The principles of bureaucracies and businesses are not just different, but opposed

As a species, human beings are unique in forming organisations for a wide variety of collective purposes which go well beyond simple survival.

Throughout history, there have been two fundamentally different types of organisation. Neither is good or bad, so they are simply labelled ‘Type A’ and ‘Type B’. Both have been vital to the development of civilisation.

 Type A OrganisationType B Organisation
PurposeCreate stabilityCreate change
PrincipleSubsume reality into itselfAdapt itself to reality
GoalExtend its power through growth and continuity (internally directed)Fulfil its mission by achieving tasks benefiting stakeholders (externally directed)
Organisational rationaleEnd in itself (seeks perpetuation)Means to an end (can abolish itself)
Managing principlesAvoid corruption
Processes dominate individuals, inputs dominate outputs
Follow procedures
Treat everyone the same
Personnel are servants of the organisation
Reward compliance
Create accountability
Individuals dominate processes, outputs dominate inputs
Show initiative
Treat everyone appropriately
Personnel are free agents within boundaries
Reward achievement
ConsequenceThe general dominates the specificThe specific dominates the general
Definition of failureDeparting from process (how)Failing to achieve goals (what)
State bureaucracies

This is a heuristic device, a model in terms of which real examples can be understood, not an attempt to describe an organisation or group of organisations. The dimensions define scales along which it is possible to plot any organisation. Nevertheless, impurely, but perhaps usefully, one could think of Type A as standing for ‘Administrative’ and Type B for ‘Business’.

In businesses, people dominate processes. In bureaucracies, processes dominate people

Type A’s used to be the most common. They include political bureaucracies and churches. Two of the most successful organisations in history, the Imperial Civil Service of China (221BC – 1904AD) and the Catholic Church have been Type A.

Type A's create the conditions in which Type B’s can flourish.

Type B’s are now far more numerous because they include the business corporations which dominate market economies. However, they only started to become common some 200 years ago. Prior to this the main examples were some standing armies, but they too did not become common until the C17th. The outstanding Type B of all time probably remains the Roman Army (ca 580BC – 565AD).

Importantly, the principles of Types A and B are not just different, but opposed. Hence a hybrid will have immense difficulties in being effective.

Military organisations are curious. In peacetime they exhibit the characteristics of Type A. In war, their effectiveness, and hence their survival, depends on the speed at which they can change into Type B. Some have been very good at this, others less so. Today, the armed services signal the change by being very clear about when they are and are not ‘on operations’. They are not hybrids, because they switch between the two states. However, if a military apparatus at war consists of one part (e.g. the Army) which switches to Type B and another part (e.g. a Ministry of Defence) which remains a Type A, there will be friction.