Adaptive Organizations

Finding the optimal level of task specialization helps organizations adapt and gives workers needed flexibility.
April 16, 2008
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The Idea

Finding the optimal level of task specialization helps organizations adapt and gives workers needed flexibility.

The Research

In stark contrast to the assembly lines of the past — where homogeneous products were the norm — modern production lines produce highly specialized goods. Many economists have argued that advanced communication technology is responsible for a different but related shift toward specialization. The ability to call, e-mail or connect online with other employees is presumed to eliminate time and space boundaries and allow companies to better coordinate specialized production tasks. But a growing body of research shows that companies today are actually giving workers less specialized tasks, suggesting that improved communication technology does not necessarily translate into increased levels of specialization.

According to Professor Tano Santos and Wouter Dessein of the University of Chicago, improved communication does allow organizations to capitalize on specialization — but only to a point. Once the number of people who are using new communication tools exceeds a certain level, the volume of new information shared between specialists becomes difficult to manage, with diminishing returns. To better coordinate specialized tasks, organizations are embracing a bundling approach — assigning more tasks to each person — which gives workers more flexibility in carrying out their work and improves efficiency, since valuable information can be applied to several tasks at once.

Santos and Dessein developed a mathematical model in which many workers carry out many tasks. In the model, an organization’s productivity depends on how it adapts to local information — information in the work environment that pertains exclusively to one task and can be observed only by the worker carrying out that task — and how well it coordinates various tasks across teams. By analyzing the number of tasks each worker performed as conditions changed, the researchers determined that the division of labor decreased as uncertainty in the work environment grew, resulting in more flexibility and task bundling. In addition, they found a threshold at which an increase in specialization resulted in a decrease in productivity.

Striking the right balance between adaptation and specialization, then, can maximize worker productivity without requiring unreasonable levels of coordination. To increase productivity, the researchers suggest, organizations should assign more tasks to each worker, as long as workers can efficiently adapt and coordinate tasks. This approach enables organizations to adapt tasks rapidly to accommodate shifting market or operational conditions.

Practical Applications

Marketing managers, human resources managers

This research can help you determine the optimal tradeoff between task specialization and adaptation for employees. If you work in an industry that must respond to fickle, fast-changing consumer tastes, such as apparel manufacturing and software development, you may find this research especially useful.

Wouter Dessein

Prior to joining the Columbia Business School faculty in July 2008, Wouter was an associate professor of economics at the University of Chicago, Graduate School of Business from 2005-2008, where he taught Competitive Strategy and Organizational Strategy. He earned a Bachelor in management and applied sciences from Katholieke Universiteit Leuven in 1997 and a Ph.D. in economics from Universite Libre de Bruxelles and Toulouse University in...

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Tano Santos

Professor Santos' research focuses on two distinct areas. A first interest is the field of asset pricing with a particular emphasis on theoretical and empirical models that can account for the predictability of returns, both in the time series and the cross section. A second interest of Professor Santos is applied economic theory, specifically, the economics of financial innovations as well as theory of...

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Read the Research

Wouter Dessein, Tano Santos

"Adaptive Organizations"


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