Do we need hierarchy?

What if colleagues worked as equals instead of in a hierarchy? What if every colleague could exercise their own power? What if the CEO could no longer veto decisions? What if there was no CEO?

Jordan Peterson said, perhaps controversially (as he often is...),

Dominance hierarchies are older than trees. The part of our brain that keeps track of our position in the dominance hierarchy is therefore exceptionally ancient and fundamental.

Hierarchy made be ancient. But in 21st century business do we still need it? We look here at a new breed of company that is ditching it....

Self-Organisation

In 2014, Frederic Laloux, a former Associate Partner with McKinsey and MBA graduate from INSEAD, published the now-cult book, Reinventing Organizations.  For three years he researched the ways in which twelve extraordinarily successful organisations operate.

Laloux found that what these successful organisations all have in common is that they share a set of rare and unusual management practices and principles.  In particular, they practise:

1. Self-organisation – Distributed authority and collective intelligence instead of rigid hierarchical management structures – natural hierarchies emerge and dissipate depending on the context.

2. Wholeness – Individuals are allowed to “drop the mask,” and express all of who they are at work, as and when they want to, not just those characteristics traditionally deemed to be professional.

3. Evolutionary purpose – The organisation has a purpose of its own. Instead of attempting to predict and control the direction of the organisation, members strive to listen and understand where the organisation collectively is naturally drawn to go.

These organisations operate largely without fixed management hierarchies, direct reports or other traditional and embedded management structures of command & control.

What replaces it is fluid leadership, distributed power (everyone can make a decision within the container of their role and remit), and practices that foster equality and genuine respect.

This approach is so new and dynamic that the conversation and practices continue to evolve. But they share wider features like self-managing teams, intuitive reasoning and decentralised decision-making (Workology).

Looking back at the historic changes of organisations and their structures and cultures across time shows us just how far we’ve evolved so far, and where at The Circle Line we hope to play a part in the journey.

The Psychological Evolution of Company Culture

In Reinventing Organizations, Laloux describes humanity as evolving in leaps, or steps.

Drawing from the philosopher Ken Wilber’s colour-based description of these steps, Laloux describes five stages of human consciousness, and suggests that organisations evolve according to these same stages.

The way organisations have evolved through history broadly reflects individual human development - from an infant with instinctive needs responding to survival-level threat, to a mature and psychologically secure autonomous adult. It goes a little like this (taken from Strategy + Business) :

• Red (impulsive) – Establishing and enforcing authority through power of the chief. Fear is the glue. Highly reactive, short term focus. Energised by chaos. E.g.: street gangs, mafia. Breakthroughs – Division of labor, top-down authority.

• Amber (conformist) – Highly formal roles within a hierarchical pyramid. Top down command and control (what and how). Stability valued above all through rigorous processes. Future is repetition of the past. E.g.: Police, Army, some manufacturers and law firms, UK schools. Breakthroughs – Replicable processes, stable scaleable organisation chart.

• Orange (achieving) – Organisations are seen as machines: the aim is predictability, and to be able to be scientifically understood and controlled to achieve a desired outcome. Growth and profit is the goal. Command + control over what; freedom over how. E.g.: City law firms, investment banks, global corporates, most manufacturers, many MBA programmes. Breakthroughs – Innovation, accountability, meritocracy.

• Green (pluralistic) – Focus on culture and empowerment to boost motivation. Stakeholders replace shareholders in giving purpose. E.g.: Southwest Airlines, Zappos, Ben & Jerry’s, many non-profits. Breakthroughs – Empowerment, values-driven culture, stakeholder value.

• Teal (evolutionary) – Self-organisation replaces fixed hierarchy in an organic and evolving system where everyone is called by an inner voice to contribute based on their unique and full potential. E.g.: Patagonia, Holacracy, FAVI. Breakthroughs – Self-management, wholeness, evolutionary purpose.

We see the slow shift to a Greener way of operating through the B Corp movement and growth of purpose-led businesses.

But we wait to see whether the adoption of formal Teal constitutions like that offered by HolacracyOne or other self-managing methodologies, takes off; and to see what levels of success Teal companies achieve.

Unless, of course, we’re brave enough to take the leap and experience it for ourselves…