Organizational Structure

Organizational Structure

Hallmarks of a Bureaucracy:

• Formalization

• Standardization

• Centralization

• Hierarchy

Business Model (Christensen):

The relationship between:

• Value proposition

• Resources

• Processes

• Strategy

• Organizational structure

M-Form:

Companies organized into operating units

• Organized by division and within that, usually by function

• Emphasis on innovation & flexibility

Pros & Cons of M-Form:

PROS	CONS
Operating decisions resolved at divisional level Strategic decisions reserved for general office	More competition than communication Silo mentality between divisions

U Form:

Salaried leadership in a hierarchy

• Organized by function

• Emphasis on efficiency & stability

Pros & Cons of U-Form:

PROS	CONS
Most cost efficient Increase specialization	Coordination among functions becomes increasingly more difficult

N Form:

Organizational structure not hierarchical but fluid and network-like

Matrix Structure:

Strategy & Organizational Structure:

• The organization is the means to how the strategy is to implemented (strategy first, then structure)

  • Foster new ideas, flexibility, and innovation while also being cost-efficient

  • Organize for both stability and change; for both exploitation and exploration