Six archetypes and their tradeoffs
Functional structures group people by discipline: engineering, sales, marketing, finance. This creates deep expertise within functions but slow cross-functional coordination. Divisional structures organize by product or geography: each division is a mini-company with its own P&L. This creates ownership and speed but duplicates functions and prevents specialization. Matrix structures overlay both: a person has a functional manager and a product manager. This creates flexibility but role ambiguity.
Hub-and-spoke structures radiate around a central team: the product team is the hub, and design, engineering, operations are spokes. This works well for small companies but does not scale past 100 people. Network structures are loosely coupled teams that collaborate via platforms and shared tools: common in remote-first organizations. Holacracy replaces hierarchy entirely with role-based circles that self-govern. This sounds flat but often recreates hierarchy in different form and adds meetings.
Choosing structure by growth stage and strategy
Early startups naturally adopt hub-and-spoke or even no formal structure: everyone is close to the founder and customer. As they grow to 50-100 people, they need function: the functional org lets specialists go deep. When the company hits 300+ people or multiple product lines, divisional or matrix structure becomes necessary to prevent bottlenecks at the top. The choice depends on strategy: if the goal is multiple independent products, divisional is better. If the goal is deep expertise and reuse, matrix or pure functional is better.
The trap is not changing structure when growth demands it. A 500-person company run with a functional structure designed for 100 people creates gridlock. Decisions move slowly because functions must coordinate constantly. A 100-person company run with a divisional structure designed for 1000 people creates waste: each division replicates finance, ops, HR. The best org structure is the smallest one that lets the company move fast without chaos. When that stops being true, it is time to restructure.