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: