The kind of analytical diagnosis presented above can first be conducted at the level of a
total organization or major division, but it will also need to be conducted at the level of
subunits within the organization to take account of Lawrence and Lorsch’s point about the
need for appropriate differentiation and integration. The analysis at this level will identify the
pattern of relations necessary for dealing with various sub-environments and show the
required differentiation and integration. However, in an analysis at this subunit level, care
must be taken to ensure that the requirements of the parts do not take priority over those of
the whole and that critical competencies are kept firmly in mind. For example, in
organizations where frontline innovation is the basis of survival, the design and management
of subunits must accommodate the primary task of innovation rather than the reverse.