How Flat Organizations Align Without Bosses

Joost
Written by
- 7 min read

In most firms with managerial hierarchies, the higher you are up in the pyramid the more information you can access. And because information is power, this can be unhealthy.

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Information is power

Information is a potential source of power if it is under exclusive control and also needed by others to reach their goals.

On the other hand, if you lose control of information, and the information becomes known to others, you can quickly loose your source of power.

In quite some traditional organizations, managers are afraid of this. It can manifest in mushroom management, described in the Urban Dictionary as:

“A management philosophy prescribing to the theory that to best motivate your employees, you must at all times:

  1. Keep them in the dark.
  2. Feed them full of shit.

This form of management applies to every situation where management is involved. Be it passing on critical information to employees, or informing people of policy change and company announcements. The entire purpose is to be as vague and unresponsive as possible.

The ultimate culmination and success of this management style can be found when people draw comparisons to management and a black hole. Where resources and information go in and nothing comes out.”

They give a telling example of this in action:

  • "Employee 1: So you talked to management on our companies re-bid for the contract?
  • Employee 2: Yea, but didn’t get much. Management said there’s nothing to report.
  • Employee 3: How can that be? Our fucking contract is up next month, how can they not now anything?
  • Employee 1: Don’t ask me dude. Man I feel like I’m constantly in the dark and fed full of shit. Kind of like a mushroom.”

Information hierarchies

But most companies on our Bucket list are flat. They don’t rely much on hierarchies to distribute (or limit distribution of) information. They rely more on information hierarchies to self-organize.

Recently, John Dobbin wrote a piece describing how alignment and collaboration between different teams can be achieved in a non-dictatorial way (without bosses) using information hierarchies.

He wrote: "It may be that adaptive systems self-organize by using information hierarchies, a theory put forward by Jessica Flack and collaborators in the Collective Computation Group at the Santa Fe Institute.

In very basic terms, lower-level components compress and percolate information up to higher-level information structures, which in turn are used for fine-tuning the behaviour of components."

I will build on Dobbin’s piece by describing a company from our Bucket List that works with non-dictatorial alignment teams: Panelfisa and its commitment and steering teams.

Panelfisa

Panelfisa, in the Basque Country, is a manufacturer of fastening elements (like screws and bolts) for the domestic appliance and automotive industries. Structured as a cooperative, it employs about 80 staff, and exports to 20+ countries worldwide.

Panelfisa is a flat organization, consisting of a network of self-managing teams. These teams are highly autonomous. Importantly, there is no formal hierarchy between them.

The teams vary in size, and are usually small with (ideally) 3 to 15 employees, depending on circumstances. Average team size is six people, and all team members are an important part of the whole.

Teams regulate their own activity, establish their own objectives, make their own decisions, distribute tasks within the team, and organise their work schedules and vacations.

Teams also have a high level of autonomy. Teams should self-organise, choose the people who lead them, establish team roles, hire new people when needed, and coordinate with other teams and partners.

Team representatives

Each team chooses its own representative - often the informal leader. While all teams have a representative, there is no internal formal hierarchy.

Opinions are valued based on experience, expertise, knowledge, and commitment - never because someone has more power or enjoys representative status.

This person represents the team in cross-team and wider organisational meetings. Teams can rotate the role, or choose one person to represents them for the long term.

Panelfisa’s teams

All teams at Panelfisa have dedicated functions. There are three kinds of teams: Customer, Client-line and Support teams.

  • Customer teams are in direct contact with Panelfisa customers, and responsible for a geographical area.
  • Client-line teams are responsible for producing Panelfisa products.
  • Support teams support the Customer and Client-line teams in back-office areas like IT, admin, people, legal and finance.

Plus, there are two kinds of alignment teams:

  • The Commitment Team consists of representatives of all Customer and Client-line teams which meets weekly during Commitment Meetings.
  • The Steering Team consists of the General Coordinator and representatives of all other teams which meet monthly in Steering Meetings.

Non-dictatorial alignment teams

Both the Commitment Team and Steering Team are examples of non-dictatorial alignment teams of team-chosen representatives to collect, curate, and distribute information to others in the firm.

To be clear, alignment teams are not able to exert top-down command or control. They only gather and aggregate information from different parts of the firm. Members of these teams have no formal authority over other members.

