The Endless Allure of Non-Hierarchical Organizations
I recently read Dana Ardi’s The Fall of the Alphas. The most important parts of her argument are:
- There are two models of organization:
- Top-down ( hierarchical, command and control)
- Lateral (networked, empowered)
- The lateral model is better
- The top-down model is being replaced by the lateral model
What’s striking is that this argument is a recurring theme in management theory. Jon Husband has written extensively about “Wirearchy” as an alternative to “Hierarchy” (www.wirearchy.com); by chance I picked up Freedom Inc. by Brian Carney and Isaac Getz, they use a series of case studies to convey a similar argument; and if we go back to 1960 we can see a similar sensibility in McGregor’s depiction of Theory X and Theory Y managers. This model is also closely related to what academics call “high-involvement organizations.”
Is this argument true? Why does it recur? What does it really mean?
Two forms of organization?
What is really meant by the two models? Suggesting there are two types could mean:
- There is a bi-modal distribution, with most organizations falling in one of the two categories.
- These are archetypes; actual organizations fall anywhere along a spectrum.
- The model appears at the level of departments or units, it is not necessarily consistent across the whole organization.
Ardi says there is some truth in all three views. They are archetypes, but organizations tend to cluster towards one end of the spectrum. The form is not necessarily organization-wide, and this is important because it shows the extent to which use of the lateral form is a reflection of the individual manager’s values. When a whole organization is “Lateral” it probably reflects the value of an individual CEO who has driven this form of organization throughout the company.
Since different people keep observing that there are these two types of organization, I agree with Ardi that the difference is real, with the usual caveat that it is not as simple as a clean bi-modal distribution.
Is the lateral model better?
Most people are more attracted to the idea of an empowered lateral organization than a top-down hierarchy. Certainly, the argument is always portrayed as the lateral version being dynamic and emotionally rewarding whereas the hierarchical version is a bureaucratic machine that crushes the soul. One could imagine an alternative narrative where the lateral version was portrayed as weak and chaotic whereas the top-down version was an efficient machine where everyone is comfortable knowing exactly what they need to do.
We need to avoid envisioning the extreme versions of either model which are clearly dysfunctional. Hierarchy is very important even in the most democratic forms; and hierarchical forms need not be slow moving and brutal. If we confine ourselves to reasonably effective organizations we can still see a clear difference between the lateral and hierarchical models. In this case, the academic research clearly shows the high-involvement model is significantly more effective and more engaging for the worker.
Which form is better is bound to be, to some extent, situational. When we think Silicon Valley we think lateral, when we think Detroit we think hierarchical, however much of the high-involvement research is on traditional manufacturing firms, leading me to believe the lateral form has advantages in many industries.
Is the lateral form replacing the hierarchical form?
If we accept that in general the lateral form of organization is nicer and more effective than the hierarchical form, do we also agree with Ardi’s hypothesis that the hierarchical form, which she calls the ‘alphas’ is being swept away by the lateral form?
It is easy to see why we hope less nice organizations are being replaced by better ones. Husband and Ardi both feel the internet is forcing this change. Many people talk about the sensibility of the Millenials and feel they are forcing this change. However, I fear we are being swayed by wishful thinking. People have been aware of the advantages of the lateral form for many decades; maybe it will finally become the norm; yet we have to confront the fact that if destiny favoured lateral over hierarchical it probably would already have happened.
I once asked Dr. Ed Lawler, an expert on the high-involvement form, why it had not become the dominant type of organization. He speculated that it was a fragile form. It needs trust and a strong culture to work. Any crisis can knock a lateral high-involvement firm back into hierarchical mode. Lateral may be better, but if it is inherently unstable we cannot expect it to become the norm.
It is also true that while the lateral form may be better for shareholders and employees it is not necessarily better for the typical manager. The top down form is easier, often more enjoyable (people enjoy exercising power) and perhaps less politically risky. If the hierarchical model is best for managers, than we can expect it to be the dominant form.
Key Take Aways
- It is useful to know the history of the field so that you can place new management ideas in context . Admittedly history can also be a touch depressing.
- Be wary of being swept up by the allure of an attractive idea; take the time to break it down as I’ve done in this case.
- The lateral form (though not in its extreme where hierarchy is seen as a dirty word) is generally better for shareholders and employees, and can be rewarding for managers.
- There are reasons why the hierarchical forms keep recurring, they are stable and often preferred by individual managers.
[…] – after I wrote this, a message on Facebook pointed me to an interesting comparison between hierarchical forms of organization and the flatter types implied by the E2 crowd. It is […]
David
Likert measured four types of organization – from I to IV — all had owners and vertical managers. But type IV had better linkage and engagement processes. Or as Stu Winby says – yes networks can work but always in the context of ownership and managers. All organizations are hierarchies — its that there is a continuum from control to greater engagement.
Just a small precision. Given that there are new conditions that have never existed before (hyperlinks and collaborative platforms replacing Microsoft Office as the main substrate for carrying out work, I have steadfastly discussed wirearchy not as an alternative to hierarchy (perhaps traditional hierarchy) but as an evolution of (intelligent and increasingly temporary) hierarchies.
You and I both know the arcanities (is that a word ? the arcane aspects, then) of job evaluation and the core tenets on which JE methods (all of them) were founded. That is what is beginning to be in play, as work, information and knowledge flows more and more laterally. The semantic scales and the definitions contained therein are increasingly less relevant in a number of ways. And JE is what informs an organization org chart, basically.
Etc.
