A company without a CEO?

Hierarchy
By Eleanor O'Neill, CA Today

9 March 2017

Names like Google and Spotify have become synonymous with non-traditional corporate structures and working environments as the technology industry has grown.

Whether it's 'squads' and 'tribes' populating the office or launching an entirely new parent brand to manage all of your initiatives, unconventional decisions on business operations tend to grab headlines as well as the attention of investors.

Innovative ideas and out-of-the-box thinking are the backbone of the digital sector, especially in the case of young companies looking for that special something to make them unique.

For example, three years ago software consultancy firm Crisp decided to rewrite their company structure and eliminate the need for a CEO, a move that has been gaining media attention from around the world.

Based in the home of the six-hour work day, Sweden, Crisp is a small business with around 40 employees who all have the opportunity to contribute to big company decisions with a semi-regular voting process.

While still legally required to have a board, the firm has effectively distributed the onus of responsibility for the company's leadership across the business, encouraging autonomy and accountability at all levels.

Crisp are not the first company to instigate this kind of culture, though they have expressed a wish for the 'Crisp DNA' to inspire other businesses to follow in their footsteps.

Different systems for business models

Zappos, an Amazon-owned online retailer, built a 'holacracy' structure into their business in 2013, sharing authority and decision-making responsibilities among a system of self-organising teams, rather than grouped with the head of the company.

However, the change came at the cost of almost a fifth of all staff being unable or unwilling to deal with the pressures of self-management. Crisp, on the other hand, regularly measures staff satisfaction and had a rating of 82% at last count.

There is a move toward empowerment of the workforce across all industries with quicker and better decision-making as a consequence.

Given that the majority of flat-structure innovations are born in start-up and SME environments, the deciding factor of success with unconventional methods may be size.

In a smaller enterprise, the key responsibilities of a CEO typically fall under securing investment and cash flow, raising brand awareness, promoting the company vision and corporate development.

Theoretically, these functions can be filtered into the roles of several people, provided there is a clear single direction - it can be difficult to achieve in a corporation with a vast number of stakeholders.

Is this the model of the future?

Jamie Livingston, Co-Founder and Director of Livingston James Group, said: "I think smaller companies, particularly service-orientated ones, may find [operating without a CEO] an easier thing to do than in traditional manufacturing where a more obvious hierarchy can be more helpful."

However, Jamie also pointed to BTR Construction, a US company with a turnover of $2.6bn who prescribe to the model.

"They have clearly operated very successfully without a chief executive under the premise that none of us know as much as all of us," he commented. "It's an interesting concept and I think that there has definitely been a growing trend toward flatter management structures in recent times.

"Depending on the business model, it's normally helpful to have someone who has ultimate accountability in the event of a 'decision deadlock' but a more democratic decision-making process is actually the norm. Regardless of sector, the 'command and control' structure is not as commonplace now as it was 30 years ago.

As companies become more digitised it shifts us more towards management of the 'grey matter', rather than process or product.

"There is a move toward empowerment of the workforce across all industries with quicker and better decision-making as a consequence. All this said, I would still point out that businesses that choose to operate without a chief executive are still very much the exception."

Will alternative workplace structures become the norm?

The rise in innovative and non-traditional workplace practices and structures may be owed to the rise of digital technology and the subsequent changing face of business and services.

Jamie said: "Where it's a very knowledge-based industry and the assets are the people, you see a more democratic and involved workforce. As companies become more digitised it shifts us more towards the management of 'grey matter', rather than process or product.

"The whole technological revolution means managing minds and encouraging people to think, something that a rigid hierarchy can work against as people expect to be told what to do.

"As the more mundane process-orientated aspects of ‘human work’ are replaced by technology, organisation design is evolving at pace to ensure that businesses of the future best engage and leverage their people’s uniquely human talents to deliver for their customers."


What do you think about a company with no CEO? How would you envision it working? Please leave a comment below.

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  • Business

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