There are written formal rules, policies and structure in corporations that are pretty straight forward and pretty clear to everybody involved, and then there is a second informal set of expectations for behavior that take over where the formal stuff leaves off.
For example -- you don't fake your expense reports. Everybody know this. In most companies its written down, along with consequences for violating the policy. The policy usually says who is responsible for reviewing and approving the expenses also. In other words it delegates or confers power to those individuals for the purpose of reviewing expenses. If it wasn't written down, there would still be a prohibition against faking your expense report, it would just be part of the informal power structure.
I consider this entire collection of visible behavior regulating rules & policies as the formal power structure of the corporation. They tend to focus on things like -- spending authorization and approval, personal behaviors (like vacations, tardiness, allowable travel behaviors), organizational structure (who reports to whom), and performance measurement (that damned appraisal process).
Extensive though this collection might be, it falls far short of the informal behavior regulating rules, which I consider the political structure of the corporation. Some people also refer to this or some subset of this structure as the culture of the organization (although culture is one of those overused business-speak terms that, like an overused knife, has lost its edge).
My thesis is that the informal (political) structure, like a gas, fills the gap between the formal power structure and way things actually get done. And it's usually a big gap.
Unlike the formal power structure, the political structure is not necessarily obvious. For example, if there's no formal dress code, you learn that jeans are only acceptable on Friday by observation or asking. Another example -- Naming names during a high pressure meeting (i.e., who screwed up), might be just the right thing to do at Company A, but a political error at Company B. It can get very subtle and confusing, and often needs to be interpreted on the fly.
Politics, is about figuring out what lies within the informal rules or is outside, and managing the perception of your behavior in the context of those rules. Perception is more important than reality because your compliance with the political norms are only important in the eyes of other people. Their perception (correct or incorrect) is their reality, and they will treat you as such.
Playing politics, is about the manipulation of perceptions -- either perceptions about yourself or someone else. This is the part of the political world that most people find objectionable.
All other things being equal, organizations with less formal power structure, tend to have more politics, and often more playing of politics going on. When you hear someone say, we don't want too many rules, as it hinders creativity, what they are really saying is -- we let the political structure take care of that stuff, despite its messiness.
Other viewpoints or opinions?