FlipChart Rick — Hierarchy Works

There has been a lot of excitement about Zappos new hierarchy free, self-organising, boss-less organisation. The holocracy, as it’s known, is all very zeitgeisty. My Twitter timeline is full of articles about smashing corporate hierarchies and getting rid of executives. Last year, Gary Hamel, described in Fortune magazine as ‘the world’s leading expert on business strategy’, told the CIPD conference that “management is a busted flush” and organisations should be getting rid of their managers. And, of course, everyone knows that Generation Blah don’t like hierarchy. Executives, reporting lines, procedures, organisation charts – all that stuff is just so square, daddio.

 At what looks like the other extreme of management philosophy, Amazon has gone for a neo Taylorist model with high control over workers at all levels in the organisation. It’s not very trendy and, on the whole, my Twitter timeline doesn’t like Amazon.

But, of course, Amazon owns Zappos. Under one corporate roof, what looks like a social experiment is taking place. Two rival philosophies of management are being tested out.

Pieria
Hierarchy Works
FlipChart Rick

The chief difference between hierarchical and consensual organization is selection of leadership. 

Hierarchical organization operates from a chain of command with leadership slot filled from above and preserved by title, rank, and privilege ("perks"). Retention may be ruthlessly based on performance, but the fact remains that the structure is crystalline and rigid.

Consensual organization is based on natural leadership. A leader is one whom others choose to follow owing to superior qualities not restricted to achieving objectives effectively and efficiently in Drucker's Management-by-Objectives style. Deming's Total Quality Management is closer, but it still subordinates people to results and process to structure, whereas they need to be balanced and harmonized for synergy. 

Abraham Maslow's Eupsychian Management and Theory Z (different from Ouchi's theory z and an extension of MacGregor's contrast of theory x and theory y) are much more in the consensual style of creating a holistic culture of success and fulfillment, quantity and quality. Not coincidentally, Maslow was a friend of anthropologists Ruth Benedict and Margaret Meade, and their influence lead him to study tribal culture and incorporate it into an analysis of a psychology of human nature as universal rather than basing a theory on a particular temporal, geographical and cultural subset of humanity. It is therefore no accident that his management ideas are closer to the consensual and incorporate a wider range of quality. See "Abraham Maslow: Father of Enlightened Management" by Edward Hoffman, Training Magazine, September 1988, pages 79-82.

The devil is in the details, however. A theoretical management style must be instantiated in a particular context. Scott Adams has made a lot of people laugh and himself a lot of money by lampooning management by fad, for example.

The challenge is integrating the many facets of organizational structure and management into institutional arrangements and culture through a combination of explicit rules and implicit customs and conventions, which involves integrating the scientific (quantity) and humanistic (quality) approaches. See, for instance, The Capitalist Philosophers: The Geniuses of Modern Business–Their Lives, Times, and Ideas by Andrea Gabor, Times Business (2000) for a summary of the ideas of Frederick Winslow Taylor, Mary Parker Follett, Chester Barnard, Fritz Roethlisberger and Elton Mayo, Robert McNamara, Abraham Maslow and Douglas McGregor, W. Edwards Deming, Herbert A. Simon, Alfred Du Pont Chandler and Alfred Sloan, and Peter F. Drucker.

Occupy Wall Street — On Consensus

All groups run up against Dunbar's number as "the cognitive limit to the number of people with whom one can maintain stable social relationships." Overcoming this limitation is the primary challenge to consensual decision-making as groups grow. This presents a challenge to emergent protest organization and coordination that are confronting hierarchical organization and coordination based on the military model. The solution usually lies thorough adopting asymmetry, decentralization, local control, and avoidance of direct confrontation. Occupy is now debating this.

The post also contains a brief history of consensual societies.

Occupy Wall Street
On Consensus

Vasilis Kostakis — Occupied Greek Factory Begins Production Under Workers Control

Tuesday, February 12, 2013 is the official first day of production under workers control in the factory of Viomichaniki Metalleutiki (Vio.Me) in Thessaloniki, Greece. This means production organized without bosses and hierarchy, and instead planned with directly democratic assemblies of the workers. The workers assemblies have declared an end to unequal division of resources, and will have equal and fair remuneration, decided collectively. The factory produces building materials, and they have declared that they plan to move towards a production of these goods that is not harmful for the environment, and in a way that is not toxic or damaging.

P2P Foundation
Occupied Greek Factory Begins Production Under Workers Control
Vasilis Kostakis