Some Can Handle Self-Management. Some Can't. Here's Why.

This work builds on my PhD work about large firms that organize without a formal middle management layer. I dubbed these "middle managerless organizations" or MMLOs for short. I shared this two years ago in long reads here and here, and more recently in this piece.

Recap

Did the introduction of this article sound like ‘jargon soup’ to you?

If so, let me briefly recap some concepts that I have described before:

• By the concept of MMLOs I mean firms that organize without middle managers. In earlier pieces I showed these radically decentralize the workforce into 'loose hierarchies' of just two layers, and use alternative organization models based on small entrepreneurial units staffed by highly autonomous peers.
• By the concept of hyperconnectivity, put forward by MIT Professor Thomas Malone, I mean the ability of new information technologies, like the Internet, to connect people to one another on massive scales.
• By the concept of relational models, put forward by UCLA Professor Alan Fiske, I mean the four elementary models that people use to organize their everyday cognition, including social interactions in firms; authority ranking (via hierarchy), communal sharing (via commonality), market pricing (via ratios), and equality matching (via egalitarian relationships).

In the recent post I argued that multi-layered hierarchies are guided mainly by the relational model of authority ranking.

I also showed that MMLOs like Haier, Buurtzorg, Viisi, Centigo, ner Group, Encora, VkusVill are dominantly guided by three other relational models—communal sharing, market pricing, equality matching.

Individual behaviors in MMLOs

MMLOs aim to create environments that promote autonomous action by its self-directed members. In my most recent interviews, I explored what behaviors would make that some individuals fit well in these environments when others seem to struggle.

So, I asked ~50 people in MMLOs. The responses I received were quite similar across different firms. A few quotes illustrate this:

• “Your own intrinsic motivation has to be there. You have to be proactive. You have to want to learn to further develop yourself. You need to be inquisitive.”
• “Here it's: 'If you have an idea, go try it out, see if it works.' And if it doesn't work, at least you learned from it.”
• “The system can help you grow rapidly. But this mechanism is kind of a double-edged sword. If you are a passive person, and you do not want to start your own business, then you may be phased out by this mechanism quickly.”
• “You try to create that sense of openness, a solid foundation in a team where it's normal to question each other.”
• “We just want to support each other. We don't want to take things over. Do what you can yourself but sometimes you might need support, and then it's there for you.”

Reflecting on the responses, I could separate them into two buckets:

• On the one hand, MMLO members report that to fit in well in this way of working people needed to be able to lead peers, and to take the initiative. They would describe this as being 'entrepreneurial', 'proactive', 'going for it', 'influencing' or 'speaking up'.
• On the other hand, MMLO members also reported that for people to fit well with their way of working they needed to be willing to be led by a peer, and be able to join the initiatives of others. They would describe these behaviors in terms like being able to 'follow', to 'give in', to 'trust others', or to 'show solidarity'.

"What is new here?", you might ask. I guess nothing. In fact, I’d argue these kinds of behaviors can be seen in all kinds of firms, however they are guided—by authority ranking, communal sharing, market pricing, or equality ranking models.

The nature of relationships

What seems to be different between multi-layered hierarchies and MMLOs is how members show different behaviors in different kinds of circumstances.

And this seems to be influenced by the nature of the relationships between the members of the firm—either static or dynamic. Let me try to explain what I mean.

Static relationships in strict hierarchies

Let us first consider how relationships are guided between individuals in multi-layered hierarchies (or 'strict hierarchies'). The dominant relational model in strict hierarchies is authority ranking.

That is, authority ranking guides the simple rules (e.g. structures, processes and norms) of how members are expected to adapt their behavior to colleagues based on the relationship they have with them.

As we know, in strict hierarchies your colleagues are generally either your superiors, or your subordinates (and sometimes your peers). It depends on your places in the hierarchy.

For example, when members are in a formal 'superior position' and enter into a relationship with a subordinate, they are expected to lead, to ‘command’ this person, and to control this particular individual.

On the other hand, when members are in a formal 'subordinate position' and enter into a relationship with a superior they expect to be led, and to receive and execute orders made by this particular individual.

The simple rules in strict hierarchies allow minimal leeway for individuals to behave differently to what their formal positions prescribe for them.

This leads to the formation of static relationships between members, which in turn lead to stability, predictability and regularity in the way members behave across the firm.

At the risk of oversimplifying, individual members of strict hierarchies only change their behaviors with others when a structural change in hierarchy ranking occurs, as when someone is promoted.

That is, the simple rules of authority ranking guide the collective actions of strict hierarchies by dictating how members are supposed to interact, collectively leading to relatively static relationships between all the members.

Dynamic relationships in loose hierarchies

Relationships in MMLOs (or 'loose hierarchies') are not dominated by authority ranking, but guided by the relational models of communal sharing, market pricing, and equality matching (as I showed in the previous piece).

This means the simple rules ('rules of the game') guiding relationships in loose hierarchies are different, and based on alternative relational models.

Now, people no longer form relationships based on one's position in the hierarchy as the majority of the workforce is now made up of peers to each other. Instead, self-directed individuals are free to adapt in particular circumstances.

For example, MMLO members report that they enjoy the freedom to take on any initiative they see fit, and the autonomy to communicate (directly, or via digital technology) with any other member in the firm—and then to jointly take initiatives that cannot be taken alone.

Moreover, MMLO members report that they are expected to take on different roles: for example, a 'leading role' in an initiative involving others, and a 'following role' in an initiative led by others.

Indeed, they report that all members are expected to be able to change their behavior, from a 'leading role' to a 'following role' based on their judgment of what is best for themselves, their colleagues and the firm as a collective.

