Thursday, July 12, 2012

Balancing Mechanistic and Organic Organizations
Mechanistic Organizations  Organic Organizations
Best pick for organizations facing slow rates of change.  Best pick for organizations facing rapid rates of change.
Simple Structure Functional Structure Divisional Structure Multidivisional Structure Complicated Structure 
Employees have a single role with multiple tasks. Employees have multiple roles with multiple tasks.
Low Differentiation The organization has few layers, sub-units, and job titles. The organization has many layers, sub-units, and job titles. High Differentiation
Vertical Differentiation (Tall Structures) Horizontal Differentiation (Flat Structures)
Centralized Decision-Making Vertical decision-making, has communication, and accountability from the top to the  bottom of the organization, with emphasis on authoritative and defensive relationships. Horizontal decision-making, has communication and accountability at every level, with emphasis on collaborative and supportive relationships. Decentralized Decision-Making
Low Integration Hierarchy  Manager Meetings Integrating Coordinator between groups or divisions on a temporary basis. Integration Committees or task force coordinates organization-al activities on a temporary basis. Integrating Coordinator between groups or divisions on a permanent basis. Integration Team coordinates organizational activities on a permanent basis. Integrating Department coordinates large activities in the organization on a permanent basis. High Integration
Standardized and Formal Environment Heavy reliance on managers, SOPs, rules, and formalized culture, and little reliance on informal culture. Work progress is predictable. Little reliance on managers, SOPs, rules, and formalized culture, and heavy reliance on socialization, or informal culture. Work progress is unpredictable. Self-Correcting and Informal Environment
Inflexible to Change, Incremental Innovators, Focus on Short-Term Revenue Growth Flexibility to Change, Radical Innovators, Focus on Long-term Revenue Growth


The following is focused on balancing the characteristics of mechanistic and organic organizations, triggered by the rates of change that an organization faces.

To begin, let us put mechanistic and organic structures on opposite sides of a black and white spectrum, and let us recognize that some organizations share both mechanistic and organic organizational features, denoted in shades of grey. Every organization has a different optimal combination of these organic and mechanistic traits, and so “one size does not fit all”.

Mechanistic organizations adapt well to slow-changing environments, but do not adapt well to fast changing environments, like an organic organizations. Accordingly, organic organizations facing slower rates of change need to balance by becoming more mechanistic, and mechanistic organizations facing faster rates of change need to balance by becoming more organic, as follows.

Mechanistic organizations tend to have simple structures and organic organizations tend to have more complex structures. A functional structure, that of a small business owner, is relatively simple, where one person tells their employees what to do.

These types of structures tend to support one product or service type, one geographic location, and one customer or market type.

As the organization grows it becomes more complex and must change into a divisional structure to separate the leader/manager role of the owner into two different roles for two different people, one for leading and one for managing, using shared resources.

These types of structures tend to support more than one product or service type, geographic location, or customer type, and therefore choose to form a product, geographical, or market divisional structure.

As the organization continues to grow and becomes more complex, the organization grows into a multidivisional structure, which is led by a corporate office, and each division no longer shares resources.

These types of structures tend to support multiple product and service types, multiple geographic locations, and multiple customer types.

Simple mechanistic structures have employees occupy one role or job title with multiple tasks, but complicated structures, like matrix structures, may find employees in multiple roles performing multiple tasks.

Simple structures tend to be less differentiated than more complicated structures, as there is less work to be done, and fewer employees available to fill new roles.

Mechanistic organizations tend to be taller with more layers from top to bottom, whereas organic organizations tend to be flatter, given an equal number of employees.

Mechanistic organizations with vertical structures use centralized decision-making, where decisions and ideas flow from the top to the bottom. However, as the organization grows past 7 vertical layers, communication costs soar exponentially, because the large number of decisions that need to be made exceed the ability of the top to make them, requiring organic decentralized decision- making, where decisions are made at every level of the organization. Three to five vertical levels is ideal.

Taller mechanistic organizations with centralized decision-making don't need to integrate as much as flatter decentralized organizations, as directions flow down from the top, but organic structures require more collaboration, and thus more integration.

Mechanistic organizations that operate in slowly changing environments can afford to develop standardized procedures, whereas a rapidly changing organic environment may not be able to develop standardized procedures faster than those procedures need to change.

Mechanistic organizations are inflexible to rapid change, and thus are really best suited to incremental innovations for incremental adaption, whereas organic organizations are very flexible or fluid and can readily adapt to slow and radical change using slow and radical innovation. Incremental changes increase short-term revenues, and radical innovations increase long-term revenues, and so organic organizations are more innovative than mechanistic organizations.

To summarize, some organizations face rapid rates of change and others face slower rates of change, and to be able to adapt to survive and grow, organizations that face faster rates of change need to become more organic in nature, whereas organizations that face slower rates of change can afford to become more mechanistic in nature. There is no “one size fits all model” and so organizations need to find the optimal combinations of organic and mechanistic components, to best be able to adapt to change to survive, and grow. 
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All rights reserved, Frederick Janson, 2012.