According to Nikil Saval, the author of Cubed, a forthcoming history of the modern office, the top-down management structure first proliferated in the U.S. in the rail era, as corporate barons struggled to maintain control of their sprawling new concerns. The easiest way to govern hundreds of thousands of miles of railroad, they discovered, was to erect a chain of command, which extended from the central office in New York or Chicago to the field offices on the frontier.
It was a strategy that also proved remarkably effective for the heads of large banks and telephone companies and eventually—I’m skipping a few decades here—PC manufacturers and soda-pop-makers and multinational data-processing firms. There may even be some evidence that the tiered framework is hardwired into our brains. “Hierarchy is prominent across all species and all cultures in the world,” Adam Galinsky, a professor at Columbia Business School, told me recently. “It reduces conflict, helps with role differentiation, and vastly increases coordination.” In other words, employees may need managers because managers define, either implicitly or explicitly, who people are as workers.
In a research paper published last year titled “The Path to Glory Is Paved With Hierarchy,” Galinsky and several colleagues measured the productivity of “mixed power” work teams and found that tiered groups outperformed flat ones. The pecking order, they concluded, is the “universal default for human social organization”—a default that requires minimal social interactions to emerge. The paper cites work by poultry scientists, who have discovered that putting too many high egg producers in the same small space actually decreases overall egg production: “It turns out the best egg producers are also the most competitive birds, and in a group setting, they quickly begin fighting over food, space, and territory; these intragroup conflicts then drive egg production down and bird mortality up. Chicken farmers take note: If you want to maximize group-level productivity, you need harmony, and it seems that hierarchy provides the key.”
The theory that too many bosses may be an obstacle and not a boon did not achieve widespread prominence until the early eighties. The reasons are multifarious, but business historians believe it had something to do with the economic recession, which gutted the ranks of the middle managers and in the process helped companies realize that all those bosses had actually been slowing things down. There was also an increasing sense that creativity—an invaluable commodity at the tech firms and software companies of the new “knowledge economy”—might be muffled by hierarchy. A tiered framework had worked fine for railway bosses, but it could have a frankly inhibiting effect on a team whose sole task was to build something new, often out of thin air. For that, you needed space, you needed support, and above all, you needed freedom.
Studies, in fact, show that although some structure is conducive to creativity, the “time to experiment and potentially fail”—to quote Pierre Azoulay, an associate professor at the MIT Sloan School of Management—is vital to the consistent production of innovative ideas.
Among the earliest agitators for a decentralized workplace was Ricardo Semler, the chairman of Brazilian industrial-parts manufacturer Semco. Semler took over Semco from his father, in the early eighties, when he was 23; his first move was to eliminate the majority of the executives and managers. He opened up the company books, organized employees into self-sufficient work teams, and instituted profit-sharing. Semler believed that Semco would perform better as a company if the workers didn’t have a platoon of “bean counters”—one of his favorite insults—constantly looking over their shoulders.
“Bureaucracies are built by and for people who busy themselves proving they are necessary, especially when they suspect they aren’t,” he wrote in his 1988 book Turning the Tables (published in the United States under the title Maverick). “All these bosses have to keep themselves occupied, and so they constantly complicate everything.” Rules are good for prisons and armies, Semler wrote, but “for a business that wants people to think, innovate, and act as human beings whenever possible,” they serve only four purposes:
1. Divert attention from the company’s objectives.
2. Provide a false sense of security for the executives.
3. Create work for bean counters.
4. Teach men to stone dinosaurs and start fire with sticks.
Maverick was an international best seller, and it remains a foundational text for advocates of the flattened workplace today. Tom Preston-Werner, a co-founder of the tech firm GitHub, which allows all employees to set their own schedules and choose their own projects, told me that the book “changed my understanding of how a business could be run.”
In 1980, less than 20 percent of the companies on the Fortune 1000 list boasted at least some sort of team management structure. By 1990, it was 50 percent. By 2000, it was 80 percent. “Companies were trying to figure out the best way to foster creativity, to effect rapid change, to deal with growing global competitiveness,” says Stephen Courtright, an assistant professor at Texas A&M, who specializes in the study of self-governing workplaces. “In many cases, that involved flat, horizontal management.”