An Organizational Approach: Bell & Howell

Tyrone Schiff OS 310 Assignment B

December 12, 2007

Professor Jason Owen-Smith and GSI Danielle Molina

Change, along with death and taxes, is one of the few constants in life. Changehas the capacity to affect societies, individuals, and even organizations. As time marcheson, organizations work to harness and sometimes even combat the endless onslaught of changing elements in order to maintain their aura of excellence. However, companiesoften stumble and lose their footing on the path to success.For instance, the Bell and Howell Company (B&H) was a member of the lucrativeFortune 500, a list of businesses with the highest annual revenue, until their suddendeparture after 1992. To truly understand why B&H lost their way, an exploratorynarrative of significant events in the company’s history will provide us with the necessaryclues. Furthermore, these events will be elaborated on and substantiated by organizationaltheories. These theories will help in revealing the systematic and almost predictivedownfall of B&H. B&H, incorporated in 1907, originally focused its efforts on thecreation of products for the motion picture industry (Wilson, 2005). With continuedsuccess, B&H expanded and began to acquire a diverse array of companies. However,B&H was criticized for being stretched too thin with a hodge-podge of jumbled holdingsthat offered seemingly unrelated products and services (B&H Company). As a result, newmanagement was brought in with the sole objective of slashing and streamliningcorporate processes. The decisions made by B&H at this point depict elements of population ecology, specifically structural inertia (Hannan, 1977). As things progressed,the management made choices that would lead to an eventual buyout of B&H. In the process, B&H was sued by their shareholders and a court case followed. This harks onconcepts of institutionalism as they relate to organizational theory (Meyer, 1977). A final blow came to B&H in their acquisition and continued investment in weaker industries,2

compounded with the selling of one of their most profitable endeavors. The theory thatexplains how the legs of B&H were swept right from under them is interdependence(Scott, 1998). Ultimately, these theories combined with the causes given here explainwhy the Bell & Howell Company fell from the Fortune 500.The management and strategic choices that B&H made is representative of anorganizational theory known as structural inertia, which outlines the hardships inadapting a new focus for an organization (Hannan, 1977). Donald N. Frey was appointedchief executive officer of B&H starting in 1971. Frey entered into the company at a timein which it was in need of restructuring (Simon, 1986). One of the first moves he chose tomake was to abandon B&H’s core industries of projectors and movie cameras, andinstead opted to direct the company into the emerging information technology market(Simon, 1986). There are several significant and severe detriments that are the result of making such a decision. Hannan suggests that, “much organizational knowledge is tacit.It is neither written into procedures nor coded into technology” (1977). This excerptspeaks to the culture within a company. Employees in organizations come to learn whatactions are correct and necessary in order to complete a task properly and efficiently(Hannan, 1977). Furthermore, these methods are not necessarily documented, but arerather learned and perceived through years of habit (Hannan, 1977). In changing acompany’s foundation, there are enormous costs that result. For example, employees maywork to maintain their entrenched traditions, which make the process of reorganizingharder (Hannan, 1977). Additionally, the costs of learning and establishing neworganizational traditions detract from the benefits intended in restructuring.An additional harm of structural inertia goes off of the premise that resources are3