Organic Organization: What It Is and How to Build One

TL;DR: Organic Organizations in 60 Seconds

• What it is: A flexible, decentralized structure where authority flows by expertise, not title. Coined by Burns & Stalker in 1961 after studying 20 Scottish firms
• Why it matters: In volatile markets, organic structures enable faster adaptation and better decision-making at the team level
• The Spotify lesson: The famous Spotify model was never fully implemented. Copying structures without building underlying capabilities leads to failure
• 5-step transition: Assess environment → Start with one team → Build psychological safety → Create clear purpose → Invest in capability
• When NOT to use: Stable industries, heavily regulated sectors, and operations requiring strict standardization benefit more from mechanistic structures

An organic organization is a flexible, decentralized structure that distributes authority by expertise rather than title. People closest to the problem make the decisions. Communication flows horizontally across functions, not just up and down a chain of command. Roles adapt as markets shift.

In my coaching experience, most teams want organic structure for the wrong reasons. They want the autonomy without the accountability. They hear "flat hierarchy" and think "no management." But that misunderstanding is exactly why most organic transformations fail.

When sociologists Tom Burns and G.M. Stalker studied 20 Scottish electronics firms in 1961, they discovered something that still holds: there is no universally better structure. The right choice depends entirely on whether your environment is stable or volatile. Their book "The Management of Innovation" gave us the organic vs mechanistic framework that organizational design still builds on today.

This guide covers what organic organizations actually are, why the famous Spotify model failed to deliver on its promises, and a practical 5-step framework to transition your team or organization.

What Is an Organic Organization?

An organic organization operates more like a living organism than a machine. Different parts communicate and coordinate without rigid chains of command. Structure adapts to environmental demands rather than forcing the environment to fit the structure.

Burns and Stalker's key insight was that organizational structure should match environmental conditions. In their study of 20 Scottish firms, they identified two distinct systems: mechanistic (suitable for stable environments) and organic (suitable for changing conditions). The firms that matched their structure to their market conditions outperformed those that did not.

Five characteristics define organic organizations:

• Decentralized decision-making: Authority distributed by expertise, not just title
• Horizontal communication: Cross-functional dialogue rather than strictly up and down the chain
• Broadly defined roles: People wear multiple hats. Adaptability is valued over specialization
• Collaborative culture: Team-based problem solving with shared ownership
• Continuous adaptation: Structure changes as market demands shift

For product managers and leaders, understanding organic structures matters because they directly impact how decisions get made, how fast you can respond to customer feedback, and how empowered your teams feel. When I was working at a fintech company that grew from 600 to over 2,000 employees in two years, I witnessed firsthand how organizational structure either enables or constrains product development. Teams with organic characteristics shipped faster, iterated more, and retained better talent. Teams stuck in mechanistic silos struggled with handoffs, approvals, and slow feedback loops.

The practical implication: if you lead product teams in a volatile market, you need to understand how to build autonomous teams that can make good decisions without waiting for permission from above.

Organic vs Mechanistic Organizations

The difference between organic and mechanistic organizations is not just about hierarchy. It is a fundamentally different philosophy about how work gets done and how people coordinate.

Burns and Stalker found that neither structure is inherently superior. Mechanistic organizations work well in stable, predictable environments. Utilities, manufacturing, and heavily regulated industries often thrive with mechanistic structures because consistency and compliance matter more than speed.

Organic organizations excel in volatile, unpredictable environments. Technology, creative industries, and fast-moving consumer markets benefit from organic structures because the ability to adapt quickly outweighs the efficiency gains of standardization.

The pattern I see in my coaching work is teams treating organic vs mechanistic as binary. You are either "agile and flat" or "traditional and hierarchical." The most successful teams I coach use hybrid approaches, applying organic principles where adaptability matters (product development, innovation) and mechanistic structure where consistency matters (compliance, operations, financial reporting).

"There is no way we can define a structure for an organization which outlasts market changes because if the way people work is only driven by structure, then we will probably encounter situations in the market very quickly in three, four months' time for which our structure is not supportive." — Andrea Tomasini, CSO at Agile42

The research supports this hybrid view. A 1990s study of Internet firms by researchers Sine, Mitsuhashi, and Kirsch found that hybrid approaches combining mechanistic clarity in some areas with organic fluidity in others produced superior performance compared to purely mechanistic or organic models. This aligns with how product teams should think about aligning structure with strategy: your organizational design should serve your strategic goals, not the other way around.

Why the Spotify Model Failed

No discussion of organic organizations in the product world is complete without addressing the Spotify model. When Spotify published its organizational approach in 2012, companies rushed to copy it. The promise was compelling: autonomous squads, minimal bureaucracy, and rapid innovation at scale.

