Teamwork

Flat Will Kill You, Eventually: Why Every Company Needs Structure

By on November 18, 2015

flat organization

Going flat is the hot idea right now, but can it increase productivity, or is it just workplace culture rebellion?

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About a year ago at Flow, we had a big problem with how certain projects got done. Small projects were easy to handle: they’d come up, and then a small team would orbit around them, and get them done without much trouble. But whenever bigger, more complex projects would bubble up—projects that needed multiple opinions and specific requirements—progress would be unbelievably slow.

Sure, tasks would get doled out and properly assigned, but we’d miss deadlines, and requirements always seemed to be unclear. Even worse, nobody seemed particularly motivated to drive work home. And with nobody steering the ship, there was always a general sense of uncertainty about who should lead, and when. This resulted in things usually needing to float all the way to the top of the chain to get done.

Projects like this always seem to turn into an internal blame- or groan-a-thon. You’ll DM your co-workers complaining about… well, nothing. About how it’s really annoying that this project isn’t done yet. About how you feel helpless and stifled. About how things aren’t working like they used to. But there’s a lot of other stuff to do, so instead of looking closer and figuring it out, you’ll focus on your work, be irritated, and then complain that evening over a few beers.

This vicious cycle at Flow was borne from a lack of structure, and a tendency towards being a flat organization—where anyone could chip in when they felt like it, but nobody ran the show. If we didn’t do something, this was going to rot us from the inside out.

New best thing ever, or novelty?

There’s an impulse among companies these days to differentiate themselves with new and daring practices at the organizational level. There’s unlimited vacations, the rise of remote work, or most recently and most astonishingly, raising your minimum salary to $70,000 per year.

Practices like this are usually an attempt at culture, not authentic structural or organizational change. It’s hugely important to know the difference.

If it’s the former, we’re throwing complex systems into our companies as nothing more than competitive hiring advantages: things that sound great, but aren’t installed at our companies professionally or correctly, or with any thought to whether or not that program will scale. This is scary, because as we all know, things only get harder to change as a company grows.

The flat organization, which was just starting to seep in at Flow, is perhaps the most beautiful and shiny of all your differentiators. Everyone hates managers, right? What is this—the 50’s? Well, let’s get rid of those. We’ll have a bunch of smart people orbiting around whatever needs to get done, and without middle managers, we’ll get rid of bottlenecks. Oh, and with the added responsibilities, people will make big mistakes and learn quickly. We’ll have a team of creative geniuses and everyone will feel like they own a piece of the product. Screw it. Let’s ditch structure. Let’s have fun.

Nice try, but there’s no such thing as no structure

While a structureless environment can succeed—people are indeed forced into a creative mindset in the absence of draconian middle management—the reality of human nature and the need for rules usually catches up with a flat organization. Chris Savage, whose company Wistia moved from a flat organization to one more traditionally structured, pointed out the following:

Early on, we were never super explicit about how we made decisions as a company, and that tended to work in our favor. It meant that everyone dabbled in every decision. Anyone could share their two cents on any project, and we were collectively on the lookout for opportunities to improve… This lack of clarity created an insane amount of chaos and allowed us to be more creative.

“As your company gets bigger, responsibilities get chopped up into smaller pieces. The relationships between areas of ownership become exceedingly complex, which clouds the decision-making process. For us, it became hard to take risks—no one was clear on who was responsible for what. We moved more slowly, and it felt harder to learn and be creative.”

While a 10-person team with a flat structure might just mean trotting over to someone else’s desk to ask them for something or to check on the progress of a small piece, a larger company might require the involvement of multiple individuals working on multiple projects, and the sheer volume of projects means that opportunities for creativity get less consideration.

That’s all without mentioning that structure has a curious way of imposing itself within an organization. While the flat organization attempts to keep restrictions at a minimum in the interest of cultivating creativity, the same old structures tend to rear their ugly ogrish heads. Chris Savage again:

While people on the team made smaller decisions about their parts of the business, I ultimately acted as a bottleneck for major decisions. We began to realize that by building a company with a flat org structure, we had done the exact opposite of what we had intended. We had centralized all the decision-making, and we were relying on a secret implicit structure to make progress.”

Those bottlenecks you got rid of when you ditched middle managers? They’re replaced by an even narrower one at the top of the ladder. Remember what I told you about those Flow projects? Yup.

