ITIL (Version 5) and the Physics of Organizations: Why Flow of Value Beats Structure
# ITIL
Shifting from org charts to value streams: how ITIL (Version 5) helps leaders engineer momentum instead of adding friction.
March 3, 2026
Sumit Jha
ITIL (Version 5) and the Physics of Organizations: Why Flow of Value Beats Structure
The outcome promised from most of the digital transformation programs initiatives is ‘organizational velocity’. While in practice, I have experienced many of them deliver new layers of structure.
I have seen organizations redraw org charts, introduce new frameworks, and rename roles. Everything feels modern and aligned for some time. Then the familiar symptoms return - decisions stall, growing work queues, and teams spending more time navigating the system rather than on delivering outcomes.
At that point, leaders often assume the transformation wasn’t deep enough, or the organization has not evolved with the changing industry dynamics. And another structural adjustment is proposed…another reorganization follows.
After working with service organizations across industries, I’ve concluded that most performance issues or challenges are flow problems and not structural problems (the way many leaders perceive these to be).
I perceive that ‘Work’ is not ‘moving cleanly’ through the system. This perspective of mine is based on systems thinking and flow-based management, which often borrow concepts from physics to explain how work moves through complex systems.
When I see the organizations through the lens of Physics, I observe that they start to resemble physical systems. In physics, ‘performance’ of an object is based on movement, energy, or behavior under the influence of forces, rather than its shape. We know that friction slows the movement of the object; bottlenecks create pressure and resistance wastes energy.
I see that these principles apply to our enterprises too. And this is where the New ITIL introduces a subtle but important shift - shifting attention from static structure to dynamic movement. It encourages us to design organizations around the movement of ‘Value’, not just the arrangement of structure.
Organizations Are Flow Systems
At a basic level, an organization is a system through which work, decisions, and information flow.
Let us consider an example of a service request - its fulfilment goes through multiple teams, various tools and layers of approval. I see each of these touchpoints (especially manual handoffs) introducing friction, and every delay at any of these steps acts as a resistance. And every activity ownership ambiguity acts as a bottleneck.
Our physics analogy is very useful here. In any flow system, friction reduces efficiency, which slows the momentum, and we find energy gets lost as heat.
In the organizations perspective, we see a very similar thing - except that the energy being lost in this case is human effort, efficacy and value.
We experience friction in the organization when we see people spending time following up for (or) seeking approvals, clarifying ownership/responsibilities, and resolving conflicting priorities. I do not view these as a value creating activities for the organization.
As these ‘frictions’ accumulate, they slow the transformation and at times lead to its failure. This is not because of the incapability of people, but rather because the system resists ‘motion’.
Case Example: The Global Bank That Optimized ‘Everything’
I had worked with a large global bank that made a huge investment in various transformations. They had reorganized twice in three years, introduced new governance forums, and deployed a modern ITSM toolset. On paper, they were mature.
Yet a simple infrastructure change still took them six to eight weeks to implement.
When we mapped the journey of a typical change request, we found it crossed nine different teams. Also, each team was efficient and met its service targets. Yet the implementation time of changes was high. We observed that the handoffs between teams were poorly defined, approvals overlapped, and there were ownership ambiguities that existed.
No single team was slow. The system was.
Once we mapped the end-to-end value stream (a practice that we see strongly aligned with the New ITIL thinking), the bottlenecks became obvious. Some of the approval steps existed simply because it used to be historically that way, without a strong reason for the same.
We streamlined the flow, clarified the roles & ownerships and simplified the decision matrix. This resulted in the implementation time for the very same category of changes reduced to days.
Nothing dramatic changed in the org chart. What changed was the design of the flow and corresponding movement of value.
Why Structure Alone Fails
I have seen many transformation efforts focus on re-structuring, merging functions/departments, introducing new roles and (re)creating Governance committees. On paper, the organization looks modern and aligned. But in practicality, we see that the performance of these organizations or teams often remains unchanged.
The reason is straightforward: structure is static.
We can restructure an organization without changing, and thus improving how work actually moves. Many times restructuring adds new decision points or layers, introducing new friction points that increase overall friction, leading to slower flow.
I’ve seen organizations having adopted industry-recognised frameworks and standards still struggling to deliver basic changes quickly. I believe that this issue is mostly due to the lack of “thoughtful” flow design (not the “structure”).
Case Example: The Healthcare Provider That Reorganized Itself Into A Gridlock
I worked with a healthcare provider that had attempted a bold structural change - they moved from a traditional functional model to a product-aligned operating model/structure. The organization expected that the initiative would help them realize shorter delivery times and tighter alignment with clinical needs. Instead, the cycle time increased and delivery slowed. Business stakeholder experience went downwards.