Moreover, members aim to influence each other’s behaviors, and correlate their roles, in ways that help them address opportunities and challenges collectively.

Via these simple rules, loose hierarchies aim to create maximum leeway for individual members to autonomously and dynamically change the way they interact, so as to best solve a task at hand. This creates much more flexibility in the firm.

Because where individuals in strict hierarchies only change their relationship with others after a structural change in the hierarchy, members of loose hierarchies are expected to be able to change their relationships with peers constantly and dynamically.

Thus, loose hierarchies operate with alternative relational models that allow for dynamic relationships between all members of the firm, and create a situation where collective performance of the firm depends on the individual members’ capability to change their relationships with others based on tasks that need arise at a certain point in time.

Who fits? Who adapts? Who leaves?

It is exactly this capability—being able to constantly and dynamically change your relationships with others—which separates those who fit well in self-managing environments from those who do not.

To be clear, this capability does not seem to be influenced by skill, knowledge, or education level. In fact, MMLO members report that the majority of people that join their firms eventually adapt well to working in the loose hierarchies.

The way people adapt to this new environment can be roughly broken down into three different pathways:

• First, there is a small group that rapidly adapts, and naturally fits in well with working in a loose hierarchy. MMLO members report that these are often those with limited work experience, like students recruited straight from university.
• Second, there is a large group that initially has problems adapting, but eventually fit in well. MMLO members report these are often people with work experience in strict hierarchies. It seems these experiences hinder them from fitting in rapidly. They often need time (up to months) to adapt to the new situation.
• Third, there is a small group of individuals that never manages to fully adapt to the new working environment. Unsurprisingly, they eventually leave the organization.

The negative effects of previous working experiences

How people adapt to a self-managing work environment seems to be influenced by previous experience in environments guided via authority ranking relationships.

This suggests some are less capable of changing their relationships with others after substantial experience in hierarchical firms. MMLO members report that both former 'superiors' (like former managers or entrepreneurs) and former 'subordinates' (like former front-line staff) can struggle to adapt.

This reluctance does not seem to connected to the kind of position somebody held in the hierarchy, but rather to the unconscious routines they developed to fit with previous working environments.

These previously developed routines (also called heuristics) make some people struggle to adapt to life in a loose hierarchy. This is especially true when these routines have served them well in strictly hierarchical firms, but are not desirable in loose hierarchies.

Members of MMLOs report that these routines can lead to two kinds of trap that hinder people, consciously or unconsciously, from fitting into their new environment: the anchoring trap & the status quo trap.

1. The anchoring trap

Anchoring is the mental phenomenon describing our tendency to give disproportionate weight to first impressions (like past events and experiences) in anchoring subsequent behavior, thoughts and judgments.

Some people attempt to adjust to a new working environment by showing the behavior that made them successful in the previous environment.

While this might be successful if one moves from one strict hierarchy to another, it tends to give more weight to past experience while not sufficiently weighting in other factors; in this case entering a firm which operates on another relational model.

People guided by historical anchors can stay stuck to identities they created in their previous organization, and face problems adapting to the different behavioral requirements in loose hierarchies.

Both former 'superiors' and former 'subordinates' can experience the anchoring trap.

Former 'superiors'

Some former managers or entrepreneurs continue behaving as if they are still in a formal position with authority over others.

In general, they seem able to take initiative themselves, but may face problems when expected to join the initiatives of others (especially if the initiative is launched by a younger peer).

For this group, the anchoring trap seems to have conditioned them to behaviors and routines expected of them in a previous 'superior' position.

Former 'subordinates'

Some former front-line staff continue to behave as if assuming others have authority over them, and wait for others to instruct them what to do.

This group faces problems taking initiatives themselves and leading others. Here the anchoring trap seems to have conditioned them to routines expected from them in previous 'subordinate' positions.

2. The status quo trap

Second, some step into the 'status quo trap.' This is related to the biases that we all carry, which means we don’t always make decisions rationally and objectively.

Biases influence how we behave in life, and also how we behave at work. Biases also encourage us to find the status quo comfortable. We’d rather avoid taking initiatives that could upset the status quo.

Because taking initiative means breaking the status quo. Also if we take initiative, it means we need to take responsibility for our actions and, as a consequence, open ourselves up to criticism. And criticism may hurt our egos.

Unsurprisingly, some look for reasons not to take initiatives. Not because they think it’s the best choice, but because it is the most comfortable thing to do.

This is especially true for people with previous experiences where the sin of taking initiative tended to be punished more severely than the sin of not taking initiative.

Former processes

This group of individuals often stays stuck in former processes and behaves according to the processes of a former strict hierarchy. Often, in their previous firms, the processes did bear responsibility, not the people.

In general, they seem to struggle with taking initiative themselves. Sticking to the status quo just feels safer. It carries less psychological risk.

The need for learning, unlearning & relearning

It seems both traps can prevent people from dynamically changing their behavior. It takes unlearning, relearning, and learning to be able to fit in well with the simple rules dictated by MMLOs.

What makes the situation problematic is that these traps are often invisible and hardwired in the thinking process of people. Moreover, many people do not easily recognize them—even if they walk right into them. Over and over again.

So, what is needed for new people entering self-managing environments? First is to be trained to be aware of the existence of these traps. Then to understand them. And finally, to compensate for them.

That is why it always seems to be a good idea to onboard and train new people extensively when they enter a self-managing environment.

Next steps

In a next post I will describe how the simple rules in MMLOs seem to replace the traditional multi-layered hierarchies (authority ranking) by another kind of hierarchy: information hierarchies...

Stay tuned.