But instead of having this top-down system defined or at least acknowledged, an implied structure develops: one which is much harder to change, and infinitely more frustrating for the people working within it. Confused, directionless employees create a sort of ad-hoc system of self-management, which is catastrophically non-communal and ultimately results in some Lord of the Flies-level chaos.

Brian Robertson, co-founder of HolacracyOne, describes this madness:

We have leaders whose implicit expectations rule – we learn to figure them out and align with them first and foremost, and we look to these leaders to resolve other conflicts. As leaders, with others trying so hard to align with our expectations, we learn to temper ourselves and hold back, so we don’t accidentally create pressure or contribute to a disempowered culture. And across our peers we learn to engage in the process of building consensus or buy-in – a sometime-insidious political game to align expectations using personal relationships and force of character.”

Rather than communally working under an explicit system which we can choose to either like or dislike, we (leaders included) opt to work in chaos and individually figure out our own ways of getting things done. Law of the office-jungle. Yikes.

Holacracy: close, but not quite

Holacracy is an interesting antidote to the issue of implied structures: it aims to maintain the openness and creativity-fostering of a flat organization, while giving each role an explicit structure and authority. It gives organizations a good mix of central governance and autocracy, as you see in this image from Holacracy.org:

holacracy

In a holacracy, employees get their managerial-ish decision making authority, but within specific, defined boundaries. Holacracy.org also provides this helpful metaphor:

“In football, you know to pass to the striker not because you’re friends with him, but because he’s in the best position to score. Even if you’re mad at the person playing the striker position, you’ll still pass the ball to that role because the strategy of the game suggests that you should. Similarly, in Holacracy, the roles are vested with authority, not the people.”

In essence, holacracy makes a noble stand against the politics of our normal workplaces, and stops power-hungry sharks from stealing everyone else’s chow—something which can easily plague both conventional and flat organizations.

While an important step forward from the complete chaos of flat, there’s something critical that seems unacknowledged in the structure of holacracy: the vulnerability of working in the open. My personal experience in working in a company without C- or middle-level management (as Flow was in the beginning) was that it created a certain kind of idea paralysis. Every decision felt too paramount because there were too many eyes on every move, and not enough direct management about who should (or even how they should) make those moves. 

Sometimes, we just need a curtain

In Ethan Bernstein’s excellent Harvard Business Review piece, The Transparency Trap, he puts forth the idea that for the average worker, the ability to work in private can be just as important for productivity as openness and transparency; that a too-large working group or an excess of authority can leave people feeling exposed and vulnerable.

In his research, he describes the case of a mobile phone factory in China, one of the world’s largest of its kind. It was a factory of 14,000 workers, but a paragon of openness—a massive floor, without walls or dividers. Everyone was able to observe everyone else: it was flat organization realized as a structure.

Interestingly, Bernstein observed that workers would often conceal better ways to work—from both their managers and their peers—because they felt it was “most efficient to hide it now and discuss it later. Everyone is happy: They see what they expect to see, and we meet our targets.”

Being part of a workplace with too few boundaries inhibited workers; the power to change everything for everyone was totally undesirable.

Bernstein asked the management to set up an experimental production line, and overheard an employee’s suggestion that their workstation be surrounded by a curtain. They tried it out, and to their amazement, productivity increased 15% around the curtained line. Here’s what Bernstein had to say:

“By shielding employees from observation, the curtains supported local problem solving, experimentation, and focus. But within the curtains work became much more transparent. And over time the camaraderie within boundaries made the workers more likely to share—as a group—their privately worked-out solutions with other lines.”

The average worker at this factory was not interested in bringing forth changes too dramatic; but when it came to implementing ideas in their own enclosed team, enthusiasm jumped. Many of us, just like the workers in the factory, have anxiety about our ideas shaking things up just a little too much. We do better work in the womb-like confines of a small, trusted organization of a team, where we can observe and manipulate the change—ensuring that our idea will be properly understood.  

And sometimes we need yelling

Some of the best wisdom on running teams comes from kitchens, and recently, in Lucky Peach, chef Wylie Dufresne discussed his thoughts on running a great kitchen:

“People don’t realize what they’re capable of; almost nobody realizes their potential. As coaches, we’re here to help you reach further than you thought you could—and sometimes, duress helps with that. It’s also part of life. People need boundaries; they need structure. Children need structure; grown-ups need structure. Do we need hitting or pot-throwing? No. Do we need yelling? Probably. Probably we do, at times.”

I agree with Wylie wholeheartedly—and I think he nails the only fundamental rules we need to follow when we’re trying to impose some very necessary structure on our team.

