What makes an organization alternative?

The type of organizations we usually discuss in business management are conventional large corporations, often multinationals or occasionally SMEs, startups and family businesses. However, there is a bit of an embedded assumption which is perpetuated by doing so, that this type of organization and its embedded values is the only legitimate means of acting on the world. A recent response to this type of thinking is the focus on ‘alternative’ organization, where research has tried to highlight the importance of voluntary and co-operative organizations as different ways of addressing a social or market ‘need’, but using structures which embed a different set of priorities or ethics. These organizations are often left out of discussions when students learn about ‘organizational behaviour’, so in a recent lecture on Contemporary Issues in Management, we made a point of ensuring this was featured; not only to stress the importance of different organizational structures, but also to highlight how easily we come to accept the ‘normal’ or most frequently used way of thinking about a problem as the ‘truth’. One example of organization I will discuss below also indicates how easily we can be seduced by the promise of new technology, but that when we look more closely it’s often possible to see that this novelty conceals repetition of existing structures and approaches.

Dr Mangan’s lecture for Keele students provided a few different definitions and examples of ‘alternative’ forms of organization, including the different purposes an organization may have, specifically purposes which are not directly linked to the pursuit of profit. However, many small or entrepreneurial businesses will not always talk about the pursuit of profit as their main aim, but will rather stress their product or service and how important they feel that is to their identified market. Equally, many defenders of the ‘mainstream’ approach to business argue that it is ‘common sense’ that profit is not the main ambition of most businesses, but is nonetheless an important motivator for companies to improve their product or service.

The way we talk about companies and businesses tends to include a lot of fundamental assumptions about their structures and strategies, functions and purposes which we then hold in our minds as a basic model of what ‘an organization’ is like. The assumption that profit is an important ‘reward’ or motivating factor is one of these assumptions, as is the focus on a link between ownership, responsibility and reward. Underlying these debates is a fundamental question about what we (that is, society as a whole) value. Organizations that are ‘alternative’, make a point of valuing more than economic success and trying to explore different ways of organizing themselves in order to promote those values. In order to do so, they often disrupt ‘common sense’ approaches to reward or ownership. Sports organizations, for example, often stress rewards for the work which are not financial, but rather promote status in a community and self-respect through personal achievement. A system of values which is increasingly popular is the democratic system of peer-to-peer service provision, yet not all organizations promoting this are necessarily ‘alternative’.

We can look at publications such as the Harvard Business Review as examples of where certain ‘common sense’ knowledge about business is often presented as ‘truth’. In HBR, there is often talk about ‘value creation’, but usually only in the context of ‘shareholder value’, i.e the pursuit of profit. There is also regular concern over economic growth and productivity. Again, this is not to say these things are unimportant, but they are discussed very differently in less well known and more critical outlets. Compare this article on concerns about the study of economic growth in HBR, with this one, in Aeon. Yet HBR is much more widely read, and has greater impact on the business community, as well as it’s aspirants such as business management students.

So, to return to the question of identifying alternative organizations. Here’s my challenge; is Uber an ‘alternative organization’? I put forward this example because, like many similar companies such as AirBnB, this is considered part of a growing peer-to-peer or ‘sharing economy’ which has emerged in a response to a search for low-cost or sustainable alternatives to traditional business models. Uber is certainly a different sort of company and service which promotes value for customers and has had significant worldwide impact, very quickly. It has been widely reported as a disruptive element in the transportation industry. Uber disrupts conventional models of employment and control, as drivers are self-employed and are not ‘signed up’ to a specific shift pattern, instead working whenever they choose. Yet this is not so different to working for a taxi firm. The rate charged is still set by Uber (using demand algorithms), they take a commission from each driver’s earnings and exert indirect control through the driver rating system. The company relies upon high levels of technology among the population of its users and Uber’s focus is primarily upon the technology as a liberating mechanism for drivers and customers. Yet the benefits seem to accrue primarily to customers, with few advantages for the self-employed driver.

Uber has been discussed in HBR specifically in terms of it’s ‘value creation’ but the concept of value creation focuses on benefits for investors or shareholders, as well as ‘value’ for consumers in the sense of a competitive product, but not necessarily ‘value’ as it is determined by all stakeholders. Uber is a notable case as it’s rapid success challenged not only the market dominance of other providers (notably US yellow cabs and London black cabs), but also their traditional role in and contribution to local tourism. In response, these organizations have released their own competitive phone applications to address consumer value. Debates on the long-term success of any of these organizations continue to focus on how long they can maintain ‘value’ (in the sense of being financially solvent), and whether they can maintain a high speed of innovation. But such debates continue to perpetuate the idea of value as no more than a financial measure of success in the marketplace. It is perhaps more interesting to look at the ways in which transportation services are being provided through alternative forms of organization by groups who genuinely want to reconsider the market model of competition, ownership and reward. In some cases these groups are integrating services such as Uber into worker ownership structures, whereas other services rely on wholly different models such as community car clubs.

In summary then, I would argue that Uber does not ‘fit’ the model of an alternative organization, but that the ways in which some cooperative groups are banding together indicate it is not intrinsic to the technology; rather it is that the values of Uber are too closely in line with ‘business as usual’.

[EDIT – you can find some more excellent thoughts on contemporary issues around corporate approaches to value here and on alternative organization here]

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