Earlier this year, with sweeping transparency as the goal, Zappos announced that its traditional organizational structure is being replaced by a Holacracy - a "self-governing" management system where there are no job titles and no managers". Expected to be fully in place by year's end, the retailer's commitment to establishing a flatter, leaner and more flexible work environment is yet another example of how successful organizations are changing the way businesses are structured and organized.
The multi-layered pyramid structure remains the predominant organizational design of today. It is popular because it facilitates and supports the use of command-and-control management approaches. However, the pyramid is becoming increasingly inefficient because it characteristically builds layers of management within it. Decision-making and quick response is made difficult when we have an organizational structure that reinforces the bureaucracy through its "managers managing managers" design.
Of course, Zappos isn't the only successful business breaking the mold on organizational design. Companies big and small are overturning our previously-conceived notions about how best to be structured. For example, W. L. Gore & Associates, known for its Gore-Tex product line, employs more than 10,000 associates worldwide and describes its culture and organizational design, as follows:
"How we work at Gore sets us apart. Since Bill Gore founded the company in 1958, Gore has been a team-based, flat lattice organization that fosters personal initiative. There are no traditional organizational charts, no chains of command, nor predetermined channels of communication.
Instead, we communicate directly with each other and are accountable to fellow members of our multi-disciplined teams. We encourage hands-on innovation, involving those closest to a project in decision making. Teams organize around opportunities and leaders emerge. This unique kind of corporate structure has proven to be a significant contributor to associate satisfaction and retention."
Valve Corporation of Bellevue, Washington is an entertainment software and technology company founded in 1996. In addition to creating several award-winning games, its 300 staff members have been boss-free since 1996. It's website describes the work-setting at Valve as follows:
"Imagine working with super smart, super talented colleagues in a free-wheeling, innovative environment - no bosses, no middle management, no bureaucracy…Just highly motivated peers coming together to make cool stuff. It's amazing what creative people can come up with when there's nobody there telling them what to do."
What makes the firm even more interesting is the way in which it carries out its work. Staff members are outfitted with desks on wheels so that collaboration and free-form teaming can be done without having to put out a work request to the building manager to reconfigure its workspace every time a new project begins.
These examples make it clear that the pyramid organizational design needs to be rethought and gradually replaced with more fluid and responsive operating models – ones that can withstand the stresses of the modern day business world and still adequately respond to marketplace demands in ways that keep the enterprise competitive and vital. Flatter, modular and more cooperative-based organizational designs will need to be forged to satisfactorily replace the pyramid.
It is foolhardy to think that the shift will be accomplished overnight. After all, it has taken decades upon decades to build some of the huge, multi-national organizational empires that are in place today. It will take ample time and careful planning to supplant these structures and install new, more innovative organizational designs.
Indeed, these kinds of changes transpire one step at a time. There are strong signs that the shift is beginning, even among the largest of concerns. Executive teams, like the ones referenced above, are recognizing that organizational design changes are needed in order to remain competitive. It is time for all of us to accept the inevitable and focus our collective attentions on driving this aspect of organizational transformation.
