Organisation theory’s common position of a centralized formalized and specialised organisation corresponds to a business whose primary focus is the large scale processing of relatively simple transactions. This model has been shown to be closely related to environments where uncertainty is low, and to both Porter’s¹ cost leadership strategy and the Defender strategy² proposed by Miles & Snow .

Where the core activities of the organisation are inherently complex, the organisations most common response is the segmentation of the process by the establishment of functionally specialist expert groups in the core of the organisation. These groups are highly interdependent, and need to co-operate closely (reciprocal interdependence³) to achieve the overall purpose of the organisation. This is inherently an organic model⁴ with decreasing formalism but higher levels of integration resources as the organisation becomes increasingly devolved and specialised.

An alternative model occurs where the nature of the information processed is simpler, but diverse and such that each group or specialist can operate in an relativly independent, autonomous manner(pooled interdependence³). The resulting groups are specialised to segment the output being delivered (customer, market, geography etc.)⁵ each undertaking the whole of the delivery process for their segment. In such environments increasing decentralization and specialisation is likely to be matched by increases in formalization to ensure consistency and control.

 

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