Mintzberg's Organizational Configurations

Understanding the Structure of Your Organization

A traditional hierarchy is not always the most effective structure.

© iStockphoto/WendelFranks

Financial services firms are known for having tight procedures and rigorous control systems. Staff in design agencies, on the other hand, can sometimes seem to operating as free agents. Big organizations merge to achieve "synergies", but they sometimes also split divisions out into separate, more agile companies.

So why are these organizations so different?

The reason for this variety is that an organization's structure can make a real difference to the way it performs. That's why some companies achieve success through strict controls and systems, but others that try to duplicate that structure may suffer terrible results. It's also why a start-up company has to evolve its structure over time as it grows, and as its strategy and its environment change.

Successful organizations are those that have figured out the best way to integrate and coordinate key internal and external elements. And they understand the importance of reviewing and redesigning their structures on an ongoing basis.

But with so many factors and combinations, how do you determine the best structure for your company at any given time?

According to renowned management theorist Henry Mintzberg, an organization's structure emerges from the interplay of the organization's strategy, the environmental forces it experiences, and the organizational structure itself. When these fit together well, they combine to create organizations that can perform well. When they don't fit, then the organization is likely to experience severe problems.

Different structures arise from the different characteristics of these organizations, and from the different forces that shape them (which Mintzberg calls the "basic pulls" on an organization). By understanding the organizational types that Mintzberg defines, you can think about whether your company's structure is well suited to its conditions. If it isn't, you can start to think about what you need to do to change things.

Mintzberg's Organizational Types

The main successful organizational structures that he identifies are as follows:

  • The entrepreneurial organization.
  • The machine organization (bureaucracy).
  • The professional organization.
  • The divisional (diversified) organization.
  • The innovative organization ("adhocracy").

We'll look at each of these in more detail.

The Entrepreneurial Organization

This type of organization has a simple, flat structure. It consists of one large unit with one or a few top managers. The organization is relatively unstructured and informal compared with other types of organization, and the lack of standardized systems allows the organization to be flexible.

A young company that's tightly controlled by the owner is the most common example of this type of organization. However, a particularly strong leader may be able to sustain an entrepreneurial organization as it grows, and when large companies face hostile conditions, they can revert to this structure to keep strict control from the top.

The entrepreneurial organization is fast, flexible, and lean, and it's a model that many companies want to copy. However, as organizations grow, this structure can be inadequate as decision-makers can become so overwhelmed that they start making bad decisions. This is when they need to start sharing power and decision-making. Also, when a company's success depends on one or two individuals, there's significant risk if they sell up, move on to new entrepreneurial ventures, or retire.

The Machine Organization (Bureaucracy)

The machine organization is defined by its standardization. Work is very formalized, there are many routines and procedures, decision-making is centralized, and tasks are grouped by functional departments. Jobs will be clearly defined; there will be a formal planning process with budgets and audits; and procedures will regularly be analyzed for efficiency.

The machine organization has a tight vertical structure. Functional lines go all the way to the top, allowing top managers to maintain centralized control. These organizations can be very efficient, and they rely heavily on economies of scale for their success. However, the formalization leads to specialization and, pretty soon, functional units can have conflicting goals that can be inconsistent with overall corporate objectives.

Large manufacturers are often machine organizations, as are government agencies and service firms that perform routine tasks. If following procedures and meeting precise specifications are important, then the machine structure works well.

The Professional Organization

According to Mintzberg, the professional organization is also very bureaucratic. The key difference between these and machine organizations is that professional organizations rely on highly trained professionals who demand control of their own work. So, while there's a high degree of specialization, decision making is decentralized. This structure is typical when the organization contains a large number of knowledge workers, and it's why it's common in places like schools and universities, and in accounting and law firms.

The professional organization is complex, and there are lots of rules and procedures. This allows it to enjoy the efficiency benefits of a machine structure, even though the output is generated by highly trained professionals who have autonomy and considerable power. Supporting staff within these organizations typically follow a machine structure.

