It’s hard to remember now, but there was a time when silicon valley companies did not serve free meals to employees. Back in the first .com boom, even lunch was not a typical perk and dinner was rare.
Google changed that. Google made amazing free, high quality meals on-site a centerpoint of their recruiting strategy. This simple idea was monumentally successful. To keep up, everyone who competes with Google for talent, which includes all silicon valley startups and most large tech companies here, have had to match Google’s perk.
I believe this story may play out again with a different perk. And that perk is unstructured / democratized management.
We don’t like bosses
There are now a handful of companies that have publicly come out with a management model that rejects the traditional top-down hierarchy and gives an unprecedented amount of decision making power to individual contributors.
Valve probably made the first splash in this area, releasing a document describing their manager-free culture. When you show up to Valve on you first day, no one tells you what to do. You look around, see what needs doing, and start working on something that seems important. People self-organize into small, temporary teams.
Judging from its reception on Hacker News with hundreds of comments, this struck a nerve. I don’t know if Valve released this document as a recruiting strategy, but if they did it was a smart one.
The things is: engineers don’t like bosses. Millennials in general are resistant to authority. So even in conventionally structured organizations, there has been a trend towards less hierarchy. Google pioneered 20% time, which in less flattering terms means that you only have a boss 80% of the time. At one point, it was most common for engineers to report to a professional manager, probably an MBA, who was not himself an engineer. That would never fly these days, where managers are more like coaches than bosses.
More recently, the excitement is around Holacracy, which attempts to build a very structured framework for running this kind of organization. Zappos made headlines when Tony forcefully switched the 4,000 person company over to this new model. It was a tough transition for a large company and many people left, but you have to give Tony credit for having the courage to stick with it.
How do you run a company with no one in charge
Management science is still at the early stages of figuring out how to run a company with something other than a conventional hierarchy. There are still only a handful of companies that have pulled this off. About 50 companies are now using Holacracy, but the only other big name in the valley is Medium. The prominent software companies using some non-Holacracy flat management system are Valve, Github, and Treehouse.
Many smart people are still skeptical that unstructured management is a good idea. There is a legitimate argument that the companies that made it work have succeeded despite their unique culture not because of it. There are examples of companies that tried to do this and changed their minds after hitting major obstacles.
From a purely practical standpoint, there is insufficient information on how to actually implement this. There are a million management books and advisors who can tell you how to run a conventional company. The only alternative that is well documented right now is Holacracy. What Valve or github are doing is very different from holacracy, but they haven’t released enough information for someone to copy it.
The future of management?
So many question marks still remain. But if the market can work out a template for running companies this way and there are a few more big success stories, sentiment could tip quickly like it did with free food. Companies with less structure will have a major recruiting advantage. Engineers will vote with their feet, putting pressure on the market to match the early movers.
One difference is that it is much harder for existing companies to change their management structure than to change their cafeteria prices. Large tech companies will be very slow to adopt a management change – even within engineering – so this could become a sustainable competitive hiring advantage for startups.
I would caution anyone who wants to “try this at home” with their startup that the going is likely to be tough. But if you are ambitious enough and ready to be an explorer of new management models, the timing is right to give yourself a recruiting advantage, and to build a team and culture that will be unusually dedicated.
Further reading for those interested
Articles and other Online resources
Zappos, Medium and Holacracy
Valve and other non-Holacracy approaches
General discussion and resources
Glassdoor reviews are a good place to go to read first-hand accounts of how these experiments are playing out for employees. Generally, reviews are mixed:
Sorry, but it won’t disrupt much of anything other than a few optimistic experimentalists who are in denial about the changes necessary as your company grows in size. There are zero successful examples of it at scale in politics, religion, civics, or any other form of social organization throughout human history. That’s not for a lack of anybody trying over the past few millennia.
You’re burying your head in the sand if you feel that business environments are a special unicorn where none of that social history applies, as if social organizations were a construct just invented in the 1990s.
You should definitely check out Ricardo Semler and SEMCO, brasilian company which has been doing workplace democracy since the 90s. He wrote a book about it, gave TED talks, in Japan there is/was a little movement of the “semlerists” which aimed to implement what he did, etc. It’s incredibly radical and democratic(they can vote on their own salaries and see the salaries of everyone in the company, for example), and it worked. “Holacracy” sounds like it’s just a new buzzword but still, I think there is something to workplace democracy, I also think “it’s the future”. Make sure to watch his TED talk.
And to reply “Swag”, there is NOT zero successful examples. Also through history democracy happened and more democratic structures(Islam for example appears to have something about not obeying other men, but just the ‘law of god’, which makes everyone equals, I guess? Regardless of the current situation in Islam it one could argue that being egalitarean played a part in it’s success. Also, law itself is about equality, no?) eventually won over more repressive/authoritarian ones, I see no reason how it couldn’t happen.