Worlds next Top Organizational Model

Time to get real. After six long posts comparing three advanced management systems and the traditional, hierarchical management, it is time to look at their performance. Which system is better?

The first nomination of the world’s next top organizational model happens right here – right now! You have the opportunity to cast your vote now or at the end of this post.

What are advanced Management Systems useful for?

All advanced management systems are focused on releasing the inert creative potential of individuals and teams in an organization. To use the wisdom of everyone in the organization to come up with much more ingenious solutions to whatever problems the business faces.

All advanced management systems agree that hierarchical management systems do a bad job fostering learning. And all three are out to rectify that by toppling the hierarchy and pushing down control to the individual, to the point where work is done, and the best info is available to make a decision.

Liberation and Holacracy take on a very decisive approach to that devolution of control. They abolish the hierarchy for all intents and purposes. This is subject to the goodwill of the benevolent dictator at the top, whose primary missions becomes shielding the organization from hierarchical interference from within.

This is not a starting point for Management 3.0, though. Management3.0 aims to work with the hierarchy through slowly growing the maturity level of the organization so that more and more authority, control and decisions can be pushed down to work level. The ideal state does not have to be a total abolishment of the hierarchy. For some organizations with particular business models, lower complexity, and lower degrees of change, maintaining a strong hierarchical model can still be the optimal strategy. Management 3.0 practices can help here and there, but the hierarchy may still remain the dominant factor in an organization. Therefore the focus of Management3.0 is more on sustainable excellence by whatever means, not only by pushing authority down to work level. Still, devolution of control remains its main driver for change.


Wherelse Holacracy is a rather rigid system of management, Liberation and Management 3.0 are more sets of beliefs and worldviews which leave a lot of room for interpretation. Holacracy is built on the premise that one system fits all. Wherelse the other two systems recognize the complexities of businesses and refrain from rigid advice. Instead, they are just pointing in directions.

What premise is better? Holacracy’s premise of “one size fits all” sounds ridiculous at first, but if you understand that Holacracy’s core is actually limited to a very general mechanism of a company, i.e., to make operational and governance decisions as a group, it is really quite reasonable from a logical standpoint.

My pick for outcome focus: All three advanced systems. I believe in emancipating people. I have been proven dumb as a Nut so many times by supposedly less educated, know-nothings. In this more and more digital world, I wouldn’t dare to run a company in an “I know it all!” way.

Value proposition

The metaphor for a classical organization is a centrally planned machine made of hierarchies and reporting lines that creates outcomes reliably and efficiently. From this intention alone one can derive that hierarchies will underperform…

  • If the results cannot be exactly planned
  • If planning is very hard, because of unpredictable changes in the environment
  • If the creator of the machine (the “CEO”)  has made unwise design decisions


By moving control away from managers and towards work level, the utilization rate of the intelligence of all the members of an organization will be maximized. The result is that time to market and costs decrease while revenue, quality, productivity, flexibility, and resilience go up.

My pick: All three advanced systems. I have worked shaping and optimizing management systems in my career and believe that hierarchies are great for routine work, but not for the modern, digital, knowledge-driven economy.

Initiative, Experimentation, and Learning

These three factors – initiative, experimentation, and learning are beautiful:

  • They are linked to the future
  • They imply that something is transformed from an inferior state to a superior state
  • They are dynamic, permanently forward-looking
  • They suggest a bias for action, to go out and explore

If these factors are left to the manager – as they systematically are in hierarchies- my stomach turns sour. If anything should be clear from the last six posts, is that hierarchies are simply not built for initiative, experimentation, and learning.


So with no further ado:

My pick: All three advanced systems.


Can advanced management systems be adopted by big or growing organizations? The Agile movement is centered on the team. The Lean Startup Movement is focused on small start-ups, which are seldom more than a couple of teams.  Is there any proof that Advanced Management Systems can be scaled to companies with thousand or ten’s of thousands of employees?

Let us see what the greatest references are:

  • Liberation: Michelin, ca. 112.000 Employees, but the transformation has just started in 2016 so only a minority of those are impacted, and the final scale is unclear yet
  • Holacracy: Zappos, ca. 2000 Employees
  • Management 3.0: Small companies or teams

More References for companies that have adopted these models can be found in the appendix of this post.

There is no clear evidence yet that the advanced management systems scale.  As of now, smaller companies and teams use these organizational models, and some major cooperations are experimenting. Even Silicon Valley, with companies like Amazon and Tesla, restrict the use of flat hierarchies to their inner organizations and continue to rely on hierarchies for scaling their outer organizations, e.g., Logistics, Manufacturing, Sales.

My pick: The classical hierarchy. It seems to be that pure execution in low uncertainty environments is still best done in a hierarchy that enforces standards.

Advanced Management Systems are best to handle complex situations, but in predictable environments, the hierarchy is superior, as it allows quick and decisive scaling of operations.

Are Advanced Management Systems just good for Knowledge-driven Businesses?

The closing sentence of the last paragraph can be interpreted as meaning “keep advanced, nonhierarchical management systems limited to business areas where knowledge work is done.” There is truth in that statement, but you need to have a proper definition of knowledge work:

  • Nurses do knowledge work. They have the maximum amount of info on their clients, they are where their patients are. This is knowledge work, too. See for example the war story of Buutzorg, which employs 14.000 people
  • Manufacturing of Automotive Parts is knowledge work, see FAVI S.A.
  • Designing, Selling and Producing clothing is knowledge work, see Patagonia

So why is running one of Amazon’s Distribution Centers not knowledge work, too? As variations are to be minimized and the work-force is ever-shifting, standardization is what is needed in a Distribution center. Still, feedback from work-level is appreciated and actively thought after. But this feedback remains just one input besides a whole array of other measurements that are used for the “scientific” design of warehouse layouts, automation, and processes. This is classical management with a small, data and business savvy team optimizing operations through Lean Start-up experimentation techniques. But control is definitely not pushed towards workers.

Maintenance of the Management Model

Every Management Model is a logical construct that humans superimpose over reality. An abstraction that must be carefully tended to, or it will degenerate. That is correct for classical hierarchies, too.  There is no need for the organizational artifact “hierarchy,” if no one ever is enforcing hierarchical power and orders things to be done. A hierarchy where hierarchical power isn’t used is leaderless and will descend into chaos.

An abstraction that must be carefully tended to, or it will degenerate. That is correct for classical hierarchies, too.  There is no need for the organizational artifact “hierarchy,” if no one ever is enforcing any hierarchical power and orders things to be done. A hierarchical organization where hierarchical power isn’t used is leaderless and will descend into chaos. So there have to be rituals enforcing the standards of these systems.

So there have to be rituals to enforce standards in order for any system to exist:

  • In hierarchies, these rituals are called “Status Meetings,” “Annual reviews,” “Kick-offs,” “Reporting” etc.
  • In Holacracy these are called “Governance Meetings,” “Operational Meetings,” “Tribes”.etc.
  • In Management 3.0 supplements rituals of more or less hierarchical Organizations with a growing range of workouts called “Delegation Poker”, “Merit box”, “Value Poker”, “Guilds” etc.
  • In keeping true to its fluid nature, Liberated Companies hasn’t got a list of standard rituals. Instead, war stories are used to describe motives, values, and behaviors. Any attempt of standardization runs against the grain of liberation

As it turns out, Holacracies rituals appear to be quite painful. Some Companies tried Holacracy and returned to the hierarchy. Even the poster child of Holacracy, the e-commerce company Zappos, had attrition jump to over 30% for two years (that is the ratio of people that left the company to the total number of employees).  This quote from Andy Doyle, Head of Operation of Medium (a well-known publishing platform that tried and moved away from Holacracy) tells a lot:

…the system had begun to exert a small but persistent tax on our both effectiveness and our sense of connection to each other. For us, Holacracy was getting in the way of the work.

A similar pain of adjustment is to be born by management and employees in Liberated Companies.  But Holacracies maintenance problems appears to be more severe.  I suspect that…

  • looking at an organization as an operating system and
  • expecting people to be operating in that operating system and
  • installing new organizational routines “just like apps on an organization system”

are fundamentally flawed metaphors. Ok, these are just metaphors, put words matter, and the number of people quitting is telling.

My pick: Management3.0. With Management3.0 an organization is able to remain firmly grounded in the socially known area of the hierarchy but is able to mature step by step, practice by practice, unit by unit to a more empowered work culture.

Empirical evidence

Spoiler alert: There is no empirical proof of any management system being superior. So far the complexity of separating the influence of the organizational model on a companies performance has eluded even the best of scientists. There are simply too many factors that determine a companies success.

But some studies come close to making this correlation between organizational model and a companies performance. Here are two of those.

From Good to Great

One of the best empirical studies on the impact of the organization and leadership of a company on performance is Jim Collins et al., “From Good to Great”, 2001. In this book, which is built on exhaustive empirical studies, Collins names 7 Factors for well organized (“Great”) Organizations.


You can find huge parts of the ingredients of Liberation, Holacracy and Management3.0 in each of those 7 factors. Collins did not go so far as defining a Management System out of those three factors. But if he did, I guess he would end up with a system which looks quite similar to these three advanced Management Systems discussed here, don’t you think?

Corporate Culture and  Performance

In 1992, HBS Professor James Heskett and John Kotter, both professors at Harvard Business School, completed an extensive research project detailing the corporate cultures of 200 companies and how each company’s culture affected its long-term economic performance.

They found that those cultures highly value employees, customers, and owners and that those cultures encourage leadership from everyone in the firm.  So if Customer needs change, a firm’s culture almost forces people to change their practices to meet the new needs.  And anyone, not just a few people, is empowered to do just that.

One standout exhibit in that book highlights the difference in results over an eleven year period between twelve companies that did and twenty companies that did not have this sort of culture.

Screenshot 2017-09-21 11.51.59

That study suffers from some biases. But the impact of culture on organizational performance is a theme that John Kotter is working on to this day, validating the findings at large in later studies.

My pick: All three advanced systems. I think all factors point into the direction that the three advanced Management Systems are beneficial for companies. Clear, academic evidence is elusive, though. But the proxies that we have, from the clear superiority of agile team level models (like Scrum) to Jim Collins or John Kotter’s holistic study of enterprise-level performance, point in the direction that hierarchy will often produce inferior results compared to advanced, emancipating Management Models.


Ladies and Gentlemen,

The votes for the nomination of the world next top organizational design have been received and counted. My verdict is:

3rd place:  Hierarchy

One vote, albeit with an honorary mention for the ability to scale and its efficiency in low change, low complexity situations.

2nd place: Liberation and Holacracy

Four votes – with Liberation winning the sympathy prize, as there are lots of amazing companies running it. The bad thing for me as – I guess – technocrat is, these are just case studies, but no proof. Liberation might be nonprescriptive by design, but by being so, it means different things to different people. I can see beautiful things in it, but other people will see different things.

Holacracy is bolder because it makes those strict prescriptions that Liberated Companies refrain from. In doing so, it opens itself up to attack. I like that boldness, but it feels like too much technocratic engineering for me (..says a self-proclaimed technocrat…)

1st place: Management 3.0

Five votes.

The one vote that has tilted the balance in favor of Management 3.0 is the factor I called “Maintenance.” It is much easier and less risky for a company to gain the benefits of empowered Management Systems by following the gradual, maturity model-driven approach of Management3.0.

