Digital-age appropriate hierarchy


Hierarchies are much maligned these days and self-management is all the rage in the digital media. There is a lot of talk of networks replacing hierarchies, self-organizing teams replacing conventionally managed teams, and so on. Several frameworks such as Sociocracy, Holacracy, and Teal have been proposed, all promising to help realize this bold vision, and some early movers have tried to adopt them in recent years. However, their experience has fallen short of expectations, so much so that a number of them have reverted to more conventional ways.

Among tech organizations, Github and Medium have given up on their idealistic pursuit of non-hierarchical organization. Zappos offered a severance package to employees who were not comfortable with Holacracy and lost a third of their workforce in the process. AES Corporation, a Fortune 500 company in the energy sector is probably the only large organization to have benefited from Teal, but unfortunately, even they moved away from Teal under new leadership.

Cleararchy provides an alternative, pragmatic approach to organize hierarchy for the digital age. Its prescriptions stand somewhat in contrast to the popular but ineffective anti-hierarchy stance of self-management frameworks.

To begin with, let’s unpack what hierarchy means in a corporate context. Hierarchy is not a monolithic construct. Broadly, we have reporting hierarchies, communication hierarchies, and decision-making hierarchies. For instance, every corporate has a signing authority hierarchy as a means of delegating authority over expenditure decisions. This is a type of decision-making hierarchy. Org charts, on the other hand, depict reporting hierarchy—the most obvious form of corporate hierarchy. Finally, communication hierarchies are the least documented and the most informal of hierarchies. In a traditional set up, communication hierarchy is closely aligned to reporting hierarchy. In the so-called networked organization, communication (not reporting) is non-hierarchical—the graph of who can have official interactions with whom resembles a network.

Given this multi-faceted nature of hierarchy, what does it mean to be a non-hierarchical organization? A Cleararchical organization aims to relax communication hierarchy, limit reporting hierarchy and reform decision-making hierarchy.

Why relax communication hierarchy? To help break silos and to facilitate a free flow of (non-sensitive) information across the organization. Seamless communication within the organization is necessary (though insufficient) for a customer experience that is seamless across products, channels and regions. Read more.

Why limit reporting hierarchy? To bring senior management and executive leadership closer to the action. When the CEO is fifteen reporting levels away from the coalface, their understanding of reality is, in some ways, fifteen levels removed. Read more.

Why reform decision-making hierarchy? To institutionalize a culture of learning from the consequences of previous decisions. And to enable true inclusivity and even some decentralization of decision-making without loss of alignment. Read more.

At first blush, this may seem like a mere tweak of old-school command-and-control thinking. As we get into the details, we’ll see that it is anything but a tweak. Of course, Cleararchy stops short of completely abandoning hierarchy because unlike other idealistic formulations, it recognizes that hierarchy is inevitable in human organizations.