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.
Having a flat organization does not imply a lack of leadership. To the contrary, leadership is essential, and it has to learn how to be the center of gravity, drawing others into it. A flat organization is more like coaching a team than running an army. Everyone knows that the coach makes the plays, but players must perform individually on the court. The talent and judgment of the players is what wins games, not the playmaking of the coach.
A flat organization is an attempt to channel employees' best ideas and collectively guide the team towards a common goal. It empowers the team, not the executives. It rewards risk taking, applauds what can be learned from mistakes, and requires exceptionally talented people.
Thriving in flatland
Are you ready for a flat organization? If so, you must be prepared to accommodate the following practices:
Leadership by coaching, not directive. One does not lead from above in the flat organization. The coach is a member of the team. It is a roll-up-the-sleeves kind of environment.
Decision by team consensus. The team must consist of the most talented people available. The best flat organization is one in which team members' talents overlap but avoid duplication. The goal is to pool the knowledge and experience of the entire team. Motto: every idea can be improved.
Communication occurs in all directions at once. Rank does not restrict who can speak to whom. Everybody's opinion counts. Communication is opportunistic. You can talk to the CEO in the bathroom. The best decisions are often made spontaneously, on the fly, as when two coworkers run into each other and share ideas. Motto: leadership is by walking and talking.
Decisions are made quickly. Decisions are merely a formality that follow consensus. There should be a disregard for paperwork and a respect for team members' ability to articulate recommendations.
Tolerance for error. Mistakes are undone just as quickly as they occur. Motto: error and the correction of error are vital parts of long-term success.
The power center shifts from budgetary control to information and ideas. Those with the best ideas will gravitate towards the center of leadership. That is where many traditional managers must step out of the way. Success and power are shared by the team. No individual has a monopoly on good ideas.