The Spotify model organized the company into:

• Squads: Cross-functional teams of 6-12 people with end-to-end ownership
• Tribes: Collections of squads working in related areas (up to ~100 people)
• Chapters: Groups of specialists across squads (e.g., all iOS developers)
• Guilds: Company-wide communities of interest

Here is what most companies did not realize: Spotify never fully implemented this model. It was documentation of aspirations, not reality.

Joakim Sundén, who worked as an agile coach at Spotify from 2011 to 2017, stated: "Even at the time we wrote it, we weren't doing it. It was part ambition, part approximation. People have really struggled to copy something that didn't really exist." (Source: Jeremiah Lee)

The model failed for four critical reasons:

1. Autonomy Without Alignment

Spotify gave squads extensive autonomy but did not establish common collaboration processes. Teams reinvented wheels constantly. Knowledge sharing was inconsistent. When product manager Jeremiah Lee joined Spotify, he found that engaging with different teams required learning each team's unique way of working. Autonomy without a shared product vision creates fragmentation, not innovation.

2. Missing Management Structure

The chapter lead concept created accountability gaps. Chapter leads managed people across multiple squads but were not embedded in any squad's daily work. Product managers had to negotiate with multiple engineering managers, creating inefficiency when consensus was needed.

3. Assumed Skills That Did Not Exist

The model assumed team members had the emotional intelligence, collaboration skills, and agile knowledge to self-organize effectively. Many did not. And Spotify did not have enough coaches to fill the gap. As Joakim Sundén later reflected: "If I were to do one thing differently, I would say we should not be focusing so much on autonomy."

4. Confusing Nomenclature

The terminology (squads, tribes, guilds, chapters) made ordinary organizational concepts seem exotic. This created unnecessary cognitive load and made it harder to discuss problems using familiar language.

What should companies do instead? Rather than copying the Spotify model wholesale:

• Adopt elements selectively based on your actual problems
• Maintain clear engineering leadership and accountability
• Balance autonomy with explicit guidance and processes
• Invest in developing collaboration skills before increasing autonomy
• Use familiar terminology to minimize cultural disruption

5 Characteristics of Successful Organic Organizations

If the Spotify model is not the answer, what makes organic organizations actually work? Based on research and practical experience, here are five characteristics that distinguish successful organic structures from chaos disguised as autonomy.

1. Decentralized Decision-Making With Clear Boundaries

Successful organic organizations push decisions to those closest to the problem. But they also establish clear boundaries. People know which decisions they can make independently and which require escalation. The goal is empowering teams to make decisions within a defined scope, not unlimited freedom that leads to fragmentation.

2. Purpose Over Procedures

Instead of detailed procedures for every situation, organic organizations rely on shared purpose. When everyone understands the mission and the direction the product is heading, they can make decisions aligned with organizational goals without needing step-by-step instructions. This requires investing time upfront in defining and communicating direction.

3. Horizontal Communication Across Functions

Information flows where it needs to go, not just up and down reporting lines. Cross-functional teams talk directly to each other. Engineers talk to customers. Designers participate in strategy discussions. This requires breaking down silos and creating forums for regular cross-functional dialogue.

4. Adaptive Roles That Evolve

Job descriptions are starting points, not constraints. As the organization learns and the market shifts, roles evolve. People pick up new responsibilities based on need and interest, not just title. This flexibility enables faster response to opportunities but requires people comfortable with ambiguity.

5. Learning Orientation Over Blame

Organic organizations treat failures as learning opportunities, not occasions for blame. This requires psychological safety: people must feel secure enough to surface problems early, admit mistakes, and propose experiments that might not work. Without this foundation, organic structures collapse into either chaos or hidden bureaucracy.

Real Examples of Organic Organizations

Several companies have successfully implemented organic principles, though none perfectly. Understanding their approaches and tradeoffs provides practical insight.

W.L. Gore & Associates (makers of GORE-TEX) has operated with a lattice organization since 1958. There are no traditional managers or hierarchy. Associates commit to projects and elect leaders based on followership. The company has consistently appeared on "Best Places to Work" lists and generates billions in revenue. The tradeoff: onboarding is longer and more confusing for new hires.

Valve Corporation, the gaming company behind Steam, operates with self-managing teams and no formal management structure. Employees choose what projects to work on. The company generated approximately $4 billion in estimated annual revenues in 2017, and the Steam platform held roughly 75% of the PC gaming market share in 2018. The tradeoff: the approach works with highly skilled, self-motivated people but struggles with accountability and performance management.

Consulting firms naturally operate organically because their work is project-based and client-specific. Teams form and dissolve based on project needs. Partners lead through influence rather than direct authority. The structure adapts constantly to client demands.

Product teams in scaling startups often exhibit organic characteristics out of necessity. In my coaching experience, startups between 20 and 100 employees tend to operate organically by default. The challenge comes during the scale-up phase (100-500 employees), when some mechanistic structure becomes necessary for coordination. The teams that handle this transition well are the ones that consciously choose which decisions to centralize and which to keep distributed, rather than defaulting to either extreme.

