Divisionalized Form.
Source: Mintzberg (1979, p. 393). Copyright ©1979. Reprinted by permission of Prentice Hall, Upper Saddle River, NJ.
One of the oldest businesses in the United States, Berwind Corporation began in coal‐mining in 1886. It now houses divisions in business sectors as diverse as manufacturing, financial services, real estate, and land management. Each division serves a distinct market and supports its own functional units. Division presidents are accountable to the corporate office in Philadelphia for specific results: profits, sales growth, and return on investment. As long as they deliver, divisions have relatively free rein. Philadelphia manages the strategic portfolio and allocates resources based on its assessment of market opportunities.
Divisionalized structure offers economies of scale, resources, and responsiveness while controlling economic risks, but it creates other tensions. One is a cat‐and‐mouse game between headquarters and divisions. Headquarters wants oversight, while divisional managers try to evade corporate control:
Our top management likes to make all the major decisions. They think they do, but I've seen one case where a division beat them. I received … a request from the division for a chimney. I couldn't see what anyone would do with a chimney … [But] they've built and equipped a whole plant on plant expense orders. The chimney is the only indivisible item that exceeded the $50,000 limit we put on plant expense orders. Apparently they learned that a new plant wouldn't be formally received, so they built the damn thing. (Bower, 1970, p. 189)
Another risk in independent divisions form is that headquarters may lose touch with operations. As one manager put it, “Headquarters is where the rubber meets the air.” Divisionalized enterprises become unwieldy unless goals are measurable and reliable information systems are in place (Mintzberg, 1979).
Adhocracy
Adhocracy is a loose, flexible, self‐renewing organic form tied together primarily through lateral means. Usually found in diverse, freewheeling environments, adhocracy functions as an “organizational tent,” exploiting benefits that structural designers traditionally regarded as liabilities: “Ambiguous authority structures, unclear objectives, and contradictory assignments of responsibility that can legitimize controversies and challenge traditions. Incoherence and indecision can foster exploration, self‐evaluation, and learning” (Hedberg, Nystrom, and Starbuck, 1976, p. 45). Inconsistencies and contradictions in an adhocracy become paradoxes whereby a balance between opposites protects an organization from falling into an either‐or trap.
Ad hoc structures thrive in conditions of turbulence and rapid change. Examples are advertising agencies, think‐tank consulting firms, and the recording industry. A successful and durable example of an adhocracy is W. L. Gore, producer of Gore‐Tex, vascular stents, dental floss, and many other products built on its pioneering development of advanced polymer materials. When he founded the company in 1958, Bill Gore conceived it as an organization where “there would be no layers of management, information would flow freely in all directions, and personal communications would be the norm. And individuals and self‐managed teams would go directly to anyone in the organization to get what they needed to be successful.” (Hamel, 2010).
Half a century later, Gore has more than 10,000 employees (Gore calls them “associates”) and some $3 billion in annual sales, but still adheres to Bill Gore's principles. In Gore's “lattice” structure, people don't have bosses. Instead, the company relies on “natural leaders”—individuals who can attract talent, build teams, and get things done. One test: if you call a meeting and no one comes, you're probably not a leader. When Gore's CEO retired in 2005, the board polled associates to find out whom they would be willing to follow. They weren't given a slate—they could nominate anyone. No one was more surprised than Terri Kelly when she became the people's choice. She acknowledges that Gore's approach carries a continuing risk of chaos. It helps, she says, that the culture has clear norms and values, but
Our leaders have to do an incredible job of internal selling to get the organization to move. The process is sometimes frustrating, but we believe that if you spend more time up front, you'll have associates who are not only fully bought‐in, but committed to achieving the outcome. Along the way, they'll also help to refine the idea and make the decision better. (Hamel, 2010)
Helgesen's Web of Inclusion
Mintzberg's five‐sector imagery adds a new dimension to the conventional line‐staff organization chart but retains some of the traditional image of structure as a top‐down pyramid. Helgesen argues that the idea of hierarchy is primarily a male‐driven depiction, quite different from structures created by female executives:
The women I studied had built profoundly integrated and organic organizations in which the focus was on nurturing good relationships; in which the niceties of hierarchical rank and distinction played little part; and in which lines of communication were multiplicitous, open, and diffuse. I noted that women tended to put themselves at the center of their organizations rather than at the top, thus emphasizing both accessibility and equality, and that they labored constantly to include people in their decision‐making. (Helgesen, 1995, p. 10)
Helgesen coined the expression “web of inclusion” to depict an organic form more circular than hierarchical. The web builds from the center out. Its architect works much like a spider, spinning new threads of connection and reinforcing existing strands. The web's center and periphery are interconnected; action in one place ripples across the entire configuration, forming “an interconnected cosmic web in which the threads of all forces and events form an inseparable net of endlessly, mutually conditioned relations” (Fritjof Capra, quoted in Helgesen, 1995, p. 16). Consequently, weaknesses in either the center or the periphery of the web undermine the strength of the natural network.
A famous example of web organization is “Linux, Inc.,” the loose organization of individuals and organizations that has formed around Linus Torvalds, the creator of the open‐source operating system Linux, whose many variants power most of the world's supercomputers, cell phones, stock markets, and web domains. “Linux, Inc.” is anything but a traditional company:
There's no headquarters, no CEO, and no annual report. It's not a single company, but a cooperative venture. More than 13,000 developers from more than 1,300 companies along with thousands of individual volunteers have contributed to the Linux code. The Linux community, Torvalds says, is like a huge spider web, or better yet, multiple spider webs representing dozens of related open‐source projects. His office is “near where those webs intersect.” (Hamm, 2005)
Freewheeling web or lattice structures may encounter increasing challenges as an organization gets bigger. When Meg Whitman became CEO of Internet phenomenon eBay in 1998, she joined an organization of fewer than fifty employees configured in an informal web around founder Pierre Omidyar. When she tried to set up appointments with her new staff, she was surprised to learn that scheduled meetings were a foreign concept in a company where no one kept a calendar. Omidyar had built a company with a strong culture and powerful sense of community but no explicit strategy, no regular meetings, no marketing department, and almost no other identifiable structural elements. Despite the company's phenomenal growth and profitability, Whitman concluded that it was in danger of imploding without more structure and discipline. Omidyar agreed. He had worked hard to recruit Whitman because he believed she brought the big‐company management experience that eBay needed to keep growing (Hill and Farkas, 2000).
GENERIC ISSUES IN RESTRUCTURING
Eventually, internal
