What do a small retail store, an electronics firm run by a hard-driving entrepreneur, and an airline’s war room during a pilot’s strike have in common? They probably all use the simple structure. The simple structure has wide spans of control, low departmentalization, and central authority. It is a flat organization; it usually has only two or three vertical levels, a loose body of employees, and one individual with decision-making authority. Most companies start as a simple structure.

The strength of the simple structure lies, of course, in its simplicity. It’s fast, flexible, and inexpensive to operate, and accountability is clear. One major weakness is that it becomes increasingly inadequate as an organization grows because its low formalization and high centralization tend to create information overload at the top. Decision making typically becomes slower as the single executive tries to continue doing it all. The simple structure’s other weakness is that it’s risky—everything depends on one person.