There is no one type of organization. Businesses can evolve many different ways depending on the industry and how leadership wants to develop the business. This has led to a certain amount of duality in organizations.
Some are mechanistic while others are organic. Some prefer large vertical structures with many layers, while others use flat structures that encourage cross-training. Another common duality occurs with differentiation and integration, two possible methods for businesses to organize their operations and projects.
Differentiation refers to how a business separates itself into key components such as departments or product offerings. Integration refers to how businesses work between their components, such as inter-departmental coalitions.
What is Differentiation in Organization?
Differentiation refers to how a business separates itself into key components. This is common among larger companies; the larger a company grows, the more differentiated it tends to become. Businesses with a large amount of differentiation give these separate components a great deal of autonomy. Business culture may differ significantly between the IT department and the marketing department, for example.
A business must decide if it wants to differentiate based on tasks or product offerings. Some companies may prefer to divide into sectors that produce only one product each and have functioning marketing and accounting centers for each of those products.
What is Organizational Integration?
Integration refers to how organizations work together between their components. A business with a high amount of integration can have different divisions, but the divisions are closely connected and do not tend to be as independent. From the perspective of strategy, a business creates its plans and budgets with all departments in mind and has communication methods in place to transmit the same instructions to each component. Inter-departmental coalitions and projects are very common in highly integrated businesses.
Time Plays a Role
Time can play an important role in the difference between differentiation and integration. Differentiation tends to be permanent. A business can change how differentiated it is over time or make sudden alterations, but the components are typically designed to be separate for as long as the business exists.
Integration, on the other hand, is composed of projects that do not tend to last as long. A business may create a team through integration to solve a particular problem; afterward, that team disbands. Another team forms to solve another issue. This makes integration a more flexible concept than the typically stable differentiation.
Integrate in Times of Uncertainty
In a highly uncertain industry where prices and consumer interest can change easily, integration tends to be more common because the different parts of the business need to work together to meet new challenges. Industries that are more stable and easier to predict tend to be more differentiated.