Adapting to the Changing Environment: A Theoretical Comparison of Decision Making Proficiency of Lean and Mass Organization Systems

In this paper we examine the adaptability of the Japanese style lean organization system and the traditional American style mass organization system under changing environments. From an organizational design perspective, key structural aspects of the two organizations are modeled in a problem solving context using computational methods. Organizational-level performance in terms of decision making accuracy and severity of errors is measured as an indicator of organizational adaptability under conditions where the task environment shifts between predictable to unpredictable or vise versa. Our study shows that both organizations have their respective advantages under different task environments and that they adapt to environmental shifts in different forms. Specifically, when the time pressure is high the lean organization system’s performance is virtually identical to the mass organization system, even though the lean organization system’s members are more proactive. When the time pressure is low, the mass organization system shows a much faster adaptability when the environment shifts to a predictable one but it is also more vulnerable when the environment shifts to an unpredictable one. In contrast, the lean organization system’s response to the changing environment is characterized by its slower adaptability. When the environment shifts to an unpredictable one, the lean organization system shows a gradual improvement till reaching a high level. When the environment shifts to a predictable one, however, the lean organization system shows a gradual decrease of performance. Our study further shows that the lean organization system, with its strong team decision making emphasis, can be more successful in avoiding severe errors when compared with the mass organization system, even under a predictable task environment.