It's worth keeping in mind that this is a company of 40 people. Half the size of most primitive hunter-gatherer tribes which had no formal organization whatsoever. At sizes that small, everyone knows each other, everyone knows what everyone else is doing, and people can make decisions through consensus after a round of informal discussions.
The problems only start once the "tribe" grows beyond 150. That's when the number of people involved is too great for the human brain to process the entire social network. Hence why formal organisations and hierarchy are now needed.
It's great that startups and small companies are innovating with different organizational styles. Many of the structures found in big corporations are overkill for small organisations where everyone knows each other. Just don't expect any success stories from these startup experiments to scale up to bigger companies though.
> The problems only start once the "tribe" grows beyond 150.
The problems also start when there's a potentially extremely large, but uncertain to happen, reward looming over the horizon. In crude terms, when there's a huge money bag that everyone could potentially snap up. Then all sorts of perverse incentives start to manifest.
I'm thinking of stereotypical Wall St. companies, and also of many Silicon Valley "startups" in recent years.
The no-leader scenario is stable when everyone is looking forward to having a regular job as a middle class citizen. It's also stable when EVERYONE is motivated by ideals other than money - great scientific breakthrough, big humanitarian cause, etc. That's when people cooperate with each other easily, there's the rule of the law, civilization as we understand it.
But when huge piles of money could potentially materialize on the table, things revert to a much more primal state.
Agreed. I've noticed that organizations that often times claim to be 'leaderless', just have other implicit ways of exerting power and influence. Truly leaderless is difficult, and requires humility from all it's members.
There's possibly a good analog in data. A while ago it seemed very popular to talk about "schemaless" data systems, and I heard the perfect commentary: "If you think your data is schemaless, what that really means is you don't know what the schema is, and that's bad."
What people probably meant by schemaless: It's very easy for things to have a slightly different schema than they used to if that's needed. Things that don't all conform to the same schema can still be handled well. And it should be understood that sometimes you do need a better defined schema.
So my point? Don't focus on being 'leaderless' or 'structureless'. Focus on being flexible enough to allow new substructures in the company as needed. Make sure there's a system in place that allows people to coordinate with groups that don't have the same structure as them. And recognize when you do need a bit of structure to keep scaling.
This seems like an opportune moment to remind people about the Tyranny of Structurelessness article. If you haven't come across it before, it's definitely worth a read.
I was just about to post this. I find Freeman's description of successful "unstructured" groups to be an uncanny description of the idealized early-stage startup, despite her very different context.
Yep. It only works as long as everyone knows each other. I've been arguing this point for years with my anarchist friends (both left and right varieties), who seem unwilling to grapple with basic concepts like scale and externalities.
I don't think straight hierarchies are the only possible organizational structure but it does seem like more people want to be told what to do than to think for themselves. .
> but it does seem like more people want to be told what to do than to think for themselves
I just want to have some clarity around what my role is and where my responsibilities begin and end. Necessarily sometimes I'm required to reach beyond my regular duties.
In that context, then, being told what to do vs thinking for myself is a false dichotomy. The two are a nested-hierarchy, whereby I think for myself within the role required.
>I just want to have some clarity around what my role is and where my responsibilities begin and end.
This. There are two basic ways of looking at things when the organization is fluid. One, "everything is my job", which is a recipe for burnout. Or two, "I decide the boundaries of my job." That doesn't work very well either, because some people will draw the boundaries so small they never have to do anything, and others will draw them so large they don't do anything well.
My experience working with anarchist friends is that something as simple as leadership creates a certain hierarchy. Obviously if there's nothing formal everyone is pretty cool, but in the organisation of a society and a longer time frame I can see how it can lead to our historical material conditions.
Voluntary association could produce hierarchies, and it's interesting to think about what sort of societies would result. But classically government is defined as a monopoly on violence, and that formulation essentially rules out the possibility of non-coercive government, at least so long as men are capable of violence.
If you're interested, I've been toying with the idea of an organizational structure that's loosely but explicitly modeled on the human body. My basic idea is that since bodies are complex interdependent structures that mostly Just Work, social structures that explicitly recapitulate human anatomy should be inherently more robust.
Would this open the social structure to all sorts of disease states in a similar way to the human body?
Then you would need teams within the social structure who's role it is to seek out pathogenic agents / sub-structures and terminate them. An immune system, if you will. Analogy could be a police force to deal with auto-immune issues, and a military to deal with foreign invaders.
