Hierarchical vs. networked management models

eileenfisher.jpgReading two very different articles about business in two different publications the other day got me thinking about models of management. Management Today by Chander Chawla on Forbes.com is an overview of what he sees as the models of management.

The military was problem the first attempt to gather a diverse group of people organized to work together towards a common goal. hat structure gave us a few principles:

  1. Hierarchy

  2. Command and control

  3. Incentives for achieving the goals

  4. Division of responsibility based on function

  5. Centralized decision making

My experience working for a very large company, then called Thomson, now Thomson Reuters, with about a $7 billion dollars in yearly revenue down to a two-person startup jibes with the traditional model. And every startup I mentor at MIT has a CEO, CTO, and often a COO. Startups all have boards of directors, CEOs and a hierarchical management structure. Nothing has changed in my five decades of working life.

But Eileen Fisher, founder of her namesake clothing company, managed to build a company that for three decades has gone without a CEO.

The unconventional leadership structure reflects Ms. Fisher’s belief that consensus is more important than urgency and that collaboration is more effective than hierarchy.

She’s driven her company to annual sales of $500 million and it’s still growing. The interview with her in The New York Times Corner Office column by  David Gelles provides fascinating insight into a company with decentralized decision making and no boss.

I’ve written previously about how companies need to be built on a foundation of values and Eileen Fisher clothing is built upon the values of timeless designs, sustainability, and simplicity.

Her employees now own much of the company and she believes that really works:

It engages people and their sense of ownership, and they’ll tell you things. They’ll say in a meeting, “Don’t spend my money on that.” People aren’t happy when they see people wasting money here or there or being extravagant on something.

Nothing could be more counter business cultural than Eileen Fisher’s “leadership through listening.”

At that point you had a real business going. What was it like to become a boss?

I still struggle with that. I don’t think being a boss is my strength. I think of myself as leading through the idea, trying to help people understand what I’m trying to do, or what the project is about, and engaging them. I always think about leading through listening. I was a designer, so I didn’t have preconceived ideas of how this business works. And I was kind of lucky to not know.

I encourage you to read the rest of the article for more details on this founder who has refused to  become a boss and has succeeded not despite that,  but because of it. Those of you with the time and patience can also read the full Management Today article where the author posits four types of management:

management

Frankly I can buy into both domain management and organizational management. You will have to decide for yourself about Perception management and Feelings management – neither resonated with me. While perception is important in any business and of course we all have feelings, that doesn’t mean they are domains of management. Mr. Chandra himself admits that However, the four management categories do not carry equal weight. A lot depends on your level in the hierarchy, the maturity of the organization, and your function. 

Before you just follow your friends and classmates by building your startup on the military command and control model at least take the time to understand where that model came from and that there are alternatives. And whatever you build, build it on a strong foundation of values.

Being a rather anti-authoritarian myself, the choice of models is easy, the one built upon the values of the networked model where colleagues collaborate, create, communicate and arrive at consensus.

 

 

 

Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

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