Management 3.0 is more prescriptive than Liberated Companies and less descriptive than Holacracy. This balance, works for me, as there is both, guidance and flexibility.

What is your ranking? Take the survey here.


That concludes part 7 of the series. Are we done? Nope, one more to go. The subject of the next post will be on the different paths to adopting the three advanced management systems and some apps, tools, and suggestions that you might want to try on the road to devolving control.

 Don’t forget to take the Survey. I will list survey results in the next post.


Appendix: I need names, now!

Holacracy References: Holacracy is a registered trademark, so it is easy to identify companies. There will be more companies off the radar of the parent company

Liberation References: There are businesses and persons listed here, who follow the creed of Liberation – at least in the mind of the two Dutch consultants maintaining this list. As there are no strict criteria of what liberation is, this list can be much more exhaustive than Holacracies list.

Management3.0 Site: There are very few references given on the site, as it basically started 2016 as an official trademark. Management3.0 does market itself as a set of agile practices, not as a system. So I expect there will be lots of company names in the future.

Holacracy does everything it does with missionary zeal and rigor. That’s analytically great, but it does complicate marketing quite a bit. The barriers to qualify as a “Holacracy-driven” company are quite high.  Liberation has a much easier job to marketing itself, as it is hard to accurately pinpoint what exactly a “Liberated company” is. Management 3.0 is a marketers dream, as it just promotes practices and will find it easy to gather references along the way.


Last, not least: The updated Comparision Table



  • Louis, David Marquet, “Turn the ship around”, 2012
  • Frederick Laloux, “Reinventing Organizations”, 2015
  • J. Collins et al, “From Good to Great”, 2001
  • Issac Getz et al. “Freedom 2.0”, 2017
  • J. Appelo,  “Management 3.0”, 2010
  • B.J. Robertson, “Holacracy”, 2015
  • J. Haskett and J. Kotter, “Corporate Culture and Performance”, 1992
  • J. Collins, “Great by Choice”, 2011

All sources and a short review can be found on 


Why the Climb is more important than the Summit: Jobs and Motivation.

What is the formula for individual performance? The best formula of scientific value I know of is delivered by Daniel Pink:

Performance = f (Mastery * Autonomy * Purpose)

where else…

  • Mastery is the longing for perfection
  • Autonomy is the freedom to do it your way
  • Purpose is the longing for a higher sense of being


Wrong. What are you thinking of when you write a job description for a new position in your company? I bet that the primary factor you are thinking of is A. what this person is supposed to do and derive from that B. what Skills, Qualifications and Experience this person should have.  Where in this process did you ever think of Mastery, Autonomy, and Purpose? Never.

But what do you want this person to deliver? Excellence, n’est pas? And all you think about is what the person will be doing and what kind of skill she needs. Ok, you might even think of C. Character traits, as third hiring criteria. But the character is so hard to judge, chances are that you will overweigh Skill and Experience.

The folly that most people in traditional companies are falling for is that they fail to recognize that they are still a child of the industrial revolution. The world is understood as being static. A job is to be done. Look for a person with the optimal fit, find her and assign her to a position. Job Done!

Ugly. Underperforming. Old School. Let me say why:

  1. Jobs are not static. In a modern, digital world with accelerating rate of change, this old way of thinking kills traditional companies. The Jobs to be done will change and change again over time. I am not advocating having no hiring criteria, quite the opposite. But a static job description as the main hiring criteria, that’s obsolete.
  2. Skill is not static. You may hire people for a skill, but a person won’t perform well if that’s the only thing you expect from that person. As Daniel Pink as shown, people aim for mastery, if given a chance. To not provide the opportunity to people to strive for mastery, means that performance will stall and decline over time

There is a better way. So let’s continue with the 6th part of the series that compares modern management systems and classical, hierarchical management.

Stop defining Jobs – provide Opportunity for Growth instead

Job Descriptions: No, thank you

Advanced Management Systems have done away with job descriptions. There are simply no Job Descriptions whatsoever in Liberated Companies and in Holacracy.  Let the people themselves figure out what is best for the company at any point of time. As long as the social collective is functional and a shared purpose aligns peoples actions they will find their place in an organization – again and again. The realignment to changes of the business environment will happen on its own,  based on the social collectives judgment of competence and motivation of a person. No formal job description required.

Management 3.0 straddles the middle position. It propagates keeping job descriptions, but these should be described in broad, general terms. Job titles should be as broad as possible, too, to allow people room to grow and develop.


Roles: Yes, please

That does not mean that all formality is foregone. It still pays to be as clear as possible on what someone is responsible for.

Holacracy takes great care to get people to draft role descriptions to do exactly that. The difference between roles and jobs is that roles are meant to be held only temporarily. They can be assigned and reassigned by Holacracies teams (“circles”) as needed. No HR required, no legal counsel, no organizational chart to be adapted.

Within Liberated Companies, it is still a good idea to clearly communicate responsibility, but there is no formal description how to do that.  Management 3.0 is not prescriptive about the subject of roles, but I extrapolate that roles remain a good way how to define, assign and communicate responsibility.

The guys from Corporate Rebels, a blog preaching the virtues of Liberation, have recently published a post with the headline that says it all: “Delete Titles and Job descriptions. Add: Talents and Mastery“.

Career: Sideways is the new up

What all three modern management system have in common is that people should be provided with opportunities to advance in mastery and pay grade through deep specialization or by moving to other, more or less unrelated jobs in the organization.

Job titles are frowned upon in all these management systems. This requires people to hold an egalitarian attitude.

Again, Management 3.0 holds the middle ground. It frowns upon job titles, but only in organizations accustomed to a high empowerment level. In organizations with a lesser empowerment level, broadly defined job titles are still useful. After all, some people do not only strive for Mastery and Financial Reward, they may strive for prestige and status instead.

What Management 3.0 is saying is that an egalitarian Attidiute must be grown. This is hugely contested by Liberation and Holacracy, which hold that piecemeal, evolutional “egalitarianism” will not work. You have to go all-in, taking a revolutionary leap. For example like Irizar, a Spanish Bus Manufacturer. But more on the subject of adopting one of the advanced Management Systems in the next post.

Motivate! But do it in a sustainable way

But wait a minute. Let’s take as a given that people are the happier, the more they are able to strive for mastery, in their own (autonomous) ways and following their own sense of purpose. But how many people do you know who are actually driven by mastery?

A few, at best, I guess. The thing is: Providing a work environment that fosters Mastery through Autonomy and Purpose is simply not enough. Just offering people the chance to grow does not mean that the offer will be taken up. For people to enter the self-reinforcing feedback loop of Mastery, people need to be motivated to go the first steps on this path.

A traditional way to motivate is to offer money. But financial rewards have been proven to be dangerous, costly and short-term: Every financial target is a golden opportunity to play the system, esp. for all those inventive, sneaky types. Good Goals must be SMART (specific, measurable, attainable, relevant and time-bound). Targets are an opportunity to play the system in these dimensions, e.g., for short time profit, by the negligence of quality, for unsavory trade-offs with other targets, by taking advantage of other departments or persons, etc.

Yet traditional companies rely on financial rewards or dole out status perks, like job titles or corner office spaces. In return, employees get a certain amount of job security, a defined place to go and a defined set of tasks to do every day. Deal?

This package is very different for Liberated companies and Holacracy. Here people are expected to turn up to work every day for Self-fulfillment, i.e., aiming to realize one’s deepest desires and capacities.

motsThat seems like a lofty concept. Hey, there is a job to do here, say in accounting for instance. The company couldn’t care less about employees “deepest desires and capacities.” And why should a company care? As long as the job is done everything is in order, isn’t it?

The Fog of Business

The problem with this way of thinking is: What can be measured and what is seen by a manager of an employees work is limited. A Manager sees the performance of his people through his limited perceptional capabilities, creating a “fog of business.”

fog of business.png

  • Observed value-add: What is measured by an organization and what is seen by a manager are two different things. Lots of work or even measurements go unnoticed or are ignored. Lots of observations and measurements consist of a lot of noise. The quality and quantity of work itself is hard to measure, esp. in knowledge-driven work
  • Unknown value-add: There is a lot of good, beneficial work, that escapes the notice of a manager
  • Negative value adds: But so there is a lot of none or negative value-adding work spend for example in local optimization thereby undermining other departments, tuning reports, neglecting customers, etc. That goes unnoticed, too.
  • Potential Value Add: If the energies of a worker can be directed into this field, the company can benefit more. For example spending more time with customers, honing data skills to achieve greater efficiency, liaising with other units for better cooperation, spending more time to set-up and perform experiments, etc. All those things which would have been beneficial, but have not been done because of other priorities, incentives, a lack of goals, no shared purpose or simply because of loafing

It is the job of a manager to redirect more work from the “Negative Value Add” area into the “Potential Value-Add” area. But the fog of business stands in the way of this undertaking. While the fog might be reduced by adopting a policy of utmost transparency, it will always be there. But there are ways to help people orientate themselves in this fog towards directing more of their work to beneficial undertakings:

  1. Allow people self-direction
  2. Give them the compass of a shared purpose of the organization
  3. Get co-workers to provide instant and rapid feedback, so that more work is seen
  4. Rely on broad measurements for the organization overall, and less on small, specific, individual measurements

The size of the “Negative” and “Potential Value Add” areas in the picture above must be vast, given that so many people are disenchanted with their jobs.

That is why self-fulfillment is such an important concept. It allows for people to re-direct their work to more beneficial areas, that are otherwise bound to remain unseen by managers.

Relatedness at scale: Social Control

But by just letting people off the leash in a quest for self-fulfillment an organization may end up with a bunch of uncoordinated egomaniacs. Motivation must be directed, by controls such as shared targets, organizational discipline (esp. in Holacracy) and – foremost- relatedness. Relatedness to other persons provides social control of a group. And social control is the most powerful control there is in groups of human beings.


Modern Management systems reduce the fog of business by designing a work environment to

  • allow people to self-direct towards Mastery
  • providing Autonomy and
  • to embed their purpose into the companies purpose
  • utilize social control for coordination

Therefore, Job descriptions are no longer needed. As job requirements and individual skills change, temporary roles become a much better tool to coordinate work and to arrange virtuous cycles of organizational learning.

Thereby, the overall outlook of employees on work changes from “a place to go” to the “things you do” – a much more dynamic and explorative proposition, don’t you think?


This was part 6 of the series on the comparison of the three modern management systems. Part 7 will be about outcomes:

  • What is the evidence that these management systems are working better than traditional hierarchical management?
  • What are the conditions?
  • Is it changing Mangement Systems worth the effort?

The updated comparison table can be found below.


By the way: The featured image shows a panopticon prison, where all inmates can be observed from exactly one central position, the tower in the middle of the round building. Such prisons were built in Southern US,  Latin America, and Western Europe. This is a like a wet dream for a control-minded manager. Scary fact: This architectural design is obsolete in modern times. Today, we get cameras and sensor to achieve total control at a fraction of the costs. A physical line of sight is no longer required.



  • Pink, Daniel “Drive”, 2011
  • I. Getz et al. “Freedom 2.0”
  • J. Appelo,  “Management 3.0”
  • Robertson, “Holacracy”


A Message to Managers: Keep your Hands off but your Eyes on!

