Organi­zational Structures

Coordinated by direct supervision and standardization of work through a single chain of command.

1. Simple structure

   One leader coordinates nearly everything by direct supervision, with little specialization, few rules, and almost no staff.

   DCoordinated mainly by direct supervision.Compare with Functional structure

2. Functional structure

   People are grouped by the kind of work they do (engineering, production, sales, finance), and the functions meet only at the top.

   DWCoordinated mainly by direct supervision and standardization of work processes.Compare with Machine bureaucracy

3. Machine bureaucracy

   Routine operating work is standardized by a technostructure of analysts, and authority runs down a formal hierarchy of rules.

   WCoordinated mainly by standardization of work processes.Compare with Professional bureaucracy

4. Line and staff

   A single chain of command (the line) does and decides the work, while specialist staff units advise it without command authority.

   DWCoordinated mainly by direct supervision and standardization of work processes.Compare with Functional structure

5. Stratified hierarchy (requisite organization)

   The number of managerial layers is set by the time span of discretion each role requires, so each layer adds a real step in the complexity of work.

   DCoordinated mainly by direct supervision.Compare with Machine bureaucracy

Coordinated by standardization of outputs: a center sets targets and allocates capital, and semi-autonomous units deliver results.

1. Multidivisional (M-form) by product

   Product divisions, each with its own functions, run their businesses, while a general office sets strategy, allocates capital, and judges results.

   OCoordinated mainly by standardization of outputs.Compare with Holding company (H-form)

2. Divisional by region

   Geographic divisions each run the whole business in their territory, and a center coordinates across territories.

   OCoordinated mainly by standardization of outputs.Compare with Multidivisional (M-form) by product

3. Divisional by customer or market segment

   Each division serves one customer group or market segment end to end, with its own products and functions.

   OCoordinated mainly by standardization of outputs.Compare with Front-back organization

4. Holding company (H-form)

   A parent owns legally separate businesses and governs them mainly through financial controls, leaving strategy and operations to each.

   OCoordinated mainly by standardization of outputs.Compare with Multidivisional (M-form) by product

5. The corporate center and shared services

   The headquarters itself is designed as a unit: which parenting roles it plays for the businesses, and which services it pools for all of them.

   WOCoordinated mainly by standardization of work processes and standardization of outputs.Compare with Multidivisional (M-form) by product

Coordinated by mutual adjustment across two or more lines of authority or bases of grouping held at once.

1. Matrix organization

   People report to two bosses at once, usually a function head and a product or project head, so two dimensions are managed together.

   MCoordinated mainly by mutual adjustment.Compare with Hybrid structure

2. Front-back organization

   A customer-facing front end, organized by customer or market, is joined to a product or capability back end, with a linking process between them.

   MOCoordinated mainly by mutual adjustment and standardization of outputs.Compare with Matrix organization

3. Transnational and multidimensional organization

   A multinational holds product, region, and function in tension, giving national units different roles in one integrated network.

   MNCoordinated mainly by mutual adjustment and standardization of norms.Compare with Matrix organization

4. Process (horizontal) organization

   Work is organized around a few end-to-end processes, each with an owner, rather than around functions.

   MOCoordinated mainly by mutual adjustment and standardization of outputs.Compare with Functional structure

5. Hybrid structure

   Different parts of the organization are grouped on different bases at once, for example functional at the center and product divisions below.

   WOCoordinated mainly by standardization of work processes and standardization of outputs.Compare with Matrix organization

Coordinated by standardization of skills and mutual adjustment among experts.

1. Professional bureaucracy

   Trained professionals do the operating work with wide autonomy, coordinated by skills and norms they learned before they arrived.

   SCoordinated mainly by standardization of skills.Compare with Machine bureaucracy

2. Professional partnership (P2 form)

   The senior professionals own the firm, produce its work, and manage it together, so ownership, production, and management are fused.

   MSCoordinated mainly by mutual adjustment and standardization of skills.Compare with Professional bureaucracy

3. Adhocracy (innovative organization)

   Experts from different specialties are fused into temporary project teams that innovate, with little formalization and authority that moves to whoever has the expertise.

   MCoordinated mainly by mutual adjustment.Compare with Project-based organization

4. Project-based organization

   The project, not the function or division, is the main unit for production, innovation, and competition, and people move from project to project.

   MCoordinated mainly by mutual adjustment.Compare with Adhocracy (innovative organization)

5. Ambidextrous organization

   Units that exploit the existing business and units that explore new ones are kept structurally separate but joined under one senior team.

   DNCoordinated mainly by direct supervision and standardization of norms.Compare with Hybrid structure

Coordinated by contracts, prices, outputs, and mutual adjustment across unit or firm boundaries.

1. Network, modular, and virtual organization

   A firm keeps a few core activities and coordinates the rest through contracts and relationships with other firms that perform them.

   MOCoordinated mainly by mutual adjustment and standardization of outputs.Compare with Cellular organization

2. Internal market organization

   Units inside one firm run as small enterprises that buy from and sell to one another, and often to and from outside, while the center sets the rules and the infrastructure of the market.