Well, in a way, our social / structural systems already do mimic bacterial colonies: reproduce by consuming all available resources until the host system dies or the infection is cleared.
The actual number is a bit higher than 150 (290 according to Bernard-Killworth [1]), but the real cost is all the social grooming required to hold a large leaderless group together becomes an increasing drag on the organisation's efficiency.
The ideal leaderless company size is going to be a function of the efficiency gained by having increased specialisation (each person can focus on fewer things) against the cost of social grooming. Having a hierarchical structure allows the cost of social grooming to be constrained vertically rather than across the whole company.
"That's when the number of people involved is too great for the human brain to process the entire social network. Hence why formal organisations and hierarchy are now needed."
Or innovate on a divisional or matrix-style organization where it's a series of independent units or teams of teams. Not too different from how we make complex programs integrate well. Decomposing them properly with complexity in the right spots lets the integration or supervisory part be small and simple. Could be something to apply to real-world organizations there.
Gore & Associates (makes of GoreTex) operate like this. Whole groups of worker-owned co-ops in Northern Italy (Emilia-Romagna) also operate more or less this way, in a loosely-coupled network.
The trend in modern employment toward more individual empowerment, less hierarchy, and greater profit share points toward a co-op future for a large band of white collar jobs. Or it would, if they weren't so heavily discriminated against in the US tax code.
There are ways around that. Cooperatives can raise cash through subordinated capital campaigns (essentially an investor-backed loan at a capped rate of return) and other methods. Even capital-intensive industries like manufacturing have big, successful worker cooperatives operating in them.
Honestly, too many people make too big a deal out of the inability for cooperatives to trade ownership for cash. And yet bootstrapping a start-up is somehow still possible, acceptable, and laudable. And I won't even get into all the perverse incentives introduced by stock ownership and the secondary market.
The tax issue, though, is the deal killer. Being double taxed by the federal government on your income is a non-starter. Until worker cooperatives get treated the same as producer and consumer cooperatives, I can't see them taking off in the US.
> too many people make too big a deal out of the inability for cooperatives to trade ownership for cash
It doesn't need to be impossible to raise cash, it just needs to add enough incremental difficulty and expense to outweigh the other benefits of being a cooperative.
I would not be surprised, though, if there is a sudden increase in organizational costs above a certain threshold due to the limitations of human social capacities.
It might be the natural size optimal for efficiency but not for survival (in the natural selection sense). The capacity of an organization grows with headcount even with diminishing efficiency per capita.
> The problems only start once the "tribe" grows beyond 150. That's when the number of people involved is too great for the human brain to process the entire social network. Hence why formal organisations and hierarchy are now needed.
That's an interesting claim! Can we find any places where it doesn't hold up? Yep! In fact, there's a great book called Reinventing Organizations[1] where the author studied successful workplaces that have >100 people each. It's still a research project how to make these organizations work well, but the author and the community around that book are trying to gather working techniques because the benefits can be phenomenal (and that's empirical!)
Lindy Beige on YouTube discusses the size of military units and how it relates to that. Platoons have 30 men (with smaller squads), a Company 100 men or so but not over 150 for the same reasons.
People tend to build a small business and aren't interested in growing number but profit.
Basecamp has been about 17 years standing, and currently has just 51 people[0]. Everyone seems happy.
I am an export in economy but most of problems companies born to solve doesn't require big size corps. At least in my country, SMEs are driving the GDP.
Still. There are 40 people companies where some people don't have the slightest idea what others are doing (anecdata: I am working for such a company at the moment).
What if you never allow it to grow over 40?
What if those bossless creatures form a swarm, with diplomats, connecting to other "tribes"?
A swarm of headless amoebas, hunting down and eating a giant.. its a mad world - we might see it.
I get the impression that service companies like Crisp can get away with this kind of org structure in a way that product companies cannot. If you are simply executing on consulting contracts, you can afford to act more like a collection of freelancers who share a space. When doctors do this, it's called a "group practice".
This BBC article is terrible and manipulates the reader via the omission of critical facts. If you haven't read it yet, I suggest you first read the company's recruitment webpage[1] and specifically their following sentence:
- "It also means that there is no guaranteed salary. The only thing we guarantee is that you will have to pay a flat fee every month plus one-tenth of what you bill."
