Henry Mintzberg, a world renowned author and management theorist, developed a list of five basic organizational types. He identified the five types of various organizations by analyzing their blend of strategy and organizational structure. The five basic types of organizations are: Entrepreneurial, Machine, Professional, Divisionalized and Innovative.
This type of company has a loose organizational structure and is typically driven by creative types and entrepreneurial-minded leaders. Energy, enthusiasm and forward thinking are common denominators for leaders in this type of organization. Its key characteristics are direct supervision, organic organization according to functions with authority concentrated at the peak, typically in the CEO. Small and start-up companies typically fall into this category.
The machine organization gets it’s name from the high level of work standardization. Highly bureaucratic organizations, such as, government agencies and other types of large corporations fit this category. These companies are highly structured, very consistent and typically have had a long run, consequently, they are slow to change and typically burdened by bureaucratic processes.
The professional organization is similar to a machine organization with a high level of bureaucracy. It is characterized by a high number of professional workers with specialized skills, working individually, or in a group, with the ability to make decisions, decentralizing authority.
This structure is most common in large corporations with multiple product lines and/or business units. These organizations divide their business units and products to ensure dynamic, and specific, management of each division. Command and control is centralized with divisional managers overseeing all business elements within their respective divisions. One major advantage to this organizational structure is that divisions can act with a high degree of autonomy to address their issues, providing the centralized authority room to concentrate on the big picture. A drawback to divisional organizations is that they suffer from a duplication of processes, inherent in their design.
This organizational type is also referred to as an adhocracy. This type is common in new and evolving industries that require adaptability. In project-based firms where the business environment is continuously changing, or in industries that are rapidly evolving, a formal organizational structure can stifle the effectiveness of a firm. This highly fluid form of organizational structure has the ability to adapt quickly, but lacks the efficiency and checks and balances associated with formal structures, like the divisional or professional types. Decision making is decentralized, as leaders have the authority to use their judgement in making decisions. Highly skilled employees make up self-organizing teams, that are entrusted to carry out work, and communicate in a matrix, to efficiently complete tasks.