In the last 4 posts of this series on comparing three modern management systems, I have tried to lay out the difference between them using 27 different criteria cluster in 4 Categories: Foundations, Leadership, Structure, and Actions. The bad news is: We are only half way through the total list of 54 criteria’s and 10 Categories. But the good news is: We are only half way through this series, so there is a lot more to discover.

So much about Management is easy. Hey, stop it right here! Shouldn’t Management be easy? What about all those numerous articles on the “10 secrets of good Management” or “The three cornerstones of management success” or the whole lot of Management Literature making rather one-dimensional recommendations about “results driven” or “mindful”  Management or those biographies of idolized leaders like Jeff Bezos or Elon Musk. Simple lists of bullet points are what mainstream literature sells.

Simple Mangement Systems are good – simple minded Managers are not

There is a lot to be said in favor of simplicity. A sound management system must feel simple for everyone who happens to be working in a company. No Management system should ever distract from the work itself.

But there is one group that does not enjoy the luxury of the simplicity of working inside a well-defined System of Management. These are the Managers themselves, as they need to be aware of all the complexity, levers and buttons that are available to define and continuously tune a management model to the evolving environment the business faces. Only then results of an organization will be optimal.

Within complexity science two theorems are supporting this view:

  • Law of Requisite Variety (W. Ross Ashby): If a system is to be stable the number of states of its control mechanism must be greater than or equal to the number of states in the system being controlled
  • Good Regulator Theorem (Roger C. Conant and W. Ross Ashy): Every good regulator of a system must be a model of that system.

In other words: You got to know what you are managing. The more complex it is, the more there is to know.

However, this is not to say that everyone who is doing a bit of management needs to know the whole stack of knowledge on management systems. She just needs to know the relevant bits of the part she is responsible for. But at the highest level of management maximum knowledge about the science of management is essential.

Still, high-level managers can get away with limited knowledge if the business environment is sufficiently stable or sub par results are not immediately visible. But:

If the needs of an organization and business environment are not reflected in its System of Management, you have to expect systematical underperformance. In a changing environment, those managers stuck with just one (“their way”) of doing things, will underperform.

Heuristics help Managers – a catalog of Heuristics helps even  more

While fully sentient, all knowledgeable Managers are in short supply, there is no need to worry. If a situation is too complex to fully control, heuristics (i.e., rules of thumbs) do a better job controlling complexity, as Gerd Gigerenzer has shown in his 2014 book “Risk Savvy: How to Make Good Decisions.” 


Still, having a catalog of alternative heuristics and being able to vary them at will is more powerful than just having to rely upon one heuristic to propel a manager through her professional career. In other words: Having specialized tools that can be applied to organizational problems instead of always using the same old hammer, makes a manager so much better.

Ergo: It’s good to build a managerial tool box containing highly specialized tools. So let’s get on with the next 27 criteria that distinguish modern management systems.


The “Good Manager” (aka the “Good Regulator) needs to know what he is managing. So what about if Mangement is a more distributed task and basically all employees are Managers in certain aspects at certain times. Does everyone need to know everything?

Shared Information – Shared consciousness

In such distributed management environments as Holacracy and Liberated Companies are, every employee has the right to know everything. Transparency is what is needed for management systems relying on the distribution of control.  The classical “Need to know” paradigm, i.e. employees just need to know what they need to know to do their assigned jobs, is not enough. Every employee should have the chance to understand the big picture and to know what the co-workers are up to.  As control is delegated to the social community (as in Liberated Companies) or regulated by a constitutional framework (as in Holacracy), informational transparency is a must. The goal is to achieve alignment on actions on specific targets based on a shared consciousness, commanders intent  – however you want to call it.

This shared consciousness is an objective of Management 3.0, too. But Management 3.0 focusses more on the path towards making more and more information available, according to the maturity level of the organization and its people. It highlights the fact that it is not much use overwhelming people with info. It might be more useful to educate people how to identify and process more and more bits of information over time. After all, people need to trust the information provided and need to feel secure in their actual freedom to act. This trust can not be achieved overnight – it must be grown.


Hands-off – Eyes on

Irrespectively of which of the new management systems one looks at, a managers communication styles shifts from the classical “hands on, eyes on” approach to a “hands off, eyes on” approach. It is important for a manager to listen to people and it is equally important to let people try to fulfill their responsibilities in whatever way they choose and not to intervene in the way how things are done.

This is pretty hard. “Hands off” means that managers will from time to time see people fail, while a word of advice could have prevented this failure.  There is a very fine line to walk here, especially if an organization is new to management systems relying on distributed control. The line between “advice” and “order” is a pretty vague one. The tool of choice here is to work with open questions “Why, What, How, When.”  That should allow the employee to reflect without the manager being too suggestive.

By the way: Do not ever try a “hands off – eyes off” communications approach. This would imply that you are either fired or dead.

Reporting & Metrics visible for everyone

Reporting in classical organizations is done via reports or broadcasts up and down the hierarchical line. In modern Management Systems reports are still existing, but they are available to everyone, in real time, irrespective to hierarchies. It’s a part of shared information – shared consciousness.

Open Work Space

The work space is a very powerful enabler of shared information – shared consciousness. To box up employees in cubicles or small offices is counter productive. The physical layout should follow the following principles instead:

  • Open work spaces with few walls
  • A lot of flexibility to rearrange sitting arrangements at will
  • Central service areas and walk ways arranged in a way to facilitate meeting one another across hierarchical levels and departmental lines
  • Spaces for people to retreat to focus on getting work done without interruption
  • Central metrics communicated with large scale print outs or screens that float into view of passers by, and not hidden in some corner


While this list can be extended one thing is not needed: Special amenities such as free food, massage services, gaming areas, etc. These might have their uses in certain situations for certain times, but they quickly become perks that are taken for granted and fail to motivate anyone in the long run. On the contrary: Perks breed a sense of entitlement over time. Once a person does feel a sense of entitlement, the perk is good for nothing except driving up costs.


Conflict in classical organizations is discouraged. A conflict signals that the organizational machine has a defect, there is a part not functioning as it should. Messengers bringing up a conflict are quickly associated with being the source of the conflict and are discouraged to bring a conflict to light. In the long run, experienced employees do not seek to highlight conflicts in classical organizations. Instead, they learn to rely on underhanded, subversive tactics to leave the job to point out conflicts and failure to others. This is just a classical feature of any autocratic structure:


In modern Management Systems conflicts are seen a chance to improve. Conflicts are an essential part of every social fabric. They do not necessarily need to be solved in the shortest possible time frame, as the metaphor of “failure of one part of the machine” dictates in classical organizations. Instead, conflicts are useful even if lingering over time, as they highlight an underlying tension which is better kept in the memory of the social fabric instead of being swept under the rug by the courtiers in hierarchical organizations.

In Liberated Companies, the social fabric will work out conflicts over time through the mechanisms inert to human societies since time immemorial, i.e. persuasion, coalitions and social pressure.

Holacracy is much more specific. A core feature of Holacrcies operating system, its constitution, is dedicated to solving so-called “Tensions” (i.e. Conflicts) through a prescribed agenda that needs to be followed in a “Governance Meeting”:

  1. Check in a round: Everyone says whats most on her mind. No discussion
  2. Administrative Concerns: Brief timing check
  3. Agenda building: Agenda are built on the fly with 2-word maximum by everyone
  4. Process agenda items with the “Integrative Decision Making.”:
    1. Present Proposal (by who raised the agenda item)
    2. Clarify questions: No discussions
    3. Reaction Round one: Everyone except Proposer, no discussions
    4. Amend and clarify (Proposer)
    5. Objection round
    6. Integration: Mainly objector and Proposer
    7. Return to objection round until solved
  5. Closing round: Everyone reflects on the meeting

Management 3.0 does not make specific recommendations who to resolve conflicts. It basically relies on a mixture of social pressure (as in Liberated Companies), participative meeting formats (of which are many, basically all agile practices like Stand-up meetings or post-mortems or classical one on ones). Very situative, rather vague, but in tune with its world view that complex environments do not lend itself to one approach fit all.

That’s it for now. The next posts in this series on comparing three modern management systems will be on Jobs, Motivation and (possibly) Outcomes. I hope you still enjoy the series – let me know what you think and tell your friends!

Last, not least: The updated Comparision Table:




Why Management still matters – even in organizations with flat hierarchies

Managers are characters that are pretty loathed. The term manager has an image that can be described as uninformed, ignorant and power driven. A Manager is not doing anything, except ruling and playing nice with superiors. Yet, here are the facts (#1):

  • The number of managers in the total workforce in the US has increased from 12,3% in 1998 to 15,4% in 2015
  • Between 1980 and 2012 more and more jobs became “Management-like”: The demand for routine skills decreased, and the demand for social skills (e.g. negotiation, coordination, persuasion and social perceptiveness) grew
  • Even in Silicon Valley’s most successful Companies, Middle Managers are still the norm and shape the “transmission belt of information” between the top and the working level

In fact, there is a huge case to be made for middle managers, even in the digital age:

  1. In an ever changing VUCA environment good middle managers help to make this complexity manageable for the top management: They “encapsulate” complexity (not unlike API’s do in modern IT architectures)
  2. Persuasion is what is needed to get results from all this data. Without getting your points across, no one will follow. Persuasive people attract followers and are – by definition – managers/leaders
  3. Collaboration needs encouragement. While people may collaborate naturally with one another, a manager gives the act of collaboration a particular purpose and keeps it on the target of an organization

Modern management systems are not blind to these advantages. Here is how those systems let Middle Managers (or people charged with management tasks) do their work more effectively.

(This is part 4 of a series on a comparison of the three Management Systems Liberated Companies, Holacracy and Management 3.0)

Management Actions

No matter if Managers are still called Managers or not, there are still a hell of a lot of management tasks to be done.


Let’s start with decision making. In classical hierarchies, the superior is supposed to decide everything of importance, except those decisions explicitly delegated to coworkers. Delegation has been recognized as the critical to tool to keep an organization running smoothly and develop your coworkers at the same time. Good delegation is 80% of what good management is about.

In ever changing VUCA environments there is just one problem with it: You can only delegate those decisions that you expected. In a climate of constant exploration, experimentation, and adaptation the traditional form of delegation is to slow. As long as the “residual rights of control” (to borrow a term from the theory of Incomplete Contracts as described by 2016 Nobel prize winners Oliver D. Hart and Bengt Holström)  for every unexpected decision lies with a manager, decisions will automatically slow down, as a manager needs to find time to acquaint herself with the situation.

Therefore Liberated Companies and Holacracy takes a bold step: The “residual rights of control” for every decision shifts to the work level, as a default. Only if a worker does feel sufficiently informed to decide, she is able to escalate it to a superior. That superior can be a manager or a group (a “Circle” in Holacracy).

Management3.0 does not go so far of shifting the “residual rights of control” to work level. But it does change the nature of delegation, by using Mission type tactics in the delegation, as explained in the next chapter.

Here are my Orders!

“As long as everyone follows my orders, nothing can go wrong.”

Who hasn’t heard this sentence? I even heard that from the CEO of a Billion Euro Company. He claimed that if every business unit just performed according to the revenue and budget numbers he came up with all by himself, everything will be okay: “Everyone! Just focus on these orders!”

Attractively straightforward and easy to understand, this order. But an utterly flawed attempt by one mind to compress all the complexity of a business and the environment to a set of numbers. For sure, people acted on these figures. After all, the CEO provides them with a living. But as sure as hell people will play with these numbers. They will game the system, e.g. use creative accounting, shift burdens to the future, other business organizations or anything that is not measurable as for example quality and risk. This “fantastic” plan just got everyone to focus their energies on gaming the system instead of making the customer happy.

