Contingency Theory: Applying the Differentiation and Integration Approach

As organizations undertake more complex tasks, they tend to complicate internally by differentiating new organization units. This process can readily be traced historically in many organizations. Spencer long ago noted this phenomenon in his analogy between social and biological systems:

A social organism is like an individual organism in these essential traits; that it grows; that while growing it becomes more complex; that while becoming more complex, its parts require increasing mutual interdependence; that its life is immense in length computed with the lives of its component units . . . that in both cases there is increasing integration accompanied by increasing heterogeneity.

The manager who develops a working familiarity with the concept of organizational differentiation will be more observant of this process. He can use the concept to sharpen his ability to discriminate intelligently between differentiation proposals based on new task complexities and superficially similar proposals based on Parkinsonian tendencies toward empire building. Our research indicates that the clear-cut and formal differentiation of organizational units, when based on significant task and environmental differences, contributes to good performance. By contrast, one common organizational error is to combine two distinctly different tasks in a single organizational unit. These conditions are schematically presented below (Figures IX-1 and IX-2) ; the solid lines depict the configuration of the actual formal structure and managerial orientation, and the broken lines represent the requisites stemming from the nature of the task and environment.

We found some evidence of this type of differentiation error in the low-performing food company. This firm maintained research as a single structural entity, in spite of indica-tions that the applied and basic research tasks required capacities to deal with somewhat different parts of the environment.

A historical example close to the experience of many busi- nessmen may clarify this point. For years many companies treated selling as one big, unified task and the sales department as a management superstructure built up over the individual salesman. Most modern firms now recognize that the term sales covers over some distinctly different tasks—such as product development, product management, advertising and promotion, and market research, as well as sales management. The organizations that recognize these emerging task differences at a proper time and reflect them in their structure and related management practices tend to achieve a competitive advantage. But they must first break through the semantic barrier of seeing sales as a single entity. We think an understanding of the concept of differentiation developed in this study can help managers to solve similar organizational issues in the future.

The same process has led firms to break out the function of accounting into such different tasks as financial accounting and statistical control. Nowadays, operations research and computer specialists tend to be lumped together in one organizational unit, but an analysis of the tasks as they emerge might turn up the requirement for some considerably different orientations and management practices for each group.

The analysis of tasks and environments can also occasion a reversal of the splitting process. It sometimes reveals the wisdom of melding two units that have traditionally been separate. This has happened in some engineering departments, when task distinctions that were important at one period of time disappear with new knowledge. Our findings in low- performing plastics organization B indicated that their two separate applied research units were charged with essentially the same task. They had a record of competitive clashes, redundancy of effort, and poor coordination. This type of differentiation error is illustrated in Figure IX-3.

Any attempt to use the decentralization and integration approach systematically would have to begin with a diagnostic study of the organization and its immediate environment. This may seem an obvious point, but it is surprising how many organization planners start elsewhere. The first stage of such a study would involve examining the essential nature of the selected tasks and parts of the environments. What are the rates of change, the certainty of information, the time span of feedback, the relative number of environmental opportunities, the complexity of the tasks? These data can be gathered both from direct evidence and from the informed judgment of experts. Such information would provide a picture of the requisites for the differentiated units of the organization. Does it set up a requirement for heterogeneous or homogeneous units? Does it suggest some new splits or mergers among units? The study would then proceed to examine the actual attributes of the various units, along their crucial dimensions (which should not necessarily be the same as those used in this study). What are the structural characteristics? What are the actual orientations of the various units’ members? Which units have structures or orientations that are out of line? Is it possible to pinpoint these problem spots? Our present diagnostic tools for these purposes are still crude but can be refined with further usage.

So far, in considering the application of the differentiation and integration approach, we have encouraged readers to take a designer’s attitude toward organizations. This could also be called the social-engineering mood. It is not enough by itself. When it comes to application, the orientation of the teacher is also essential. One potential value of the differentiation and integration outlook lies in its use as an educational tool. When people live day in and day out in a specialized role, they tend to see their own organizational surroundings in terms of that role. The more personally involved in their jobs they become, the more this is true. Such involvement often leads them to personalize the conflicts that arise with representatives of other organizational units. Of course they know logically that an organization needs different kinds of specialists, but they forget the full meaning of this when they run into a particular person who is “impossible to work with.” Then they all too readily turn to an ex-planation based on personality traits that writes off the individual as an oddball and justifies their own withdrawal from or forcing of the conflict.

Training sessions that build on differentiation and integration concepts and findings can be developed to improve this situation. Specialists can be trained in some depth to appreciate the fuller implications of the behavior of other types of specialists. The purpose underlying such training would be to help the participants to understand the reasons behind differences in orientations and behavior patterns and thereby to legitimatize and maintain them. Such training cannot erase the basic antagonism between differentiation and integration, but it can relax the tension somewhat.

As various specialists sit together and exchange firsthand information about their respective ways of working, the insights begin to appear. The mood of such meetings is not unlike that of a sensitivity training session, as people learn more about one another and the reasons for their differences. These exchanges can take place within a framework that is clearly related to task accomplishment. In such a setting applied researchers discover with a shock how differently they often think and work from their “fellow researchers” who are involved in more basic projects. The marketing managers are surprised to learn that an offhand response to a question from a basic researcher about the market potential of an idea might start the latter off on a six-month inquiry. If such personal exchanges can be tied to the quantified results of a general study of the state of differentiation and integration in the participants’ own organization, the effect is reinforced. Thus the findings of a diagnostic study can be used for both planning and education.

Any study of the requisite and actual states of differentiation in an organization would be inadequate without simultaneous examination of the state of integration. The inverse relation this research has shown between the two states sug-gests the importance of any manager’s thinking out the inte- gration consequences of his differentiation plans. The whole trick is to plan concurrently for both conditions. Where it is necessary to develop highly differentiated units to cope with a diverse environment, provision must also be made for appropriate conflict resolution processes, or integration will be inadequate. Measuring the actual state of integration between each pair of units indicates the trouble spots where particular attention should be given to the development of integrative devices and conflict, resolution procedures. This topic will be explored in the next section.

Source: Lawrence Paul R., Lorsch Jay W. (1967), Organization and Environment: Managing Differentiation and Integration, Harvard Business School.

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