Mintzberg’s Organizational Configurations
There is no one right organizational configuration for all businesses. The best way to arrange one business could be completely wrong for another, based on a variety of factors.
It is up to the management of any organization to determine exactly what kind of structure is going to be most effective based on the market, goals, and more of that particular business. Many companies have fallen short of their goals – or failed altogether – simply because they weren’t organized in a manner that made sense for the job at hand.
Mintzberg’s Organizational Configurations can help business owners and managers to understand exactly how they should be setting up their operation based on what they are trying to accomplish.
There are five structures outlined within this model, each of which is highlighted below.
The Entrepreneurial Organization
Most businesses start out in this manner. An entrepreneurial organization is one that has a very simple, straightforward design and decision making process. When a company is started, there is generally one owner – or maybe a few owners – who make all of the decisions. As the company grows, the ownership tends to maintain managerial control for an extended period of time. While large organizations will eventually grow out of this model, many companies exist in this form throughout their life cycle.
The advantage of running an organization in an entrepreneurial fashion is the ability to take quick, decisive action. Since there are very few steps to go through in order to make a decision, the company can respond to the market almost immediately – as long as the owner or manager at the top is making wise choices. Since there isn’t the ‘red tape’ to deal with that can exist in larger, more complex organizations, this type of company is agile and nimble in the marketplace.
The Machine Organization
In many ways, this type of organization stands in complete contrast to the entrepreneurial company. This business is one that has a long list of well-defined procedures that are going to be followed each and every day. Efficiency is the name of the game when it comes to a machine organization, as the process that has been created has been designed with efficient operation as its top priority.
As you would imagine, changing directions is not something that this type of company does well. Moving on a new track means redesigning most or all of the systems that have been created, and that process will take time and effort.
Generally, it is companies who need to do the same thing day after day – such as produce a specific product on an assembly line – that will work best as machine organizations.
The Professional Organization
A company that is made up of a collection of professionals who possess expertise in their own fields is likely to fall into this category. While this type of organization can be orderly just as with the machine organization, in this case the individual professionals are going to expect to be able to operate with a certain level of autonomy.
Decision making is not handled by a single person, or even by a single board, as the professionals within the company are going to want to be able to make their own decisions on a daily basis. Commonly, organizations such as accounting and law firms will fall into this category, as their staffs are made up of professionals with plenty of experience in their given field.
The nature of this type of organization leads to it being highly complex. All of the professionals within the company will want a say in decisions that affect them personally, so the decision making process tends to be long, complicated, and difficult to complete. However, maintaining a staff of highly trained professionals requires that those individuals be granted at least a modest amount of power, making this the only viable structure for such an organization.
The Divisional Organization
This is a type of organizational design that is meant to accommodate a company with a variety of product or service lines that it offers to its customers. Large companies will frequently fall into this model because they need to separate the operations of one part of the business from another.
The divisions that fall under the umbrella of the organization as a whole will have a high degree of autonomy to make their own choices. In this way, the various brands or products within the business will be able to thrive into the future as they don’t have to go along with choices that are made by the company as a whole. Unfortunately, this kind of structure can also lead to a good deal of waste, as there may be functions duplicated between divisions which could have been centralized and streamlined for efficiency sake.
The Innovative Organization
Moving on to the last type of organization in the model, we find the innovative organization. At this level, it is creativity that rules the day. Instead of trying to develop any kind of structure or hierarchy for decision making, this kind of organization adapts from day to day based on need.
The core of running a business in this manner is having talented people who have the knowledge necessary in their specific field to help steer the organization as a whole in the right direction. Employees tend to enjoy this type of structure as well, since they will have more input in decisions that are being made. Naturally, that input can lead to conflict, as the lack of a clear power structure may lead to struggles for power over time. Generally, most companies that start out operating in this way will shift into one of the previously defined structures once they gain experience and find their way in the market.
The right organizational structure for each business is going to vary based on a wide range of factors. It is a worthwhile exercise to determine which of these configurations is going to be best suited to your operation, so you can then move in the right direction with respect to decision making, hierarchy, hiring, and more.
- Mintzberg’s Organizational Configurations can help business owners and managers to understand exactly how they should be setting up their operation based on what they are trying to accomplish.
- The model uses five idealized organisational configurations that managers a framework to understand and design organisational structures.
- An entrepreneurial organization is one that has a very simple decision making process in which the business owners make all of the decisions.
- A machine organization has a list of well-defined procedures that negate the need for decision making which is done ‘by the book’.
- A professional organization is one in which individual professionals are able to operate with a certain level of autonomy. Accountancy and law both fall into this category.
- A divisional organization relies on the standardisation of outputs where line managers run independent divisions.
- An innovative organization does not try to develop any kind of structure or hierarchy for decision making, but instead adapts from day to day based on need.
- This model is not designed to provide guidance for setting up an organisation’s decision making structure but it can help you to understand how organisations change over time and how their decision making structures evolve.