Pancakes or Pyramids: Which organisation structure works better today?
Greater access to information, people working from home, COVID-19, and the speed required to do business in the current age have put pressure on traditional organisational structures. More agile businesses are better equipped to capture emergent opportunities, while more traditional structures are often better equipped to manage risk.
So which is better – the flatter, faster ‘pancake’ organisation? Or the taller, slower ‘pyramid’ that defined business for the better part of the last century?
Let’s look at each in a bit more detail, because the answer isn’t as simple as you might think.
Pyramid structures were typical over the past few decades because the spoken word was one of the fastest methods of communicating messages. Additionally, businesses were less complex and moved slower than today, due to less advanced technology and geographical barriers to entry.
The structure is used for maximum control over tasks and messages. It also encourages and promotes functional expertise, which is great for simple businesses that require high levels of control.
These business structures are slooooooooow. Approvals and administrative processes can hamstring progress, potentially leading to missed opportunities. This is an issue when pyramid structures are implemented by default rather than by necessity, as competitors with more agile business models can capitalise.
Additionally, more levels lead to more opportunities to politicize and/or distort activities and communication. Some savvy employees work this to their advantage, but overall, it is inefficient to deliver value to stakeholders.
Flatter organisation structures take advantage of the speed of technology to deliver a higher volume of business outcomes. They are agile, offer reduced message dilution, and have fewer opportunities to politicize information or activities. Pancake models are useful for businesses that are looking to grow fast, need the flexibility to adjust quickly, and where the business impact of a misstep is low.
While the pancake structure allows businesses to ‘move fast and break things’, that’s not ideal if ‘breaking things’ causes major reputational, financial, social, or other impacts. Because there’s less control in this structure, the margins for error are smaller; you move faster, but you’re more likely to make mistakes, and unless managed very well, you might not get all the information you need before making a decision. This might be accepted if speed is favoured, but in some high-stakes scenarios where small missteps can be the difference between winning and losing a contract, this model can be detrimental to success.
I could dive into so much more detail on both of these structures, but at the core, it depends on the size and type of business you’re looking to run. Is the impact of mistakes extremely high? You might consider your business to be more pyramid-leaning. Is speed to market and flexibility required? Perhaps a flatter organisation suits your needs.
The one thing I can say without doubt is that modern businesses cannot be completely one or the other anymore – a certain level of flexibility is needed given the pace of growth and change in today’s business environment, while a level of control is also needed due to increased visibility, transparency, and standards required of today’s businesses.
So maybe the best model is the short stack – a mix of both pyramid and pancake. How many layers high it is, or how wide the pancakes are, depends on you.