Rethinking Hierarchy: The Organizational Design That Optimizes Performance

In an era where new organization models are often glamorized, it’s worth stepping back and asking a deeper question:

What kind of structure truly supports performance, accountability, and innovation at the enterprise level?

The answer isn’t to eliminate hierarchy. It’s to design it better.

Hierarchy Is Inevitable—So Make It Intentional

Every organization has power dynamics. Even in flat structures, hierarchy doesn’t disappear—it’s just pushed farther down. People still need to make decisions, align across teams, and move work forward.

Without clear structure, informal hierarchies take hold—harder to see, harder to manage, and harder to hold accountable.

Hierarchy isn’t outdated—it’s nature’s blueprint.

From ecosystems to the animal kingdom, hierarchy evolved to manage complexity, balance coordination, and ensure survival. It’s a recurring pattern—for good reason.

The Real Problem Isn’t Hierarchy. It’s Poorly Designed Hierarchy

When people say “hierarchy is broken,” they're usually describing the symptoms of poor design:

• Too many layers

• Vague or duplicated accountability

• Mismatches between capability and role complexity

These aren’t reasons to abandon hierarchy—they’re reasons to redesign it.

A well-structured hierarchy adds value at every level.

No duplication. No dead weight. Just clarity, focus, and forward momentum.

The Three “Nested” Structures in Every Organization

Every organization—whether it knows it or not—operates within three nested structures:

1. Formal Structure

   The visible layer: org charts, reporting lines, and official policies

2. Operating Structure

   How work is actually being done: informal networks, Centers of Excellence CoEs, silos, overlaps, and workarounds

3. Optimal Structure

   The ideal design: designed around end-to-end value chains, cross-functional collaboration, expanded CoEs, streamlined management layers, clear role authorities, capability-role alignment, and KPIs tied to shared value creation.

   
   

   

   Making the nested structures visible is the starting point for transforming today’s organization into its optimal future state.

Most transformation efforts fail because they treat the formal structure as reality.

Real change begins when all three layers are exposed—and the gaps between what is and what should be come into focus.

Those gaps become the roadmap.

The Right People for the Right Problems—By Design

Design extends all the way down to the individual level—where roles meet people.

One of the most powerful (and most misunderstood) levers of organizational performance is this:

Matching individual capability to the complexity of the role.

It requires looking beyond résumés and tenure to ask:

Can this person consistently solve the problems this role demands?

Repeatedly, benchmark studies trace underperformance to one root cause: a mismatch between role complexity and individual problem-solving capacity.

Misalignment at this level isn't random—it’s structural.

It reflects how roles are defined, how layers are designed, and how capability is deployed.

Higher Capability Enables Broader Span

When managers have higher capability, they can effectively manage broader spans of control. This unlocks powerful design advantages:

• Fewer layers

• Stronger cross-functional coordination

• End-to-end accountability

• Fewer silos

Authority Becomes More Strategic

With broader spans, the nature of authority shifts—from task-by-task oversight to strategic leadership. High-capability managers use their authority to drive higher-order decisions and influence system-wide outcomes

Hierarchy Isn’t the Problem—Poor Design Is

Every organization operates within formal, operating, and optimal structures. The key to performance is closing the gap between how work is done—and how it should be done.

Flatness isn’t the goal. Fitness is.

And it starts with hierarchy that works—by design.