Organisations possess three structures: formal, informal, and value creation. The formal structure, often represented as an organisational chart, outlines the official hierarchy and reporting lines. It is static, slow to change, and in many cases, obsolete. The informal structure, on the other hand, is dynamic, fluid, and based on relationships and interactions. It often contradicts the formal structure and is the one that employees navigate to get work done.
The third structure, value creation, is the most important yet least recognised. It’s where the actual work happens and value is created. It is dynamic like the informal structure but purpose-driven, focusing on tasks, projects, and processes. This structure is often invisible in traditional organisations because it is overshadowed by the formal structure.
Understanding these three structures is critical for organisational success. Ignoring the informal and value creation structures can lead to inefficiencies, miscommunications, and missed opportunities. To truly optimise an organisation, leaders must recognise and leverage all three structures, with a particular focus on the value creation structure. This requires a shift from traditional hierarchical thinking to a more networked, flexible approach that prioritises value creation.
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