Information Technology and Organizational Structure

These hypotheses about the effects of IT on organizational structure appeared to be as infamously wrong as Thomas Watson's 1943 prediction about the world market for computers (“maybe five”) but 30 years later, scholars called Leavitt and Whisler’s predictions 67 accurate.

Abstract

The first commercial uses of computers—for applications such as accounting, insurance claims processing, and airline reservations—date from the early 1950s. It was not long afterward that futurists began to speculate about the effects of computer use on the form and functioning of organizations. In 1958, Leavitt and Whisler—coiners of the term “information technology”—predicted that IT would have “definite and far-reaching impact on managerial organization” in largeand medium-sized business firms (Leavitt and Whisler, 1958, p. 41). Leavitt and Whisler made four specific predictions. First, occupational specialization would increase: Business planning work would be taken from mid-level line managers and given to a new class of specialists such as operations researchers, who would develop tools and standardized routines for their work. Second, large organizations would re-centralize, with top managers taking over much of the planning and innovating work that they had formerly delegated to middle managers. Third, while the new specialist functions would increase in status and compensation, many middle management jobs would be downgraded or eliminated; instead of the traditional pyramid shape, the organization of the future might look more like “a football [the top staff organization] balanced on the point of a church bell” (p. 47). Fourth, the invisible line separating the top of the organization and the middle would become more distinct and impenetrable. For years, these hypotheses about the effects of IT on organizational structure appeared to be as infamously wrong as Thomas Watson’s (then IBM’s Chairman) 1943 prediction about the world market for computers (“maybe five”). But 30 years later, scholars called Leavitt and Whisler’s predictions 67