Why Do Organizations Exist – Sriram, A Fin-Tech Professional Shares His Views

“The purpose of an organization is to be an organization of purpose.” (Adapted from Robert Byrne’s original quote)

The term ‘organization’ is a derivative of the Greek word organon meaning tool. Most of us may already know this but do we really mean it in the current context of organizational practice? “Commonly, an organization is a social arrangement that pursues collective goals, which controls its own performance, and has a boundary separating it from its environment”.

Looking at this definition through a manager’s lens it doesn’t get very different -”An organization is a group of people intentionally organized to accomplish an overall objective” but then, when it comes to practice it’s a whole lot different.

As the legendary baseball player and coach Yogi Berra once said “In theory there is no difference between theory and practice. In practice there is”.

Observing the state of most organizations today, a few things come to mind instantly – High-flying celebrity CEOs, private jets, huge bonuses (including golden parachutes!), yacht parties, multi-million dollar mansions, mega-mergers, high-profile scandals, bankruptcies, bailouts etc, though not necessarily in that order.

Why is it that a group of people who ‘intentionally’ gather together to accomplish an overall objective get prosecuted for deceit and fraud, turn bankrupt, end up in jail, seek bailouts etc? Something must be wrong, isn’t it? Well, there indeed is – They don’t seem to have understood the very ‘purpose’ of an organization.

The raison d’être of an organization has undergone a radical change from the good old Taylorian days (coined after renowned management scientist F.W.Taylor) to the now prominent Welchian culture (coined after Jack Welch, once the legendary CEO of General Electric).

During his heyday, F.W.Taylor saw things others didn’t see and hence was called The Father of Scientific Management. He kicked-off the efficiency movement and kicked-out inefficient people at Bethlehem Steel (once was the 2nd largest steel producer in USA) during the late 1800s, which sadly doesn’t exist today following its bankruptcy in 2001. Indeed, Taylor would have had his last laugh if he were alive today.

On the other hand, Jack Welch had gained a solid reputation for his uncanny business acumen and unique leadership style during his long stint as the CEO of General Electric, where he increased its market capitalization by over US$400 billion.

His managerial style (firing bottom 10% of managers every year, cutting lackluster old-line units, brutal candor, rewarding top-20% of his managers etc…) is now being adopted, by many managers in most parts of the corporate world. While this strategy may not be in the best interest of all stakeholders, it certainly does re-enforce a belief in what is being practiced today at organizations worldwide.

It’s imperative to note that every organization, like individuals, has its own DNA. Managers (and workers) are taught and trained to imbibe this DNA and act accordingly when making decisions, performing tasks, delegating work etc. That said, a few organizations do appreciate and inculcate a bottom-up (participative) approach to organizational behavior and discipline. But, most organizations prefer a top-down (authoritative) approach – not just because it’s easier – but because the executives sitting in ivory towers feel the need to do so – the HARD truth is that the bottleneck is always at the TOP of the bottle!


sriram kannan

Sriram Kannan is a senior fin-tech and analytics consulting leader with almost 17 years of extensive and progressive experience in a suite of areas – BI, Analytics, EPM/BPM, Management controllership, Finance-technology, Risk & Compliance – with proven ability to manage large-scale, multi-discipline programs effectively and exceed expectations in the delivery of results. His educational qualifications are B.Com, FCCA(UK), FCIS(UK), FRSA(UK).