Informal Structures

A lot of people just don’t like traditional structures. They say that rigid hierarchies stifle people’s creativity and slow down decision making. I think they are right. However there are also fish hooks in very informal structures. They can be overcome, but this takes a lot of work.
 
The founders of Hewlett-Packard were early adopters of Management by Objective, or MBO. Dave Packard said, “No operating policy has contributed more to Hewlett-Packard’s success than the process of MBO. This gave our people the flexibility to work toward goals in ways that they determined best for their own areas of responsibility.”
 
In 1993 Ricardo Semler wrote Maverick! – a book about how he took over the family business from his father and promptly gave employees a tremendous amount of latitude, which in turn delivered greatly improved financial results. He said, “People are responsible adults at home. Why do we suddenly transform them into adolescents with no freedom when they reach the workplace?”

In the mid-2000s, an American company Ternary Software developed a system call Holacracy, which Wikipedia describes as “A method of decentralized management and organizational governance, in which authority and decision-making are distributed throughout a holarchy of self-organizing teams rather than being vested in a management hierarchy.”
 
Currently, a US video game company called Valve lives in Flatland. There is no structure. There are no managers. This is how they describe work assignments for employees: “We’ve heard that other companies have people allocate a percentage of their time to self-directed projects. At Valve, that percentage is 100. Since Valve is flat, people don’t join projects because they’re told to. Instead, you’ll decide what to work on after asking yourself the right questions. Employees vote on projects with their feet.”
 
Here’s the thing – for these more informal systems to work, everybody must be crystal clear on exactly what the organisation is trying to achieve. The culture must very strongly reinforce the importance of aligning to those goals. This normally involves incredibly hard work in the set-up phase, and success is not guaranteed. Peter Drucker, perhaps the most revered management guru, said: “Management by objectives works if you know the objectives: 90% of the time you don’t.”
 
If you want to be informal, you have to be totally committed to making it work. My observation is that it requires more effort than a little bit of structure, but plenty of people have made the effort and enjoyed the fruits of their labour.