Still, there is nothing more efficient than giving good orders. It relieves people with all tedious work of getting to a decision themselves. It eliminates uncertainty and indecisiveness. It gets people to work on the spot. It is very efficient.

But it is rarely very effective: Given a complex and changing environment, where a superior can not possibly know all relevant details, the more detailed or exact an order is, the more it is likely to fail to bring about the intended consequences.

In a complex and changing environment a detailed Order is inferior to an Order expressed as a Mission. 

This style of command is known as “Mission Command.” Orders are expressed as Missions, i.e.

  • The intent of the Commander is stated clearly: “Why?”
  • The objective is described in the broadest possible terms: the expected actions to be taken, the “What,” the “Where” and the “When.”
  • The authority over resources that may be employed for the mission is specified

While this is still an order, this type of order delegates maximum authority to the subordinate. Not only the authority to vary means, but also the authority to alter ends – as long as the commanders intent, the receiver of the order has the leeway to do whatever is in her power to bring the situation nearer to the status intended


Management 3.0 wants orders to be given in a Mission command style. It shares that preference for Mission Command with the Lean Movement. There is one precaution in this: Mission Command must be complemented by the competence level of the receiver of the order. It is no use making orders so broad and vague that people are just overwhelmed by all the decisions they need to make. In this case, it is better to make the order less general and more specific – and therefore more executable.

Within Holacracy or Liberated companies, there are no orders – on the surface. While there is no individual who has the authority to order anything, there are informal social groups (Liberated Companies) or  Circles (Teams in Holacracy) expecting individuals to do things. This hasn’t the hard look and feel of an order, but disobedience is full of consequences, too. In fact, decisions of informal social groups or organized circles that oblige individuals to do things are orders in all but name. These orders are just not given by individuals but by groups.

Holacracy’s “integrative decision-making process” is built on consensus and is a safeguard against the tyranny of the majority. However, this protection comes with a hefty price tag: Consensus.

Information: From Need to know to Right to know

The flat organizational structures of Liberated Companies, Holacracy and Management 3.0 need to be based on ubiquitous information that is available to every member of the organization. It is a sine qua non for everyone working in such organizations to be as transparent as possible.

There is a “right to know” that is in stark contrasts to the classic “Need to know” mantra, which is the norm in most organizations. Why should a worker know more than he needs to do his job? Well, there is no reason, if the job is precisely defined so that the “right” amount of information can be specified and the environment is stable.

In knowledge based organisations and in inherently unstable environments “Right to know” is therefore superior to “Need to know”.

But I have to insert a qualifier here: The amount of information and the usefulness of the information is essential. Information overload and echo chambers will undermine the success of any management model – and it will all but devastate modern, less hierarchical management systems. Any current management system has to rely on Social Network Theory (see Social Physics: The Revival of Science in Management) to engineer an effective information flow, e.g. a structure that will reign in echo-chambers.

Specialization: Go forth and specialize

Specialization – the separation of tasks within a system – is tremendously powerful. Everyone human being is being specialized during education and in work life –  so that this specialization becomes an important part of oneself. The specialization is internalized not only in the skills that we have, but in the values, we tend to have, and finally in the people we are. Accountants, lawyers, construction workers, salespeople, etc. – we all attribute certain values to these professional specializations.

For Adam Smith specialization (“the division of labor”) was one of the three cornerstones of an industrial society, along with the ability to act according to self-interest and free trade. Up to this day, people are not hired primarily for character traits, they are hired for their specialization. A job profile is defined predominantly by the tasks and skills that a person is supposed to bring into the new position. A suitable candidate for the job is selected and the position, the cog inside a machine, is in place and ready to work in the manner planned by the manager in charge.

The total opposite position is taken by liberated companies. Here persons are hired because primarily because of their character traits. The skills that a person has are not unimportant, but they are secondary. If a person has got the right “growth mindset” (read: expected capability for learning) is curious and has grit, the hire will be made. The predominance of character traits over current skill is something that is actively supported by Google (see Hiring like a Pro: Lessons from Google).

Once a person is hired, she is rotated from job to job to find her calling. The path is not pre-planned as in classical organizations, i.e. “you were recruited to fill this position – now do your job.” Instead, it is left to the personal interest of the new recruit to find her calling.

The mechanistic staffing of a person into a predefined slot in the organization is replaced by a series of explorations that enable the new recruit as well as the organization to find the place of long term maximum impact and value

Let’s face it: Nobody knows a new hire at the start. What is known is a CV. Interviews reveal next to nothing – just check the article on Google’s hiring experiments above. If people are the most valuable asset a company has, conducting a phase of controlled experiments by rotating to different positions is a wise and even – as Google has proven empirically – a scientifically sound strategy.

Holacracy approach to specialization is all about roles. Here the circle is defining the roles needed and is deciding on the question who should hold which roles at what point of time. Basically, the Circle’s need determines the degree of specialization.

Management 3.0 works with roles instead of job descriptions, too. Here the roles are defined (or sanctioned) by a superior manager instead of a circle.

What’s all this obsession with Roles instead of Job Descriptions?

  • A Job Descriptions implies some binding legal definition of all that an employee should do: The more detailed it is, the more difficult it is to change – which is wrong in the digital age
  • A Job Description is tied to a position which is held by a person in a 1:1 relationship.  This risks creating a single mindedness of the individual over time, due to a lack of other perspectives: With the locking in of a person in a position, world views get locked in to. This is very bad, as growth and innovation need impulses from the outside
  • Roles are not legally binding, they can be flexible invented and discarded
  • Roles are temporary: They are held only for a time, giving the employee a chance to grow with every change of perspective
  • Multiple Roles can be held by anyone at a particular point in time

The recommendation is: Keep Job Descriptions as general as legally feasible. Use roles instead and maintain those vigorously. Especially Holacracy is very adamant to formalize roles in written form.


Now let’s talk about Specializations twin sister: Coordination.

The need for coordination increases with the number of employees and the degree of specialization. I would say the need increases exponentially, foremost because it’s trendy to be exponential. Linear is so 1980ish…isn’t it?

There are two game changers in the realm of coordination these days:

  1. Technology is there to connect everyone to everyone, across hierarchies and levels, instantly, e.g. Slack, Trello, Jira, Google Hangouts, etc. There technology crowds-out traditional coordination mechanisms like Meetings, Broadcasts (“Letter from the Manager”), or One on Ones. These traditional coordination mechanisms do not disappear, though
  2. Change is here to stay. The ever expanding rate of change requires a company to redirect resources time and again. Coordination is already required in stable environments to keep things running smoothly, but in unstable environments, it is much more necessary

All three modern Management Systems rely on a shared purpose, a clearly communicated “Raison de être” of the organization. This shapes the values and behaviors of everyone in the organizations giving it a “true north” as a base for any decision. An extreme, very successful example of this is Amazons “Day one Message“.

But a “true north” is not enough. It needs to be supplemented on the tactical level with free flowing real time information about hard facts (numbers) and soft facts (social relations and emotions). Not communicating openly, not in real time, and painfully long drawn out decision processes mean – as Jeff Bezos said in the clip above- Stasis followed by excruciating pain and death.

Liberated companies rely mostly on a shared mission and free info. This system does not give any other recommendation, but people are free to try anything else and check what works. In stark contrast to this is Holacracy. Its whole Operating System is basically about coordination. There are accurate and detailed descriptions how to achieve coordination in a nonpersonal, nonviolent, systematic process.

Management3.0 is openly embracing the concept of coordinating by shared purpose and free information flow.  But it does reserve a place for traditional coordination methods by managers. By expecting managers to regard their trade as a craft, which one should seek perfection in, it offers concrete, simple practices to do so. These practices are not just about coordination, but coordination is always involved as soon as more than one person is participating.

A couple of Management 3.0 practices center on supplementing the hierarchy with networks, e.g. forming of ever more self-governing communities of interests called “Huddles, Tribes or Guilds”.


Rules, Policies, and Processes

Rules are one of the arrows in the quiver of coordination.  They are usually made to regulate behavior.

This is obviously something that Liberated Companies are allergic to. Besides Kant’s categoric imperative in its second formulation (simply said “Nobody should act to do another one harm”), it actively discourages the use of any rules:

Rules are made to regulate the behaviours of the 3% of employees who may be misbehaving and are punishing the 97% with limitation and distrust.


Rules can never be perfect, especially not in ever changing complex environments. It follows that rules bred rules. The Proliferation of rules will kill companies, they will create, “stasis, followed by excruciating pain, followed by death” – to cite Jeff Bezos.

Please note that processes share a considerable overlap with rules, if they are very strict, formal, static and not applied in a reflected manner.

Holacracy shares this aversion of rules – with one ironic exception: The rules of Holacracy must be strictly adhered to. Do not temper with the Operating System! The Operating system is fixed, go innovate somewhere else, on top of the operating system.

Management 3.0 is averse to rules, too.  But it prefers a gradual reduction of the use of rules, as competence and trusts grow. I think there is an inherent conflict here: Rules proliferate over time. Yet, they should be reduced over time, which sets a high bar for the skill level of the manager in charge. Getting rid of established rules is empirically very hard. What is first: Granting trust to build competence or gaining trust by sticking to the rules? I do think the first.

Summary: The evolution of the craft of Management


Decision making, Getting people to do things, Communicating, Specializing, and Coordination remain critical activities of managers or people doing management tasks in any System of Management.

All these management activities require new tools, as the challenge of managing a knowledge based organization in a rapidly changing digital age has changed. Get a new tool-set you people doing management!

This is not the end of middle management but an evolution.

A final word about the presentation of the Management Systems:

Practical advice is very warmly presented on the Management 3.0 Site. Looks a bit like a children’s birthday party, though. In contrast to this, look at the core of Holacracy, the Constitution. This looks like “legalese” small print terms and conditions.

  • Holacracy wants to treat people as adults – who it obviously expects to be all lawyers.  

  • Management 3.0 wants people to “manage for happiness” – so we all got to be children again? 

  • Liberated Companies offers narratives but little guidance.

I think there is a space to be filled here.

We are not done with this series on Management Systems yet: 4 done, 2 more to go. The next weeks, I will be heading for the coasts of France. So posts will be shorter and smeared with a mixture of sun-cream and sand.

Enjoy Summer, ladies, and guys!

Here is the updated summary table:




Leadership and Structure: What has changed with the Digital Age

Quite a bit has happened since my last blog post. Due to a re-tweet of a popular writer, there have been about 600 views of Holacracy, Liberation and Management 3.0 – the first article in a series comparing those three Management Systems. Compared with the usual 50 views, that felt good!

What is more important: Comments came in, which highlighted some background of these Management Systems. That sent me into a frenzy of research about subjects like:

  • Sociocracy3.0, a system of governance which replaces hierarchy  – of which Holacracy basically is a popular application in a business environment
  • Prescriptions how to implement Agile Software Development in large, multi team environments like LeSS (Large Scale Scrum), SAFe (Scaled Agile Framework) and DaD (Disciplined Agile Delivery). Special thanks to Ralf Metz for pointing in this direction
  • The commonalities, overlap and supplementary nature of all those systems and their foundations like Lean, Scrum, eXtreme Programming,  KANBAN, etc.

