In the Simple Structure, decisions concerning strategy and operations are together centralized in the office of the chief executive. Centralization has the important advantage of ensuring that strategic response reflects full knowledge of the operating core. It also favors flexibility and adaptability in strategic response: only one person need act. But centralization can also cause confusion between strategic and operating issues. The chief execu- tive can get so enmeshed in operating problems that he loses sight of strategic considerations. Alternatively, he may become so enthusiastic about strategic opportunities that the more routine operations wither for lack of attention and eventually pull down the whole organization. Both problems occur frequently in entrepreneurial firms.
The Simple Structure is also the riskiest of the configurations, hing- ing on the health and whims of one individual. One heart attack can literally wipe out the organization’s prime coordinating mechanism.
Like all the configurations, restricted to its appropriate situation, the Simple Structure usually functions effectively. Its flexibility is well suited to simple, dynamic environments, to extremely hostile ones (at least for a time), and to young and small organizations. But lacking a developed administration, the Simple Structure becomes a liability outside its narrow range of conditions. Its organic state impedes it from producing the stan- dardized outputs required of an environment that has stabilized or an organization grown large, and its centralized nature renders it ineffective in dealing with an environment that has become complex. Unfortunately, however, when structural changes must come, the only person with the power to make them—the chief executive himself—often resists. The great strength of the Simple Structure—its flexibility—becomes its chief liability. One great advantage of Simple Structure is its sense of mission.
Many people enjoy working in a small, intimate organization, where its leader—often charismatic—knows where he is taking it. As a result, the organization tends to grow rapidly, the world being, so to speak, at its feet. Employees can develop a solid identification with such an organization. But other people perceive the Simple Structure as highly restrictive. Be- cause one person calls all the shots, they feel not like the participants on an exciting journey, but like cattle being led to market for someone else’s benefit.
As a matter of fact, the broadening of democratic norms beyond the political sphere into that of organizations has rendered the Simple Struc- ture unfashionable in contemporary society. Increasingly, it is being de- scribed as paternalistic, sometimes autocratic, and is accused of distribut- ing organizational power inappropriately. Certainly, our description identifies Simple Structure as the property of one individual, whether in fact or in effect. There are no countervailing powers in this configuration, which means that the chief executive can easily abuse his authority.
There have been Simple Structures as long as there have been organi- zations. Indeed, this was probably the only structure known to those who first discovered the benefits of coordinating their activities in some formal way. But in some sense, Simple Structure had its heyday in the era of the great American trusts of the late nineteenth century, when powerful en- trepreneurs personally controlled huge empires. Since then, at least in Western society, the Simple Structure has been on the decline. Between 1895 and 1950, according to one study (cited in Pugh et al, 1963-64:296), the proportion of entrepreneurs in American industry has declined sharp- ly, whereas that of “bureaucrats” rn, particular and administrators in gener- al has increased continuously.
Today, many view the Simple Structure as an anachronism in so- cieties that call themselves democratic. Yet it remains a prevalent and important configuration, and will, in fact, continue to be so as long as new organizations are created, some organizations prefer to remain small and informal while others require strong leadership despite larger size, society prizes entrepreneurship, and many organizations face temporary environ- ments that are extremely hostile or more permanent ones that are both simple and dynamic.
Source: Mintzberg Henry (1992), Structure in Fives: Designing Effective Organizations, Pearson; 1st edition.