Two companies I have worked closely with recently have a common thread: Both are very good, very lean manufacturers making very good money; and neither has any respect for organizational charts and chains of command.
One of the companies is pretty big and there is an org chart … somewhere. Someone in HR is tasked with maintaining it and he sends out emails every now and then asking people to review the chart and send him updates. No one answers the emails so the chart is usually close but wrong. The other company is fairly small – and only about fifteen years old. They just never got around to drawing one up. Creating and growing the business, and now making and shipping lots of stuff, have kept them too busy to ever sit down and formalize the organization.
Formalizing org charts isn't important to either company because no one seems to think the chain of command is important. Who works for who seems to have little bearing on who should talk to who when problems and opportunities arise, and it doesn't seem to have much impact on who makes decisions. People talk to whoever they think has information they need, or is in charge of an area that is needed to support whatever it is that has to be done.
The polar opposite is the military, where chain of command is virtually a religion. The theory is that a clearly defined chain of command and immediate, unquestioned obedience to orders is a vital necessity for wartime success. There is a fair amount of evidence that American war time success actually results from a culture willingness on the part of soldiers to improvise (another word for violating orders and thumbing their noses at the chain of command). At any rate, the rigid adherence to the organizational chart as the framework for all communications and decision making, while it may be important in battle situations, is the root of off-the-charts bureaucracy and away from the battlefield.
WL Gore describes their utter disregard for organizational structures and chains of command with this:
"There are no traditional organizational charts, no chains of command, nor predetermined channels of communication. Instead, we communicate directly with each other and are accountable to fellow members of our multi-disciplined teams. We encourage hands-on innovation, involving those closest to a project in decision making. Teams organize around opportunities and leaders emerge."
Explanations for the need for clearly defined chains of command spelled out on organizational charts revole around words like 'accountability', 'control' and 'authority'. Strong lean cultures revolve around words like 'empowerment', 'respect' and 'cross-functionality'. They seem to be describing vastly different ways of getting things done.
Toyota is spending a lot of time worrying about this issue these days. I recently heard someone from their strategic planning group rattling on about self-reliance, a term they use rather fluidly to describe the need for decisions to be made on the fly at the right level, and the right level is not something that can be pre-determined or has a one-size-fits-all definition.
The moral to all of this is that org charts are unimportant, and are often substitutes for a weak culture. Lots of relationships between people, all of them having respect for each other's knowledge, and little regard for egos inflated by formal authority are keys to success.
Another company that does this very well is Sun Hydraulics, which we wrote about a few years ago – over 1,000 people and no job titles. As you mention, strong culture is the key.
The big issue for them was how to duplicate that radical culture when they had to grow through acquisition.
Costikyan Jarvis says
I agree that an org chart that restricts communication is bad, but believe that Principle Seven from “The Puritan Gift” overrules having no org chart. Would you agree?