choice between whether to do so, or whether to amend the routine

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Routines defined Conclusions

the term refers to three different aspects of regularities:
Cognitive regularities (rules, heuristics, etc.): (IF-THEN) RULES Behavioural regularities (expressed behavior that is stable): RECURRENT INTERACTION PATTERNS Dispositions

These are ontologically distinct, cannot be reduced to one another

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The role of routines in organizations

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(a) Co-ordination and control

Routines enable/facilitate effortless coordination Capability of routines to enable coordination builds on the basis of a balance between the interests of the participants in the routine (the so-called 'truce') Triggers play an important role in bringing about coordination

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Empirical findings
Knott and McKelvey (1999) compare the relative value of residual claims and routines in generating firm efficiency; US quick printing industry. Conclusion: routines can be more efficient for co-ordination and control than residual claims Standards (and standardized routines) are especially influential for exerting control (Segelod 1997), one way to bring about coordination; routine behavior is easier to monitor and measure than non-routine behavior (cf. Langlois 1992)

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(b) Providing stability of behavior

'stability' is a relative term it always includes the potential change that is endogenous to the routine due to its participants (Feldman) Implication: stability allows to form expectations about the behavior of others Implication: enables learning

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Empirical findings
routines are not inert, but typically change over time (endogenously) routines have a great potential for change due to an internal dynamic participants responding to the outcomes of previous iterations of a routine (Feldman 2000, 2003; Feldman and Pentland 2003) artifacts have an impact on the processes that they are used in (Hutchins 1991, 1995; Clark 1997; D'Adderio 2001, 2003)

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(c) Economizing on cognitive resources

tasks can often be executed in the realm of the sub-conscious, thereby economizing on limited cognitive resources True organizational level as well as on individual level

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Empirical findings
routines economize on cognitive resources by establishing organizational predispositions to respond to issues in certain ways (Ashmos, Duchon and McDaniel 1998) Experiments indicate that routines also economize on the time necessary for reaching a solution; this allows for spontaneous reactions even under constraint situations, such as time constraints (Betsch, Fiedler and Brinkmann 1998).

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(d) Storing knowledge

routines bind knowledge, including tacit knowledge knowledge in its application therefore, routines are seen as building blocks of organizational capabilities

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Empirical findings
declarative and procedural knowledge (Cohen and Bacdayan (1994) 'procedural knowledge' characterizes knowledge of how things are done, which is relatively inarticulate and encompasses both cognitive and motor activities a thorough mapping of a routine would also include the documents and artifacts used. (Hutchins 1991; 1995)

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Empirical findings
routines are sometimes used as 'quarry', that is, they are used as 'a system of manipulable elements', as a 'structuring resource' for manipulating the list of activities and restructuring their position in time. Routines are used as heuristics: instead of being executed in a precise way, they are followed as a guideline, with a rather high portion of variation injected (Narduzzo, Rocco and Warglien 2000) changes in the knowledge held in the organization, for example the creation and articulation of knowledge, have an impact on the routines in use. As case studies in the French food and steel industries have illustrated, such changes put the routines and the 'truce' surrounding them in question (Lazaric)

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(e) Reducing (pervasive) uncertainty

the standard strategy of dealing with choice under uncertainty is to increase information-processing However, there are situations of uncertainty where this strategy does not help (Knightean or pervasive uncertainty) In such situations, routines can be a way to help agents reduce uncertainty

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(f)

Legitimacy

routines legitimize behavior (less need for justification as it has already been carried out this way before)

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Conclusion: Contributions of routines concept

Description
Helps identify processes that generate performance Helps identify variation Base-line for identifying endogenous change

Understanding organizational behavior

Provide analytical depth Provide an analytical framework for capturing interrelations between rules, behavior patterns, dispositions and artefacts

Understanding organizational change

routines help understand endogenous change

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Conclusion: Contributions of routines concept

Routines can capture both structure and agency
Structure as it applies to a particular person Psychological factors as influenced by the specific situation

Explanatory power
Including dimensions in the explanation Exploring interactions between those dimensions (upwards- and downwards-reconstitution)

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Conclusions
Organizational routines concept is central for analyzing the behavior of organizations As sources of stability ... But sometimes also as drivers of endogenous change And, under certain circumstances, organizational routines can also be drivers of/generate innovation

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Organizational routines and innovation

Observation: Some companies (e.g., Apple, IDEO) have a track record of consistently outperforming competitors in terms of innovation (new products) Research question: Why are some companies able to innovate continuously? focus on endogenous drivers of innovation analytical perspective: Organizational routines
proposed for analyzing organizational behavior capturing what systematic, typical and consistent features of firm behavior sustained source of innovation

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Innovation routines
Keith Pavitt, innovating routines good reasons why knowledge of innovating routines especially in large firms deserves greater attention:
identify ingredients for the successful management of innovation more realistic interpretation of what managers actually do in a messy and changing world there are opportunities of successfully combining the new theoretical concepts of innovating routines with rich bodies of empirical evidence on what happens inside the innovating firm (Pavitt 2002, 118).

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Innovation routines
The idea is not new but builds on Nelson & Winter: Identify the way in which the routine functioning of an organisation can contribute to the emergence of innovation (Nelson and Winter 1982, 129). There is, however, more to be said about the relations of routine behavior and innovation than to observe that these concepts are commonly (and appropriately) regarded as opposed ideas (Nelson and Winter 1982, 129) Schumpeterian idea

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How to deal with routines in innovation?

The efficiency (stability, control, replicability) of the innovation process is linked to proper project management (stage gate processes, concurrent engineering) and organizational structures (heavyweight project teams, matrix structures, teams, etc.) often, the reliance on procedures and standardization is associated with privileging incremental innovation (exploitation) over radical innovation (exploration) exploration/innovativeness at odds with efficiency and control of the process (trade-off)?

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Linkpings universitet