Stamp It Flat

Two fundamental characteristics in the model of Economic Man are that people are lazy and don't want to work (economists call it shirking), and that we will steal, given the opportunity. If you believe these things, you will most likely create a management system that looks similar to most of the ones we see today: designed to prevent employees from shirking and stealing.

In Drive, we learned that people actually want to be productive. What if people don't actually want to steal, either? (Netflix tells its people to act in the best interests of the company, dispensing with numerous rules and accountants in the process). What if these core principles of last-century management are actually wrong?

We won't go so far as to assume that some people don't behave antisocially. The traditional hierarchical system is designed around those people, and in many ways has become designed for those people. Instead, we shall create a system that is uninteresting to those people, even to the point of invisibility or repellence. They look at this system and see no way to gain power and control over others, so the organization is completely unattractive to those people; they cannot imagine why anyone would want to work there, and they look elsewhere.

Suppose we can assume that people -- or at least our people, the people that end up at our company -- will be productive and they won't steal. What does a business look like if you can believe those things?

This system doesn't try to fix people by forcing them to behave in appropriate ways. Nor does it try to fight the tendencies of the traditional hierarchical system, because the pressures of the hierarchy will always reassert themselves -- you can build a company that is temporarily different, but when you expose it to "normal" corporate pressures (by hiring a "professional" executive team, for example, or by going public), those pressures turn it into the same undesirable result.

Instead, it changes the foundational rules so that the organization (1) attracts the right people and repels the wrong ones, and (2) grows and evolves without changing its fundamental character (avoiding the "growing pains" points of traditional companies, where they basically change who they are).

The basic principles for this kind of organization should be few: We have trouble remembering more than a few things, and it's very important that we keep these principles clearly in mind at all times (the Rider needs clear direction). In addition, the same principles that make this organization attractive to people who have positive social behavior should make this organization repellent to those who behave antisocially; in particular, those who desire power and control over others.

In A Modest Proposal, I suggested a flat pay system, because I find that to be one of the most powerful signals that We're All In This Together. Chapter 8 of Hard Facts is filled with evidence of the corrupting effect of power within corporations, and arguments against the cult of leadership. Unfortunately, the best suggestion they could make was to say, in effect, "Don't let it go to your head" (if you find yourself in a position of power). The alternative was too radical to consider: take power off the table. The answer lies not only in the pay system -- perhaps the answer is to take the whole hierarchy and

Stamp It Flat

In Here Comes Everybody: The Power of Organizing Without Organizations, Clay Shirky makes a compelling case that the hierarchy was created for communication. Even if that communication is flawed, as we see in the mum effect (information gets "happier" as it goes up the hierarchy), enough information flowed for organizations to stumble along. But, Shirky says, we now have electronic communication which can replace and flatten much of the hierarchy. What if, with some adjustments to our system, we can flatten it completely?

This removes power from the equation. Nobody is "better" than anyone else, and nobody controls anyone else. Nobody gets to help themselves to perks because they have the power to do so, or abuse others because they feel like it. Corporate psychopaths will look at such an organization and not only see no advantage for themselves, but will see a distinct possibility of being exposed. There is no need for a No Asshole Rule, because those people will not be interested in joining the organization in the first place (indeed, they will flee from it).

I didn't invent idea of a leaderless organization; in 2008, The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations was published (see here for a nice summary), and I suspect there are others who have suggested the same thing.

If we replace leaders, we need to replace their responsibilities. Leaders:

• Tell us what to do. Let's assume we can figure out what to do.
• Make sure we don't shirk. Let's assume we want to be productive and useful.
• Monitor and evaluate our output so they can determine raises. Both tasks are eliminated by a flat pay system.
• Communicate with higher-level managers and express their desires to us. (And incidentally filter it both ways). We use electronic communication with transparency, so filtering is not necessary.
• Prevent Mistakes. How often does this actually happen? How many mistakes have been caused by managers, via the aforementioned filtering, and through over-managing?
• Make decisions. This one can't be so easily dispensed with -- someone with authority must make decisions, right?

Well, let's think about that last one. Is it reliable to assume that managers always know more than those they manage, and can make the best decisions? How often do managers make the best decisions, vs. just flipping a coin -- or even letting subordinates make the decision. And once a manager is invested in a decision, how difficult is it to change when it becomes clear it was wrong? We've learned that groups make better decisions than individuals via crowdsourcing. Then there's the Dunning-Kruger effect, making managers believe they are smarter than they actually are.

Might it be possible that in many cases, just making a decision and seeing what happens -- correcting later if necessary -- might actually be far more effective than relying on the traditional hierarchy to do it?

I will suggest a scheme for distributed decision making in a future post.