To get work done in a planned fashion we create formal organization structures. From bureaucracies to ad-hocracies, we develop structures to address the specific unique needs of the environment we serve. The environment dictates competitive pressures, quality expectations, capacity needs, investment returns, and agility demands.
With apologies to organizational theorists, such a variety of demands renders any single organization structure incapable of meeting all needs. In other words, one size fits none.
So we build a basic formal structure that meets the core, high priority needs of the environment we are trying to serve. If you look carefully at any industry, you will find most of the players use fairly similar formal organizations. Because of pragmatic external pressures, if you examine any two large companies in the insurance industry, they will likely be divided into group and individual insurance divisions. Hardly rocket science and hardly a competitive advantage. Simply a realistic necessity.
To meet unique demands and to be competitive, organizations must relentlessly find ways to distinguish themselves. We create cross-functional links that span the formal structure creating short-cuts. We design dynamic teams using subject matter expertise from across different knowledge realms to develop unique value-building entities. Hopefully these combinations create efficiencies and innovations that cannot be copied by other organizations in the same market space.
These cross-functional webs superimpose a wide variety of structures over the traditional organization chart. Now, add in the informal organizations that humans invariably create. Regardless of the formal structure or any cross-functional team, humans seem to find ingenious ways of connecting and re-combining into completely unexpected groups as a result of interpersonal relationships and informal hierarchies of expertise and respect.
These informal groups add yet another layer onto the organization. Suddenly the nice neat organization chart becomes a "vast array of interwoven matrices." (Thanks to Alan Harrison for that quote). Is this complexity such a bad thing? Certainly it doesn't fit into an easy to categorize organization architecture. But the trade-off is a dynamic living organism that can respond to external pressures in an infinite number of ways. It may seem confusing, but I wouldn't want it any other way.