What's Wrong With Your Organizational Structure?

August 2, 2013 - 12:34pm

A common myth among entrepreneurs is that organizational structure gets in the way of getting work done. Several innovative companies thus try to minimize or loosen their structure (Valve, Asana) to address issues they perceive are a result of "too much structure". In my experience, this is usually a mistaken goal: problems don't come from structure itself, but from an inappropriate structure. That's why Holacracy aims at appropriate, requisite structure. To understand what this means, I find a simple distinction used by organizational theorist Elliott Jaques particularly helpful. He identifies three distinct types or meanings of structure that can be useful in any organization.

Holacracy according to Elliot Jacques' model of Formal, Extent, and Requisite structure

First, there is the “formal” structure—the org chart and the job descriptions. Now, ask yourself: how many times in a day do you go and look at job descriptions to get real, grounded clarity on what you need to focus on and what you can expect from others? Most people laugh at the question, as the formal structure in most organizations is far removed from the reality of what is actually happening and needed; they are little more than formalized bureaucratic artifacts. In many cases job descriptions are out of date and irrelevant by the time they roll off the printer.

When the organization’s formal structure offers little guidance on what’s actually needed day to day, as the creative beings we are, we humans work around the formal structure to get the job done. This gives rise to another kind of structure, which Jaques calls the “extant structure.” This is the structure that is actually operating—the often implicit reality of who’s making what decisions, who owns which projects, and so on. As we work together in this way, cultural norms develop, and we start aligning with those, creating an implicit structure that becomes the often unconscious “way things are done.” Yet Jaques goes on to point out a third potential structure: the “requisite structure”, which is the structure that would be most natural and best suited to the work and purpose of the organization – the structure that “wants to be.”

(Exaggerated?) example of "extant structure" — by Mark Walsh from Integration Training

Evolving the Requisite Structure

Going back to the idea of sensing and processing tensions discussed in previous blog posts, we defined a tension as a gap sensed between what is, and what could be – some sensed potential that would somehow be more ideal or enabling. Using Jaques’ language, we could say we’re sensing a gap between the extant structure (what is), and the requisite structure (what could be). When we process a tension through governance, we thus end up evolving the formal structure to be more requisite – we evolve the explicitly-captured details of who does what and the authorities and expectations at play, so they reflect a more ideal state. So while we do have a formally-captured structure in Holacracy, is it continually being refined and modified in response to tensions sensed by individuals as they go about their daily work, to reflect our best understanding of how we need to organize to most effectively get the work done.

Consequently, in a Holacracy-powered organization, people do refer to their and others’ job descriptions regularly, sometimes on a daily basis—because they contain relevant, accurate, and useful clarity on what makes sense to do and expect. The way we actually work together (the extant structure) more closely reflects the formal structure at play, which more closely reflects what’s requisite – these three structures collapse and become one and the same. At least, for a time – but then another tension is sensed, and this evolutionary process must continue.

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Submitted by sebastian (not verified) on August 2, 2013 - 6:15pm. #

Made me think.

It's certainly intriguing.

The idea of tension coming from the expectations gap is very helpful to detect breaches or sources of lack of alignments.


Submitted by Olivier Compagne on August 4, 2013 - 12:19am. #

Hey Sebastien. Yes, absolutely. In fact, one way of describing Holacracy is as a "tension-processing engine". It's all about processing tensions into meaningful change, but only those tensions that get in the way of the work. Thus the organization adapts continually, incrementally. From experience, I find it to be a more natural and intuitive way of working. Come to our free webinar next week if you'd like to get an overview of the model.

Submitted by sebastian (not verified) on August 5, 2013 - 1:18pm. #

Sounds great! I have a meeting there but maybe the next one?

Submitted by Clyde Smith (not verified) on August 7, 2013 - 8:36am. #

I sense a tension between your blog posts and your blog RSS feed:


Last post is from 2010?

Submitted by Olivier Compagne on August 7, 2013 - 2:16pm. #

Hah :-) You're right, there was a bug in the sorting of the posts, the last one was displayed first... It should be fixed. Thanks for letting us know!

Submitted by Olivier Compagne on August 7, 2013 - 2:17pm. #

sebastien> yes, feel free to join for the next webinar, it's in November.

