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  • Writer's pictureTodd Dyer

How does organizational structure affect strategy?

Organizational structure and strategy are two concepts that are so inherently linked that it can be hard to determine where one begins and the other ends. So how does organizational structure affect strategy? Simply put, organizational structure affects strategy by determining how an organization will operate and thus, how it will execute its plans and goals.

The structure of an organization is the most important and crucial tool needed to execute strategy. Often organizations will develop a strategy and then implement the "plan" when there is absolutely no alliance between the strategy and the organization's structure and capabilities. When a misalliance between the organization and the strategy exists, unfortunately, more than not, failure is the ultimate outcome. It is important when developing a corporate strategy that an evaluation is done on the capabilities of the team and the organizational structure so that if "gaps" exist they can be addressed by recruiting the necessary resources required to be successful. Once the capabilities and structure have been addressed, the likelihood for success has just improved by a large percentage alleviating unnecessary costs and productivity.

The most important aspect of the strategy is vision, namely that an organization has a long-term goal in mind. But it's not enough to have a vision; it also has to be set into motion using some kind of organizational structure. A business leader must choose a structure, assess its strengths and weaknesses, and select strategies accordingly. If the structure is too rigid, strategies might only be able to focus on central goals. If it's too loose or ambiguous, it might have a tough time cohering with other parts of the business.

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