Are management-free workplaces too good to be true?

Some companies claim to have no bosses. Is this sustainable, or is some semblance of order necessary, at least to not scare off investors and customers?

Every so often, you hear about innovative companies -- really, really innovative companies -- that give employees unfettered free reign to explore any opportunities they see fit, without any bosses looking over their shoulders or second-guessing their decisions. Are such companies utopian ideals, or can they actually stay in business?

Photo credit: Michael Krigsman

In the 1980s, W.L. Gore & Associates (maker of Gore-Tex) was held up as an example of such a company, with only one mandate for employees: "have fun and make money." W. L. Gore is still functioning as a management-free company. Whole Foods was originally run with a democratic ethos, with managers picked through employee elections. For years, tech companies have been famous for their lack of hierarchy.

But are management-free companies sustainable? Or is some semblance of order necessary, at least to not scare off investors and customers?

In the latest edition of New York, Matthew Shaer took an in-depth look at this new model of management, or lack of management, to determine how well things can run without a boss around. He cited some examples of companies without bosses:

  • Menlo Innovation, a software company, is run by committees, and kick-started by morning meetings to review activities.
  • DreamHost, a web-hosting company, elects its managers, including the CEO. "Workers have the freedom to select their own projects, and the offices, in downtown Los Angeles, are open 24 hours a day," Shaer recounts.
  • Employees at Valve Corporation, a video-game company, can work on any project and join any team they chose.
  • Morning Star, a tomato-processing company, is proof that the model works outside of the high-tech sector. People joining the company sign an agreement to produce x amount of product, and are responsible for their own performance. Work is evaluated by teams of peers.

The team management structure has been slowly catching on over the decades.  Shaer observes that "In 1980, less than 20 percent of the companies on the Fortune 1000 list boasted at least some sort of team management structure. By 1990, it was 50 percent. By 2000, it was 80 percent."

The rise of self-directed employees may be attributable to two things. First, each generation since the end of the World War II has had its own elements of mistrust of, and resistance to authority. Second, ongoing global competition and economic turmoil have created lean and mean organizations with few middle-management ranks. Employees who want to get their jobs done are required to marshal their own resources, rather than rely on the bureaucracy to deliver support.

Along with self-directed employees, technology tools and platforms have digitally networked organizations. Rather than relying on a co-worker down the hall for support, the tech-savvy worker can call upon a global network of contacts, suppliers and information sources to get things done -- I've heard this referred to as "personal outsourcing."

Of course, the ultimate management-free zone is one a person creates him or herself, through entrepreneurship. As John Naisbitt predicted some time ago, the successful organization of the 21st century will not be a hierarchy, but rather, a "confederation of entrepreneurs."  All the successful examples Shaer cites in his article have learned to capture at least a part of that entrepreneurial spirit.

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