Submitted by Dick Webster (not verified) on August 21, 2013 - 7:44am. #

Mark Walsh, & Colleagues also interested in new forms and effectiveness for OD (organization development):

  Your "Real Organization Chart" showing "extant structure" is useful and interesting ~ thank you.

  For a resource confirming this fact of organizational life, see Kleiner 2003.

Kleiner, Art. 2003. Who really matters: … Core group theory of power, privilege, and success. Currency/Doubleday. Studies the structure and politics of business organizations. Case studies conclude that a  depressing number of business corporations have evolved into organizations with one primary purpose: To extract wealth from all constitutions … and give it … to the children and grandchildren of some … executives – described as corporate selfishness. Illustrates how power and control are exercised through key decisions being made by the core group: executives or other members whose needs and desires determine the company’s behavior. Provides a useful perspective on leadership, power, and authority, showing how Core Groups guide and control organizations. … A must read for managers and would-be leaders (Edgar H. Schein, Sloan Fellows Professor of Management Emeritus, Sloan School of Management, MIT–from Amazon.com).


Authors dealing with trust may also be useful, e.g., Shaw, Robert. 1997. Trust in the balance: ….  DeRose, Chris & Noel M. Tichy. 2012. Judgment on the Front Line: How Smart Companies Win By Trusting Their People. 


Cordially ~ Dick Webster

P.S.: Mark ~ When you publish your "Integration Training" work, please consider "Integration Learning," or perhaps "Learning Integration."  Lots of evidence that "training" is not a good use of time, talent, and treasure.


Submitted by Olivier Compagne on August 21, 2013 - 8:20am. #

Hi Dick, thanks for stopping by and sharing your findings. I don't know these writings, but from the titles alone and this excerpt, it looks like they resonate well with Holacracy.

Submitted by William lewis (not verified) on August 22, 2013 - 2:36pm. #

The comments on the standard job descriptions really hit home. How many times to we see these used when people are hired into an organization,used in job postings on Linkedin and job boards,etc. The validating point in tjhe argument is these archane tools are static models that somebody came up that's most likely never done the job.Holocracy will allow people to work in real time and not some artifical scenario. It just makes complete sense

Submitted by Olivier Compagne on August 22, 2013 - 4:06pm. #

Yes, you really nail it here William. Holacracy is entirely focused on getting clear and real. It's all about getting clear in real time on what's going on, and on adjusting what we're doing to better serve the company's purpose.

Submitted by Martin Bartonitz (not verified) on September 15, 2013 - 5:39am. #

Thank your for this greate article which I have reblogged here:


Submitted by Olivier Compagne on October 10, 2013 - 5:27pm. #

Thanks Martin!

Submitted by terre (not verified) on November 20, 2013 - 1:49am. #

looking forward to your webinar tomorrow as I am still finding my way in the myriad of ;organizational structure and function, as I attempt to bring together a team to establish a relatively new concept- a makerspaace. People really do have preconceived ideas of how things should be run, but taking little ownership of flawed execution. I can't help feeling that some team members would prefer that I back off- "just leave the checkbook on the table."

Submitted by Olivier Compagne on November 20, 2013 - 9:30pm. #

Cool, I hope you enjoy what you discover with Holacracy. Indeed, Holacracy does push back against structuring the work by following pre-conceived ideas - or at least it ensures that the impulse to change the organization is grounded in a real organizational tension before allowing it to have an impact.

Submitted by Len Nanjad (not verified) on February 5, 2014 - 1:35pm. #

Right on!

Glad to see this article and discussion and the resurgence of these key principles of requisite organization. We have been practicing applying these principles in mid-size, large companies, as well as "start-ups" for almost two decades - and have yet to find something that works better. And that is what our clients tell us too.

The real secret sauce though, is not just the shiny new design based on proven principles of how human organizational systems really work. It is also a set of management practices and formal accountabilities for those practices that strengthen how the structure is supposed to operate. This is that part that drives the engagement, retention and strong culture that most senior leaders are really looking for to drive their ability to sustain achieving great results.

Think of it this way...If you moved from driving a Ford F150 to a Ferrari - would you drive differently? The systems may seem to have the same levers for action and performance - gas pedal, gear shift, brakes, clutch, steering wheel - but it takes different driving styles to get the most out of them. Even on the same road. And driving style that is fit for purpose of the design which is in turn fit for purpose of the race course, will often determine who is first/best to the prize. So with a better requisite design, you will also need some different formal managerial leadership practices to achieve the desired results.