December 13, 2000, 3:16 PM — If the Internet represents a call to arms for the new economy, then the flat
organization represents the structure of the new militia.
It is not unlike what the British faced when they crossed the ocean to fight the
colonists. Their staid hierarchical structure -- the foundation of the modern corporate
organizational chart -- could not keep pace with the scrambling, improvised tactics of
the revolutionaries. Now we find the same thing happening on the economic battlefield
as new, upstart companies are pressed into action against an established corps of
deeply rooted predecessors.
Many well meaning and experienced managers think a flat organization is about as
useful as a flat tire. Theirs is a self-fulfilling prophecy. "Any form of behavior that
you reward, you will reinforce," B.F. Skinner said. Of course he meant good behavior as
well as bad behavior. The power-centric habits of the traditional organizational
hierarchy are difficult to leave behind unless the entire operation is stripped clean
and built from scratch. That just doesn't happen without resistance in an established
company. You quickly find that the flattened organization is being called a matrix
organization. What is a matrix organization? It is a manager's term for a failure to
draw clear lines of authority, a management disaster, a bloody mess. In other words, it
is a failed attempt to breathe life into a hierarchical organization.
Traditional hierarchical organizations
The traditional military structure of most corporations has its advantages. Authority
is clearly drawn and leadership is by decree. Communication is restricted to those
above or below you but never across ranks. Power is measured by budgetary control.
There are rules for making every kind of decision and forms for creating a paper trail
of approval. It is an effective way to manage an old established industry. It is
perfect for a cash cow economy because it demands little of its workers. It rewards
savings and punishes risk taking.
The traditional organization comes up short when business conditions require swift
action. Those in control often do not have enough information to make informed
decisions. But they make decisions anyway, based on past experience. Past experience
doesn't always cut it in the new economy. Slow to approve decisions, the hierarchical
structure often ignores staff members' talent and experience and, having a general
intolerance for mistakes, sacrifices underlings to save face for those in authority.
One follows orders in the traditional organization. One is not part of a team.