The traditional organization consists of a hierarchy of a general, colonels, majors, captains, lieutenants, and troops. The business equivalent consists of a president, vice-presidents, directors, managers, supervisors, and employees. Work is organized by functional area that is headed by a department manager. Department managers direct areas such as Quality, Engineering, Manufacturing, Accounting, or Sales. In larger organizations, these positions may be at a vice-president level.
In the hierarchal structure, all work flows up and down these functional departments. The problem is that this takes a lot of time and ends up with a lot of redundancies. Each decision is reviewed and signed off by many people. Decisions and work can be duplicated.
Hierarchal and functional structures work well in production, operational, and technical areas. This structure encourages professionalism and specialization. Engineers engineer. Accountants count. While specialization has its benefits, it is also narrowly focused. Customer service representatives are trained to serve customers only. Or, production workers are familiar with machines and methods only in their work area. Specialization becomes a hindrance as work becomes more interdisciplinary.
But… The challenges of a vertical structure stem directly from the advantages of compartmentalization of work. In vertical structures or sometimes-called silos, work and authorizations flow up and down the structure. Work is sequential, slow, reviewed exhaustively, and over controlled.