Tuesday, March 5, 2013

The World's First Modern Organization Chart

Business historian Alfred Chandler Jr. (1918-2007) once wrote in one of his most influential works, The Visible Hand, about the momentous impact of managerial innovations, such as corporate accounting, mass production, and the organization chart. From there, he even identified the world's first modern organization chart and described its impacts in granular details.

 According to Chandler, the first modern organization chart is the New York and Erie Railroad pioneering plan created by it's manager Daniel McCallum and his associates. The purpose of the plan was to facilitate information flow from the bottom of the organization to its top in an age when the adoption of telegraph had largely increased the scale of the railroad as well as its managerial complexity. However, in none of Chandler's works had we actually seen what the chart looked like. In fact, as later revealed by Chandler in an HBR article published in 1988, "I have never seen a copy of McCallum's chart, but it was described in some detail by Henry Varnum Poor, editor from 1849 to 1861 of the American Railroad Journal. According to Poor, the chart resembled a tree. Its roots represented the president and the board of directors. Its branches were the five operating divisions and the passenger and freight departments. Its leaves indicated the various local ticket and freight agents, crews and foremen, and so on."

But the real curious question is, of course, what does the world's first modern organization chart look like? Caitlin Rosenthal, a postdoctoral fellow at the Harvard Business School finally found out (see below and enlarged here) - and as Chandler already told us, it's really not quite resemble the top-down, pyramid style chart we now see everyday, it's more like a tree and it's bottom-up.

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