Organisations operate within three distinct structures: formal, informal, and value creation. The formal structure, often depicted as an organisational chart, represents official roles, responsibilities, and reporting lines. It’s static and slow to change, but provides stability and control. The informal structure, on the other hand, is dynamic, fluid, and based on relationships and communication networks. It’s not officially recognised, but it’s critical for collaboration and innovation.

The value creation structure is the most important, as it’s where the real work happens. It involves the processes and activities that deliver value to customers. Unlike the formal and informal structures, it’s directly linked to the organisation’s purpose and strategy.

These three structures exist in every organisation, but their importance and visibility vary. Traditional, hierarchical organisations emphasise the formal structure, while more agile, networked organisations focus on the value creation structure. Achieving a balance between the structures is key to organisational success. A shift towards valuing the value creation structure over the formal one can lead to increased agility, innovation, and customer satisfaction.

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