Interestingly, I found that this restructuring led to two competing functions – the first was the product function that owned the business applications (products) end-to-end. The second function was shared services that consisted of Infra and Process teams that owned the delivery of shared infrastructure and compliance processes. This second function still operated under the old model with a lack of clear accountability, responsibility and decision authority. Thus, it created two non-collaborating competing structures and the number of escalations simply multiplied.
The reason was that the organization had redesigned its structure without redesigning the flow.
I worked with them to reconcile these overlaps, focusing on integrated governance and value stream mapping. We reoriented the governance bodies around end-to-end services (rather than functional silos). We established clear segregation of duties between product teams and shared services. We optimised the touchpoints and the flow of value. We realized a significant performance improvement. And this was not due to another reorganization, but instead because the movement of work, the flow, was finally engineered purposefully, making it fit-for-purpose.
When I look at this closely, we ‘actually’ applied the methodology that aligns with the ITIL (Version 5) principles around integrated governance and value stream alignment.
How ITIL (Version 5) Reframes the Conversation
ITIL (Version 5) emphasises value streams and ‘end-to-end’ thinking. It encourages us to look at how value travels across the entire system in an organization, instead of taking siloed approaches focused on optimizing individual functions. This is essentially the ‘flow’ perspective that I have been referring to.
Thus, I opine that governance is not about adding more controls. It is about effectively regulating the flow. Governance that is ‘Thoughtfully’ designed removes ambiguity, provides clearly defined decision rights, and reduces friction. It establishes value streams to connect strategy, governance, and operations. And the organization behaves as an integrated system instead of a “collection of departments”.
This is where ITIL (Version 5) is very powerful, providing a framework for designing movement and not just hierarchy or organization structure. Hence, it makes a major shift from the static aspect of structure to the dynamicity of flow (value streams).
Friction, Energy, and Organizational Entropy
Referring again to our physics analogy. I see every organization operating with finite energy that comes from its people, their time, and expertise.
We know that energy dissipates when systems are poorly designed. In organizational context, meetings multiply, coordination overhead grows and ‘attention’ fragments. This is a form of organizational entropy. Systems drift toward disorder and inefficiency without having a thoughtful or methodical flow design.
Practices defined in ITIL (Version 5) act as mechanisms to conserve this energy, starting from clear ownership models to integrated governance and lifecycle thinking, they reduce unnecessary motion. They enable channelling of all the organization’s effort toward value creation.
The goal of such a system (or organization) is not perfect order; It is a sustainable flow of value.
Practical Guidance for Leaders
I believe that this perspective has the following three key practical guidelines for the leaders:
- Design The Value Stream - We should design for ‘flow’ before optimizing structure. We must identify the points that slow down the work and the reasons for the same. We must map value streams and identify and eliminate friction points.
- Measure What Matters - The traditional ‘Activity’ metrics tell us how busy the system is, while ‘Flow’ metrics tell us how effectively it delivers value. Hence, Flow metrics are what really matters and they should be our focus for measurement.
- Governance Is An Enabler - We need to see governance as an enabler of motion, as a well-designed governance accelerates decisions by establishing explicit authority and reducing ambiguities.
ITIL (Version 5) offers a framework to support conversations around the above guidance - not as a rigid template, but as a lens to examine how the organization moves ‘value’.
From Static Structures to Dynamic Systems
Today’s enterprises are operating in an environment that is defined by uncertainty and speed. Thus, static structures are incapable of coping with this reality. I see the organizations thriving in such an environment behaving like “adaptive systems”. They continually adjust their flow, remove friction and redirect energy where it matters most.
ITIL (Version 5) is a catalyst that will steer this shift. It will encourage leaders to see their organizations not as ‘hierarchies’, but as ‘dynamic networks’ through which the value flows.
Realizing successful transformation is about enabling smooth movement (and not building the perfect structure). Thus, ‘Flow’ beats ‘Structure’. And organizations that understand this principle are better equipped to navigate the complexity of digital transformation (or any transformation).
In my experience, I have seen this to be a repetitive pattern across industries where organizations have focused on structure, having rearranged the complexity without realizing that they are not reducing it. While organizations that focus on flow simplify the path through that complexity.
ITIL (Version 5) is a practical framework that provides us with the ‘mean’ for designing the “movement of value”. It encourages us to see enterprises as live value systems where value must travel cleanly and continually. Thus, in a world where organizations are defined by the ability to address the need for speed and uncertainty, the organizations that master flow will always outrun those that merely try to perfect their structure. Hence, the new ITIL is the language that the IT leaders must ‘speak’ to transform their IT function into a value center for their organization.
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