A Brief History of the Firm: From Machine to Human to Human-Like Machine

Although we cannot mark the birth date of organizations as we know them, early discussions date back to around 500-400BC where both Eastern and Western philosophers began pondering on the art and science of management. Socrates, for instance, talked over a base set of general management principles that can be applied anywhere from choirs to armed forces—the same set of managerial traits were assumed to apply to both maestro and drill sergeant.

“Classical” theorists maintain that the organization is a rational, output maximizing machine and people and capital are its parts—exemplary managers thus seek to design the best machine possible.

As with most things that are worth talking about, natural forces kick in and make them better—more suited for the present context. Readjustment, adaptation, friction, and conflict occurs, more commonly in some sort of cyclical nature (think seasons or product life cycles). Out with the old, in with the new.

Enter “Neoclassical” theorists, who began chipping away at Classical theory in the early 1900s. They most certainly agreed that the central bureaucratic function was unwavering efficiency but looked to deter the oversimplistic and mechanistic nature of it put forward by the Classical theorists.

Their basic premise was that the bureaucracy is human. Humans have flaws, aren’t principally rational, and may sometimes be motivated by self-interest—which may differ from that of the organization’s. Organizations thus require proficient administration to align the wandering and unpredictability of human behaviour.

Where does that leave us today? Organizations are now seemingly morphing quicker than ever—the relevant ones at least, sorry BlockBuster Video. This swift pace is linked to another couple of variables Peter Drucker labelled the modern environment to subject to: increasing complexity and tremendous competition.

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We’ve surely got technology to give credit to (or blame) for that. Technology has pushed us from flip-phone to smartphone—to flip-phone smartphone. Its rapid pace changes just as fast as our demands do. In the same nature, the firm has added a human element to the machine-like bureaucracy and has arrived at a sort of tech-infused machine-like superhuman.

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