Three parallel organizational structures—Value-Creation, Informal, and Formal—interact to shape how enterprises function and evolve.
Organizations consist of three parallel and interacting structures that shape how they function and evolve. Each structure follows its own logic, and together they form the complete picture of how an enterprise operates.
- Value-Creation Structure (Performance and flow): The system through which products and services emerge and connect to markets.
- Informal Structure (Trust and communication): The network of social relationships, trust, and communication that exists beyond formal design.
- Formal Structure (Governance and legitimacy): The official framework of roles, rules, and governance that connects the organization to its external environment.
These structures coexist in varying degrees of visibility and influence. Understanding their interplay helps reveal how organizations actually work beneath their surface charts and processes.
The Formal Structure defines the organization's roles, rules, governance, and accountability systems, providing clarity and stability in its external relationships.
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The Value-Creation Structure outlines the flow of work, teams, processes, and resources involved in creating value for customers through continuous adaptation and feedback integration.
The Informal Structure outlines the social networks within organizations that influence communication, trust, and collaboration beyond formal reporting lines.
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These structures are influenced by 