After making a mental note of that, go read the BBC piece. You'll notice how empty that article actually is. For example, the following sentence becomes meaningless:
- "Ultimately, the firm hopes that its way of working could inspire other companies to emulate the "Crisp DNA"."
What "DNA" of Crisp exactly? The DNA of having employees pay the company to work instead of the other way around?!? Of course, the BBC article wants you to think "DNA" as in "no CEO" instead of "workers paying a rent".
There's nothing wrong with that model (as another commenter mentioned doctors paying into a "group practice" for shared expenses such as an office and billing staff.)
However, leaving that fee structure out is incompetent journalism. If workers are the ones paying the company, it's easier for them to agree not to have a CEO manage them.
> The DNA of having employees pay the company to work instead of the other way around?!? Of course, the BBC article wants you to think "DNA" as in "no CEO" instead of "workers paying a rent".
This is missing the point (full disclosure: I know several people working at Crisp and co-organise workshops with them in Sweden).
I remember hearing Henrik Kniberg talk about this at Oredev a while ago, and we ended up restructuring our consultancy firm quite close to their model in 2013. The idea is that you don't work for the company, the company works for you. It's applicable to consultancies, where everyone effectively goes and earns money on their own, but some shared overhead (such as accountants, paperwork, getting master-services agreements with banks and insurance certificates so you can do business) can be effectively shared by everyone under the same umbrella.
our model is not a 10% haircut, but that all shared costs are divided according to the proportion of revenue quarterly. the company also doesn't have a boss or anyone in charge (legally, in the UK, we have designated partners who are allowed to sign documents, but everyone has that right, so everyone is a boss and nobody is the Boss).
Our company is also not allowed by the statute to have any assets or own any IP, that all belongs to individuals. This is to avoid any conflict of interest and people starting to 'work for the company' in the future.
This model obviously wouldn't apply to companies trying to accumulate wealth/IP/assets and looking to create an exit by selling the company. But it works amazingly well if you want a lifestyle consulting business where everyone does their stuff.
You are missing the point of my comment. I wasn't disparaging Crisp nor passing negative judgement about their business model. (I compared it favorably to doctors contributing to a shared practice.)
My critique is of the terrible writing in the BBC article which warps the situation to spin it into a story about "no CEO". In other words, Katie Hope wrote the BBC story such that the reader is manipulated into thinking this:
- cause: "no CEO" --> effect: "better business"
When the real cause&effect is this:
- cause: "workers pay the company a rental fee" --> effect: "workers conclude they don't need a CEO boss"
The more salient point is that the "workers pay fees to the shared company" and a downstream side effect is the "no CEO". Why do we not read about freelance hairstylists and doctors in group practices having "no CEO"?!? Because it's a non-story that would waste readers' time. The cause & effect is obvious there.
>The idea is that you don't work for the company, the company works for you. It's applicable to consultancies, where everyone effectively goes and earns money on their own,
Yes, I agree. Katie's journalism omitted this critical detail. Therefore, her subsequent paragraphs with contrasting quotes from Drew Houston (Dropbox) and Meg Whitman (Hewlett-Packard) are idiotic comparisons. Dropbox/HP are not consultancies where workers pay a royalty fee to work there.
the LLP is limited liability, and unless in a case of criminal negligence that cannot be broken, so it's difficult to go after individuals. This model depends on working with people you trust not to be criminals, and as I mentioned above works only for relatively small consultancies where everyone can be trusted.
in terms of 'make them untractive to do business with', since the company was restructured in this way we worked with some of the worlds largest investment banks, big telecoms companies, and a ton of other parties that require a lot of paperwork. nobody seemed to mind that we're structured this way or find us unattractive to work with.
one nice aspect of being a small company that doesn't chase assets is that you can choose who you work with, and don't have to accept jobs just to keep employees working. generally if someone is too much hassle that shows early on and we just don't work with them.
"There's nothing wrong with that model (as another commenter mentioned doctors paying into a "group practice" for shared expenses such as an office and billing staff.)"
Another common one I've seen is hair stylists. They often rent their booth from the shop in exchange for equipment, pay processing, foot traffic especially, and so on. They get some cut of the base pricing plus tip money. Idea is they'll come out profitable on a regular basis despite paying to be there. Just another business expense really.
" If workers are the ones paying the company, it's easier for them to agree not to have a CEO manage them."
