Mintzberg's Organizational

Configurations
Understanding Your Organizational Structure
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.

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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