Will Cloud And Digital Technologies Pave The Way To Management-Free Companies?

Will Cloud And Digital Technologies Pave The Way To Management-Free Companies?

September 2016


It’s a paradox: With great technology, you don’t need management. But you can’t do technology right without great management.

Ultimately, cloud computing and digital technology is all about independence. From a technical perspective, it’s about independence from underlying infrastructure, which often constrained capacity and flexibility. From a business perspective, it means independence from the whims of vendors, as well as a more unbridled ability to pursue new ideas and rapidly change strategies or tactics as needed.

There’s a degree of independence at an individual level as well — everyone with a device (and that’s everyone) has access to an abundance of resources and information at his or her fingertips. No need for layers of hierarchy to process and disseminate things, you can go right to the source and drag-and-drop what you need. You can launch your own business, or you can build a base within your existing company.

This rising tech-driven empowerment on the individual level dovetails with a complementary trend which has been unfolding for the past several decades, and that is the flattening of the organizational pyramid — or, as I like to put it, the smashing of the corporate hierarchy — which has been fueled by an increasingly educated workforce of information workers.

There are interesting examples of organizations that have taken these two trends to the next logical level — essentially management-free workplaces, or what many refer to as “holacracies.” Zappos, the online shoe company, Valve, a gaming software company and Medium, the online content platform, are a few examples of holacracies in action. (Though Medium has scaled back on this philosophy somewhat.) There are also many examples that abound below the radar. A few years back, I spoke with employees of a tech firm that sold software into the midrange computing marketplace. The firm was essentially a collection of partners dispersed across North America, interacting online on various projects. Only the company’s founder held some heft in the company, keeping tabs on financial matters  – otherwise, everyone was self-driven.

Another force is emerging that also may portend the rise of management-free organizations. There has been an acceleration of automated decision-making capabilities, in which many day-to-day decisions are handled by algorithms. Slowly but surely, automated decision-making has been moving up the food chain, toward increasingly sophisticated levels of decision-making.

Is management an outmoded notion in the era of the digital enterprise? Probably not. No matter how digital and virtual an organization becomes, and no matter how empowered and entrepreneurial its employees become, there will always be a need for management. Lynda Gratton of the London Business School recently posted some observations that speculated that management isn’t necessarily being automated out of existence. In an article in MIT Sloan Management Review, she observes that “rather than seeing the end of management, it seems to me that the rise of a more skilled form of management is taking its place.”

It’s also notable that self-management — the core of holacracy — is becoming a reality in many parts of larger enterprises. In a recent Harvard Business Review article, Ethan Bernstein John Bunch, Niko Canner and Michael Lee (Bunch, by the way, is from Zappos) advise that “most organizations, particularly large corporations, should adopt [self-management] techniques in part, not in whole.” They observe how companies such as Procter & Gamble, Google and 3M support self-directed, team-oriented environments. In the case of Proctor & Gamble, this entails “a complex matrix organization in order to integrate its many brand categories, geographies, and functions,” along with “a vast open-innovation program, in which teams of people outside P&G’s walls organize themselves to solve problems for the company.”

There is a good case to be made for managerial direction of strategic initiatives, Bernstein and his co-authors add.

Ironically, there’s also case to be made for management oversight of digital initiatives themselves. The vision for management-free organizations is paradoxical to the business case for moving to cloud and digital. Listen to any speaker or analyst discuss the greatest challenge to digitization, and you’ll hear about the need for executive support, and executive vision. In other words, managers giving these initiatives their blessings from on high.  Lack of leadership is cited as the greatest roadblock to digital, as mentioned by 40% of executives in a recent survey released by IFS. At least 86% of the respondents think that digital transformation will play a key role in their market but 40% lack a strategy for it.

Plus, while automation is reshaping many tasks in organizations, management is not one of them. A recent report from McKinsey points out that “the hardest activities to automate with currently available technologies are those that involve managing and developing people (nine percent automation potential) or that apply expertise to decision making, planning, or creative work (18 percent). These activities, often characterized as knowledge work, can be as varied as coding software, creating menus, or writing promotional materials. For now, computers do an excellent job with very well-defined activities, such as optimizing trucking routes, but humans still need to determine the proper goals, interpret results, or provide commonsense checks for solutions.”

At Zappos itself, the hierarchy isn’t necessarily gone — it’s just different. As relayed in an interview in Knowledge@Wharton, Tony Hsieh, CEO of Zappos described it as, “instead of being a hierarchy of people, it’s a hierarchy of purpose.” Employees are part of “circles” that establish values and help define their roles within the organization. “Anyone can resign from any role at any time, and are ‘free to float around.’”

As Gratton put it, technology is changing the relationship between employees from boss-to-worker (or adult-to-child) to more of a collegial approach. “When technology enables many people to have more information about themselves and others, then it’s easier to take a clear and more adult view of the world. Self-assessment, particularly those that enable people to diagnose what they do and how they do it, can help them pinpoint their own productivity issues. They have little need for the watching eyes of the manager.”

At the same time, she adds, increasingly digital enterprises require more sophisticated forms of management, “managing virtually rather than face to face; managing when the group is diverse rather than homogeneous; managing when the crucial knowledge flows are across groups rather than within.”

Technology is an incredibly empowering force, supporting a workforce that is fully equipped with the information and resources that will take people well above and beyond traditional and confining job descriptions. But management– in one form or another — will always be part of the equation. Just be sure to say goodbye to the overbearing boss — maybe he or she can leave and launch his or her own cloud-based startup, and learn a few things along the way.


This article was written by Joe McKendrick from Forbes and was legally licensed through the NewsCred publisher network.

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