Testing the comparison again, this is also true for hair stylists. They're the ones who have to pay to be there and maximize their revenue. They'd rather be left alone to use whatever methods they can to keep customers happy, regular, and with high tips. Likewise for a consultancy where people renting space in the company would want to be flexible to maximize number of clients and revenue by targeting methods to each one's or each group's preferences. Both for hair stylists and IT consultants this take experimentation that might not happen in organizations with top-down management, esp micro-management.
>They get some cut of the base pricing plus tip money. Idea is they'll come out profitable on a regular basis despite paying to be there.
I'm fairly sure this is also how strippers often work. Pay the house a fee for the night somewhere in the $50-$200 range, and then hopefully make it back in tips and private dances before the end of the evening.
In all three cases - strippers, hairdressers, consultants - this results in a clear and unambiguous motivation to do a good job and provide value to your customers or you lose your shirt.
If a hairdresser has "hideous medieval working conditions" than a underwater welder, oil rig worker, or a line cook must be in the seventh circle of hell.
On the flip side, in a consultancy you as the developer get paid, what 1/2 to 1/3of your hourly rate? That 1/2 or 2/3 goes to cover expenses, and then the rest is profit for the owner.
In a typical company, earning a fixed monthly salary, you will end up paying the company the majority of the money you make for them, and the more value you produce the company, the less you earn by comparison (since in most companies your contribution is not immediately reflected in the salary and can be hard to measure).
Flat fee + 10% of earnings seems very, very generous to me by comparison.
But I do agree that was a very important detail left out of the article!
They've written it down -- it's the board for big things and "shared among other employees" for others. It actually sounds pretty practical to me. As people become more responsible and self-regulating, there's less need for a single person to be in charge in a hierarchical sense.
> The staff decided that many of the chief executive's responsibilities overlapped with those of the board, while other roles could be shared among other employees.
They've written it down in more detail than "shared responsibilities" too. It's a pool of self-employed freelancers handling projects in their own way paying fees/commission to a holding company with dedicated admin/sales responsibilities and major decisions made by a board or by vote. Paid projects people don't want to handle themselves go to the first person to indicate interest unless the interested parties agree otherwise. It sounds more like a non-profit, elected-board, closed-shop Uber than "shared responsibility".
Needless to say, this model is not going to work quite so well with every type of creative process and personnel.
Doesn't happen. People naturally seek out authorities and instinctively elevate and listen to them. Even if no one bears the formal title, there will be a few people who end up directing the group.
Far from eliminating political barriers, "unstructured" groups make them supreme. Without granting explicit designations for authorities, the only thing holding the group together is popularity. This means the best propagandists and most personally charming leaders (read: best flatterers; the people most willing to tell you whatever you want to hear) will be in control, regardless of their incentives, motives, or true qualifications.
ActUp used to give managerial lessons for leftist organizations. Of the materials I saw, one of the things they used to teach was that a truly flat organization results in informal hierarchies developing, by the people most capable and/or passionate (because they're motivated by the issue primarily). But then these people are most likely to burn out, because without formal recognition of the power they need to achieve that role or the formal hierarchy in place around them, they end up taking too much on themselves to cover the holes.
But they were talking to leftist organizations. Often these people had communist / socialist / anarchist ideologies, so you can't just tell them: "Implement a hierarchy". And even when they weren't leftist, they were often all volunteer organizations, so you had the same problem anyway.
So their solution, was that when you set up a new organization, you start with it flat. You identify who takes on what roles, and define those roles formally. As you define those roles formally, you define what people have to do to get into that position, clearly and openly.
And that's it. You're still flat, because the positions appear to be emergent. You have a hierarchy, but no one feels like they're stuck under the rule of a shit boss, because everyone in those positions are meritocratically elected, there's now a culture of free movement between positions and definition of positions, and what you have to do to move from one position to another is transparent, instead of opaque as a way for people above to keep their position of authority.
Probably! But I don't know of em. I helped build a movement based organization a few years ago, someone saw us falling into the same trap, was around during the time of ActUp, and gave me a bunch of papers describing what I just restated above to help. From my own experience, if you're building an organization around something people really care about, there is always an excess of people, so the constant shifting doesn't really matter too much.
I'm not sure it's that simple. Even if some people have more influence than others, it is still different from having one person, who can efficiently do whatever they please.
They went from $1 million or so to over $100 million during a time of hyperinflation and otherwise terrible economy. There's the objective evidence the methods produce results. Now just need to start tweaking the model in various ways applied to other companies to see which variables had what effects. I've seen companies get very far just minimizing management/executives, treating employees respectfully, letting them make most improvements, and giving above-average compensation.