The learnings?

  • It is the “principled anarchists” in Software Development who are pioneering a lot of new management techniques
  • People with other backgrounds, e.g. MBA’s or any other Person with a non-IT professional background, are overwhelmingly not involved or aware of new Management Models
  • There are a lot of good ideas which can be transferred from the realm of IT to other knowledge based work environments if only those Managers can be interested in understanding their trade as a craft, which they need to improve to prosper in the digital age

When I talk to interested managers, I find that they can see the advantages of Agile and its conflicts with traditional hierarchical management. But there is so much fragmented advice out there. A comprehensive but understandable management system would help them navigate.

So let’s continue exploring the differences of the three Management Models.

A. Leadership, aka: Heroically cleaning the office kitchen

As I said in The Foundations of Holacracy, Liberated Companies and Management 3.0: I do not care much about distinguishing Management and Leadership. It’s just semantics. Here are their definitions according to the dictionary:

  • Leadership: The action of leading a group of people
  • Management: The process of dealing with or controlling things or people

So once you are responsible for a group of individuals you are managing them, AND you are a Leader, too. There is no constellation in this where a Manager is not a Leader, and a Leader is not a manager. A “Leader” is a just a more grandiose name for someone who is a “Manager.” The act of leading by example by cleaning the office kitchen is as well an act of management as the multi Billion merger decision is.

Nevertheless, I use the term leadership as signifying the posturing of the Manager towards his group: The role that one adopts as a manager in relation to the group that is being led.


The Gardener

In a hierarchical organization, the role of a manager is “Command and control,” i.e. clearly stating what someone is to do and checking if it has been done. That role shifts towards the Gardner role in Liberated Companies and Management 3.0. Why a Gardener?

A Gardner is supposed to grow an organization, not build it. If the central metaphor for an organization is the “Organism” (Liberated Companies) or the “City” (Management 3.0), it is impossible to impose the will of a Manager. A Manager must grow an Organization by planning, seeding, growing and maintaining the organization. Please note that “Seeding and Growing” is wording that is well known in the world of Lean Start-ups, as in “Seed Capital” and “Scaling” (from zero to one or from 1: N, whatever). A pleasing symmetry, as a Gardener, must build hypothesis before seeding and refine her beliefs while watching the seed grow.

The Gardener role is supplemented with the role of the explorer – i.e. introducing ideas from the outside, nudge and destabilize the company from time to time to do things in new ways. And it is supplemented with the role of the coach, to foster the growth of skills and discipline in employees. Please note that not every Manager is a good coach. So Jurgen Appelo (the author of Management3.0) suggests outsourcing this activity to a professional coach. But coaching remains an obligation of the manager nevertheless.

Holacracy is different. Management is done away with. There are just “link” roles assigned to individuals, who practically acts as the Referee inside Holacracies operating system.  There is only one manager left: the CEO acting as a benevolent dictator who wants the system of Holacracy for her company.

A decrease in the number of managers

Let’s look at the span of management: In traditional companies there usually is an average number of 1 Manager to 8 employees. Management 3.0 is not specifying any number, but it seeks to increase that number by decreasing the number of middle managers. Holacracy is doing away with managers altogether, but it is recommended that coaches support the organization at a ratio of 1 coach to 50 employees, in typical organizations that I spoke to or read about.

Who appoints managers?

In a hierarchy a manager is appointed by a higher level manager. This is no different in Management 3.0. But in Liberated Companies managers are elevated by the group by vote or just by the fact that people choose to follow them. In a Holacracy, there are no managers to be appointed, but there are roles to be assigned. These are assigned by a vote by the members of a circle, requiring consensus or at least no veto from any member of the circle.

What about the power base of a manager?

Who appoints managers explains the power base of a leader. Wherelse a hierarchy bestows a manager with powers ( e.g. may direct others, decides on bonus payments, work location, promotion, etc.) that are linked to the position assigned, there are no defined positions and no positional powers in Liberated companies or Holacracy. Leaders in such companies have to rely on their skill to attract and retain followers. A feat where credibility and trust are key. Lose your followers and cease to be a leader. Not unlike leadership of a Viking tribe, in a Multiplayer Online Game or any effort to attract followers in crowd platforms like Instagram, Pinterest, Blog sites, etc.

I like to make a small amendment for Management 3.0. Even so, a hierarchy is still in place, a leader is supposed to take on a servant position ( see The Foundations of Holacracy, Liberated Companies and Management 3.0). And Servant Leadership needs social capital, e.g. trust and credibility, to work. Again, an excellent bridge build by this system between today’s reality of hierarchical systems and a less hierarchical future. It is a step. It is Realpolitik.


B. Structure, aka Silos and Networks

The first thing that a newly appointed manager usually does is to think about the structure of an organization in which to apply his skills. Which structure provides the best fit for the purpose of an organization at the current point of time?

The hierarchical organization answers this question with an organizational chart: Boxes of clearly defined responsibility, ordered by business function, geography, product or a matrix combination of these. The dominating belief is: There can be only one responsible for a box/ unit. Shared responsibility is a recipe for no one being responsible at all. For any kind of work and at any point of time, there must be someone who is in charge.

That belief does not change in any of the other management systems. What changes is how this responsibility is assigned.


Assigning Responsibility

In Hierarchies responsibility is directly assigned by a superior: Do this, do that.

Management3.0 provides the employee with more negotiating power because the manager is supposed to sell and win over the employee and not to impose a responsibility. Although there may be cases that a manager might be forced to impose her will, in the awareness that this will be depleting her social capital.

In contrast to this, Holacracy and Liberated Companies rely on people to volunteer for responsibilities. Volunteering is facilitated by a shared Mission, shared values, shared the understanding of the situation and social pressure of the team to do so. This is crucial: Without these four elements in place, neither of these three management systems (including Management 3.0) will work.

Networked, horizontal relationships

In a hierarchy, the most important relationship is the vertical one, to a superior or to a subordinate.

This changes in the other three management systems, there the horizontal relationship to the co-workers is much more important. This has profound implications: No longer is the winning career strategy for people to cuddle with their superior. It is now much more important to be valued by your coworkers.


The implications of Talleyrand’s dictum are immense:

  • Rebellious, nonconformist types of persons are able to rise in systems like Liberated Companies, Holacracy and Management 3.0
  • Subservient, some times devious types (“Courtiers”) of characters and behaviors aimed at pleasing the superior and gaining favors, that other do not enjoy, have less chance to succeed
  • People (“Demagogues”) being able to simplify matters and raise the emotions of coworkers have a better chance to rise to prominent positions because they are evaluated by their co-workers

Creativity will increase in networked, horizontal organizations. But tumult and change will increase, too.

Demagogues at work. What would you prefer to be:  A Courtier or a Demogoge?

Main source of contribution

The individual is the smallest unit of an organization where work is actually happening. That is the unit that the classical system of management is addressing. Give everyone something to do and coordinate all individuals.

But science has advanced since the days of Frederick Winslow Taylor. The phenomenon of Emergence has been discovered in System and Organizational theory:

Emergence is a phenomenon whereby larger entities arise through interactions among smaller or simpler entities such that the larger entities exhibit properties the smaller/simpler entities do not exhibit.

In other words: A team is able to perform better than the sum of the contributions of its individual members. The easy explanation is that people bouncing ideas on one another and complementing their skills lead to better solutions than anyone would be able to come up with on their own. The complex explanation can be found in Social Physics: The Revival of Science in Management.

The other three management systems recognize this scientific advance and focus more on the team as the main source of the contribution.

Maximum size of autonomous units

Ok, a team might be the most important unit for delivering performance within an organization. So an organization should be organized in teams (Liberated Companies or Management 3.0) or Circles (Holacracy). But at what size does an organization, that is made up of a number of teams, become inefficient?

For once, Liberated Companies delivers hard facts: 150 people – as a rule of thumb. If an organization grows beyond that number, split up and form a separate legal entity. If organizations fail to split up, coordination efforts will increase disproportionately leading to a reinstatement of the hierarchy or to chaos.

Holacracy does not impose any limits. The Online Shoe Retailer Zappos has 1500 Employees working under Holacraciy in one legal, organizational unit. The Operating System is supposed to scale to any number – just like classical hierarchies can be scaled to any number (e.g. Walmart with its 2,1 Mio employees).

Management 3.0 – true to its “complex” world view – does not give any exact number but recommends to keep organizational units small.

By the way: Wondering about the optimal size of teams? It is 5 plus or minus 2.  This is invariant to any management system and a result of the biologically given number of meaningful social connections that an individual is able to have.

(I love to give truly amazing, critical facts and just quickly move on…)

Attitude towards Uncertainty

This one is easy:

Hierarchies seek to analyze, reduce and mitigate uncertainty. Uncertainty is a disturbing factor that needs to be reined in.

Liberated Companies are embracing uncertainty as a chance to learn and grow. They refrain from fixing structure so that the organization is sufficiently flexible whatever the future brings.

Holcracy accepts uncertainty and sees an opportunity to learn. A Holacracy is flexible to change according to whatever the future brings, except for changes to the operating system of Holcracy itself. Uncertainty is just another of the things that the Operating system of Holacracy is build to deal with.

Yes, I am playing with words here; Holacracy is accepting change, Liberated Companies are embracing change.  The difference is subtle but important.

Management 3.0, as so often, takes the middle ground. The optimal way to react to uncertainty depends on the specifics of the situation. Sometimes it might be easier to just analyze and mitigate risks to achieve optimal execution in stable environments. And in other cases, it might be wise to act like a swarm of birds and flexible, nimbly navigating your way through adversity.

Main Mode of Thinking

All these structural elements listed above impact the things that are in the primary focus of the mind of an organization. In a hierarchy, thinking is all about Analysis. Understanding the situation and coming up with the “one best way” to do things (see F.W. Taylor above).

Within Liberated companies, it is really about Exploration. The structural elements are fragile. There are no barriers to exploration, except those of social control and personal ambition. The absence of barriers…

  • allow people to express themselves fully.
  • allow teams to assemble themselves in a way that they deem best
  • allows organizations to evolve through try,  error, and learning

In Holacracies the primary mode of thinking is Synthesis. To come up with a shared point of view to problems and how to tackle them. Synthesis is what is dictated by Holcracies operation system, that is expecting compliance to the rules and the consensus decision by the circle.

It is all about Complexity in Management 3.0. In fact, Jurgen Appelo starts and ends his book with excursions into complexity and general systems theory, stating that everything is conditional and there is no one best way. It is all situational, and the best solution can not be known.

Where do I stand on this? I favor thinking about Complexity. It’s the right mindset for a curious, learning mind. Yes, doubts can be discomforting, but they prevent complacency and lead to insights that feed the curious mind.

What’s next?

We are half way through this blog series that compares the classical and modern management systems. I guess I will need two to three more posts to finish this job.

I hope you find this work helps to understand your options on how to manage in the digital age better. If so and if not, let me know by commenting, linking, forwarding or re-tweeting this post. Let’s form an emergent team 😉

Last, not least: This week’s updated comparison summary table





The Foundations of Holacracy, Liberated Companies and Management 3.0

As Managers, we try to anticipate environments and built organizations that fulfill a certain purpose.  So what happens if we can not predict the environment to a meaningful precision?  And what if on top of that we know that the environment will change again and again, faster and faster anyway? What is the purpose of organizing when what we are optimizing for remains elusive?

