The reform of formal structure has been among the most complex and controversial problems confronting the modernization of industrial management. As the preceding chapters have indicated, each of the functional approaches to rationalization has had consequences for the allocation of authority, function, and status within industrial management. Anticipated consequences of functional reform for organizational or personal position have been among the important sources of support or opposition to these reforms.

The rationalization of formal structure has proceeded in two distinct overlapping processes. One process has been the systematic reorganization of the ministerial system, which is discussed in Chapter 6. A second, more complex process has been the extended, largely informal responses of the managers to the implications of functional reform for industrial organization. The processes converge as attempts to reform the classical model of management. At both levels, questions of reform have involved the number of hierarchical levels, degrees of centralization, spans of control, relationships between line and staff organs, departmentalization, and other structural issues. The present chapter examines some of the implications of building ASUs, implementing the 1965 reforms, and applying behavioral research to industrial organization.

In the mid-1970s, the application of the systems approach to the design of formal industrial organization became limited. The experience with this approach, which is still in the experimental stage, is discussed in Chapter 6. The more significant influences on the rationalization of industrial organization have flowed from the presumed logic of structural change required by the specific and largely uncoordinated initiatives associated with functional rationalization.