Business schools use a framework of formal power (job title, authority, etc) and informal power (influence and likability).
The most effective organizations are the ones where the formal power structures are very close to informal ones. People know how to make decisions. Flat organizations end up being run by the loudest voices in the room.
Ironically, flat organizations with largely informal power structures are often slower to make decisions because one person can become a huge bottleneck on decision making without realizing it. It can also be culturally corrosive: informal structures encourage Machiavellian behavior and the most Machiavellian people tend to rise to the top — which creates a terrible work environment for everyone else.
"The most effective organizations are the ones where the formal power structures are very close to informal ones "
There's a nice parallel here to how parliamentary democracy arose. And conversely, there's no point having a chamber full of the people who you wish had power, if they don't have it.
I think there’s a more HN-relevant one in the way that founder-controlled companies seem to be capable of more growth. There’s not as much backstabbing and jockeying for power because everyone knows who the top dog is. The founder isn’t going to step down unless things go really well (everyone gets rich) or really poorly (everyone gets laid off) so you can’t stab them in the back and take their role. Founders can make decisions with a single vision — design by committee doesn’t produce innovation.
There tend to be problems when founders step back from the top of the formal power structure. Steve Jobs remains the best example I can think of; he wielded immense influence within Apple in the early 80s, but was ultimately a destructive presence once he no longer had formal power because he would go around his bosses to build his pet project (the original Macintosh) and created a corporate culture of distrust and deception. When he left, Apple fell apart culturally and really had no product vision until he rejoined a decade later and resumed the role of founder-CEO.
Thanks, now I have this image of Jobs as the chief narco, menacing some UN-approved banana-republic democracy which really only controls a little green zone in the capital...
Business schools use a framework of formal power (job title, authority, etc) and informal power (influence and likability).
The most effective organizations are the ones where the formal power structures are very close to informal ones. People know how to make decisions. Flat organizations end up being run by the loudest voices in the room.
Ironically, flat organizations with largely informal power structures are often slower to make decisions because one person can become a huge bottleneck on decision making without realizing it. It can also be culturally corrosive: informal structures encourage Machiavellian behavior and the most Machiavellian people tend to rise to the top — which creates a terrible work environment for everyone else.