The pendulum need not swing from hierarchy to outright heterarchy … that would cause organizational anarchy. A measured, balanced approach of engagement and execution, of being ‘flat’ and an ‘armata’ at the same time in parallel is what I propose.
[…] 2,000 years. Lateral organizations, or more egalitarian structures, have been the exception. In the endless allure of non-hierarchical organizations, David Creelman notes that both forms have their flaws, but says it’s best to thoroughly […]
http://www.wirerachy.com
Spelling error .. link goes nowhere.
Upon reflection, the think the management literature you cited sets up poorly defined polarities. All employment organizations have some form of managerial accountability of a hierarchical nature. Some have more levels than others depending on the complexity of work required and there is variety in the nature and variety of vertical and lateral communications. Effective trust building employment organizations have the right balance of vertical and lateral communication appropriate to the type of work being done.
I’ve pasted in a good summary of Thompson’s three types of interdependence.
Three Types of Interdependence in an Organizational Structure
by LaToya J. Murray, Demand Media
In the 1967 book "Organizations in Action," sociologist James D. Thompson defined three types of interdependence to describe the intensity of interactions and behaviors within an organizational structure. The study of interdependence helps business owners understand how the different departments or units within their organization depend on the performance of others.
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Pooled Interdependece
Pooled interdependence is perhaps the loosest form of the three. In this type of interdependence, each organizational department or business unit performs completely separate functions. While departments may not directly interact and do not directly depend on each other in the pooled interdependence model, each does contribute individual pieces to the same overall puzzle. This creates an almost blind, indirect dependence on the performance of others wherein one department's failures could lead to the failure of the overall process.
Sequential Interdependence
Sequential interdependence occurs when one unit in the overall process produces an output necessary for the performance by the next unit. Perhaps the most obvious example of sequential interdependence is an assembly line. According to the Proven Models website, "The demand for coordination to prevent slowdown is greater than for pooled task interdependence." Scheduling and planning your organization's resources in a sequential interdependence model is essential to efficient operations.
Reciprocal Interdependence
Reciprocal interdependence is similar to sequential interdependence in that the output of one department becomes the input of another, with the addition of being cyclical. In this model, an organization's departments are at their highest intensity of interaction. Reciprocal models are the most complex and difficult to manage–the Business Intelligence website notes that "one unit can change the rules and affect everyone else at any time."
Coordination
Thompson theorized that the correct way to get departments within an organization working together effectively is to structure respective work tasks by intensity of interdependence, and then manage each of those interdependencies with different coordination methods. For example, a pooled interdependency requires standardization in rules and operating procedures, while the coordination methods for the other two interdependencies are slightly more flexible. A sequential interdependency is managed through mildly adaptive planning and scheduling, while reciprocally interdependent departments are managed through constant information sharing and mutual adjustments.
Marcelo Venerandi
Un organismo es una organización mucho más compleja y funciona.
Quizás la reflexión debería ir por el camino de que es un modelo el tema del cambio sino la forma que se integra cada una de las partes (humanas) en los determinados proyectos a desarrollar.
Es verdad que el principal problema es la forma que se evalúa y se logra entender la evolución de las tareas, pero las personas son complejas y los sistemas también lo son.
El profesor Jorge Etkin en su libro “Gestión de la complejidad” (Gránica ,2009) nos plantea que el momento de la superación llega cuando las partes que han compartido tareas y conflictos, logran un denominador común que considera esa diversidad y complejidad, asimilando los intereses en juego y permitiendo la continuidad de la organización.
El hombre como factor de cambio debe ser capaz dentro de su participación de escoger el mejor camino para el mejor resultado, atendiendo a la naturaleza de su propia complejidad.
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[…] and colleague, David Creelman, once again wrote a thought-provoking piece, this one about command and control leadership and organization structure versus collaborative. […]
[…] I once asked Dr. Ed Lawler, an expert on the high-involvement form [lateral organization], why it had not become the dominant type of organization. He speculated that it was a fragile form. It needs trust and a strong culture to work. Any crisis can knock a lateral high-involvement firm back into hierarchical mode. Lateral may be better, but if it is inherently unstable we cannot expect it to become the norm. – Dale Creelman […]
All this is very reminiscent of organisational structure and design debates of the mid late 1980s and early 1990s when the ICT revolution was beginning to significantly change the supply chains of many large organisations.
I don’t see Miles and Snow referenced re network failure. (which is worth a read see their HBR article on network failure)
Also here in Australia in the mid 1990s Limerick and Cunnington wrote a book worth taking the dust off. Managing the New Organisation: A blueprint for networks and strategic alliances (although reflecting the times) but none the less they also coin the phrases collaborative individualism which is very much what freelancing and other gig based roles are about.
Furthermore, its often outside of management theory and literature that provides the best examples of the future – in history.
I use argue to Limerick and Cunnington (when i studied under them in the early 1990s), that its all very old hat really – eg how was the Christian message spread and how did it take root before Christendom and the hierarchy of the Church of England and Roman Catholicism – through networks and networking.
Perhaps the problems the Churches have now is that they need to throw off their top down hierarchical model and get back to what they originally were doing.
Networks are the organisational form of community. All very ancient really.
And again, guilds prior to the industrial revolution were way more communal and peer based compared to the industrial age production line that replaced them.
[…] 2,000 years. Lateral organizations, or more egalitarian structures, have been the exception. In the endless allure of non-hierarchical organizations, David Creelman notes that both forms have their flaws, but says it’s best to thoroughly […]