Understanding the Dynamics of the Value Chain

The Traditional Organization

The defining characteristics of the traditional organization is embodied in the organizational chart with its boxes containing the typical corporate functions such as accounting, marketing, production, engineering, purchasing, and so forth. This development was a manifestation of Adam Smith’s idea of task specialization put forth in his 1776 book, The Wealth of Nations.2 As it turned out, task specialization was a convenient guide to create the organizations necessary to accommodate the explosive growth in capitalist enterprises in the late 19th and early 20th centuries. Organizing by the vast array of specialized knowledge required by the organization to operate made management of those growing enterprises more ...