No Managers? No Hierarchy? No way!


Steve Denning, Contributor

April 18, 2014

In the discussion of the vast ongoing paradigm shift in management from the slow-moving stifling hierarchical bureaucracies of the 20th Century to the more agile, collaborative and networked forms of organization emerging today, some of the more counter-productive phrases are “get rid of managers!” or “abolish the hierarchy!”

Thus I often hear it said, and see it written, that firms like Morning Star or Southwest Airlines [LUV] or Valve or Zappos have done exactly that, i.e. “gotten rid of managers” and “abolished hierarchy.”

This is a misunderstanding. This is not what these organizations are doing or what the ongoing paradigm shift in management is about at all.

In networked organizations, where work is self-managed, there are still managers. The managers have become enablers of self-managing teams and networks rather than controllers of individuals. In those organizations, someone has to sign checks. Someone has to sign legal documents on behalf of the organization. Someone is legally responsible for what is done by the organization. That someone is a manager. A manager after all is simply someone who is responsible for getting things done. If anything is to get done, an organization has to have managers.

There are still hierarchies in a network, but the hierarchies tend to be competence-based hierarchies, relying more on peer accountability than on authority-based accountability, that is, accountability to someone who knows something rather than to someone simply because they occupy a position, regardless of competence. It is a change in the role of the manager, not an abolition of the function.

What the emerging forms of networked organizations are getting rid of are arrogant management attitudes, bureaucracy-infested business processes, inward-looking perspectives that ignore customers and competitive realities, efficiency-driven mindsets that undermine the long-term health of the firm, and one-way top-down communications that prevent listening.

The world is inherently hierarchical

If I look back on some of my own writings, I have to admit that I have sometimes used phrases akin to “abolishing the hierarchy.” A book that transformed my thinking on the subject of hierarchy is an old book by Arthur Koester, The Ghost in the Machine (1967). It is absolutely brilliant. Koestler shows how the notion of hierarchy is pervasive throughout the whole of nature, not just the activities of human beings.

The human body is inherently hierarchical. A finger is subject to the control of the hand. The hand has to do what the arm does. The arm is subordinated to the control of the body. And so on.

Language is also a hierarchy. Letters are subject to words. Words are subject to sentences. And so on.

Similarly music is a hierarchy. The notes are part of a chord. The chord is part of the harmony. It is a hierarchy of sounds that creates music. And so on.

Koestler makes the case that when you look around carefully, you can see that the entire universe is hierarchical in nature. His book is out of print, but it’s well worth the trouble to get hold of and read.

Now don’t get me wrong. I’m all against nasty tyrants and mini-Napoleons and steep vertical hierarchies. They have no future. But durable organizations inherently have people who have responsibility for getting things done, namely, managers in some form of hierarchy.

Southwest Airlines certainly has hierarchy, even though its teams are self-managing. As a public company, it is required to have people who sign checks and legal documents, and take responsibility for getting things done, like making sure the planes are safe.

Valve can let people do what they want, so long as the firm is making a ton of money. But if it ever stops making money, then they will find out that it too, has a hierarchy of some kind that is forced to make decisions about what to do. It might be a horizontal hierarchy. It might be a democratic process. But there will inevitably be people making decisions or the organization will collapse.

The same thing with Morning Star, sociocracies, holacracies and the rest.

Organizations, like the rest of the universe, are inherently hierarchical. We may as well get used to it.

Finding language to discuss these issues

Yet I can see what colleagues mean when they cry “no more managers!” or “no more hierarchies!” They are calling for an end to all the things that we want–and need–to end, such as arrogant management attitudes, bureaucracy-infested business processes, inward-looking perspectives that ignore customers and so on.

Yet the use of phrases like “no managers!” and “no hierarchy!” by those wishing to accelerate the Great Transformation in management can be a show stopper. In conversations with people running organizations, use of those phrases often signifies to listeners that the speaker is some kind crazy person and it often brings effective communication to a screeching halt.

The serious practical matter then, once we have sorted out the substance, is to find language to discuss the transition that we are talking about without using inflammatory phrases like these.

Some colleagues and I are even thinking of setting up a registry of words and phrases that are counter-productive in the sense of effectively stopping conversation on the subject of transforming management, along with suggestions for how the relevant issues can phrased more constructively.

Any suggestions for other entries in the registry?

The link to strategy

Roger Martin, Academic Director of the Martin Prosperity Institute comments:

I buy this totally. In fact, I wrote an HBR article precisely about this July  2010. The article is here, although it is behind a paywall.

My way of thinking is that there is no distinction between strategy formulation–notionally done by those at the top of the organization–and execution/implementation by the rank and file below them.  If strategy formulation is about making choices (under uncertainty and competition), then if execution/implementation is inherently different than strategy formulation then it must be “choiceless” doing – or we would call it strategy formulation too.

But we know when the CEO says “we are going to differentiate on the basis of awesome customer service” that the Executive Vice-President of customer service doesn’t just “choicelessly” produce awesome customer service. He has to make a bunch of important and difficult choices as to how to do just that–which is remarkably like the thinking task of the CEO.

So in my language system, every organization–whether it realizes it or not–operates as a set of nested choices, with people at the top making broader choices and those below at multiple levels making choices that need to be nested under the choices above.  In this conception (which is what actually happens regardless of whether people realize it or not), everyone is a strategist and there is no such thing as execution.  Everyone is making choices under competition and uncertainty.

In such a system, the responsibilities of everyone in the organization are as follows:

  1. Explain the choice that you have made and the reasoning behind it;
  2. Explicitly identify the next downstream choice and who is responsible for making it;
  3. Offer to assist in making the downstream choice if the person assigned wants/needs help;
  4. Commit to revisiting your own choice and modify it if the person below can’t find any choice that nests properly below it.

That is good hierarchy and one that adjusts its operation based on logic and people in it thinking productively together. There is explicit hierarchy.  Some people make bigger choices than others. But everybody is in a choice-making enterprise together.

Hierarchy is poorly understood

Richard Straub, President of the Drucker Society Europe also comments:

I believe you are right in showing that organizations (especially large ones) cannot do without managers and hierarchy. As Elliott Jacques’ research shows there is a need for hierarchy to achieve accountability and performance in organizations. Moving up the ladder means different levels of complexity of tasks and different time spans that are covered by a manager’s decision.

The big issue with hierarchy is that it is poorly understood and badly applied. Each management layer must add value – not slow down the organization or kill initiative. Instead of trying to abolish hierarchy and bureaucracy we should rather learn how to use it effectively in large organizations. Since it is a difficult and complex subject, it would require management skills and more sound research to explore it further e.g. for new types of fast moving organizations. However, it is a totally neglected subject these days in business schools and management education programs.

Even with the current terminology and the current models used in organizational theory we could make progress if we would develop a better understanding of how to use hierarchy as a tool of organizational effectiveness rather than making it a debilitating draw-back. I would believe the field of organizational behavior and the discipline of sociology of organizations should get additional focus in the discussion about the transformation of management—something that you support.

And read also:

The Great Transformation In Management: A Turning Point

A glimpse at a workplace of the future: Valve

Making sense of Zappos and holacracy

The management revolution that’s already happening

Five surprises of radical management


Steve Denning’s (@stevedenning) most recent book is: The Leader’s Guide to Radical Management .

Follow me on Twitter at @stevedenning

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