The pattern across these examples: organic structures require highly capable people, clear purpose, and cultures that support both autonomy and collaboration. They are not shortcuts to faster growth. They are different operating systems that work under specific conditions.

How to Transition to an Organic Organization

If you are considering moving toward a more organic structure, here is a practical framework based on what works. Not copying models, but building conditions for organic practices to emerge.

Step 1: Assess Your Environment Honestly

Is your market actually volatile enough to warrant organic structure? If you are in a stable industry with predictable customer needs, a more mechanistic approach might serve you better. Organic structures have costs: they require more coordination, more skilled people, and more tolerance for ambiguity. Do not adopt them because they seem modern.

Step 2: Start With One Team

Do not transform the entire organization at once. Pick one team or product area and experiment there. This limits blast radius if things go wrong and creates a learning laboratory. As you figure out what works, you can expand gradually.

In my coaching experience, I worked with a product organization that tried to "go organic" overnight across 12 teams. Within two months, three teams had no clear decision-making process, two had reverted to their old ways, and the rest were confused about what had actually changed. We regrouped, picked the two most willing teams, and ran a focused 90-day experiment. Those two teams developed practices that the other teams eventually adopted voluntarily. The lesson: organic transformation spreads through demonstrated success, not mandated change.

Step 3: Build Psychological Safety First

People must feel safe to fail before autonomy works. If your culture punishes mistakes, adding autonomy just creates anxiety and hidden problems. Invest in building trust before increasing decision-making authority.

"You can't design culture because culture is how we are, how we behave." — Andrea Tomasini, CSO at Agile42

This is critical: you cannot mandate organic culture through reorganization. It emerges from how people actually interact, day after day. Start by changing behaviors, not org charts.

"You need to have safe to fail experiments and also a safe to fail culture that allows you to do experiments in a way that you can at least make sure that you are not bringing yourself into financial problems." — Andrea Tomasini, CSO at Agile42

Practical tactics for building a safe-to-fail culture:

• Blameless post-mortems: When things go wrong, focus on what happened and what you can learn, not who is at fault
• Celebrate learning: Recognize experiments that taught something valuable, even if they did not succeed
• Start small: Limit the scope of experiments so failure is survivable
• Make failure visible: Share what did not work so others do not repeat the same mistakes

Step 4: Create Clear Purpose, Not Detailed Procedures

Replace extensive rulebooks with clear mission and direction. When people understand why the organization exists and where it is going, they can make good decisions without detailed instructions for every situation. This requires leaders to invest time in defining and communicating direction repeatedly. Using OKRs as alignment guardrails gives teams both the autonomy to decide how to achieve goals and the clarity of what success looks like.

Step 5: Invest in Capability, Not Just Structure

Organic organizations need more skilled people, not fewer managers. The Spotify model failed partly because it assumed collaboration skills that did not exist. Before increasing autonomy, develop your team's ability to work cross-functionally, resolve conflicts, and make decisions collectively.

"The biggest mistake people do when it comes to organization and change is they think at the organization and at the change as a single entity. It isn't right. When we're talking about change and organization, we are talking about people, every one of them as a name, every one of them as a history, every one of them as a character, as values." — Andrea Tomasini, CSO at Agile42

When NOT to Use an Organic Structure

Organic structures are not always appropriate. Knowing when not to use them is as important as knowing how to implement them.

Stable, predictable environments: If your market, technology, and customer needs are stable, mechanistic structures can be more efficient. Utilities, manufacturing, and mature industries often benefit from standardization.

Highly regulated industries: Healthcare, finance, and other regulated sectors require compliance and documentation that can conflict with organic flexibility. You can still have organic elements, but core processes often need mechanistic structure.

Large-scale operations requiring standardization: When consistency matters more than adaptation (supply chain logistics, food service operations), mechanistic approaches may serve better.

The research suggests hybrid approaches often work best. You might have organic product development teams operating within a more mechanistic overall structure. Or mechanistic production processes supported by organic innovation groups. The key is matching structure to the specific work being done.

Getting Started With Organic Practices

Building an organic organization is not about copying a model or flipping a switch. It is about gradually building the conditions where organic practices can take root: psychological safety, shared purpose, capable people, and clear boundaries.

The Spotify model's failure teaches us that copying structures without understanding underlying conditions leads to disappointment. Autonomy without alignment creates chaos. Structure without capability creates frustration.

Start with one team. Assess honestly whether your environment even requires organic structure. Build safety before autonomy. Invest in people before restructuring org charts.

If you want to go deeper into building team autonomy, start with how to empower product teams. For help structuring your organization's transition, you can also learn more about my coaching background and explore my product coaching services to discuss your specific situation.

Andrea Tomasini said it best: you cannot design culture. Culture emerges from behavior. Start there, and the right structure will follow.