Modern Business is the realm of uncertainty: three quarters of the factors on which the success of business depend is based is wrapped in a fog of greater or lesser uncertainty. A sensitive and discriminating judgment is called for; a skilled intelligence to scent out the truth

Do you agree with these two sentences above? Keep them in mind, I will get back to them.

We need to grow a system of management, that is adapting itself to rapid, uncertain changes with greater speed than traditional hierarchical management systems are able to deliver. So let me give you a puzzle:

What is the organizational system best known to man that is able to bring about rapid decisions, timely execution in ever changing, immensely uncertain environments?  

There is such as system. This system has seen never-ending evolutionary refinement. It brought out the absolute best and worst of man. It has shaped nations and created heroes. It is still a part of every society, all around the world.

What is this system?

Foundation 1: Complexity and Autonomy

This system has been shaped in wartime and has is called: The Military Organization.  I stole the blockquote above from Carl von Clausewitz, one of the world’s most influential thinkers on military theory, and just replaced “War” with “Business”:

clausewitz citation.png

Ain’t this ironic? One of mankind’s least idolized organizations, known for its rigidity and inefficiency, its steep multilevel hierarchy is the best organizational type humans came up with to organize in uncertain times. This is difficult to believe. Yet in the life and death situations of war, in a time of great danger, desperation, and need, in cases of maximum uncertainty and change, humankind invented and sharpened, reinvented and sharpened this organization, the Military, again and again. Failure not to evolve the military system meant death to war bands, tribes, and nations.

Yet business is not war. Business is not a life and death struggle as War is. After all, in business, the individual can just quit and do something else. The element of coercion in the military organization makes a stark difference to the fundamentally voluntary nature of businesses, even with all the material needs that need to be satisfied.

Nevertheless, there is a lot to learn about agility from military organizations, e.g.:

  • Napoleons field armies that decentralized into many columns marched divided and strike together in 1802-1815 through superior coordination by multiple staff organizations
  • German “Storm Troops” bringing the French Front Line close to defeat at the end of World War I 1917/1918.  These were basically empowered teams with a clear mission and a lot of autonomy how to carry out their only broadly defined mission
  • German mechanized “Panzer” units devasting all opponents through superior information technology (radio) and decentralized coordination of combined arms in World War II from 1940-1943,  despite inferior numbers and often inferior Tanks
  • American troops fighting in asymmetrical warfare campaigns through a maximum use of empowered teams augmented by real-time information systems in Stanley McChrystals Campaigns in Afghanistan and Iraq from 2003 to 2010 (see his 2015 book “Team of Teams)

The story of the evolvement of military organizations is a story moving towards ever more decentralization, local autonomy, individual empowerment in the face of ever greater complexity and uncertainty.

It is ironic: To stay in control, you need to let go and decentralize control.

And this is highlighting the way for businesses, too: Handling complexity by decentralizing in a fluid environment: Welcome to Liberated Companies, Holacracy and Management 3.0.


Foundation 2: Very little Hierarchy

Military organizations need the hierarchy to achieve the level of coercion of soldiers necessary to make them expose themselves to destructive power. While some businesses rely on coercion by “nondeadly means” aka Jobs and Money- coercion won’t achieve much in settings where…

  • knowledge workers need to be managed. These enjoy, by definition an immense informational advantage over their managers
  • individual and organizational learning and innovation is important
  • motivation of people is necessary to achieve organizational performance

This is why Liberated Companies and Holacracy abolish the traditional hierarchy.

Management 3.0 attitude towards Hierarchy is similar, but it acknowledges hierarchies substantial role in legally authorizing people to do things. Thereby, it connects the business organization to the legal sphere – a very sensible thing to do, won’t you say?


Foundation 3: Servant Leadership

Managers do not produce anything themselves. All they are doing is providing direction and coordination. They are there to ensure that others get things done. Traditionally they do that by assigning jobs and checking that these jobs are done.

The modern three management ideologies discussed in this post rely on Servant Leadership, the notion that a Manager is there to enable others to put in their best performance for the common goal. Servant Leadership has been first described by Robert K. Greenleaf, an American early management theorist, in 1958. It has been since picked up in many styles and flavors like Jim Collins “Level 5 Leadership” in his all time classic book “From Good to Great.”

Each of the three Management Models is based on Servant Leadership, but there are special flavors:

  • Within Liberated Companies, everyone can be a leader, as long as others are willing to follow. Leaders do not coerce others to follow, but they attract them to do so. They are not promoted to be a leader, they are natural leaders at certain times for certain topics, elevated by followers.
  • Holacracy embraces Servant Leadership only implicitly. Indeed, the new Operating Models (i.e. Holacracy)  job is to do away with the role of a Managers for good. Everyone is free to lead within the framework of the “Constitution” (a set of rules) of a Company. As with Liberated companies, Leaders need to attract willing followers – within the checks and balances of the operating system.
  • Management 3.0 recognizes the need for Managers. It wants managers to see their trade as a craft which needs to be honed and perfected every day to achieve excellence. Again, I see this a very sensible demand: Managing (or its elder brother Leadership) requires skill. And skill comes from hours of deliberate practice (see Malcolm Gladwell, “Outliers“)

By the way: I do not care much about distinguishing Management and Leadership. It’s just semantics.

Foundation 3

Foundation 4: A jolly good Metaphor

The leading Metaphors of each model are useful to illustrate their workings. And they are so telling about the values of the authors…

The traditional metaphor for hierarchical organizations is the machine: Specialization, interchangeability of parts, the smooth, predictable relation of In- to Outputs which is easy to control.

For liberated companies, the leading metaphor is the organism: All the liveness, the interdependencies of all parts based on the nervous system and the metabolism, the specializations of organs and the adaptability of the body and mind. Although there is no firm reference to this metaphor in Isaac Getz “Freedom Inc”, that is the metaphor I find most fitting. Plus: This Metaphor is often used in the Agile Software Movement.

This stands in sharp contrast to Holacracies technocratic view of the organization as an Operating System:

  • Messaging Bus & Clock Speed: The flow of information from one individual to another through the organization is organized in meetings of circles with strict timing and rules
  • API – Application Programmable Interfaces: Individual people may have a “link” role in representing their home circle in other circles
  • I/O Units, Periphery, Hard Drives, Screens: All circles in the organization have specialized roles
  • Message types and Interrupts: Organizational problems are defined as “tensions,” like error messages that are to be  logged and resolved through standard ways by the operating system
  • The Operating System must be installed as the whole. There can be no other operating system. Full stop. But once the operating system has been installed, you are free to install additional “Apps” (i.e. other management processes) on top

I think this sounds rather frightening, as it degrades people to programs existing on a computer.

Isn’t a business more like a city? This is the view that Management 3.0 is taking. Very diverse people are living in a city. They all have their own agenda, but the city connects  them into a whole, e.g.

  • Public transports or telecom infrastructure connect people to other people
  • Open Spaces are where people can explore and interconnect to the people
  • Offices, factories, and workspaces let people produce
  • Universities, Libraries, and Schools let people learn
  • Public services for Water, Power, Waste, Security, etc. provide the basic needs
  • There is a mayor taking care of the people, but he can not rule by coercion alone without threatening his prospect of reelection, and he is reined in by the legal system, anyway

Wow: Sim City!


Jurgen Appelo attacks the Organism metaphor by questioning its validity: If people are cells, who has ever heard of a Cell that is able to leave the organism and join another organism? Which cell is able to voluntarily transform itself from a Hair cell into a heart cell (i.e. transfer from one department to another)? In short:

The organism metaphor is not taking into account the amount of freedom people have to decide themselves what and what not to do.

The same can be said for the Machine Metaphor: People are independent actors, with their own minds, beliefs, and motives. They will never be a dumb and passive cog in a machine. They will play the system to their advantage, dummy.

But I disagree with the City metaphor, too. A city is not an as purposeful system as a company is. It is a place to live and exist – everyone according to her tastes. But it is not a very purposeful system, which a company certainly is. A company is threatened by bankruptcy.  A daily fight for survival. A city might go bankrupt, but will not cease to exist: Hej, even Detroit is still (kind of) alive!

So what is my metaphor for an organization? A city under siege by a hostile enemy? That would make a city a more purposeful system, but it’s such a negative way of thinking: To see business as a struggle for life and death is plainly wrong. The struggle is mainly about material wealth and often about psychological health. Business is not War.

I do not know the best metaphor. Do you?

Foundation 4

Foundation 5: Benevolent dictators

NONE of these three Management Systems would work if the person with legal authority over an organization does support it: Someone in an organization must provide shelter for the new system, where Hierarchy takes a back seat and Management takes on a serving and not a ruling perspective.

That someone acts -de-facto- as a benevolent dictator: She has got the power to do as she pleases but chooses to be a servant leader and expects the same patterns of behavior from others in the organization.

Does this make Liberation, Holacracy, and Management 3.0 unstable? After all, the succession of a dictator is often a bloody affair and the successor is free to act as she chooses. So these Management Systems can never be stable: Once the shelter provided by a benevolent dictator is removed, the systems will break down over time. How long that takes is just a function of how deeply engrained the management system is in the culture of the company. How deeply it is engrained into the individual beliefs and behaviors of its people.

But: The Classic Hierarchy has the same instability problem. By Succession or by willingly changing her behavior any leader can break an existing system. So the stability problem is NOT a weakness of these new Management Systems. It is inherent in any organization.

The transfer of power is dangerous. There is no such as thing an organizational model without power. Even in the most basic democratic organizations like Wikipedia or Linux, there are people with more, and there are people with less power: What distinguishes Management Models is not the existence or nonexistence of power. Instead, it is the arrangement of the checks and balances that separate Management Systems.

By the way: I do not care much about distinguishing Management Systems and Organizational Systems. It’s just semantics…

Where to Start?

The benevolent dictator does not need to be the CEO, it can be any middle manager in a strong enough position to organize her part of the organization along these less authoritarian ways.

That’s it for now. More on the intricacies of the “craft of management” in the digital age next time, when I will explore some other dimensions of these modern Management Systems.

I am really interested in your opinions on Management Systems – share them with me and give others – including me – a chance to learn.

Summary Table: The Foundations of Liberated Companies, Holacracy and Management 3.0

Foundations summmary.png

Holacracy, Liberation and Management 3.0

Everything should be lean and agile these days. But in an organization, as a whole leanness and agility are next to impossible to achieve or maintain over time. If the management model is in the way, no well-meant initiative to introduce “Design Thinking,” “Lean” or “Agile” Methods can ever be sustained over time.

It really amazes me how many organizations pay for consultancies for “Design Thinking Workshops” or hire them to do the next system implementation by an “Agile Method” instead of the classical Waterfall Model – only to end up with mediocre results, budget overruns and 6-month testing phases from supposedly “Agile” projects.

This is silly. All these methods need to be addressed holistically in the organization. Lean, Agile, etc. are not some new process that you introduce, these are whole new mindsets and values that need to be supported by an organization through changes to

  • People: A new management ideology, aka a new way to lead and manage
  • Organization: New structures, which are necessarily less hierarchical
  • Process: Insert your Kanban/ Scrum Boards, Your Design Thinking Sessions, your Agile Sprints here. But neglect the other 3 dimensions at your peril
  • Systems: Systems need to be agility enabled with automated testing, continuous delivery and the whole Stack of DevOps Techniques.  Putting on a tight fitting running shirt on your fat legacy systems won’t do the work: It won’t be a pretty picture nor will it enable your legacy systems to run agile projects all of a sudden

OMG – this is a lot to do. It will take years! 

