These are some of the essential ways in which our approach differs from the ideas of the classical theorists and from those of many of the human relations researchers. There is, however, one other difference—to us the most important of all. Until very recently, as we have suggested, organization researchers and theorists have tended to view the internal functioning of effective organizations as if there was one best way to organize. No attention was devoted to the problem in which we are interested—that different external conditions might require different organizational characteristics and behavior patterns within the effective organization.
Our conviction that this approach might be fruitful came from several sources. First, our observations in many organizations as we gathered case studies for teaching provided concrete examples of the fact that different types of organizations were effective under different conditions. A case study of a highly profitable fine-grade paper company revealed an organization with very little reliance on formal rules and procedures, and with only limited control at the top of the organization.18 Many important decisions were reached at the lowest levels of management. On the other hand, a case study of a highly profitable meat packing firm uncovered a different type of organization. Here we found highly detailed procedures, many levels in the hierarchy, and very strong and dominant control at the top. We were intrigued wit h the question of what differences in the production technologies and in the markets might be related to the different styles of these two highly effective organizations.
Our curiosity was further stimulated by the involvement of one of the authors in a recent research study of worker response to varying technologies. Although this particular research was not designed to examine overall organizational patterns in relation to technological and market differences, as the data were gathered and the researchers were exposed to eleven different organizations in as many industries it became apparent that there were differences in organizational patterns among these firms. If there was one best way to structure and administer an organization, how could these companies, which by economic criteria were all reasonably effective, have such diverse organizational styles?
Two recent studies have more systematically addressed these questions and further stimulated our interest. Joan Woodward reported that successful organizations in different industries with different technologies are characterized by different organizational structures. For example, she found that the most successful firms in industries characterized by a unit or job-shop production technology had wider spans of supervisory control and fewer levels in the hierarchy than did successful firms in industries with continuous-process technology. A related finding was reported by Burns and Stalker in a study of firms in both a dynamic, changing industry and a more stable, established industry. Organizations in the stable industry tended to be what the authors called “mechanistic.” There was more reliance on formal rules and procedures. Decisions were reached at higher levels of the organization. The spans of supervisory control were narrower. On the other hand, effective organizations in the more dynamic industry were typically more “organic.” Spans of supervisory control were wider; less attention was paid to formal procedures; more decisions were reached at the middle levels of the organization, etc.
Both of these studies suggested that differing technical and economic conditions outside the firm necessitated different organizational patterns within it. More specifically these studies, particularly that of Burns and Stalker, suggested that the certainty of information or knowledge about events in the environment was one external dimension that impacted on the organizational variables in which we were interested. As we have already suggested, it might affect the organizational practices within departments, but it might also create different requirements for the way integration was achieved in the total organization. In more certain environments conflicts might be resolved and integration achieved at the upper levels through the management hierarchy. In less certain environments conflict resolution and the achievement of integration might have to take place at the lower levels of the hierarchy.
The questions raised by these two studies and our own observations of organizational situations can be summarized as follows:
- How are the environmental demands facing various or- ganizations different, and how do environmental demands relate to the internal functioning of effective organizations?
- Is it true that organizations in certain or stable environ- ments make more exclusive use of the formal hierarchy to achieve integration, and, if so, why? Because less integration is required, or because in a certain environment these decisions can be made more effectively at higher organizational levels or by fewer people?
- Is the same degree of differentiation in orientation and in departmental structure found in organizations in different industrial environments?
- If greater differentiation among functional departments is required in different industries, does this influence the problems of integrating the organization’s parts? Does it influence the organizational means of achieving integra-tion?
As we considered these issues, we realized that many organ-izational theorists and researchers were asking the wrong question. There probably is no one best way to organize. If our observations were correct, better practicing managers, consciously or by natural selection, recognized this fact as they designed and administered organizations under different environmental conditions. If we could investigate and com-pare organizations in several different environments, we might provide a systematic understanding of what states of differentiation and integration are related to effective performance under different environmental conditions, and further, we might learn something about how these states are achieved.
Source: Lawrence Paul R., Lorsch Jay W. (1967), Organization and Environment: Managing Differentiation and Integration, Harvard Business School.