W. Edwards Deming, the famous management philosopher used to say that the organization chart was a flow chart. It depicted a flow of blame. He helped the Japenese think about customer driven flows which mattered a lot more.
The reality is there are social networks within companies and they represent how most important work gets done - and innovation happens. BusinessWeek (subscription required) has a neat article on how companies are - quietly - mapping such networks within organizations. I say quietly because we persist in having formal organization charts even 50 years after Deming made his famous observation. If anything with Microsoft Visio and other tools we have glamorized the traditional organization chart even more - when we should be using them to map social network charts - "corporate X-Rays" as the article describes.
Also, see here how SAP is innovating with its own internal social networks.
