Information Processing Theory

I want to know
What you're thinking
There are some things you can't hide
--Information Society

Information processing theory (Galbraith 1973; Tushman & Nadler 1978) views effective production as the organization's central objective. In order to effectively produce, the organzation must obtain and process information relevant to its 'task environment' (market demand, customer requirements, new technologies, regulations, etc).

The difference between information required to perform a task and the information already processed is known as 'task uncertainty' (Galbraith 1973: 5). Uncertainty creates lack of clarity about what must be accomplished to satisfy market needs, and generates exceptions to the status quo (Ford et al. 2014). At low levels of uncertainty, exceptions to what is already known are passed up the decision-making hierarchy for resolution.

However, as uncertainty increases, exceptions mount, and the hierarchy must process ever greater quantities of information in order to achieve acceptable performance (March & Simon 1958). At some point, information processing capacity of the hierarchy is exceeded, and exceptions can no longer be handled in conventional channels without lowering performance.

To take pressure off the hierarchy and improve performance, organizations must develop information processing mechanisms that enable effective task execution. As uncertainty increases, performance should benefit from coordination and control mechanisms that reduce information processing requirements. Joint planning, establishing standard operating procedures, and creating self-contained work groups decrease the need for frequent interaction and take pressure off the hierarchy as long as task performance remains within specificiation.

If uncertainty continues to increase, then benefits gained from mechanisms that reduce information processing requirements no longer compensate for the large number of exceptions that must be addressed. To cope with this situation, the organization must install mechanisms that increase information processing capacity.

Mechanisms for increasing information processing capacity are of two general types depending on the formality of the information. When the information to be processed is formal, then management information systems that span work unit boundaries create common languages and higher levels of information processing. For processing informal information, lateral relationships that cut across lines of authority create joint decision processes that effectively handle more data. Cross functional teams, task forces, and integrating roles such as project or program managers exemplify lateral mechanisms that add information processing capacity.

References

Ford, M.W., Evans, J.R. & Masterson, S.S. 2014. An information processing perspective of process management: Evidence from Baldrige Award recipients. Quality Management Journal, 21(1): 25-41.

Galbraith, J. 1973. Designing complex organizations. Reading, MA: Addison-Wesley.

March, J. & Simon, H. 1958. Organizations. New York: John Wiley & Sons.

Tushman, M.L. & Nadler, D.A. 1978. Information processing as an integrating concept in organizational design. Academy of Management Review: 3: 613-624.