Five Reasons Why Leaderless Organisations Are Leading the Way

Monday 11 May 2015
While executive search firms scour the world to provide organisations with decisive leaders, some firms do without bosses – and leave it up to staff to set the tone
self management

The hunt is on for new personalities at the top for Labour, the Lib Dems and UKIP following their General Election woes, highlighting the difficulties that every wayward organisation faces with hiring that ideal candidate to inspire a new sense of direction. But over the past few years, evidence has mounted to suggest that time-honoured, centralised leadership is not the “be-all, end-all” of business. In fact, flat-structured, non-hierarchical firms are paving the way to a future of “self-management”.

A pioneering study of this trend was Ori Brafman and Rod Beckstrom’s book The Starfish and the Spider: the Unstoppable Power of Leaderless Organisations, which drew a distinction between traditional “spider” businesses, based on top-down, linear structures, and “starfish” firms that are decentralised and rely far more heavily on the power of peer-to-peer relationships. The authors nodded towards the likes of Wikipedia and Napster as early examples of those structures, with their inherent flexibility making huge impacts on the delivery of knowledge and music. As we shall see, their lessons have been absorbed by a wide range of companies at work today.

Here are five reasons why starfish organisations are built to succeed:

1. Self-management is a Lot More Instinctive Than We Think

Supporters of the starfish model argue that the bosses are not essential, as workers have the innate ability to manage themselves. For example, anti-hierarchy thinker Frederric Laloux, author of key text Reinventing Organisations, argues in this essay: “The tasks of management – setting direction and objectives, planning, directing, controlling, and evaluating – haven’t disappeared. They are simply no longer concentrated in dedicated management roles. Because they are spread widely, not narrowly, it can be argued that there is more management and leadership happening at any time in self-managing organisations despite, or rather precisely because of, the absence of full-time managers.”

2. The Internet Has Improved Our Ability to Collaborate

As Beckstrom points out, the world wide web allows the absence of structure, leadership and formal organisation to transform from a weakness into a major asset. Assessing the impact of business models such as Craiglist on the newspaper and publishing world, Beckstrom notes: “Seemingly chaotic groups have challenged and defeated established institutions. The rules of the game have changed. In today’s world, starfish are starting to gain the upper hand.”

3. Staff Have a Clearer Understanding of Their Goals

Affirming the responsibilities required of staff can also be a less politically charged process in starfish organisations. Chris Rufer – founder of the world's largest tomato-processing company, Morning Star – uses peer-to-peer contracts known as Colleague Letters of Understanding (CLOUs) to codify commitments between the company and its workers. In that document, each employee devises a “personal commercial mission”, which outlines their goals and how they plan to contribute to the company’s success. As Rufer states: “The terms of how everyone will work with everyone else are negotiated by the people doing the work.”

4. Measuring Accountability is Easier

In the absence of traditional office politics, it is simpler to judge whether the goals set out in CLOUs have been achieved. With no formal promotions to be had, workers can only earn more money through being better at their jobs, providing them with greater motivation to hit targets. For highly driven staff, that can be all the impetus and pressure they need to excel. At Morning Star, employee-elected compensation committees set pay levels after measuring colleagues’ performance against their CLOUs and other metrics.

5. Staff Feel More Able to Speak Up

With no superiors or hierarchy, employees have no need to conceal their honest feelings about their jobs. GoreTex manufacturer WL Gore identifies its staff as “associates”, and provides them with ample opportunities to voice their concerns, if they feel they need to. Despite its lack of union representation and other, standard HR policies, WL Gore says that its inherent transparency deters associates from being disruptive and deviating from the company’s core values. “We don’t fit into the standard HR mould,” explains the firm’s people manager Ann Gillies. “We don’t do many disciplinaries, for example. People feel they have a voice.”

However, a Note of Caution…

In March, Tony Hsieh – CEO of online shoe retailer Zappos – said that any members of staff who were not happy to work in the firm’s new, non-hierarchical structure could quit with severance, and set a 30 April deadline for staff to make up their minds. On 8 May, it emerged that 210 employees were preparing to take him up on his ultimatum – signalling widespread discontent with the new system. Clearly – and not without a touch of irony – it seems that the introduction of a self-management system must be (you guessed it) properly managed.