startups business structure

Are startups sleepwalking into 19th century structures?

Adam Tinworth Startup Tips

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A significant number of the tech industry’s leading thinkers have passed through the doors – and stage – of LeWeb over its decade of life. Take Ev Williams, founder of Blogger, Twitter and now Medium, the long form blogging site you’ve probably read several articles on in recent months. Medium sits comfortably somewhere between Blogger and Twitter in Ev Williams’ CV: it’s one central service, like Twitter, but with all the individual long-form publishing power of Blogger – and more.

But that’s not the really interesting thing about the company. In many ways the company’s external structure is reflected in its internal structure. Just as Medium’s collections are loose aggregations of individual people, so too the internal organisation is fluid, dynamic and non-hierarchical. In fact, they use an organisational structure called Holacracy.

Fast Company covered this in some depth over the summer:

Medium adopted the Holacracy model about a year ago. Calling it “hands down, by far the best way I know or have ever seen to structure and run a company,” Stirman says. He’s especially drawn to the strategy’s crystal clear minimalism and logic. “It’s basically an operating system for your organization, so the engineer in me loves it. In fact the Holacracy organization just released 4.0 of its constitution, so our company is upgrading—just like you would update to a new iOS.”

 

It’s been popular as an approach – popular enough, in fact, that people who leave Medium are using the same tactics. Leight Taylor took the ideas from Medium back with him to the UK for his design-led startup Gravita.

He talked with passion about the model at an event in Brighton, England back in April, suggesting that it helped people do their best work – by letting go of personal ownership of work, and roles, and bring their skills to bear where most relevant, when they’re needed.

Lurking in the background of this is the idea that too many startups are sleep-walking their way into using organisational models designed for the industrial age. Do we really need command and control models designed to keep production lines flowing smoothly for information businesses?

 

Lee Bryant, co-founder of Post*Shift, which advises both existing businesses and start-ups, thinks not: “There is indeed a lot of interest in new organisational models such as Holacracy, especially among startups,” he says.

In short, I think no one single model is the right answer for all orgs, but Holacracy, John Kotter’s Dual Org model, Dave Gray’s Connected Company and Niels Plaeging’s Organising for Complexity are all good starting points for startups wanting to explore this field.

Holacracy is being used by Medium and Zappos and few European firms are trying it out, says Bryant.

My own view is that it replaces a hierarchy of boxes and arrows with a hierarchy of linked circles. and therefore does not solve the political issues underlying problems with hierarchy. I like its focus on roles and how they are ‘activated’, and the idea of sensing and resolving tensions between roles, goals and what is going on day-to-day is very useful.

However, he’s not sure that Holacracy is the solution:

I find it far too structured and prescriptive and insufficiently tolerant of the messy nature of human endeavour. Not to say it is bad, just that I would not recommend it as a total solution. Some firms will be able to take the good bits and adapt it, which makes sense, but that is against their trademarked ‘whole system’ approach.

 

His concerns are shared by Alan Patrick, co-founder of Agile Elephant, a business that consults on Enterprise 2.0 technology and processes:

I agree with whoever it was that said the other night that when you see a “TM” attached to an idea, its time to be very wary… You may want to read their Constitution for your edification, and see what it reminds you of…

Patrick points out that we’re very much in the early stage of this thinking process, and Holacracy is just one expression of that:

There is a lot of discussion about what future organisation structures could or should be, in the UK and Europe, but after speaking to Jane McConnell, who has done quite a lot of research on this issue, I am increasingly coming to the conclusion that it’s more the culture than the structure or anything else that make the major difference in an organisation.

 

Where, then, will we end up?

I think a “fishnet” type of structure – a hierarchy / heterarchy hybrid, with some flex – is the most likely outcome.

Bryant strikes a similar note:

I think it is very important that startups have the confidence to grow their own structure and practice and not sleepwalk towards tired old models of corporate structure, or be nudged in that direction by VCs because it makes them easier to package up for sale.

Most start-ups pride themselves on disrupting existing businesses – but are they really looking as hard at disrupting existing models of running businesses?

 

 

Adam Tinworth is a blogger and digital publishing consultant, working with national newspapers, international media groups and small start-ups. He’s also a visiting lecturer at City University, London, specialising in social media and content strategy. He blogs at One Man & His Blog, and will liveblog LeWeb’14!

Top photo via Shutterstock – Sergey Nivens