The clear disadvantage with the professional structure is the lack of control that senior executives can exercise, because authority and power are spread down through the hierarchy. This can make these organizations hard to change.

Our article on Professional Services Organizations   tells you more about working within this kind of structure.

The Divisional (Diversified) Organization

If an organization has many different product lines and business units, you'll typically see a divisional structure in place. A central headquarters supports a number of autonomous divisions that make their own decisions, and have their own unique structures. You'll often find this type of structure in large and mature organizations that have a variety of brands, produce a wide range of products, or operate in different geographical regions. Any of these can form the basis for an autonomous division.

The key benefit of a divisional structure is that it allows line mangers to maintain more control and accountability than in a machine structure. Also, with day-to-day decision-making decentralized, the central team can focus on "big picture" strategic plans. This allows them to ensure that the necessary support structures are in place for success.

A significant weakness is the duplication of resources and activities that go with a divisional structure. Also, divisions can tend to be in conflict, because they each need to compete for limited resources from headquarters. And these organizations can be inflexible, so they work best in industries that are stable and not too complex.

If your strategy includes product or market diversification, this structure can work well, particularly when the company is too large for effective central decision-making.

The Innovative Organization ("Adhocracy")

The structures discussed so far are best suited to traditional organizations. In new industries, companies need to innovate and function on an "ad hoc" basis to survive. With these organizations, bureaucracy, complexity, and centralization are far too limiting.

Filmmaking, consulting, and pharmaceuticals are project-based industries that often use this structure. Here, companies typically bring in experts from a variety of areas to form a creative, functional team. Decisions are decentralized, and power is delegated to wherever it's needed. This can make these organizations very difficult to control!

The clear advantage of adhocracies is that they maintain a central pool of talent from which people can be drawn at any time to solve problems and work in a highly flexible way. Workers typically move from team to team as projects are completed, and as new projects develop. Because of this, adhocracies can respond quickly to change, by bringing together skilled experts able to meet new challenges.

But innovative organizations have challenges. There can be lots of conflict when authority and power are ambiguous. And dealing with rapid change is stressful for workers, making it difficult to find and keep talent. However, given the complex and dynamic state of most operating environments, adhocracy is a common structural choice, and it's popular with young organizations that need the flexibility it allows.

Mintzberg's classification is just one way of looking at the ways in which organizations are structured. You can find out more about other aspects of structuring – and its relationship to strategy and growth – in our articles on Miles and Snow's Organizational Strategies  , Porter's Generic Strategies   and The Greiner Curve  . And read our article on Organization Design   to learn more about how to design your organizational structure, and which common elements to consider.

When it comes to changing organizational structure, this can be a very challenging task! See our Manage Change! learning stream for an introduction to the skills and techniques you'll need to do this successfully.

Key Points

There's no one "right" organizational structure, so it's important to understand how structure relates to the variety of attributes in a company. Mintzberg gives us a useful description of common structures that are appropriate in different circumstances. None of these is necessarily ideal, and they're very simplified versions of what exists in real life. In fact, it's common for a company to have a combination of elements of each structural type.

When considering your organizational structure, analyze the environment, assess your internal needs and capacities, and then make sure your structure is a good fit with your strategy and environment.

Apply This to Your Life

  • Consider the organization where you work. Which structure does it use, and what does this tell you?
  • Taking the positive points of that structure (such as the use of standardized procedures in a machine structure), how could you enhance this strength in your team's work? And how can you adapt the way that you work to support this?
  • Taking the negative points of your organization's structure (such as duplication of activities across teams in decentralized structures), what can you and your team do minimize the cost of this? For example, can you share knowledge and experience with other teams, or develop relationships with them so that you can get advice rather than "reinvent the wheel"?

This site teaches you the skills you need for a happy and successful career; and this is just one of many tools and resources that you'll find here at Mind Tools. Click here for more, subscribe to our free newsletter, or become a member for just $1.

Add this article to My Learning Plan

Comments (12)
  • Tsitsi wrote Over a month ago
    where is the six one/ missionary
  • bigk wrote Over a month ago
    Hi

    If I created an organization I would want the organizational structure to be flexible.
    What reason is there why this could not be achieved?