It surely does. There are no quick fixes here. It is easier to hire some consultancy to run an agile project or build up a laboratory environment or run a Workshop on Design Thinking than to develop a master plan and start to work on all above dimensions in an orchestrated manner. A one-off action is undoubtedly easier – but ultimately fruitless.

Start at Root: The Management Model

You really need to start with the people dimension. Without a fundamental change to central values and beliefs – especially those held in management –  no strong convictions will lead to reshaping the organization, to build up the stamina to sustain, e.g., Agile practices and to invest millions in systems.

What are the modern alternatives to the classical hierarchical management model? 99% of the advice found in management literature is just patchwork: Organize a company on trust, Embrace Failure, Exponential Organizations, Digitalization guidebooks, etc. Good ideas, mostly, but not holistic ideas.

And that is understandable. To approach all 4 Dimensions, from the lofty, complex realm of people to the nitty-gritty of systems is very hard:

  1. Few people can grasp the whole complexity, especially as our education systems and our siloed systems are much better at producing specialists than they are in creating generalists
  2. It takes a long-term time horizon to tackle this problem at all
  3. It takes real conviction at top management to start this process

These three reasons are at the core of the puzzle why traditional companies find it so hard to mimic the success of start-up businesses and unicorns.

But there are companies of any sector that made a successful transformation of their management models into the digital age, and there are templates of modern management models available. I have found three – if you happen to know more, let me know!

Comparison of Management Models

All those three models provide viable, proven alternatives to hierarchical management models. On a superficial level they appear quite similar:

  • They reject the hierarchical management model as being inferior and outdated, both in its capacity to deliver excellent results for most organizations in the digital age as well as for the self-fulfillment of people
  • They are solutions designed to fit complex environments, as such environments can only be controlled by understanding the lessons of holistic systems theories
  • They rely much more on the autonomy of the individual. The decentralization of authority is the pre-requisite for getting people engaged, getting people to grow and to control a complex environment
  • They are backed up in theory and in practice, with real live successful companies that have implemented these management systems

But they are quite different in their values and prescriptions.


Liberated Companies

With Poster child’s such as Gore (Textiles),  Favi (Automotive) or Michelin (Tires, lately) this management model is not a new fashion, but one that has been around since 1960. One can argue that even as early as the 1960’s companies, like the car rental giant Avis under the Management of Robert Townsend, have been engaged in liberated leadership.

Within this management model, all managers are supposed to leave the center stage of a business and let employees do and decide. Management role shifts solely to build an environment that fosters the growth of the individual and organizational learning while keeping the overall mission of the company updated and communicated.

Companies are seen as an Organism, with a metabolism that is connects everything to everything, resulting in a complexity that can only be controlled by decentralizing control.

Authors Isaac Getz in ” Freedom Inc” and Frederic Laloux in “Reinventing Organizations”  (see sources) are both chroniclers as well as engineers of this Management Ideology. There runs a large streak of humanitarian good intent in this approach, with words as “Self-fulfillment,”  “Human growth” and “Ascendence to new types of consciousness,” especially in the Laloux’s work. This can make this ideology hard to swallow for hard-nosed business executives. Which is a pity, as this wording distracts from the excellent business results in growth and revenue that this Management Ideology is able to deliver. It is just that the language is sometimes so esoterical, that conventional managers are overwhelmed by all the humanitarian goodness.

I think that is an inherent sales problem that this approach has. It’s a pity that humanitarian values don’t sell to a conventional business, capitalist audience, but so is life.


Holacracy (a word created from the Greek “Holons,” i.e., roughly speaking autonomous units) is the brainchild of Brian J. Robertson, an American Software Engineer, who invented the idea in 2007 and put it in a book in 2015. The most prominent company running the organizational model of Holacracy is the US Shoe Retailer Zappos.

As prescribed by the Liberated Companies approach, the usual company hierarchy is dissolved, and autonomy of teams is propagated.  But in contrast to liberated Companies it is replaced with a somewhat rigid set of rules which constitute an operating system for a company, e.g.:

  • Organizational Units become loosely coupled “circles.”
  • Circles are autonomous, they organize themselves in every aspect including setting their own goals and hiring
  • Roles are standardized to get multiple circles to work in a coordinated fashion
  • Strict process discipline is imposed on conflict (called “tension”) resolution and who to solve “operation” and “governance” issues
  • Meeting procedures are crafted in great detail and are to adhere too

Basically, people become a part of this Operating System. They need to learn the system for the organization to succeed. They need to comply with the system. Where liberated companies can be so widely different in their organizational structures and procedures, holacracies claims that there is one right way of operating which needs to be there. Companies can be specialized in this or that respect (e.g., HR procedures, Expense management, etc.), like Apps being installed on an Operating System.

Holacracy received a lot of press attention and is well organized – as one would except for an “organizational” operating system.” Just take a look at to get an impression. For me Holacracy seems like the rule-bound Roman Catholic Church, while Liberated Companies or Management 3.0 seem more like flexible Buddist beliefs, to stay in that metaphor.

Management 3.0

I do not think that it is by chance that another former Software Engineer, Jurgen Appelo, invented another streak of nonhierarchical Management which he named “Management 3.0“. Coming from a similar, Agile Software Engineering background as Brian J. Robertson, Jurgen felt that there is one component missing in Agile: The governance structures of companies and especially the way of managing these structures.

Being an eager student of complexity theory, Jurgen came up with the conviction that Management is a craft to let companies achieve optimal results in complex environments. For this, it is essential, that the wisdom of employees is entirely used in a system of distributed control.

So Jurgen wrote a couple of books about his convictions and – not to be outdone by Holacracies Brian J. Robertson – decided to do a business out of that, licensing Management 3.0 as a trademark to trainers and selling workshops.

The advice given on Management 3.0 is much more detailed as in liberated companies and much more flexible than in Holacracy.  Best of all, the Management 3.0 Model offers detailed instructions on how to incrementally move towards flatter hierarchies and does not a revolutionary big bang of change, that both Liberated companies and Holacracy require. It is, therefore, a much more practical approach.

Oh yes, I like this approach. It is so close to what I called “Management Digital” in previous posts.

Is it worth changing to a less hierarchical model?

Where is the evidence that it is worth to adopt a nonhierarchical organization of any form? All authors and proponents of the above-mentioned management systems come up with the following evidence:

  • A rising number of companies adopted nonhierarchical models and some having worked with them successfully for decades
  • The need for innovation and knowledge-based, learning organizations, is more urgent than ever, with all the mega-disruptors and unicorns around that uproot ever more industries
  • The scientific evidence is substantial on the benefits of all the key components of autonomy and decentralized control, especially in the fields of systems theory and Innovation Science

But hard scientific evidence on the performance benefits on company level is really not there: there are simply too many factors influencing a companies performance than just its organizational model. The organizational model is an important influence on a companies performance –  there is evidence for that in empirical organizational research. But as a predictor of success, it is just not enough. Market Position, Competition, technological or demographical trends or simply pure luck (e.g., that one special deal) are all factors at least as important.

That is the way it has ever been. But now with the rise of hyper-competition, ever-changing environments and a knowledge-based world of possibilities hitherto unknown, creating a learning, “generative” company is more important than ever.

After all, Learning is the only sustainable competitive advantage there is.

In the next couple of posts, I will dive deeper into Management 3.0, Holacracy and Liberated Companies. It is an exciting ride into some real alternatives to get organizational learning going and make the workplace a better place for everyone.




A New Ideology for Management in the Digital Age

We may like it or not, but everyone who works has a personal Ideology, a comprehensive set of normative beliefs and ideas.  This ideology has been learned in school, in university and from working in companies. It is deeply engrained in every individual. It is very hard to change.

Ideologies are hard to break. Take the ideology of communism, which despite good intentions, did not work out, but kept being embedded in person’s mind for at least a decade. Take the Ideology of Share Holder Value, which in its most extreme dominance in the 1990’s led to disastrous mergers based on short-term, financial decisions. Both of these ideologies are deemed obsolete by now, even so, a lot of ideas embedded in them remain valid.

Or look at a dominant Ideology held by some of the established Silicon Valley giants today, which have re-interpreted monopolies (Amazon, Facebook, Google, etc.) to be good, as they provide more money that can be reinvested into innovation. An ideology described by Peter Thiel, an outspoken early supporter of Donald Trump, in his influential book “From Zero to One.”

All ideologies rest on individual ideas and beliefs that are self- supporting. Therefore, they are hard to change. And so is the current ideology of work and management.

But the world has changed. With the Digital Revolution in full swing, the social innovation of Management needs to change too. As defined in the last post Big Tax Cut! Flatten the Management Hierarchy:

Management in the Digital Age = Freedom * Discipline * Autonomy * Accountability

  • Freedom to pursue personal fulfillment
  • Discipline to care for the rules
  • Autonomy to say and do as you want without fear
  • Accountability for success and failures

So what on earth is the new “Digital Manager” compared to the Classic Manager supposed to be doing day by day? Here is my answer in four categories.

1.Sic Semper Tyrannis!

Since Cesar and Brutus, Autocrats are regularly killed. Although the murderer is not always the Gardener  – this time,  the murderer really is the Gardener.


To maximize the creativity of an organization, the autocrats need to make way for a Digital Manager who interprets his job as an Explorer, a Coach, and a Gardener. The Digital Manager

  • is bestowing a lot of authority, and freedom to the team
  • refrains from controlling inputs and focuses on refining outputs
  • does no longer define the supposedly one best way to do things but lets teams experiment, in the conviction that inefficiencies incurred in the short run will be more than paid for by efficiency created by learning and personal development in the future

2. Put yourself on the sidelines

A football coach is on the sideline to analyze the game and make decisions. She has set up her team before the game, and she will improve the team by walking the team members through the learnings afterward. And so should a manager in the Digital Age.


The leadership span is increased by the factor of 5 from an average of 10 to 50. Why this? This increase is caused by the primary target of the Digital Management Model, i.e. to release the creativity of an organization and of individuals to the utmost.

Creativity and Freedom are so interrelated in human nature that a manager hovering near a subordinate will quickly be driving out all initiative.

Once in a while, there are emotionally intelligent managers who may be able to avoid this drowning of individual initiative for a time, but it wouldn’t be wise to rely on good luck.

Better to rely on a system of management which restricts the access of managers to employees so they can tune the mission and entice expected behaviors through the management tools described below, instead of ordering people to do things.

And a leadership span of 50 does just that. First, there is simply not enough time to micro manage. Second, employees must find their way into the system themselves. Coached by the new “Digital Managers,” but still they are to a large part the master of their own destiny, thereby causing the exact behavior and dynamics that Digitalization calls for.

3. Be a Close Observer of Results

The day to day tasks of managers shifts from “do as I say” to “do as you please.” If the mission is clear and social norms are embedded inside the organization, this will not lead to chaos, but to creativity.