First off, everyone needs structure. Just acknowledge that. It’s a basic requirement of any good, comfortable work; very few of us are such consummate artists that we can draw genius from the most bare of requirements. Structure is what lets us focus on our work, rather than navigating the best way to accomplish even the easiest tasks. The path from beginning to end needs to be well-tread and obvious. Your team should not battle a non-existent system.

And sometimes, we need yelling—or more accurately, we need someone pushing us from behind into actually getting our work done. Someone who gives a shit about our careers and our sanity and our company, all at once. We need someone in charge. If we don’t have it, things stagnate, and work doesn’t feel that important. You can’t have 15, 20, or 25 people working in their own silos, emerging only when they feel like chipping in.

Meet in the middle?

While the aggressively structureless and lawless world of flat organizations provides neither structure nor yelling, and the holacracy seems to provide too much responsibility and expectation for the average worker, it seems that Wylie’s happy medium must lie somewhere between the two: an ideal balance of structure and hierarchy of people.

Is the answer simple conventional management, which brings in distinct departments and managers who prevent you from having bottlenecks? It’s entirely possible, and extremely possible that such a simple system isn’t as outmoded as it might sound (P.S., that’s how we solved our stagnating problem at Flow).

What’s important, though, is that we look beyond neon-sign benefits of things like flat organization (“We don’t have bosses here!”) and look at how this system will impact the work we’re doing, and how it’ll influence the unique people who make up our team—how it will give people the structure they crave.

Sometimes, we just need to find the easy answers. Maybe your team’s solution isn’t radical organizational change; maybe it’s just putting up a curtain to give your team some space, or giving your team a few managers to help get rid of their bottlenecks. Maybe we don’t need to do the sexy thing. Maybe that sexy thing is what kills you.

What’s your take on having a flat organizational structure? What structure has worked best for your team?

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About the featured photo:

Fabio Napoleoni’s “Welcome to the Unknown” is our feature painting this week. Many events influenced Fabio’s artwork but none more than the traumatic events that followed the birth of his second child. His daughter, born with major heart abnormalities, had to face several surgeries to correct issues that could prevent her from having a future. Through this experience, Fabio realized what was missing from his work: emotion.

TAGS
  • Charles Lines

    Interesting article. Thanks! I like the curtain concept very much: simple and memorable. Perhaps part of getting the right mix of flexibility and structure is about focusing upon how people interact (more specifically trade with each other) as an organisation, or the teams within an organisation, grow and develop. Different ‘trading styles’ will be most effective at different times and will have an effect upon what people do, what people achieve and how people chose to structure themselves. Such a focus also makes clear that healthy structures are not set in stone but perhaps layered and flexible – like oil on water. I explore the different trading styles people can use at different times here: http://cuttingedgepartnerships.blogspot.co.uk/2015/09/trade-with-style-four-trading-styles.html The article focuses upon collaboration within complex organisations and between organisations, but the concept is relevant, I think.

    • Mark Nichols

      Flexibility is huge. I think that many organizations get pigeonholed into flat organization because it’s too easy to adopt as a default. Flat isn’t really a structure—it’s the absence of a structure. When we treat it like a structure and implement it, it only means you’re fighting against changing the system as your company gets bigger, and it’s much harder to make that change with a larger team. It’s probably not ideal to be too dogmatic about any way of organizing your business, but flat is particularly bad.

  • Doug

    Didn’t Ronald Coase win the Nobel Prize for a paper he wrote in 1937 about this? In “The Nature of the Firm,” he wrote, among other things, about how and why firms organize as top-down hierarchies.

    • Mark Nichols

      This looks like a solid read. Good find.

  • I can highly recommend reading Frederick Laloux’s “Re-inventing Organizations” where he examines examples on non-hierarchical organizations that have succeeded. There are a few key elements that are common to these organizations, two of which are; firstly a true, clear and absolute stated purpose around which members can align and secondly a high degree of trust in each other as human beings to do the right thing. The companies that succeed often do have their own systems to organise around, it’s just that the system is not a hierarchy. There is typically less inequality between the highest and lowest paid and they can outperform their competitors significantly. Laloux calls these organizations, “Teal Organizations”, and sees the new model as the next step in human social evolution, a step forward from hierarchical meritocracies that dominate our current commercial and political landscape.

