Hierarchy, Holacracy, and NoHierarchy (Fractal) structures in a nutshell.

This post started as a drawing on a napkin while a friend of mine challenged me to explain why I believe that No hierarchical organizations are better for our current and future world.

Flights always provide the perfect environment for a long and fruitful discussion. The complete separation from all stimulation creates lengthy and meaningful conversations. So, when I found myself with a friend on a long flight a few months ago, I started to chat with him about No hierarchical organizations and why they are better solutions for organizations now and in the future.

In some point in our conversation, the chat was more focus on why no-hierarchical structure supports better organizations long-term strategies. Most of the people still believe that hierarchical organizations are more efficient and therefore are a better fit for today’s world and the future, but facts are showing a different picture.

Most people believe that hierarchical organizations have some clear advantages. It’s easier to decide, to change direction, to lead (or manage) and to show short-term successes. But there are also many disadvantages for hierarchical organizations. One of them is a weak connection or disconnection between the leader steering to a particular direction to the group that needs to follow the leader goals. Hierarchy creates a weak and fragile connection between the individual setting direction and others that need to follow the direction. When the leader set a long-term strategy, the weak and fragile links between leader and groups are even more problematic.

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Diagram A

As you can see in Diagram A, the connection between the leader or manager and the group is depicted by a belt. This belt is used to create synchronization between the gear depicts the leader, and the gears depict the team. This belt represents a weak and fragile connection between leaders and groups (as any change in the belt will change the impact on the other gears, especially if the belt tears). 

Hierarchy, by definition, has more layers of leaders/managers. Therefore, the leader direction is going through intermediaries that add their interpretation to the original message. Last but not least, the hierarchy structure created single expertise teams that depend on leaders to communicate between teams.

In this structure, any change in the leader function or any change in how the direction being communicated and followed end up with disconnection. The disconnection might be an utterly new direction when a new leader introduced to the structure. That might be one reason why it’s so hard for organizations to create and execute long-term strategies, but it’s much easier to reach short-term goals.

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Diagram B

One of the known alternatives to Hierarchy is Holacracy, but also this structure has several disadvantages, most of them the same you’ll find in hierarchies. Holacracy improved how the team operates, but in a nutshell, replace people hierarchy with circles (group) hierarchies. Holacracy also does not actively request circles to be multi-expertise. As long as leaders are nominated and can nominate people to roles, the same problems that applied to Hierarchy applied to Holacracy. Diagram B depicts Holacracy. You can see that belts again describes synchronization, the only difference that in this structure is between teams.

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Diagram C

Team of teams (or fractal) organizations structure different from Hierarchy and Holacracy in many perspectives. First, as the name implied there aren’t any managers or leaders that drive other people to reach goals, there are teams that are doing it together. Second, the teams are multi-functions by design. As you can see in Diagram C, no belts exist in this structure. All you can see are many gears depicting different expertise working together to perform certain organization function. Organization functions are connected to each other based on connections between different gears from various business functions.

The disadvantage of this structure is a challenge with fast decision making and the time it takes to create an architecture, whereas many relations exist between gears. The advantage of this structure is that you can remove many gears out of the current structure, but yet the functions will still perform. Such a structure can support long-term strategies as there isn’t any dependency on one gear or even several gears to reach long-term goals.

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