November 2005 – Could business thrive without hierarchy?

Imagine a company without bosses. Impossible? I would be inclined to agree, but Gerard Fairtlough, author of a new book called The Three Ways of Getting Things Done, begs to differ and, the more I listen to his arguments, the more I believe he is on to something.

Mr Fairtlough, a biochemist, former Shell executive and founder of Celltech, the UK biotechnology company that was sold in 2004 to UCB, the Belgian biopharmaceutical company, for £1.5 bn, believes that for too long society has accepted hierarchy as the natural order of organisations.

The pecking order, after all, is a common feature of animal communities, but there are instances where some animal groups - meerkats for example – have developed interchanging roles for the good of the colony. Even here, however, there are alpha males and females.

Mr Fairtlough believes what he calls our “addiction to hierarchy” is draining the energy of collaborative projects and sometimes failing, as a result, to either recognise or pay due regard to the input of able individuals whose significant contributions can be overlooked in a formal reporting structure.

We must all know of bosses who have taken credit for work accomplished by members of their teams. Then there are those who brazenly steal ideas or who, on occasion, have been prepared to profit disproportionately from the input of others.

But it is not only the possibility for such selfish behaviour that limits the effectiveness of hierarchy, it is the focus of attention on a few designated individuals who are expected to make the right decisions on every occasion. The rise and fall of so many chief executives confirms that a state of grace for executives simply does not exist.

The problem of hierarchy historically is that it has bred authoritarianism, even despotism at times, creating fear in some cases and dependence in others. Even when a hierarchy is relatively benign it can inhibit independent thinking by maintaining familiar relationships, allowing some to settle in comfort zones with few responsibilities.

“In a strictly hierarchical organisation, the only learning that takes place is the learning of the individual at the top. Everyone else obeys orders. An organisation without learning will only survive in very stable conditions,” writes Mr Fairtlough.

“In practice, of course, the lower ranks actually learn and adapt without being told to do so. But hierarchies tend to learn slowly, especially because a lot of effort goes in to preserving the superior status of those at the top, inevitably an anti-learning activity.”

Mr Fairtlough speculates that a spontaneous emergence of hierarchy among groups of people, even in pre-school children, may have something to do with genetic predisposition. While he argues that this should not mean that hierarchies are inevitable, it would help to explain why they are almost taken for granted in society.

“It won’t be easy to change a hierarchical system but two hundred years ago aristocratic domination was considered inevitable and a hundred years ago so was patriarchal rule,” he says.

“Change away from these was strongly resisted, but it happened. It could be that hierarchy in organisations is a further idea whose end is nigh, driven by social, intellectual and technological change.”

But if there is no inevitability about hierarchy what sort of organisation could exist in its place? Mr Fairtlough believes that there are no more than two alternative arrangements for getting things done. These he identifies as “heterarchy” and “responsible autonomy”.

He describes heterarchy as divided, supported or dispersed rule where control shifts around depending on the project and the personality, skills, experience and enthusiasm of those who can make things happen.

Much of the project work that is becoming common in large technology companies, he argues, fits this kind of arrangement. W G Gore and Associates, the US-based makers of Gore-Tex waterproof fabric uses this system where managers emerge not through promotion but depending on the popularity of a project. Those who become accepted as leaders are those who prove capable of selling and articulating ideas and seeing a job through from beginning to end.

Pay differentials are also based on the success of individual projects so employees are not going to move on a whim. “Some would say this is a recipe for chaos. In fact it has created a successful business that finds itself consistently voted as one of the best places to work,” says Mr Fairtlough.

At Hewlett-Packard a board of senior managers acts like a peer review group of academics holding the purse strings of project funds. Project ideas are put to the board and, if approved, the project champion must be capable of gathering together well-qualified team volunteers or the funding is withdrawn.

During my early career at the Financial Times we ran newspaper investigations like this where a group of reporters would grow as a story gained a head of steam, then disperse with some individuals re-entering at intervals. In fact instant teams are drawn together on a daily basis for single stories in the newspaper industry.

But news stories must still be co-ordinated, and sometimes a command must be as baldly stated as “drop that and do this”. That is rare because good journalists are capable of prioritising their work.

This is where the third system of responsible autonomy emerges. Mr Fairtlough points to the kind of autonomy enjoyed by fund managers who tend to be left to themselves if their fund is performing well. Success attracts a larger fund and more clients. “Autonomy is provided by the internal policies of the investment institution. Accountability is provided by the performance of the fund, ” he writes.

In practice, he notes, each of these three systems can sometimes be observed working together. Having worked for most of my career at a newspaper where journalists had more of a supplier-customer relationship with editors, I find it difficult to relate to management hierarchies governed by reporting systems.

Some people seem to do their best work when they sit outside hierarchies. If this is acknowledged as it seems to be, at least in the more creative workplaces these days, why do the vast majority of companies retain their management cadres where people are propelled through command-structured careers from graduate to company chairman?

Mr Fairtlough believes that this system is maintained partly by the excessive interest that we all take in discussing who’s up and who’s down rather than in whether an organisation is working well or not. Last week, for example, there was far more media interest in a UK “cabinet row” than in the outcome banning smoking in most public places. This week the focus has been on David Blunkett, forced to resign his cabinet post amid yet another frenzy of gossip and accusations. In the same way, last year’s take-over struggle for Marks & Spencer was portrayed in the media as a battle of egos.

Heterarchy’s battles are those of ideas, fostering the kind of debate that demands greater personal responsibility. “There is a mass of evidence to suggest that, in the twenty-first century, the time is ripe for sustainable change in the ways organisations use to get things done,” writes Mr Fairtlough. The result, he believes, will be a gradual move away from hierarchy in organisations.

I still find it difficult to imagine business without bosses. But perhaps, in future, they will come to know their place.

The Three ways of Getting Things Done, Hierarchy, Heterarchy and Responsible Autonomy in Organizations, by Gerard Fairtlough, is published by Triarchy Press, price £12.50.