Organizational models beyond (fixed) hierarchy [Corporate Rebels]
This one was a tough one to parse through but contained some sold gold nuggets that made it worth it. This post is a synthesis of two posts by Joost Minnaar, one of the two founders of Corporate Rebels:
To the best of my understanding, they are the product of Joost’s Phd thesis where he’s exploring the way progressive organizations are choosing to organize in a way that minimizes hierarchy and bureaucracy, which he dubs as “middle managerless organizations” or MMLOs for short. While I wish the research methodology was more rigorous than case studies, Joost did aim to extend the robustness of the sample of organizations studied, from the mid-sized US-based core to include also large-sized and international organizations.
The label “middle managerless” still seem rather hyperbolic to me, but both the problem framing, and the patterns/archetypes he identifies in the applied solutions are rather interesting.
The organizing problem
Building on his academic literature review, Joost defines “organizing” as solving three intertwined problems:
- Strategy — the problem of organizing the strategic direction of the company and related objectives. This was traditionally done by a top-management team defining short-term (monetary) goals, and now while the structure is unchanged, the management teams tend to be smaller and focus more on defining long term objectives and curating the organizational culture as a means for steering strategy.
- Division of Labor — organizing “vertically” in the company. This is broken down into Organizational Structure — the problem of decomposing the objectives set by top management into tasks and roles, traditionally done by the introduction of hierarchy (functional departments, etc.); and Task Allocation — the problem of assigning these tasks and role to employees, traditionally the responsibility of middle management.
- Integration of Effort — organizing “horizontally” across the company This is broken down into Coordination — the problem of providing employees with the information they need in order to coordinate their actions with peers, traditionally done by middle management by introducing a set of rules and procedures (“bureaucracy”); and Motivation — the problem of monitoring the performance of employees and distributing rewards for the tasks they have performed, traditionally done by middle management which assess performance and allocates rewards.
I like this construct a lot. The one thing that doesn’t fully sit with me is grouping “motivation” under “integration of effort”, but it may just be the behavioristic language that’s used to describe it. When I use simpler, more succinct language it seems to fit better:
Organizing means figuring out:
* The shared direction we want to head in together (organizing “direction”)
* Who is doing what (organizing “vertically”)
* How to complete coupled pieces of work and ensure that all work gets done (organizing “horizontally”)
Since the focus of the research is on the role that middle managers play in organizing and its alternatives, the solutions focus on the “vertically” and “horizontally” aspects of organizing where middle managers play a key role.
In addressing the “vertical” organization problem Joost identified two key approaches that differ in the way they think about the smallest organizational building block. The first views individuals as the basic building block, who then form ad-hoc teams who emerge and dissolve organically. Individuals can be part of one or more of those teams at the same time. Most Holacratic/Sociocratic systems that champion the separation of “role and sole” adopt this approach. Whereas the second views teams as the basic building block, where people self-organize into permanent teams and individuals can only be part of a single stable team at a time.
In addressing the “horizontal” organization Joost also identified two key approaches that differ in the way the “rules of the game” for coordination between building blocks are defined. The first adopts a more collaborative approach emphasizing a sense of community, belonging and a shared mission. The second adopts a more competitive approach by introducing an internal market system for coordination, oftentimes placing a financial value on transactions and services rendered by one building block to the other.
The combination of the “vertical” and “horizontal” organization approaches creates 4 organizational model archetypes:
- European Model — Permanent teams, collaborative dynamics. Companies like NER Group, FAVI, and Buurtzorg as the primary examples. Though it’s also easy to see how Spotify fits that model.
- Asian Model — Permanent teams, competitive dynamics. Haier being the leading example.
- American Model — Ad-hoc teams, competitive dynamics. Companies like W.L Gore, Morningstar and Valve.
- Digital Model — Ad-hoc teams, collaborative dynamics. Mostly common in open-source projects where the collaborative motivation is non-financial like: Wikipedia, Linux and (former) GitHub.
Just like any 2x2, the real world is more complex, with multiple “hybrid” companies that fall in various places on the spectrum between these extremes. Companies may also move along on the spectrum over time, Zappos being one interesting example moving from the “American Model” to the “Asian Model” and breaking the naming convention in the process :) Nonetheless, this seems like a super useful taxonomy for codifying different organizational patterns.