The Anatomy of a Self-Managing Organization: Why Networks Trump Hierarchies

These progressive organizations operate more like living social networks than static structures. They're fluid, adaptive, and interconnected.

The anatomy of self-managing organizations

Let's dissect the anatomy of these self-managing organisms, based on Dave Gray's powerful book 'The Connected Company', and see why they're leaving traditional hierarchies in the dust.

Image credit: Dave Gray

Closure: Teams as clusters

Look at the above social network map. You'll see tight clusters of interconnected nodes. In self-managing organizations, these clusters are small, autonomous teams.

Just like close-knit groups in your social circle, these teams build strong internal bonds. They develop their own micro-culture, shared language, and mutual trust. This "closure" within teams creates a safe space for innovation and rapid decision-making.

But unlike siloed departments in traditional companies, these teams don't operate in isolation. That's where things get interesting.

In practice: Haier's network of microenterprises is closure on steroids. Each tiny unit builds tight-knit trust, shared goals, and a distinct identity. It's like having 4,000+ startups in one large networked organization.

Brokerage: Connecting the gaps

In any thriving network, you'll find key individuals who act as bridges between different clusters. These are your connectors, your brokers of information and relationships.

Self-managing organizations cultivate these bridge-builders. They're the folks who participate in multiple teams, work on cross-functional projects, or simply have a knack for connecting the dots across the organization.

These brokers are crucial. They prevent groupthink within teams and facilitate the cross-pollination of ideas. They're the antibodies against the "not invented here" syndrome that plagues so many large companies.

In practice: At Krisos, our impact fund, we don't just talk about this stuff - we live it. When we transform the companies we buy, we install a system of elected representatives. These folks become the connectors, the bridges between teams. They're our secret weapon for making sure ideas and information flow freely across the whole organization. It's brokerage by design, and it works like a charm.

The influencers: Leading without authority

Networks have critical nodes – individuals with an outsized influence due to their position in the overall structure. In self-managing organizations, these nodes emerge organically.

These are your informal leaders. They don't have fancy titles or corner offices. Their influence comes from their "betweenness" – their ability to connect otherwise disparate parts of the organization.

They become go-to problem solvers, mentors, and vision-setters. They lead through expertise and social capital, not hierarchical authority.

In practice: W.L. Gore doesn't do bosses. Instead, they have "sponsors" who emerge based on their ability to connect and influence across the organization. It's leadership by network position, not title.

Fast lanes: Closeness and quick information sharing

In a well-designed network, information travels fast. The same is true in self-managing organizations.

Without layers of middle management to wade through, everyone is relatively "close" to everyone else. Ideas, feedback, and decisions flow rapidly through the system.

This closeness enables the organization to sense and respond to changes quickly. It's the difference between an oil tanker and a school of fish when it comes to changing direction.

In practice: Buurtzorg, the Dutch healthcare organization, uses a simple social platform to connect all 15,000+ nurses. Need advice? Post a question. Within minutes, you'll get answers from across the country. That's closeness in action.

The power of connections: High-degree nodes

In network theory, a node's "degree" refers to the number of connections it has. In self-managing organizations, employees aren't limited to interactions within their department or reporting line.

This freedom to form diverse connections creates high-degree nodes throughout the organization. These well-connected individuals become invaluable resources. They know who knows what, where to find information, and how to get things done.

They're the human routers of the organizational network, directing queries and resources where they're needed most.

In practice: Vertica's approach to resource allocation is a perfect example of high-degree connections in action. People move between customer teams frequently - about 20 people (14% of the workforce) switch teams each quarter. This constant movement creates employees with diverse connections across the organization. They become go-to resources, knowing who knows what and how different teams operate. It's like having human routers, directing queries and resources where they're needed most, all without a formal hierarchy. The interview we conducted with Vertica on how they work is exclusively available for members of Corporate Rebels.

Why networks win

This network-like structure gives self-managing organizations some serious advantages:

1. Adaptability: With information flowing freely and decisions happening close to the action, these organizations can pivot quickly in response to market changes.
2. Innovation: Diverse connections and cross-pollination of ideas create a fertile ground for breakthrough thinking.
3. Distributed leadership: Leadership emerges based on context and expertise, not fixed positions. This taps into the full potential of the workforce.
4. Resilience: Multiple pathways of communication and decision-making make the organization less vulnerable to single points of failure.
5. Engagement: Employees in networked structures report higher levels of autonomy, mastery, and purpose – the key drivers of intrinsic motivation.

The result is an organization that's more than the sum of its parts. It's a living, breathing, adapting organism that can thrive in the face of complexity and change.

Rethinking the anatomy of your organization

With the above in mind, take a good hard look at your own organization. Does it resemble a rigid hierarchy or a dynamic network?

Are you fostering closure within teams while also encouraging brokerage between them? Are you allowing influential nodes to emerge naturally or relying solely on positional authority?

The most successful companies of the future won't be the ones with the best organization charts. They'll be the ones that master the art of organizational networks.

It's time to embrace the new anatomy of work and organize accordingly.