Is Your Management Structure Helping or Hindering Innovation?

Should You Destroy the Hierarchy?

The traditional top-down structure in organizations can be a powerful inhibitor to innovation. It is a reflection of a command and control style of leadership where orders are issued at the top and followed by the ranks. People lower down the organization who have great ideas can feel inhibited about promoting them. They feel it is disrespectful to challenge the command chain. Most modern businesses try to overcome this with open communication and employee empowerment. But there is a more radical alternative – destroy the hierarchy altogether.

Oticon, the innovative Danish hearing-aid manufacturer, broke the conventions of corporate structure when it tore up the hierarchy and created what became known as a ‘spaghetti organization’. People are not allocated to departments but move from project to project. The system looks chaotic in a conventional sense but Oticon have achieved remarkable success with it over a period of ten years.

Another celebrated example of this approach is W L Gore & Associates, manufacturer of the world famous GORE-TEX® fabric. In 2006 it was voted number one in The Sunday Times ’100 Best Companies to Work For’ – the first company to stay top of the list three years in succession.

Gore’s unusual approach involves teams forming for projects and selecting their own leaders. There is no formal executive structure and you are appraised by your peers. Associate John Housego, Livingston plant leader, explains: “You quickly learn what it means to be a real team player. Many companies profess to foster team spirit, but at Gore your contribution is rated not by an individual, but by your immediate team.”

There are many examples on the internet of communities that come together for a common purpose and largely manage themselves. Wikipedia is a good example.

It appears that successful organizations of the future will not resemble the hierarchical structures of the past. They will be fluid, adaptable networks. People will coalesce into teams to accomplish certain tasks and then reform into new teams. A useful analogy is a theater company. Everyone agrees a common goal – a vision of a brilliant team performance. Each person learns their part in the play and fulfills their role in a creative and high quality manner. Then there is a fresh objective – a new play with a new director. The actors and support staff have entirely different responsibilities. The person who was a star before is now in a supporting role. But everyone shares the common purpose – to put on a great performance and to delight their customers.

Is Your Management Structure Helping or Hindering Innovation?