    If the organization has many people the issues might become complex but the flexibility could still be maintained.
    Maybe not all industries have this need?

    What reason stops a structure from being created, changed and recreated?
    This should be possible in small or large organizations.

    If it is stability, there seems no reason why this could not be done with flexible structure development, stability could still exist and the business could still develop.
    If it is confidence, it could exist with focus aligned to business targets and results.

    It is an uncertain time, the slogan said earlier...but it could still be done.

    Bigk
  • nick_r wrote Over a month ago
    Thank you for your answer.
  • James wrote Over a month ago
    Hi BigK - Thanks for your thoughts on this - I look forward to seeing your findings!

    Hi Nick - Thanks for your comments!

    Often, the tools we feature lead naturally to actions steps that you can follow to use them. With areas like organizational design and strategy, though, no individual tool is likely to give you the direct answer you want - different techniques offer different, valid insights. Only by exploring a number of these tools, which is the action we're suggesting in this article, are you likely to be able to develop a sufficiently nuanced view of what needs to be done to take effective action. I do encourage you to explore each of the techniques mentioned!

    With respect to taking action, existing organizational structures are often deeply embedded within the organization, and are supported and reinforced by many systems and attitudes within it. This means that it can take a huge change effort to change the way that the organization operates. In these situations, good change management skills are needed to make the changes needed. You can find out more about these in our "Manage Change" learning stream at http://mindtools.com/community/Learning ... Change.php .

    We'll update the article to refer people to this learning stream.

    Best wishes!

    James
  • nick_r wrote Over a month ago
    At first, this article called my attention based on my experience with other Mind Tools articles: Solutions or ideas and how to improve.

    Sadly, it focused on describing these different organization structures and lacked what I was looking for: how to improve or avoid some pitfalls in certain structures.
  • bigk wrote Over a month ago
    Hi James

    I had a look at a resource that contained many of these management items about organizational structures and management techniques recently where this diagram mentioned was displayed.
    I would agree with the diagram not being useful, but the diagram seemed to need some updating although compared to an expected diagram style it did not seem to look as expected and this however might be "by design" as the phrase goes.
    However I could still understand it but I felt I could perhaps create my own diagram instead of using this as a reference.
    If I needed one I would create one as I found the diagram not reusable in the context I needed it.
    But that's just visual style I suppose, I would expect a diagram to communicate and be reusable or re-inevitable.
    The important parts I felt were in the inter-relationship of the parts in the diagram and in this respect it could certainly be possible to create a different looking diagram.

    It might just be subjective but the communication in the diagram certainly could be that the items and messages to be communicated need to be clearer and more direct or perhaps simplified. This might be what was already intended but it might also be that this diagram was created to compare against what would appear to be the standard diagram that shows some kind of linear relationship that might be why this diagram has this look.

    However I viewed this on the criteria of directly communicating the items and relationships as needing more direct communication displayed. I had several questions about if the items in the diagram had variation that could not easily be represented in the diagram chosen. But this might not be what was considered.

    I looked at some of these other items and also for the Mintzberg sites and texts. Still doing some reading and assessing of value.

    If I re-interpreted this diagram I would be inclined to simplify the displayed items to allow numbers or other requirements to be added.
    Perhaps just using or developing it into a model that could have these items and any added to get analysis from it. I felt this was already intended, although the diagram I saw suggested that it had been created to show only the relationship of items.
    Maybe this was just an old diagram...

    However in the resource mentioned it gave details on many other management items and included quite a few of the items and models in mind tools, but the descriptions seemed to be what needed assessed rather than any diagrams.

    However organizational structure suggests that a diagram could be developed.

    Diagrams and interpretation seems needed for a few of these but other than mind mapping there seem few options available to graph it, a dashboard display might fit and the mind map might fit. I might experiment with it but it would likely be to develop a display that could handle number input and text input and be for a reusable use.
    These however might just be organizational items that could be measured and combined together so a simplified and communication rich display might be needed.