   OCoordinated mainly by standardization of outputs.Compare with Network, modular, and virtual organization

3. Cellular organization

   Small, self-organizing, entrepreneurial units (cells) operate on their own but share ownership, know-how, and infrastructure, and split when they grow.

   MNCoordinated mainly by mutual adjustment and standardization of norms.Compare with Network, modular, and virtual organization

4. Federal organization

   Autonomous units hold most power, and a small center holds only what the units cannot do for themselves.

   ONCoordinated mainly by standardization of outputs and standardization of norms.Compare with Multidivisional (M-form) by product

5. Shamrock organization

   A small core of essential staff is surrounded by a contractual fringe of outside specialists and a flexible, part-time or temporary workforce.

   OCoordinated mainly by standardization of outputs.Compare with Network, modular, and virtual organization

6. Boundaryless organization

   The vertical, horizontal, external, and geographic boundaries of one firm are made permeable so information and ideas move freely across them.

   MCoordinated mainly by mutual adjustment.Compare with Network, modular, and virtual organization

Coordinated by mutual adjustment inside teams, joined by overlapping membership, shared information, or explicit rules.

1. Team-based organization

   Teams, not individual jobs, are the basic building block, and the organization is designed as a system of work, management, and improvement teams.

   MCoordinated mainly by mutual adjustment.Compare with Socio-technical autonomous work groups

2. Socio-technical autonomous work groups

   Work groups own a whole task, set their own methods and allocations, and the social and technical systems are designed together.

   MNCoordinated mainly by mutual adjustment and standardization of norms.Compare with Team-based organization

3. Linking-pin organization (System 4)

   The organization is a set of overlapping groups in which each manager is a member of the group above and the leader of the group below.

   MCoordinated mainly by mutual adjustment.Compare with Team-based organization

4. Team of teams

   Many small teams are joined by shared awareness of the whole and by trust across teams, so decisions can be pushed to the edge.

   MCoordinated mainly by mutual adjustment.Compare with Linking-pin organization (System 4)

5. Self-managing organization (less-hierarchical forms)

   Authority is decentralized formally and throughout the organization, so roles and explicit rules replace the reporting relationship of manager and subordinate.

   MCoordinated mainly by mutual adjustment.Compare with Team-based organization

Coordinated by standardization of norms: shared beliefs do the coordinating.

1. Missionary (ideological) organization

   A strong shared ideology does the coordinating, so members who hold the same beliefs can act with little formal structure.

   NCoordinated mainly by standardization of norms.Compare with Self-managing organization (less-hierarchical forms)

Coordinated by different means in each tradition: horizontal information sharing, family and bank ties, negotiated voice, or member ownership.

1. Hypertext organization

   A hierarchical business-system layer, a layer of cross-functional project teams, and a knowledge-base layer coexist in one firm, and people move between the layers as the work requires.

   MWCoordinated mainly by mutual adjustment and standardization of work processes.Compare with Matrix organization

2. J-form (the Japanese firm)

   Operating units coordinate with each other directly, through shared information and wide discretion on the shop floor, while a separate ranking hierarchy of long careers carries the incentives.

   MCoordinated mainly by mutual adjustment.Compare with Machine bureaucracy

3. Business group (keiretsu, chaebol, family house)

   Legally independent firms, often in unrelated industries, operate under common control by a family, a bank, or a core company, bound by cross-shareholdings, interlocking directors, and personal ties, and act together in ways no market contract requires.

   DNCoordinated mainly by direct supervision and standardization of norms.Compare with Holding company (H-form)

4. Co-determined organization

   Employees hold rights set by law to be informed, consulted, and in some matters to consent, through elected works councils at the workplace and employee representatives on the supervisory board, so management settles many questions by negotiation.

   MCoordinated mainly by mutual adjustment.Compare with Cooperative organization

5. Cooperative organization

   The members, whether workers, consumers, or producers, own the organization and govern it one member, one vote, through a general assembly that elects a governing council, which appoints and oversees management.

   DNCoordinated mainly by direct supervision and standardization of norms.Compare with Co-determined organization

Coordinated by software, written standards, cadences, and earned governance alongside mutual adjustment.

1. Algorithmically managed organization

   Software allocates tasks, sets the pace, and evaluates performance, taking over much of what supervisors and the technostructure did.

   WOCoordinated mainly by standardization of work processes and standardization of outputs.Compare with Machine bureaucracy

2. Distributed (all-remote) organization

   Members work across places and time zones, often with no shared office, and coordinate mainly through written, asynchronous standards.

   MWCoordinated mainly by mutual adjustment and standardization of work processes.Compare with Boundaryless organization

3. Open-source and community-based organization

   Volunteers and firm-paid contributors build a shared artifact, coordinated by norms, modular code, and governance earned through contribution.

   MNCoordinated mainly by mutual adjustment and standardization of norms.Compare with Self-managing organization (less-hierarchical forms)

4. Agile at scale

   Many small, cross-functional teams work in short, synchronized cycles under a shared cadence, with product owners setting priorities.

   MWCoordinated mainly by mutual adjustment and standardization of work processes.Compare with Team-based organization