Posted by: John Vandivier | July 16, 2013

Vandivier Organizational Axiom

“Larger organizations have simpler goals while smaller organizations have more diverse goals.”

Or, more rigorously:

Ceteris paribus, an organization with one less goal will never have a lesser number of potential members, where a potential member is defined as someone who has an interest in common with the organization, unless the organization only has one goal.”

This is because it is easy to find two people with diverse interests in common, but for every additional person the diversity of interest narrows, because no two people hold exactly the same interests. Large organizations, therefore, can only be formed around simpler goals. In that case the number of people who fully share the organization’s goals are maximized. Taken to the extreme, a maximally sized organization may only have one goal. Organizations are utility-maximizing, which may be, but almost always is not, the same as profit-maximizing.

The goal of an organization is the aggregate of the goals of the members, weighted by their decision-making power, and also accounting for the goals and weight of external influencers. The aggregated goals of the members, however, may or may not be the aggregated personal goals of the members. In other words a member may have a goal with respect to the organization which is not always equivalent to, though it will always be consistent with, that person’s over-arching life goals. For example, a person may invest in a company to earn money while their over-arching life goal is not to earn money, but to do a particular thing which requires money to do.

The goal of an organization is therefore the aggregate of the goal of each member with respect to that organization, weighted by their influence and accounting for external influences. Members may still have diverse goals and even diverse goals with respect to the organization. Therefore even large organizations will have diverse goals. Goals may be further weighted by the interest level in that goal by the member. A member may have multiple goals in joining an organization which are not pluralistic. For example a person may go to work for a travel agency with both the goal of employment and the goal of reduced vacation expenditure. However they may have begun work primarily for employment and secondarily for reduced vacation expenditure. Perhaps we can even uncover, more than a simple ordinal listing, the exact ratio of preference. If we could do that for every organization member then we could mechanically calculate the organization’s goal.

If we created a bar graph of organizational utility per goal and arranged the goals from highest utility to least and then numbered them as goal 1, goal 2 and so forth, then repeated the analysis for a normative sample of small and large businesses, we should find that the average inverse curve for small businesses is less steep than the average inverse curve for large businesses, indicating a difference in the diversity of organizational goals. If this hypothesis is found it will support my axiom and if it is found not the case my axiom will be weakened or defeated.

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