The strategy is no longer something that is defined in a periodic exercise somewhere up in the hierarchy and then analytically broken down into its component parts in the hierarchy.  Instead, strategy becomes a permanent process that is initiated top-down as well as bottom-up. Interestingly, research in the field of Innovation Management has been pointing towards this bottom-up/top-down way as the optimal path to innovation for a long time. Numerous tools have been devised, such as Knowledge Management or Workflows for the appraisal for improvements handed in by employees.  But none of these innovation management tools got very far:  Hierarchy, Middle management and the whole way that classical organizations fail to give workers much context to their work at all conspired against any significant results.

One very distressing fact for traditional managers is that hiring decisions are no longer done by them. Why not? Because the results of managers selecting candidates are simply inferior to rule, test- and panel-based selection procedures. See Hiring like a Pro: Lessons from Google.

Targets are still set, but on a much higher level, based on a mission and not daily priorities. See Priorities are left to the team to figure out. See Force 4: New Work organization.

Teams are not defined and organized by managers. An additional set-up might be recommended, but once this is done, team members are free to associate and dissociate themselves from teams. Team sizes are not given but fluctuate. This approach has the danger that unwanted, tedious jobs will be vacant  – until the need for them grows overwhelmingly high or they are automated or organized away.

Tactical and operational decisions are left to the teams. What a manager controls are the overall mission, and she is the guardian of the team rules. A Digital Manager needs to realize that she is no longer the best expert in the room.  In the absence of an Autocrat, decisions inside team need to be made by consensus, absolute or qualified majority. A Digital Manager needs to define the rules, circumstances, and procedures by which decisions are made and followed through.

Control is delegated to the teams. As Control is a huge chunk of what traditional management is about, this “socialization of control” causes a big management tax cut, see Big Tax Cut! Flatten the Management Hierarchy.

Personnel Development becomes an essential activity. The Digital Manager is no longer the superior that needs to be impressed, served and cozied up to. Instead, he becomes an ally in the personal development and advancement of an employee. A huge benefit to the organization and the individual.

4. Use new tools – burn the outdated ones

As the purpose and tasks of Mangement changes in the digital age, tools need to change, too. After all, archeologists describe cultures by the traits of the tools they have used (the plow, the spindle, etc.).


One on one meetings, that allow managers to build and maintain personal rapport with an employee are no longer needed, as the employee is much more strongly embedded in his team and the community.   It is no longer practicable with a leadership span of 50 employees. And it is even counterproductive, as too much daily proximity destroys the autonomy of individuals.

Delegation remains relevant, but it is now done on a much grander, systematic scale. Instead of tasks, missions are given. They are granted to teams, not persons.

Feedback remains critical to all intents and purposes. The main rule of “good” feedback remains intact: Give Feedback immediately on observed behavior, not postponed and not based on hearsay.

Team Meetings are no longer organized or hosted by a manager. Instead, each team devises their own rules, whatever works best for them at a particular point in time. Team members take turns in preparing, heading and to follow-up on meetings.

There are still regular reports on financial matters, but they are augmented by KPI driven, quantitative measurements of results and deliverables as a more direct proxy for performance.

Job design is entirely taken out of the hand of a manager. The team’s dynamics take care that tasks are done, by whoever is competent, available and most highly motivated at a particular point in time. The whole term “job” as understood as a static job description is obsolete, as the ownership of tasks changes way too fast. Instead, the term “role” becomes much more meaningful, even so, there may be multiple roles that team members have at any point in time.

Personal work methods remain highly personal. What changes is transparency: Instead of keeping all your tasks, your daily schedule and priorities close to your body, invisible to all other members of the organizations, they should be shared on a whiteboard or shared in groupware. Trust is of the essence for a digital organization to perform well and Transparency fosters trust.

An often overlooked tool are simple checklists for personal use or shared with teams. These enable knowledge to be captured transparently, actions to be conducted thoroughly and learning to be done systematically. There is really not much different between the advantages of using checklists in a conventional or a digital organization, except for the greater emphasis on learning and transparency in a digital group. For more info checklists see Atul Gawande’s Book “The Checklist Manifesto.”

Budgets are still necessary, but business cases which are continually updated with the results of experiments are maintained on a team level. These are not the heavyweight business cases of controlling, finance or logistics departments, but light weight, KPI driven business cases as used in the Lean Movement.

Performance Evaluation can be done away with. It is replaced by more coaching. More feedback and mission based objective key results (OKR) agreements.

The closing of obsolete activities and tasks is something that a manager can leave to a great extend to the teams, as they have authority to prioritize freely within their mission.


There are numerous challenges:

  • What is the career path to advancement, if there only 20% Management positions left?
  • Who will be paid how much?
  • What to do about dysfunctional teams?
  • What to do with unwanted jobs, i.e. jobs that no one wants to take on?
  •  What about time critical actions, emergencies when every minute counts – should a company continue to rely on group decisions?
  • What about synergies, are they no longer necessary?
  • etc.

I will try to give answers in the next post.

Examples of  Management Ideologies

A glimpse of some existing management ideologies can be found in the following posts:

Force 5: Culture (continued): Xaomi, Spotify, Amazon, and

Good Managers – Good Teams: Lessons from Google

Tired of hierarchy? Try this

9 reasons why your organization might be left behind

Exponential Organizations – a way forward for traditional companies?


Hoped you liked this post. You are welcome to comment!

If interested, try my German language MangementDigital podcast.

Big Tax Cut! Flatten the Management Hierarchy

What about shifting the costs to digitalize your company to someone else? Is there something to learn from an obnoxious Reality Show host? Let’s find out.

The need for a new Management Ideology

Digitalization will happen if organizations find a better way to release the creative potential of humans. A hierarchical management style is centered on control. But innovation is focused on freedom. So the hierarchical management style and hierarchical organization structures got to go.

They need to be replaced by a set of normative beliefs and ideas that focus on individual freedom. This new ideology of management is at odds with current views. Gary Hamel, an influential author on the subject of Management, provides a comparison between the current mainstream and the new ideology of management in his 2012 book “What Matters Now: How to win in a world of relentless change, ferocious competition, and unstoppable innovation.”

Conventional Managers manufacture control. Everything they do can be attributed to ensuring that work is done: Setting targets, organizing, deciding, checking, developing employees. Each of those factors is, to a large part, an attempt to control what is going on.

This is important in a factory of unskilled labor. But as workers are educated, and work is less structured and more complex, more local initiative and more ideas are needed,  and more innate sense of commitment and care is required, control needs to give way to freedom.


But control has a value. Without control, would the company not fall into pure chaos? Would slackers have a field day? Would anything be done at all? Would there be any coordination of efforts?

Oh yes, by just stating to your organization “You are free to do what you want. Enjoy!” you ensure that the organization will go to hell in a hand basket. Control is needed. The thing is: It is a different, more refined type of control. Not the plumb hierarchical sort of control, but a social control by teammates following the same mission and playing by a set od shared social rules and values:

Management in the Digital Age =

Freedom * Discipline * Autonomy * Accountability

  • Freedom to pursue personal fulfillment
  • Discipline to care for the rules
  • Autonomy to say and do as you want without fear
  • Accountability for success and failures

One can imagine that this may be ideal for the bold risk taker, but what about the timid, honest worker type? The answer is freedom: You are free to be an adventurous or as shy as you want. As long as the composition of the team is sufficiently heterogenous, everyone can contribute in her own fashion. This is even beneficial, as diverse teams tend to perform better than homogenous ones.

So far so good for the organization and the team member. So let’s fire Managers!

Big Management Tax Cut – now!

And Mexico will pay for it!

What is a management tax? Imagine a typical organization employing one manager for every 10 employees. The manager is basically not doing any other work than controlling the work done by the ten workers. The management tax is 10% if measured in headcount, 30% of salary, supposing the manager gets three times the average pay of an employee.

Now that organization is growing. For every 10 additional teams, another manager is needed to coordinate the 10 first level managers. A company that employs 100.000 first tier employees will need 11.111 managers to manage those. The Management tax increases to 11% measured by headcount, and to >33% by personal costs, as higher level management gets exponentially larger paychecks.

33% is a very high tax just to control a company.

Now the social innovation of Management in the digital age is invented. With this invention, control is smartly delegated to the first level workforce. Managers are no longer needed in their old role as Autocrat, but in a new role as “Explorer, Gardener, and Coach.” And you need just a 1 Manager per 50 first level employees.

The Management tax decreases to 2049 Managers. That is a Management Tax of 2% in Headcount and a 6% one in personal costs.


That’s pure efficiency. Imagine saving 27% of total current personal costs just by employing the social invention.  Let’s call it “Digital Management” (as an appreciation for “Management in the Digital Age”).

And it gets even more exciting. Digital Management has not even been invented for efficiency, it has been designed to increase innovation. This enormous boost of efficiency is just a by-product.

Middle Management is like Mexico…

…it will pay for the social invention of Digital Management.  But while Mexico, much to the surprise of  President Trump, is proud and obstinate to the rogue demands of a – six-time bankrupt – reality TV host, Middle Management will have no choice but to adapt.

The ideology of Digital Management does not only enable individuals to release their creative potentials and lowers the management tax, but it also shrinks the middle management layer by 82% from 11110 to 2049.

The vast layer of middle management has been widely recognized in the academic literature as a being the primary source of resistance to any change. The Middle Management acts like the bureaucracies immune system, fighting any intrusion on the status quo.

By adopting Digital Management, change has just been made a lot easier! Yes, there will be fewer jobs in Management – but there will be more fulfilling jobs for everyone.

Reality Check

I have been surprised by the radical nature of this list supplied in the table above by Gary Hamel. Hamel has been born 1954 and has been known to me as a leading but mainstream author about management. In 1990 he core-authored “Core Competencies“,  a very influential set of ideas which got companies to re-focus their operations and is today an accepted part of mainstream management strategy know-how. He seemed to me as one of the “Business Process Reengineering” crowd of thinkers. A thinking model that was and to a large part is still dominating management, consulting and business schools.

Twenty-two years later, Gary Hamel has evolved his views further with this radical list, calling for a “new ideology of management.” A new social innovation that has been discovered by some companies, but is still unknown to the vast majority of businesses and managers.

These Companies, are the silicon valley type of Amazon, Google, Facebook, Uber, Tesla, Linkedin, Airbnb, etc. , but this innovation is not limited to Tech Companies. Traditional Companies like the grocer Wegman in the Northwest US or the Dutch Healthcare Provider Buurtzorg are practicing the ideology of “Digital Management,” too. With great results.

This Social Innovation in the realm of management will determine corporate competitiveness in the years to come – more than any other factor. But there is more than corporate progress in this.

It’s humankind, stupid!

In the year 1909 Max Weber, on whose works a lot of today’s thinking on the organization, management, and sociology rests wrote:

The great question is … how we can oppose the machinery (of hierarchies) to keep a portion of mankind free from this parceling-out of the soul.

Digital Management, as I like to call this new management ideology for lack of a better term, is a social invention that might be bigger than the invention of  “Scientific Management” in the 1880’s by Frederick Winslow Taylor. With Scientific Management, machines found a place in the human culture.

With Digital Management, humans find a place of self-fulfillment in the age of machines.


In the next post, I will dive deeper into the tools of “Digital Management” by contrasting them to traditional management tools such as meetings or performance reviews.

If you like to read more about “Digital Management” use the filter on the right side of the home screen of the “ManagementDigital” Blog and click on the label “Management.” Or use these links:

Tired of hierarchy? Try this

9 reasons why your organization might be left behind

Good Managers – Good Teams: Lessons from Google

What Google Inc. has to teach about Management

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