    However my only suggestion so far would be that if needed, a diagram could be created through a spreadsheet to display the items needing compared or assessed. But this would likely be similar in style to a time-line or some other comparison but it would need to be a comparison that could show inter-connection between items and be able to view the relationship of size and position.

    There are some methods to do this but not standard spreadsheet. In developing a diagram it could certainly display the overlap of items but it might depend what is to be measured.
    Some items I would want to measure would be;
    the size, the time, the connection, the dependence, the action, the support
    and perhaps more.
    Add stakeholder and another diagram might be needed, but small diagrams linked together with comparable definitions and measurements would be usable as a tool for analyzing these items.
    However my intended use of such a diagram would be that it must allow another item to be added.

    When I first searched I did not find any but I reckon it would depend on the type of display and use that might depend on how it could be displayed.
    I would be interested in what if any are available.
    Most other resources are just a combination of flow graphs.

    Can send a short reply on some findings quite soon.


    Bigk
  • James wrote Over a month ago
    Hi Andras

    I know exactly what you mean, and we looked hard at this.

    There's a lot of jargon that surrounds this idea, and figures and diagrams would have helped explain this. However, when we challenged jargon terms like "strategic apex", "technostructure" and "operating core", we took the view that they added no real value to the fundamental good ideas that Mintzberg was explaining, so these diagrams were redundant.

    It definitely feels that this is an idea that would benefit from a diagram, however, in this case, none seemed to help...

    Ideas would be welcome!

    James
  • Dianna wrote Over a month ago
    Hi Andras - thanks for the feedback. And you never have to apologize! I'll make sure the team sees your suggestion.

    Dianna
  • gosh72 wrote Over a month ago
    Hi,

    as a persistent critic let me give you 1 remark:
    I missed figures sooooo much. Some very simple sketches for each organization type just to have an overview and understand it easier. Sorry, I am a visual type of learner

    However excellent and very useful article.
    Nice job!

    kind regards,
    Andras
  • Dianna wrote Over a month ago
    Hi Winter - it's great to hear from you.

    And in a word, yes, it is legitimate to manage a company that has representations of different organization structures in different parts. Mintzberg himself recognized that these structures were simplified and that it's common for a company to have a combination of elements of each structural type. As with most theories, the largest benefit is the analysis part. When you start looking at your organizational structure it's important to ask yourself whether the structure fits with the strategy and environment - and in large companies these aren't necessarily the same everywhere. Some departments will function better with more controls, more centralization, and more layers of management and others with less.

    What I think you want to manage though is that the various departments or business units can still work effectively as part of the whole. So if the organization as a whole operates with a bureaucratic structure, having one department that is strongly entrepreneurial might lead to disruption and confusion. Keeping a close eye on how these different structures are working together becomes a key consideration. And also asking "why" different structures are emerging in various parts of the organization would also be important. Maybe it's time for a complete structural overhaul to bring more unity and cohesiveness. Structuring an organization isn't easy and it can take on a life of its own. Awareness is crucial and using tools like Mintzberg, Miles and Snow and others to better understand the dynamics of structure is very helpful.

    Dianna
Show all comments

Where to go from here:

Join the Mind Tools Club

Click to join Mind Tools
Printer-friendly version
Return to the top of the page

Create a Login to Save Your Learning Plan

This ensures that you don’t lose your plan.


Connect with…

Or create a Mind Tools login. Existing user? Log in here.
Log in with your existing Mind Tools details
Lost Username or Password
You are now logged in…

Lost username or password?

Please enter your username or email address and we'll send you a reminder.

Thank You!

Your log in details have been sent to the email account you registered with. Please check your email to reset your login details.

Create a Mind Tools Login
Your plan has been created.

While you're here, subscribe to our FREE newsletter?

Learn a new career skill every week, and get our Personal Development Plan workbook (worth $19.99) when you subscribe.


Thank You!

Please check your Inbox, and click on the link in the email from us. We can then send you the newsletter.