The Death of the Hierarchical Organization

The 20th Century saw the advent, rise and now decline of the Hierarchical Organizational Model.  Did you realize that top down, chain of command, hierarchical business models largely did NOT exist prior to 1900?  I suppose you could argue that any effective military force is a good example.  But you did NOT find them in business.

Why?  The hierarchical organization was a creation of the early 20th century industrial revolution.  At that time mass manufacturing was just taking off with many new factors facing business leaders.  Factors such as:

  1. Higher cost of manufacturing, equipment and people
  2. The sheer number of people to manage
  3. The repetitive nature of the process, requiring everyone to do things the same way
  4. The need to reduce the cost of each transaction over time.

The traditional small business management model simply did NOT understand how to deal with these challenges.  So hierarchical management was invented.  And it address these challenges very nicely.  Unfortunately there were many things this model did NOT accommodate.  Namely creative problem solving, speed of decision and speed to market.

Given that this was a whole new world in the 1900’s, many very smart people worked to perfect the model.  They did a fine job.

However by the end of the 20th Century and into this decade fast problem solving, increasing requirement for creativity and speed to market became increasingly important.  Unfortunately the Hierarchical Organization Model does not do these things well.  But that does not stop us from forcing new problems and opportunities through the old model.  And force them we did.  This is part of the reason for the the amazing growth of startup companies.  Companies with flat organizational structures, tons of creativity and exciting cultures.  Companies like Google and Facebook.

And then the crash of the Great Recession.  And now many, many companies are struggling.  The the old hierarchical model we cling to so desperately are dragging us down.  There are plenty of opportunities in the marketplace but our governance structure and the lack of capital and expertise are getting in the way of exploring them.  We need a new model.

I call this new model Cooperative Capitalism.  It is a model where we intentionally form marketplace communities to meet our needs for knolwedge, capital, focus and encouragement  in a true capitalistic approach.  This is not socialism.  These are marketplace communities forming, with a myriad of needed expertise, strong shared Core Values and developing Trust for each other.  This is a place where we work together to make money but for a cause bigger than just making money, for our Purpose.   Not Win/Win so much as Win with folks I trust and value.  Welcome to the journey.

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