Leaderless Organizations Make Sense, Read The Starfish and The Spider

Published by Ryan Healy on May 11th, 2007 in Books, Entrepreneurship, Noteworthy | 17 Comments

Five years ago, some friends of mine decided to start a business at Penn State. Like anything built from scratch, they put their blood, sweat and tears into its creation…it was well worth it. Within a few years, the business became a huge success. Since graduating, they created a main company and licensed the idea to entrepreneurs at 12 schools across the country. Out of respect for their wishes, I'm keeping their names and the name of their business undisclosed.

Last week, I picked up the book, The Starfish and The Spider. As it states on the cover, the book is about, "the unstoppable power of leaderless organizations. The authors describe companies like Napster and Kazaa turning the 100-year-old music industry on its head in just five years. The premise is that, like a starfish, if a decentralized organization loses one of its limbs, it may be temporarily injured, but will not crumble. However, typical top down, hierarchically structured organizations will not survive a blow to their core. Much like a spider will die when its head is cut off. You may be thinking, where is he going with all of this? Let me tell you…

Today's corporate system is set up like the spider. Everything starts at the top and works its way down. Employees have to jump through hoops just to get a new idea in the right hands or to ask for permission to attend a recruiting trip.

I think like a starfish. I was using Napster in middle school and high school, and Kazaa throughout college. "Peer-to-peer" or "starfish networks" are second nature to me. Today, I regularly use technology such as Wikipedia and Facebook which gives me the freedom to create the content I want to see and erase the content I don't. Is it any wonder that the insane bureaucracy that the corporate world thrives on is incredibly difficult for me to adapt to? Is it any wonder that nearly all of my friends plan to start their own businesses so they can create their own content?

My buddies innately understood our generations need to create their own content. Long before this book was even published, they knew that rather than creating a huge corporation with employees who report every detail to headquarters, they were better off licensing the idea to motivated students. All they had to say was, "Do you want to run your own business?" As you can imagine, very few students turned that proposition down.

If my friends had gone the other route and tried to recruit these students as employees in charge of running a business and receiving monthly paychecks, I guarantee they would not be nearly as successful as they are today. To this day, they refuse to call themselves the boss or call their licensees employees. Maybe they used this strategy to play into the well known fact that many millennials want to run their own business. But I think it has more to do with the fact that in today's world, a decentralized or leaderless organization makes a lot more sense then an antiquated hierarchically structured one. There is still a headquarters, and my friends are definitely the "CEO's," they just aren't hung up on power or control. Success is all that matters.

As our generation enters the workforce, strict, top-down corporations will face a huge problem trying to retain millennial talent. Companies will eventually have to adapt and change their fundamental structure from one of command and control to one of communication, trust and knowledge sharing. Take a tip from my friends and trust your millennial talent to run, or at least play an active role in their projects. In return you will receive great work and dedicated employees. Who knows, you may even keep your top talent from running to Google after a year or two.

Leave your thoughts here. (17 responses)

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Jaerid

May 11th, 2007 at 10:07 am

Well said Ryan. Smaller leaderless organizations are a lot more flexible and adaptable as well, which instantly gives them a leg up in today's fast paced and rapidly changing markets.

To give you a brief example of how a large corporation can screw things up with its "big ideas" – a company I worked for tried to lay the same business model on each of our customers, despite size. So what how we did business with a multi-million dollar customer is the same way we did it with a $5,000/year customer. It didn't work and resulted in lost businesses on both sides of the equation. Now (a few years later) they are learning their lesson and are creating a different division for the smaller customers. If the company was small and adaptable the transition would have been a lot quicker.

Of course there are certain industries and markets where a larger more organized company is needed too such as utilities. I like the overall idea though, great post.

Ryan Healy

May 11th, 2007 at 10:49 am

Thanks, Jaerid, great example. Obviously some industries and are better suited for larger more organized company's, but I'm sure every company could figure out a way to be more flexible. Decentralization gives more freedom to employees which in turn will create more creativity and productivity.

It probably won't catch on everywhere because many company's probably want to deny creativity and leave the decision making at the top. I certainly don't want to work for them.

-Ryan

Rachel

May 13th, 2007 at 1:31 am

great insight — loved the discussion regarding the lack of conenction between content control and hierarchy

Jacqui

May 14th, 2007 at 10:06 am

Just looking for some clarity:

I agree that hierarchies create a completely unnecessary beaurocrcy in 90% of situations. But some collective decision-making process has to be in place, or the resulting chaos would be equally as inefficient.

How, in a leaderless company, are you able to avoid the plague of committees or committee-like structures while still keeping an organized decision process?

I have the pleasure of working in a hierarchical office that is also over-committee-ized, and honestly, getting anything through the committees is the bigger hassle.

Ryan Healy

May 14th, 2007 at 1:24 pm

Jacqui,

Devin pretty much summed it up for me. Thinking about a company, group, or committee as a decentralized organization is really tricky because nearly everything we know is set up hierarchically. You have to throw "logic" out the window when imagining how an organization (or committee) will work when it is decentralized. The formation of formal committees completely defeats the purpose of a decentralized company.

I highly recommend reading the book, the authors do a great job of explaining their logic….

-Ryan

Devin Reams

May 14th, 2007 at 12:57 pm

Hi Jacqui, I think the authors would say that, in some cases, decentralizing into a committee is a great idea. A group of people come together with different skills; everyone relies on one another.

But, as you point out, the typical hierarchical workplace creates hierarchical committees where there is a leader/manager who has to oversee it all. Things have to be approved, debated, etc. In those cases, things really aren't decentralized are they?

Look at a site like Wikipedia as a better example of committees. There are a few biology experts. Nobody is in solely charge of the biology articles, though. They all work together and offer what they can to the project. Hence, widespread success…

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Drunken UFO Pilot

Dec 9th, 2007 at 12:21 pm

Interesting read. One of those good things i eventually stumble upon months later.. I don't totally get the spider metaphor, but starfish, yes. Reading Riane Eisler's "Real Wealth of Nations" which describes the difference between Dominator vs. Partnership societies, how it has played out over history. Eisler's terminology focuses on relations among people; what i just read makes creature metaphors. FWIW, "Starfish" is more fun to say than "Partnership".

I love seeing the big authoritarian organizations, with what amounts to disguised master/slave thinking, fall apart when they fail to adapt, and enjoying the successes of the "starfish" growing everywhere. I'm sorta stuck in the previous type org, unfortunately for now, but that'll change next year.

BTW, i'm too old to be gen Y, too young to be Boomer (dep. on whose definition but i don't fit in anyway), and just not an "X" either. However, the gen Y ways make more sense to me.

and i'm always wondering – what is gen 'Z' going to be like? and then what comes next?