Chapter 1
Chapter 1
Chapter 1
Introduction___________________________________________________
THE CELESTIAL SEASONINGS' STORY
If you walk into you local supermarket and find the aisle where coffee
and tea products are displayed, odds are you'll see boxes of herbal teas
with animated pictures of bears frolicking under waterfalls, chipmunks
blowing gold trumpets, and buffalo charging out of the sunset. The teas
will have names like Mo's 24, Sleepytime, Red Zinger, Emperor's Choice,
Cinnamon Rose, Almond Sunset, and Morning Thunder. The company
that brings these teas to your supermarket is Celestial Seasonings, Inc. In
1988 the company had sales in excess of $40 million. It has made its
founders— Mo Siegel and John Hay— millionaires. But Celestial Season
ings wasn't always a large, multimillion-dollar organization. In fact, it
has grown from the most humble of beginnings.’
In the summer of 1971, Mo Siegel and John Hay were in their early
1
2 PART I / INTRODUCTION: WHAT'S IT ALL ABOUT?
twenties and lived in Boulder, Colorado. Both were "free spirits"— more
interested in religion, music, and health than the security of an eight-to-
five job. But even free spirits have to eat, so Mo and John decided to
make and sell herb teas.
Mo and John spent their summer days picking herbs in the canyons
surrounding Boulder. Meanwhile, their wives— Peggy Siegel and Beth
Hay— sewed bulk tea bags: ten thousand bulk tea bags that first summer!
The two couples screened the hundreds of pounds of herbs that the men
had collected and mixed them into a concoction that would eventually
be called Mo's 24. The mixture would then be crammed into the bulk
tea bags and marked. The completed products— which they sold under
the brand name of Celestial Seasonings— were sold to natural food stores
in the Boulder area.
During the first few years, the people that made up Celestial Sea
sonings were nothing more than a group of friends and relatives. There
were no job descriptions, no production lines, and little specialization
of labor. The way the group made decisions was fully in keeping with
the values of the founders. Informal meetings were held once a week. It
was not unusual for these meetings to last eight hours, while participants
dwelled on such topics as the philosophical attributes of tea bags. There
were volleyball games during every lunch hour.
But something began to happen in the mid-1970s that changed Ce
lestial Seasonings' structure dramatically. Demand for their herbal teas
was exploding. They were moving out of health food stores and into
Safeways and A&Ps. More people had to be hired to meet the increased
demand. When Celestial Seasonings had been merely two friends and
their wives, it could adjust rapidly to new conditions because everyone
knew everyone else's job. Communication was easy— they all worked in
the same small room. But with more people came the need to develop
a more formal structure within which to make and sell their herbal teas.
Today Celestial Seasonings employs more than two hundred people who
work out of five buildings in the Boulder area. There are departments,
production lines, and written job descriptions. The simple days of four
people doing everything are gone. Herbs are received in one warehouse
and then taken to a highly automated factory for cleaning, milling, and
blending. Blending, for instance, is carefully done by specialists to ensure
consistency of flavor. On a good day workers will blend eight tons or
more of tea into fifteen varieties.
Not surprisingly, Celestial Seasonings has lost a large degree of its
"one big happy family" atmosphere. With specialization and depart
mentalization came the separation of management from workers. Profes
CHAPTER 1 / AN OVERVIEW 3
What Is an Organization?
To this point, we have assumed that you are aware of the value of
studying organization theory. This may be an incorrect assump-
tion. Therefore, before we go any further, let us address the ques-
tion directly: Why study OT?
Organizations are the dominant form of institutions in our
society. You were probably born in a hospital, and you will prob-
ably be put to rest by a mortuary. Both are organizations. The
schools that educate us are organizations, as are the stores where
we buy our food, the companies that make our automobiles, and
the people who take our income tax, collect our garbage, provide
for our military defense, and print our daily newspapers.
Organizations pervade all aspects of contemporary life—soci-
ety as a whole, the economy, and even our personal lives. It is not
unreasonable, then, to expect us to want to understand this phe-
nomenon that is so intertwined in our lives. Even though you may
have no desire to apply your knowledge, you may simply seek an
answer to why organizations with which you interact (and by which
you will probably be employed) are structured the way they are.
