Design Responses to Complexity and Instability

What makes organizations different from each other? The answer is the environment. The environment affects the organizations in two dimensions. The first dimension is the complexity dimension4a which refers to the number of environmental sectors. The second dimension is the instability dimension which refers to the rate of environmental changes with these sectors. Organizations respond differently with complexity and with instability. Organization structure that deals with complexity can be mechanistic or organic in nature. But the organization structure that deals with instability has to be always organic and cannot be mechanistic. They are “organic structure, [with] teamwork, participative, decentralized”. This is because to deal with instability effectively, the organization has to respond quickly. For example, take the case of W.L. Gore and Associates which has an organic structure. W.L. Gore and Associates has a lattice organization and there are no fixed or assigned authority4a. When the company had a crisis in 1978 when customers discovered that the Gore-Tex material was leaking, the company’s fabric and research divisions were able to offer a solution to wash the material to restore its waterproof quality. But when a mountain guide complained that his Gore-Tex parka was leaking while he is hiking in the mountains, the company realized the failure of the initial solution they offered and quickly recalled and bought back all their Gore-Tex products. They then produced a second generation Gore-Tex that did not leak and became the solution to their crisis. Moreover, in dealing with high complexity, there will always be many departments in the organization regardless of the instability of the environment. “Each sector in the external environment requires and employee or department to deal with.” For example, in Verizon Wireless, there is a Human Resources department that deals with the labor market and employment agencies. There is the Finance department that deals with the stock market and banks. There is the Legal department that deals with the city, state and federal laws and regulations and taxes, etc. On the other hand, in dealing with high instability, if the environment is simple, there could be few departments because there is no need to deal with all of the environment sectors compared to an organization that has to deal with a large number of environmental sectors all the time. In conclusion, organizations respond differently to the two dimensions of the external environment. And that is what makes organizations different from each other.