Moreover, to spread risk is to spread the consequences of that risk, a disaster in one division can pull down the entire organization. Indeed, the fear of this is what elicits the direct control of major new investments, which is which is what often discourages ambitious innovation. Finally, the divisional zed form does not solve the problem of adaptability of machine bureaucracy, it merely deflects it. When a division goes sour, all that headquarters seems able to do is change the management (as an independent board of directors would do) or divest it. From society’s point of view, the problem remains.
Finally, from a social perspective, the divisionalized form a number of serious issues. By enabling organizations to grow very large, it leads to the concentration of economic power in a few hands. And there is some evidence that it sometimes encourages that power to be used irresponsibly. By emphasizing the measurement of performance as its means of control, a bias arises in favor of those divisional goals that can be operationalized, which usually means the economic ones, not the social ones. That the division is driven by such measures to be socially unresponsive would not seem inappropriate-for the business of the corporation is, after all, economic.
The problem is that in big businesses (where the divisionalized form is prevalent) every strategic decision has social as well as economic consequences. When the screws of the performance control system are fumed tight, the division managers, in order to achieve the results expected of them , are driven to ignore the social consequences of their decisions. At that point, unresponsive behavior becomes irresponsible.
The divisional zed structure has become very fashionable in the past few decades, having spread in pure or modified form through most of the Fortune in a series of waves and then into European companies It has also become fashionable in the nonbusiness sector in the guise of “ multiversity-ties,” large hospital systems, unions, and government itself. And yet it seems fundamentally ill suited to these sectors for two reasons.
First, the success of the divisional zed form depends on goals that can be measured. But outside the business sector, goals are often social in nature and no quantifiable. The result of performance control, then, is an inappropriate displacement of social goals by economic ones.
Second, the divisions often require structures other than machine bureaucracy. The professionals in the multiversities, for example, often balk at the technocratic controls and the top-down decision making that tends to accompany external control of their campuses. In other words, the divisional zed from can be a misfit just as can any of the other configurations.