    • Mark Nichols

      I’m curious to know where he goes with that second point… but either way, this sounds excellent. Just ordered a copy. Maybe we should all give this guy our money: http://www.reinventingorganizations.com/

  • I think the flat work structure would create a stressful work environment for most humans. Not having a clearly defined leader (and this does imply a good leader…having a bad leader is very stressful too) eventually leads to the lost children effect. Chaos, discontent, etc. All bad things for organizations of any type. Very bad for families too. Can you imagine the military going flat? Or a pack of dogs? I have to laugh when I think of it because it might make a good comedy. The military would self distruct and the dogs would likely starve. You may not want to compare a pack of dogs to a business, but there is a lot to learn from the leader of a pack. The traditional structure with healthy leadership is best model for success, in my opinion.

    • Mark Nichols

      The more I think about it, the more I agree, I think. Even if it isn’t a traditional structure, *some* structure is imperative.

      Working in flat org is a lot like working remotely, now that I think about it: you spend way more time thinking about how to do your job than actually doing it.

  • Karl Pawlewicz

    (Sorry I just caught this – Thanksgiving break and the ensuing sleepiness means I’m only now getting caught up on HN reading, but…) Great article – I love to read about companies tackling the ‘flat org’ challenge. It’s a great idea in theory but at a certain point the conversation of organization always arises. One of the biggest things we realized here at Olark was our communication channels had to be improved in order to maintain (and even improve productivity) and still maintain autonomy. I’m not sure we’ve aced it, but it was a key realization as our team was growing but some projects were hitting the skids. We wrote about it here: https://blog.olark.com/our-world-is-no-longer-flat.

    • Mark Nichols

      Hey Karl—thanks for chiming in. I hadn’t seen the post but I love it. I think what your team has created there sounds like an excellent progression.

      I’ve heard a lot from companies that have ‘iterated’, and I think that’s probably the best way to put it. You took a structure that wasn’t working anymore, figured out what your team really valued, and built something better around that. That’s so much smarter and so much more reasonable than making decisions based just on what sounds the most appealing, or what could ‘shake things up’, or whatever.

      I’m particularly interested in what you did to improve Idea Flow. I love the idea of having a clear, defined way of pitching new ideas. How’s that working out—any lessons learned?

      • Karl Pawlewicz

        Hey Mark —

        Sorry again for the belated response. Here’s a little more insight on our Idea Flow process, which is also something we continue to iterate on 🙂

        We’ve tried to develop a pretty clear, defined way to ‘pitch’ new project ideas. Originally everyone in the company pitched at once, and we all voted.

        More recently we’ve moved to a more org-centric process: each org pitches ideas and votes and the top vote getters in each org get presented to a ‘board’ of org representatives.

        The board votes and projects are prioritized. We then work to allocate resources to priority projects. People are able to work on “non-priority” projects, but if there is a need help on a priority project, it’s sort of like “stop what you’re doing and help out” mentality.

        So there’s an org representative that canvasses their group to get project ideas. They bring them to the ‘board’ which is lead by a facilitator. The facilitator has no vote – they lead the other org reps in a discussion around each project idea and try to help the group better understand why each project is vital to the growth or success of the company.

        So far we’ve seen this to be a good system for getting immediate needs out in the open, but are realizing it could be improved for longer-term vision.

        And then of course executing on those immediate needs is a whole other discussion… 🙂

        Hope that helps. Happy to chat more if you’d like: karl@olark.com

  • Joakim

    Thanks for an interesting read. I’m confused about what “flat organization” means in this context. Could you point me to a resource that describes what it is you have a problem with, preferably by someone who is promoting it.

  • Hanna

    Structure, culture, called in different ways but still extremely important. For me hierarchical structure with very clear communication system works: there’s manager who plans, controls and shows the whole work progress on kanbantool.com board for the whole team. Everyone need to know what to do and be, from time to time, awarded in public for doing the duties. So communication and signs of approval.

  • Thanks Mark. I finally got around to reading this after bookmarking it weeks ago. It’s something I’ll definitely keep in mind, especially in the coming year as I look to scale my company while maintaining the high level of customer interaction we have now.

  • Tamas Kalman

    I’m a really big supporter of Organizational Democracy, this book is an essential read on the subject: https://www.goodreads.com/book/show/971989.The_End_of_Management_and_the_Rise_of_Organizational_Democracy

    I’m surprised this article was written in 2015, it feels like 1995. Flat/Dynamic/Democratic structures are our only future, and for the lucky ones, the present. These are not ‘hot new topics’, these ideas are around (and in some places: implemented) since decades.

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