Both teams work in a similar way:

  • First, team representatives gather relevant local team information from team members.
  • Then, during regular meetings (Commitment & Steering Meetings), team representatives make sense of that information at the collective level with the other team representatives.
  • Finally, the most relevant information shared at meetings is distributed back to teams by its representative so they can decide at a team level to potentially adjust things like planning, schedules, and team-level strategy.

As well as the use of IT, Panelfisa uses these dedicated alignment teams to optimize collaboration and coordination between the autonomous teams in the firm. It is these alignment teams that create information hierarchies.

Let's look closer at the Commitment Team and its meetings to show how the information hierarchies work.

Commitment Meetings

Every Monday (or more frequently, depending on demand) the Commitment Team meets for its Commitment Meeting.

Representatives of Customer Teams and Client-line Teams meet to discuss deliveries (commitments) that need to be made that week and the week after. The goal of the Commitment Meeting is for each team to commit to the collective planning of the company.

The image below shows Panelfisa's Commitment Team, consisting of team representatives from 3 Customer Teams and 3 Client-line Teams.

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During the Commitment Meeting, team representatives provide and discuss all available and relevant data, and share operational information to support decisions regarding commitments to customers.

The representatives of each team are empowered by their own teams to collaborate, share insights and make decisions on behalf of the team.

The meetings last between 30 and 120 minutes, basically discussing three main points:

  1. Data regarding the fulfillment of commitments compared to the previous period
  2. Data and planning of commitments for the next period
  3. Decision-making to fulfill commitments

After the meeting, representatives share any new insights with their own teams. Teams then enjoy the autonomy to fulfill commitments as they see fit.

Parameters

For the Commitment Team to function well as an information hierarchy, two important things need to be managed:

  • Relevance of information
  • Frequency of meetings

Relevance of information

Teams must share only information they regard as relevant for other teams. Information relevant only to a team should stay at team level.

This is to prevent meetings running for hours. Each organization should find its own level of relevance for information sharing.

Frequency of meetings

Teams must share information frequently so all know what commitments are needed to fulfill each customer’s demands. Teams should meet regularly enough to alter direction in a timely way.

However, they should avoid unnecessary meetings. Each organization should find its optimal frequency.

Other information hierarchies

The Commitment Team of Panelfisa is just one example of a non-dictatorial alignment mechanism from our Bucket List. Other examples that come to mind include:

These might be worth exploring another day...

To learn more about pioneers like Haier and Buurtzorg, join the Corporate Rebels Academy.

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Replies (5)

Imran Rehman

Imran Rehman

Getting closer and closer to building dynamic robust structures and building variabily in to living systems. Loving it totally. Truly - this gives me goose pimples and we will stop trying to change and fix people but help people to focus on better quality interactions.
The speed of learning in these structures become delf-evident and each and every person can feel the sense of belonging is around serving the customers, the products and continious improvement and not looking to serve the hierarchy to validate one's own action.

| | 2 | Flag
DrRossWirth

DrRossWirth

You forgot the third part of the Mushroom Theory of Management -
3. And, if they manage to grow, cut them off at the knees.

| | 7 | Flag
Bob Acklalnd

Bob Acklalnd

Like the concept. However, have a bit of a hard time understanding where the accountability lands for the final decision. I fully endorse the team concept and totally against the dictatorial management concept but ultimately someone has to be in charge. For profit companies are not democracies as there is a lot of extraneous cost associated with a democracy. Teamwork builds better employees and if all are on the same page, it can be a flatter company but not a flat one.

| | 1 | Flag
John Dobbin

John Dobbin

An excellent case study and a perfect example of alignment teams.

| | 0 | Flag
Ronald

Ronald

Like the concept. However, have a bit of a hard time understanding where the accountability lands for the final decision. I fully endorse the team concept and totally against the dictatorial management concept but ultimately someone has to be in charge. For profit companies are not democracies as there is a lot of extraneous cost associated with a democracy. Teamwork builds better employees and if all are on the same page, it can be a flatter company but not a flat one.

Bob Acklalnd

Who's in charge of communal tasks? Indeed, anyone interested, rotating 'responsibilities to get the job done.
The costs of a traditional hierarchical firm are hidden in spreadsheets, where no one knows exactly what waste is in the system. This cost is way more than in the described democracy above, yet no one seems to care, not even the one 'in charge', as the VP's state it as being a problem with 'execution in the teams'. The executives fail to see that the issue/problem is in the chosen 'system of work'.

| | 0 | Flag
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