I know this article is misleading, it's basically a consulting organization where they decided instead of having a partnership structure (where the old guys get to take a piece of the young guys billings) they are a meritocracy where everyone gets to eat what they kill. So not having admin/CEO overhead is fine, esp. when they can all agree on the value of marketing/PR and other shared cost programs.
But it's an interesting concept. I've managed up to 45 people at a time and believe giving people more authority and responsibility over their area not only better motivates them, but can lead to fantastic results. I would be really interested in how Zappos did it, since they seem to be a larger more traditionally organized business and had some turbulence implementing it.
I wonder what happens when the first trouble comes with an accusation of harassment, discrimination or some such thing. How will you defend the company, who will speak for it, and who takes the personal hit that eventually comes?
That's a little bit too easy answer. Who is the person responsible? If we have a company without a chain of command, will the board them have a meeting and nominate a fall guy?
Everything doesn't always work out with perfect harmony.
It's not a workers cooperative (shared ownership). The consultants seem more analogous to hair stylists renting booth space at a hair salon. Based on Google's English translation of the Swedish recruitment page[1], it says:
- "It also means that there is no guaranteed salary. The only thing we guarantee is that you will have to pay a flat fee every month plus one-tenth of what you bill."
That fee structure makes the BBC article superficial and misleading. Yes, if every worker is not paid a regular paycheck, it doesn't seem like a breakthrough innovation in business organization theory to not have a CEO boss them around.
They make the headline about "no CEO" but omit any relevant details such as how workers are compensated.
To me, the most interesting example of a similar organisation (that I see rarely mentioned) is AES (an energy supplier) under Dennis Bakke, as described in Joy at Work [1]. As he puts it, every decision made at the top was a lost chance to delegate responsibility. He advocates the advice process: any person can make any decision, provided that they first get advice from anybody with expertise, and anybody who will be affected. Note that consensus is not required: one of the desired results is that, freed from the need to persuade others, you can focus solely on listening and understanding other points of view. You're hopefully better informed to make a decision, and others feel listened to (rather than feeling like their points aren't being heard as you're trying to persuade them).
Not only did AES have tens of thousands of employees, many of them joined by way of acquisitions of existing plants, rather than being hired by AES with their ethos in mind. That's not to say that everybody was a good fit (some people chose to leave given the choice), but that many stayed and eventually appreciated the change in management structure challenges the idea that self-management is only appropriate for a small proportion of people.
I don't believe this works well, especially in larger organisations. Groups of people naturally form a hierarchy, whether it's officially recognised or not. It's human nature.
I expect that this method works better in a consultancy (which is what the company in this article is) than in a startup that builds product. In a consultancy, the customer can be the de facto CEO. They tell you what they need and when they need it, and while actually figuring out what to build and how isn't necessarily easy, at least there's some direction. That and each project is, out of necessity, scoped from day one.
In a startup where you're making something, especially BEFORE you make something and during the dark times when you don't know if the thing you're making is something anyone wants, having a single source of vision and direction is critical.
This article, as many others have pointed out, is pretty misleading. If you want to read about a company that functions mostly as a traditional business with no CEO, look into the Mondragon Corporation.
they aren't alone. many boutique shops operate like this. decisions at the top are made by consensus. everyone is their own boss. salary decisions sre made by local managers and HR. if there is a ceo, then s/he is mostly a figurehead.
it makes sense for consultancies to operate this way because they don't really sell "a product" as we come to think of it. They sell services in specific areas, and growth of that business is largely contingent on the type of work they take up, how much of it they're willing to do and keeping the structure of the firm in an optimal state to satisfy those demands.
It isn't your right to post whatever you want to this site, and I don't want to ban you. I'd much prefer to convince you to use HN as intended.
There's a constant downward pressure on the quality of this site—that's how things go on the internet—so we all have to make the effort of posting civilly and substantively, or else HN will get worse and we'll lose the things that make it worth visiting.
The problems only start once the "tribe" grows beyond 150. That's when the number of people involved is too great for the human brain to process the entire social network. Hence why formal organisations and hierarchy are now needed.
It's great that startups and small companies are innovating with different organizational styles. Many of the structures found in big corporations are overkill for small organisations where everyone knows each other. Just don't expect any success stories from these startup experiments to scale up to bigger companies though.