At a more sophisticated level, you may want to replace your
intuitive theories of organization with ones that have been derived
scientifically and systematically. Whether or not you study organ-
CHAPTER 1 / AN OVERVIEW 9
izations formally, you carry around with you a set of theories about
how organizations operate. You go to the Department of Motor
Vehicles to get your driver’s license renewed; you make a reser-
vation with an airline; you talk to the loan officer at your bank
about arranging a student loan; you order it "your way” at the
local fast-food hamburger outlet. You undertake all these activities
by using some "theory” about how each of these organizations
operates and why its members behave as they do. So the issue is
not whether you should use theories for dealing with organiza-
tions—reality tells us that we use such theories every day. Doesn’t
it make sense to use theories that have undergone systematic study?
When we use the phrase systematic study, we mean looking at
relationships, attempting to attribute causes and effects, and bas-
ing our conclusions on scientific evidence; that is, data gathered
under controlled conditions and measured and interpreted in a
reasonably rigorous manner. The objective is to replace intuition
or that "gut feeling” one has as to "why organizations are designed
as they are” or "what works best when” with scientifically-based
theories.
Probably the most popular reason for studying OT is that you
are interested in pursuing a career in management. You want to
know how organizations operate, have that knowledge based on
some scientific evidence, and then use the knowledge for con-
structing and changing an organization’s structure to achieve the
organization’s goals. In other words, you expect to practice organ-
ization design as a manager, administrator, personnel analyst, or-
ganizational specialist, or the like.
The final reason for studying OT may not be very exciting, but
it is pragmatic—it may be a requirement for a particular degree
or certificate you are seeking. You may perceive yourself as a cap-
tive in a required course, believing that studying OT may offer no
obvious end that has value to you. If this is the case, then the
studying of OT is only a means toward that end. It is hoped that
one of the earlier reasons holds more relevance for you.
THE B IO LO G IC A L M ETA PH OR
CLOSE-UP
FIGURE 1-1 B a s i c O p e n S y s te m
E nv iro nm e nt
System
E n viro nm en t
-,
FIGURE 1 -2 A n I n d u s t r ia l O r g a n iz a t io n as a n O p e n S y s t e m
C O M IN G A TTR A CTIO N S:
TH E PLAN O F TH IS B O O K
Orga nizatio n
Structu re
(Chap . 4)
SUMMARY
An organization is a consciously coordinated social entity, with a relatively
identifiable boundary, that functions on a relatively continuous basis to
achieve a common goal or set of goals. Organization structure is made up
of three components: complexity, formalization, and centralization. Or-
ganization design is the constructing and changing of structure to achieve
the organization's goals. Organization theory is the discipline that studies
the structure and design of organizations.
There is no single reason for studying organization theory. It may be
merely to understand organization structure. It may be to develop sys-
CHAPTER 1 / AN OVERVIEW 27
NOTES
1The material on Celestial Seasonings has been adapted from Eric Mor-
gen thaler, "Herb Tea's Pioneer: From Hippie Origins to $16 Million a
Year," Wall Street Journal, May 7, 1981, p. 1; Nora Gallagher, "We're More
Aggressive Than Our Tea," Across the Board, July-August 1983, pp. 46-
50; "Kraft is Celestial Seasoning's Cup of Tea,” Business Week, July 28,
1986, p. 73; and "An Herbal Tea Party Gets a Bitter Response,” Business
Week, June 20, 1988, p. 52.
2John R. Kimberly, "The Life Cycle Analogy and the Study of Organiza-
tions: Introduction," in J. R. Kimberly and R. H. Miles, eds., The Organ-
izational Life Cycle (San Francisco: Jossey-Bass, 1980), pp. 6-9.
3 See, for example, Gareth Morgan, Images of Organization (Beverly Hills,
Calif.: Sage Publications, 1986).
4 See Donde P. Ashmos and George P. Huber, "The Systems Paradigm in
Organization Theory: Correcting the Record and Suggesting the Future,”
Academy of Management Review, October 1987, pp. 607-21.
5This section adapted from Daniel Katz and Robert L. Kahn, The Social
Psychology of Organizations, 2d ed. (New York: John Wiley, 1978), pp. 23-
JO .
6Adapted from Kim S. Cameron and David A. Whetten, "Models of the
Organization Life Cycle: Applications to Higher Education,” Research in
Higher Education, June 1983, pp. 211-24.
7James Cook, "Bring On the Wild and Crazy People,” Forbes, April 28,
1986, p p .54-56.
8Ann M. Morrison, "Apple Bites Back,” Fortune, February 20, 1984, pp.
86- 100.
9 See, for instance, George Schreyogg, "Continency and Choice in Organ-
ization Theory," Organization Studies, no. 3, 1980, pp. 305-26; and Henry
L. Tosi, Jr., and John W. Slocum, Jr., "Contingency Theory: Some Sug-
gested Directions,” Journal of Management, Spring 1984, pp. 9-26.