Organizational structure allows companies to effectively communicate between internal groups and carry out activities necessary to the company’s profitability. An organization can be arranged as centralized or decentralized. In a centralized organization, information flows from the top (management) down (employees who carry out tasks). In a decentralized organization, such as a startup, information flows in many directions. There isn’t a wrong or right answer in choosing a centralized vs. decentralized structure. Younger companies may choose a decentralized structure as it allows them to move more quickly. Generally, as companies mature, they move to a centralized structure.
Having an organizational structure in place is necessary for the efficient operation of a company. Otherwise, communication can devolve into chaos, and ultimately lead to the company’s demise.