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An organization can secure the efforts necessary to its existence, then, either by the objective inducements it provides or by changing states of mind. It seems to me improbable that any organization can exist as a practical matter which does not employ both methods in combination. In some organizations the emphasis is on the offering of objective incentives — this is true of most industrial organizations. In others the preponderance is on the state of mind — this is true of most patriotic and religious organizations.

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The overvaluation of the apparatus of communication and administration is opposed to leadership and the development of leaders. It opposes leadership whose function is to promote appropriate adjustment of ends and means to new environmental conditions, because it opposes change either of status in general or of established procedures and habitual routine. This overvaluation also discourages the development of leaders by retarding the progress of the abler men and by putting an excessive premium on routine qualities.

The making of decisions, as everyone knows from personal experience, is a burdensome task. Offsetting the exhilaration that may result from correct and successful decision and the relief that follows the termination of a struggle to determine issues is the depression that comes from failure, or error of decision, and the frustration which ensues from uncertainty.

An organization is a subordinate system of a specific larger system, the cooperative system, whose components are physical, biological, and personal systems. The relations with other organizations... are outside this specific cooperative system. Other organizations are a part of the social environment of the organization. It is for this reason I have used the phrase "complex of organizations" rather than "system." Usually the most significant relationships of a unit organization are those with the specific cooperative system of which it is a part. It is this system which primarily and on the whole in most instances determines the chief conditions of the organization's existence.

Prestige, competitive reputation, social philosophy, social standing, philanthropic interests, combativeness, love of intrigue, dislike of friction, technical interest, Napoleonic dreams, love of accomplishing useful things, desire for regard of employees, love of publicity, fear of publicity – a long catalogue of non-economic motives actually condition the management of business, and nothing but the balance sheet keeps these non-economic motives from running wild. Yet without all these incentives, I think most business would be a lifeless failure.

An organization comes into being when (1) there are persons able to communicate with each other (2) who are willing to contribute action (3) to accomplish a common purpose. The elements of an organization are therefore (1) communication; (2) willingness to serve; and (3) common purpose. These elements are necessary and sufficient conditions initially, and they are found in all such organizations. The third element, purpose, is implicit in the definition. Willingness to serve, and communication, and the interdependence of the three elements in general, and their mutual dependence in specifie cooperative systems, are matters of experience and observation.