I believe that the business must first define its model, and then align it structure to fit/support the model. Model definition and formulation should ofcourse be a consultative process with all staff as so staff can embrace the model which can make the structure implementation easier.

Sachin Suknunan Great thoughts. Thanks. Any article references please?

I saw your question and it reminded me of Charles Handy's work on organisational structure and culture - he developed four different models related to power, role, task and person. It's a bit old now, but hopefully useful background for you...hope your work goes well....

Darren Leech Thanks a lot for the pointers.

An organizational structure allows companies to shape their business model according to several criteria (like products, segments, geography, and so on) that would enable information to flow through the organizational layers for better decision-making, cultural development, and goals alignment across employees

Dr Raja Kamal Thanks for the inputs. I thought the business model defines the structure. You have suggested the other way. Interesting perspective.

Dear Mr. Mulakaluri:

Your question reminds me of my first steps in strategy, when I read Chandler´s book "Strategy and structure". There, the author states that american companies of his time first defined a strategy and afterwards a structure. After that, this idea became a kind of mantra, although in modern companies it may not be so. For instance, in a burocracy that has difficulties to downsize, the company may have to create a new task for an already existing structure. Anyway, there is no doubt that a strong link exists between strategy and structure. I would recommend you to read Chandler, an excellent enterprise historian that, read with an open mind, shows wonderful ideas still useful today.

Best regards

Gustavo Concari

Just as the vision determines the Mission and the objectives/goals of every organisation determine the path to achievement so also the business model determines the organisational structure that fits into it. Models should precede structure. if the structure is put in place before the model, such structure may not be able to drive the model hence the need the consider the model first before the structure. However, for the existing structure with the new business model, the structure can then be reworked to fit into the Model. Meanwhile, the business model and structure influence each other.

Ariyo Gabriel Oluwajuwon Thanks so much for your insights. Brought lot of clarity.

Esta en función del análisis y la valoración de, ingresos, número de trabajadores, funciones y otros factores. El asunto es contar con una empresa de estructura óptima, asimismo, Drucker, uno de los mayores exponentes de la administración, "una estructura organizativa pobre hace imposible el buen trabajo, no importa lo buenas que son las personas". Es así que existen cinco tipos principales de modelos organizacionales: 4 Estructuras; funcional, lineal, divisional y por proyectos

You are probably familiar with the famous 'structure follows strategy' claim, coined by Chandler (1962). Let me then add 'strategy follows business model'. Hence, 'structure follows strategy, which follows business model'. So the organizational structure is contingent on the choices you make to win, which are in turn shaped by the business model you have previously chosen.

The traditional "structure follows strategy", in practice, is rather "structure should follow strategy". On the other hand, as key exceptions, there are at least the public organisations, with a legal inertia that typically inhibits major or faster adaptations of structure, and near obsolete organizations (private or public) that counts only with current competencies and capabilities, what may limit a lot the strategy. But, of course, the most common (and desired?) is that the strategy drives the business model, as well the operations model and the organizational structure.

Thanks so much for your response Eire Zimmermann That is a great insight about existing competencies limiting strategy.

Dynamic capabilities are deeply enmeshed with business model innovation and implementation. They reside partly in the collective learning and culture of the organization as well as in the entrepreneurial skill of the top management team. Entrepreneurial managers bear the primary responsibility for recognizing the need for business model change, for adjusting or inventing business models, for orchestrating the necessary assets, and, more generally, for (re)structuring the organization when,needed. The top management team is also responsible for strategy formulation, which is separate from, but related to, dynamic capabilities. The organization’s structure, incentives, and culture can, in turn, be more or less well suited to the recognition of new opportunities and the implementation of new structures that are integral to the dynamic capabilities of the firm. The design of new business models requires attention to balancing customer needs and technological possibilities consistent with an overarching logic of organization.

When the business is beginning or too small, you should implement the business model you could with the people you have. In all the other cases, you define your business model based on your purpose (mission, vision), then you design the structure in order that this structure have the skills, experience and knowledge to make reality the business model. These collaborators must have the will to conform all the key activities using the key resources, in order to deliver the value proposition.

Thanks a lot Ricardo Bolanos Dr Raja Kamal Pablo Collazzo for your responses and clarifications.

Key activities and resources are parts of business models. Structures are accumulators of capabilities and they are part of resources.

Bozkurt Kağan Aktürk Thank you for the response.

I agree mainly with Pablo Colazzo and Bozkurt Aktürk: The way in which I define the key processes, key resources and key activities in the business model (e.g. in the "Business Model Canvas") or how I answer the question of the "How?" regarding the the implementation of my value proposition (in the "Business Model Navigator") influences to a large extent how I have to set up the organizational structures.

Giuseppe Strina Thanks so much for the answer and insights

The business model must be related to the organizational structure, because the organization should adapt to the strategy and business that is intended as a model Sridhar Chakravarthi Mulakaluri

Nugroho Dwi Priyohadi Thanks a lot for your response.