The Triumph of The Org


It is no understatement to say that the business book market is saturated. Most of it is not nearly of the quality that I would comfortably hand or recommend those books to MBA students; which is incredible since MBA students and alumni are invariably the target market for such books. Most of those books steer clear of sensible economic theory and also the use of non-anecdotal evidence which does not help one bit.

But there are books worth recommending and they lie on a frontier. They can be classified along two dimensions. The first is the probability that what is contained in the book is actually correct; which can be high or low. The second is whether the book “makes you think.” One dimension does not imply the other. For instance, much of Malcolm Gladwell’s writings make you think but have a relatively low probability of actually being correct. Josh Lerner’s recent outing on The Architecture of Innovation falls into the opposite camp: it is evidence-based and highly likely to be correct but doesn’t put forward a stunning new hypothesis that makes you think. Sometimes one author can provide something in both camps. Tim Harford’s The Logic of Life falls into the highly like to be correct camp while his recent book Adapt, falls into the make you think camp. Sometimes a book hits both marks such as Nudge or Thinking, Fast and Slow but they are very rare.

The Org by Ray Fisman and Tim Sullivan falls well into the required reading for MBAs set. Indeed, I believe it will be THE required reading on the subject of organisational economics. It seeks to uncover why organisations are, well, organised the way they are. From reporting structures to CEO perks, from culture to the unintended consequences of incentives, Fisman and Sullivan provide a clear exposition of economic theory and relate it to proper, large data-set evidence on organisational operation. For that reason, it falls squarely into the “highly probably to be correct” camp. Moreover, it does this by framing the theory and evidence around stories that are themselves grounded in highly detailed case studies. There is no cuteness here, just on-point exposition of how offices work.

The trade-off for being rigorous is that you do not get to put forward a speculative hypothesis about the evolution of organisations and the way managers should manage in the future. Instead, there is a resignation to the world. Yes, to be sure, organisations can be annoying but Fisman and Sullivan want you to understand that there is a silver lining to your frustration and in most cases you should just suck it up. That is not an inspiring message but it can make you more comfortable with the status quo. And let’s face it, there is nothing more frustrating than some manager trying to re-organise things based on some new fangled and probably wrong managerial theory. In that way, The Org provides the fodder for those who want to ground decisions in evidence and gives them the perspective to push back on debates that might lead to costly excursions.

So I think every MBA student is going to be handed this book and it will become a classic staple of management education. But what about the rest of us? Is this worth reading? The answer is a qualified yes. It is beautifully written and the stories themselves, especially if you are not a teacher of organisational economics, are fresh and should be part of your own knowledge. But in terms of interest my belief is that if you like Downton Abbey, then you are going to appreciate your time with The Org. Now it may seem a stretch to draw a line from a British TV soap opera about 1920s aristocracy to a book on organisational economics but, in fact, both sit on the same foundations. Downton Abbey, at its core, is a rationalisation of a particular — I guess almost feudal — organisational form and all the intricacies of the power structure, information flows (including gossip) and response to external pressures that that organisation takes. The Org provides the same picture but just for a more modern set of organisations. They are two sides of the same coin.

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