High-performing Organizations: Organizational States and Environmental Demands

In each industry, as we have seen, the high-performing or- ganization came nearer meeting the demands of its environment than its less effective competitors. The most successful organizations tended to maintain states of differentiation and integration consistent with the diversity of the parts of the environment and the required interdependence of these parts. As we indicated in Chapter IV, the differences in the demands of these three environments meant that the high-performing plastics organization was more highly differentiated than the high- performing food organization, which, in turn, was more differentiated than the high-performing container organization. Simultaneously, all three high-performing organizations were achieving approximately the same degree of integration.

To illustrate the varying states of differentiation among these three organizations, we can use hypothetical encounters among managers in both the plastics and the container high- performing organizations. In the plastics organization we might find a sales manager discussing a potential new product with a fundamental research scientist and an integrator. In this discussion the sales manager is concerned with the needs of the customer. What performance characteristics must a new product have to perform in the customer’s machinery?

How much can the customer afford to pay? How long can the material be stored without deteriorating? Further, our sales manager, while talking about these matters, may be thinking about more pressing current problems. Should he lower the price on an existing product? Did the material shipped to another customer meet his specifications? Is he going to meet this quarter’s sales targets?

In contrast, our fundamental scientist is concerned about a different order of problems. Will this new project provide a scientific challenge? To get the desired result, could he change the molecular structure of a known material without affecting its stability? What difficulties will he encounter in solving these problems? Will this be a more interesting project to work on than another he heard about last week? Will he receive some professional recognition if he is successful in solving the problem? Thus our sales manager and our fundamental scientist not only have quite different goal orientations, but they are thinking about different time dimensions —the sales manager about what’s going on today and in the next few months; the scientist, how he will spend the next few years.

But these are not the only ways in which these two specialists are different. The sales manager may be outgoing and concerned with maintaining a warm, friendly relationship with the scientist. He may be put off because the scientist seems withdrawn and disinclined to talk about anything other than the problems in which he is interested. He may also be annoyed that the scientist seems to have such freedom in choosing what he will work on. Furthermore, the scientist is probably often late for appointments, which, from the salesman’s point of view, is no way to run a business. Our scientist, for his part, may feel uncomfortable because the salesman seems to be pressing for immediate answers to technical questions that will take a long time to investigate. All these dis- comforts are concrete manifestations of the relatively wide differences between these two men in respect to their working and thinking styles and the departmental structures to which each is accustomed.

Between these different points of view stands our integrator. If he is effective, he will understand and to some extent share the viewpoints of both specialists and will be working to help them communicate with each other. We do not want to dwell on his role at this point, but the mere fact that he is present is a result of the great differences among specialists in his organization.

In the high-performing container organization we might find a research scientist meeting with a plant manager to determine how to solve a quality problem. The plant manager talks about getting the problem solved as quickly as possible, in order to reduce the spoilage rate. He is probably thinking about how this problem will affect his ability to meet the current production schedule and to operate within cost constraints. The researcher is also seeking an immediate answer to the problem. He is concerned not with its theoretical niceties, but with how he can find an immediate applied solution. What adjustments in materials or machine pro- cedures can he suggest to get the desired effect? In fact, these specialists may share a concern with finding the most feasible solution. They also operate in a similar, short-term time dimension. The differences in their interpersonal style are also not too large. Both are primarily concerned with getting the job done, and neither finds the other’s style of behavior strange. They are also accustomed to quite similar organizational practices. Both see that they are rewarded for quite specific short-run accomplishments, and both might be feeling similar pressures from their superiors to get the job done. In essence, these two specialists, while somewhat different in their thinking and behavior patterns, would not find it uncomfortable or difficult to work together in seeking a joint solution to a problem. Thus they would need no integrator.

These two hypothetical examples show clearly that the differentiation in the plastics organization is much greater than in the equally effective container concern. The high- performing food organization fell between the extremes of differentiation represented by the other two organizations. These examples illustrate another important point stressed earlier—that the states of differentiation and integration within any organization are antagonistic. Other things (such as the determinants of conflict resolution) being equal, the more highly differentiated the units of an organization are, the more difficult it will be to achieve integration among them. The implications of this finding for our comparison of these three high-performing organizations should be clear. Achieving integration becomes more problematic as we move from the relatively undifferentiated container organization, past the moderately differentiated food organization, to the highly differentiated plastics organization. The organizational problems of achieving the required states of both differentiation and integration are more difficult for a firm in the plastics industry than for one in the container industry. The next issue on which we shall compare these three organizations, then, is the devices they use to resolve conflict and achieve effective integration in the face of these varying degrees of differentiation.

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

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