© 2016 by Maciej Workiewicz

Three, two, one, zero … counting down to a bossless organization

February 18, 2015

While reporting to two, three or more bosses is a daily reality for many, there are some companies, where the number of bosses has been reduced to zero. Enter the bossless organization.

 

While hierarchies may have many benefits (hence their ubiquity) they also get their fair share of criticism]. Increasingly, among the egalitarian-minded population, the very concept of formal authority sounds unappealing at best. Many employees perceive hierarchy as oppressive and stifling creativity, complaining about the “red tape” and “bureaucracy”.

 

In his 1977 article “Almost Random Careers”, James March mentioned the myth of managerial importance, arguing that humans tend to attribute special meaning to people at the top (be it in business or military), reinforcing the traditional image of a hierarchy as a valuable tool to realize the leader’s vision. Prahalad and Hamel in their 1989 HBR article “Strategic Intent” raised a similar point when they wrote management “The myths that grow up around successful top managers – “Lee Iacocca saved Chrysler,” “De Benedetti rescued Olivetti,” “John Sculley turned Apple around” – perpetuate it [the elitist view of management]. So is the traditional role of managers and hierarchy only a myth? Gary Hamel, a professor at London Business School seemed to agree, when he recently wrote “Bureaucracy Must Die”. In fact, at some organizations, bureaucracy is already dead.

 

In the last few years several companies decided to eliminate hierarchy and managers: Think Valve, WL Gore, GitHub, and Morning star. Among those, the American software company Valve is probably one of the most successful examples of this new trend. There are no bosses at Valve, and employees join whatever projects they find interesting and are able to help with. In fact, the desks at Valve have wheels so that employees can move them and physically join whatever team they are currently working with.

 

It is not my intention to do a comprehensive review of the pros and cons of bossless organizations - this blog post would be too long for anyone to care to read. Instead, I want to use the example of Valve to highlight some of the strenghts and weaknesses of flat hierarchies.

 

For certain, the flat hierarchy has its benefits. The Valve New Employee Handbook argues that: “(vertical) hierarchy is great for maintaining predictability and repeatability. … But when you’re an entertainment company that’s spent the last decade going out of its way to recruit the most intelligent, innovative, talented people on Earth, telling them to sit at a desk and do what they’re told obliterates 99 percent of their value. We want innovators, and that means maintaining an environment where they’ll flourish.

 

Not everything about such bossless organizations is great, however. Here is how Gabe Newell, the key “non-boss” and biggest shareholder of Valve, summarized the downsides:

 

a) Flat organizations are bad at controlling projects and predicting project schedules. Valve was very bad at this and missed some important, self-imposed dates, with some journalists even coining the term “Valve time” to describe the imaginary calendar that the company was supposedly using.

 

b) Finding out that people are making bad decisions. Sometimes people would make poor decisions and it takes some time to catch them.

 

c) Some personalities don’t like that kind of environment. Some people like clear lines of hierarchy and those would leave. Valve is not good for people who need clear choices.

 

d) Valve is also difficult for new employees. One needs some prior experience in project management and coding to fit in. Newell described Valve as a sink or swim environment.

 

And so the key questions remain: Are such structures scalable? In the future, will most of the companies be without bosses? For now, judging by how the biggest companies are organized, the trend seems to be quite the opposite: Adding bosses rather than subtracting them.

 

Do you want to know more? My co-chair at INSEAD Phanish Puranam has published an interesting blog post discussing Valve and other bossless organizations and my friend Ethan Bernstein at HBS wrote a business case on Valve.

 

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