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Mintzberg's Organizational Configurations

Understanding Your Organizational Structure

Mintzberg's Organizational Configurations - Understanding Your Organizational Structure

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Organizational structures come in many different shapes and sizes.

Financial services firms are known for having tight procedures and rigorous control systems. Staff in design agencies, on the other hand, tend to prioritize collaboration and creativity.

Big organizations merge to achieve "synergies," but they sometimes also split divisions out into separate, more agile companies. While smaller organizations tend to have flat structures that allow them to be more flexible.

So why are these organizations so different?

Organizational structure or design can make a real difference to the way an organization performs. Successful businesses are those that have figured out the best organizational design that suits their people, strategy and industry. And they understand the importance of reviewing and redesigning their organizational structures on an ongoing basis.

But with so many different factors at play, how can you determine the best structure for your company?

Mintzberg's Organizational Configuration model defines five key organizational structures. By understanding more about each one, you can think about whether your company's structure is well suited to your strategy.

In this article, we'll take a closer look at Mintzberg's model and explain how it can help you to develop an organizational structure fit to succeed.

Mintzberg's Organizational Types

According to renowned management theorist Henry Mintzberg's book, "The Structuring of Organizations," an organization's structure emerges from the interplay of the organization's strategy, the environmental forces it experiences, and the organizational structure itself. [1]

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. (Further information can also be found in Mintzberg's book, "Mintzberg on Management.") [2]

Different structures arise from the different characteristics of an organization, and from the different forces that shape it (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.

Permission to reproduce this model was kindly granted by Henry Mintzberg.

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

  • The entrepreneurial organization (or simple structure).
  • The machine organization (or machine bureaucracy).
  • The professional organization.
  • The divisional (uor diversified) organization.
  • The innovative organization (also known as adhocracy).

Let's 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 senior 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.

Start-ups, entrepreneurs and small businesses that are tightly controlled by their leader typically fall into this category. A strong leader may be able to sustain an entrepreneurial organization as it grows, and even help it to outperform larger corporations. That is why so much innovation tends to come from start-ups. However, they are in a precarious position – risks are high and one big mistake or a sudden change in the market can significantly damage the company.

Most businesses start off as entrepreneurial organizations, granting their founders considerable control as they grow. And most large companies revert to simple structures like these when they face hostile conditions so that strict control can be maintained 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 may become inadequate as decision-makers become so overwhelmed that they start making bad decisions.

Furthermore, if a company's success depends on one or two individuals, there's significant risk if they decide to sell up or move on. To prevent this, top leadership needs to start sharing power and decision-making.

The Machine Organization (or Machine 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 are clearly defined, there's a formal planning process with budgets and audits, and procedures are regularly analyzed for efficiency.

The machine organization has a tight vertical structure. Functional lines go all the way to the top, allowing senior managers to maintain centralized control. These organizations can be very efficient, and they rely heavily on economies of scale for their success.

However, this formal structure can lead to specialization of departments and, pretty soon, these functional units' goals can start to conflict, particularly if they're inconsistent with the organizational's 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 professional organizations 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. However, supporting staff within these organizations typically follow a machine structure.

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The clear disadvantage with the professional structure is the lack of control that senior executives can exercise, because authority and power are spread down throughout the hierarchy. This can make it difficult when things need to change or be adapted.

The Divisional (Diversified) Organization

If an organization has many different product lines and business units, it'll typically have a divisional structure.

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 managers to maintain more control and accountability than in a machine structure. Meanwhile, because day-to-day decision-making is decentralized, the central team can focus on "big picture" strategic plans. This also enables them to ensure that the necessary support structures are in place for success.

A significant weakness of this structure is the duplication of resources and activities that go with a divisional structure. Divisions can conflict, because they each need to compete for limited resources from headquarters. These organizations can also 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. Mintzberg calls this the "adhocracy" – essentially the opposite of bureaucracy.

Organizations that belong to this group find that red tape, complexity, and centralization are far too limiting. They might include project-based organizations, like filmmaking, consulting and pharmaceutical firms.

Adhocracies or innovative organizations like these 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. However, 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 who are well-equipped to meet new challenges.

But innovative organizations are not without their challenges. There can be lots of conflict when authority and power are ambiguous. And dealing with rapid and constant change can be stressful for workers, making it difficult to find and retain 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 require lots of flexibility.

Note:

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 organizational structure – 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.

How to Use Mintzberg's Organizational Configurations

First, think about your organization. Which structure does it currently use? And what does this tell you?

Then consider the following:

  • Think about the positive points of your current structure, how could you enhance these strengths to improve your team's work? For example, perhaps you use standardized procedures in a machine structure that are very important to ensure you produce quality products every time, but these could be made even more efficient by simplifying them slightly.
  • Then think about the negative points of your organizational structure, what can you and your team do to overcome or minimize these? For example, perhaps there's a lot of duplication of activities across teams because you have a decentralized structure. You could overcome this by merging teams, or improving cross-team communication so that you're better able to share knowledge and experience.

You may find that your current structure no longer suits your needs as a business. Perhaps you work in a start-up that has experienced rapid growth and a more formalized management structure is now required to ensure future progress. If this is the case, look at each of Mintzberg's five organizational configurations to see what structure would best suit your company going forward.

If you do need to change or adapt your structure in some way, it may be challenging, but also necessary, if you want to continue growing as a business. For more advice on how to manage change, read our article, The Four Principles of Change Management to discover the skills and techniques you'll need to do this successfully.

Key Points

There's no one "right" organizational structure. And, in fact, a structure that works for one organization, may be devastating to another.

Organizational structure is often highly dependent on a business' size, its peoples, its values, and its strategy.

According to Henry Mintzberg, there are five main types of organizational structure that businesses can use, each with their own benefits and challenges. These are:

  1. The entrepreneurial organization.
  2. The machine organization (or machine bureaucracy).
  3. The professional organization.
  4. The divisional (or diversified) organization.
  5. The innovative organization (also known as "adhocracy").

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

Remember that your structural needs may change as your organization grows and develops, so it's important to review your structure periodically to ensure that it's still effective.

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Comments (20)
  • Over a month ago BillT wrote
    Hi emonana,

    Thank you for the positive feedback. You might want to take a look at this link https://www.mindtools.com/community/Search.php?search_term=divisional+organisations for articles on Divisional organisations.
  • Over a month ago emonana wrote
    Hi! This is a really helpful article !
    I think the critiques on Diversified organization are really interesting. Could you please recommend some articles which relate to these critiques?
  • Over a month ago Michele wrote
    Hello Shoaib,

    We are pleased to hear that you found this article helpful. You will see evidence of Mintzberg's structures in all organizations. Applying the model to your organization which of the structures describes it best?

    Michele
    Mind Tools Team
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