Hierarchy has become the bogeyman of the "future of work" movement. Listen to some commentators, and it sounds as if the honest worker in the corporation is being oppressed by power-crazed managers, hoarding information like Gollum with a hangover. Presumably some of these managers were promoted from honest worker level, so does hierarchy bestow power, which immediately corrupts?

Not so fast. There are definitely bad hierarchies, but like all organizational forms, they can be done well or done poorly. Hierarchy still has a role, especially in larger, more established businesses, and some scenarios exist where a networked approach would be detrimental.

"Work like a network" is Microsoft’s message for the future of work. In part it sounds like Microsoft is talking about the people-centred flow of information:

Listen to the conversations that matter most to your business, both inside and outside your company, as soon as they happen.”

This fits well with the Office 365 tool suite, particularly Yammer and Delve.

But Microsoft’s message also talks about Adapt and Grow, making smarter decisions and innovating. This is much more of a fundamental shift in how companies operate than how information flows.

Many labels are used for this future work vision, including The Responsive Organization (sponsored by Microsoft), Social Business and sometimes just Networks. They all promote a shift away from hierarchy and the industrial age in favour of networks of peers.

Networks have serious appeal: they can be more flexible, innovative and for some a more engaging way to work through increased autonomy. As we move to an any time, any place digital workplace, it is clear that hands-on management has to change too.

However, what seems to be missing from the discussion is a recognition that networks have downsides too. We need to design organizations that best match their management structure to the task, rather than taking an absolute view. Many of the leading examples of the network movements, such as Zappos and Valve have been networked from initiation, and remain relatively small. Taking a current company and starting to work like a network may be a different matter entirely.

For example, there’s something of a paradox when you look at the adoption of Enterprise Social Networks (ESNs) such as Yammer. On the one hand, they appeal because they do away with power and hierarchy. On the other hand, they seem to need leadership support before they take off. Isn’t that asking turkeys to vote for Christmas? No wonder some leaders are wary of them. We’d do much better if our claims about ESNs were less about workplace revolution and more about improving working life for everyone.

Good Hierarchies are Better than Sparse Networks

Organizations structure themselves around their core processes. Done well, this means that people who need to cooperate closely or share knowledge are closer than those who don’t. This is starting with a designed approach and can be quicker than waiting for it to happen organically, so long as further organic growth isn’t supressed.

Hierarchies of Role Don’t Reflect Networks of Collaboration

Hierarchies coexist happily with other networks -- you don’t have to remove the hierarchy to get many network benefits. Let's not forget that hierarchies are networks too. It’s easy to draw a strict hierarchy and make it look more lean than a well-connected network (see below). But this is a trick: if you take an org chart and add in all the lines that indicate “communicates with,” it would look like a network. In the illustration, B and C are the same network rearranged.


Networks have their dark side. Old school ties, cliques, inner circles can be worse than hierarchy. Why? Because the way they operate and the criteria for membership are less transparent than a formal hierarchy. In a good hierarchy, power is allocated to someone on the basis of demonstrated competence (it’s called "promotion"). Good companies have refined this process for years to make it equitable and meritocratic. In networks, power can instead accrue around popularity and that can be gained independently of competence (it’s called "self promotion").

Networks don’t do the dull stuff. If you take a group of people that self-allocate tasks, they’ll certainly do the things that excite them, and engagement will be high. What will be left behind are the dull but necessary things. Most people would prefer to cook than do the dishes.

In a tight network, social pressure acts to ensure people do their fair share, but as networks grow this becomes harder to track. From an economic point of view you don’t want a highly paid chef washing up due to social pressure.

Full transparency is exhausting. Managers don’t necessarily hoard information maliciously. Their role is to interpret and filter for relevance. As middle-management has been stripped out, people suffer from information overload and an inability to find information. Although technologies are getting better, we still don’t have anything as effective at doing this as other people. If we work purely like a network, the scope of our responsibilities becomes less clear. We have to be more self-sufficient in determining what is relevant and as a consequence there’s a greater risk that we fail to pull in what we really need to know to make a decision.

Not everyone wants to be leaderless. Some people want a low-pressure job. Some people don’t want to take on extra responsibility -- perhaps they get that fulfilment outside work or it doesn’t suit their personality. There’s nothing wrong with them wanting someone else to take the lead and in effect cede control and enter a hierarchy rather than be a freelancer.

Organizational forms are best combined. I used to puzzle over a dilemma about innovation: on the one hand, creative tension and diversity seems best for breakthrough thinking. And yet most studies on team success say that having a common mindset, values and established relationships works best (this is why silos can be valuable).

My conclusion is that creativity is best done in networks, but moving that to a full product benefits from structure. In knowledge management, Nonaka’s famous tacit-explicit spiral describes innovation as the "organizational amplification of an idea." That amplification needs more defined processes to scale up, and that needs a hierarchy of decision-making, even if that isn’t necessarily a hierarchy of power.

Even innovation itself isn’t something you want everywhere or all the time: big innovations in how things are done take time to learn and refine, making them inefficient at first. Much of manufacturing, retail and services rely on tight margins where optimization (by repeatability and incremental improvements) trumps innovation most of the time.

So should we work like a network? In many situations, yes. A more networked approach would be more productive and rewarding. But networks can be good or bad, and they can be appropriate or inappropriate. Networks are not a cure-all, so be mindful of articles that don’t acknowledge this -- that’s when enthusiasm crosses over into hype. It is the organizations that manage to find the right balance between network and hierarchy that are most likely to succeed.