In many parts of the Agile community, hierarchy is viewed as a necessary evil. Hierarchical structures can be restrictive forces that limit the effectiveness of teams and inhibit self-organization. In contrast, we often emphasize flatter structures and peer-to-peer networks because we believe they will allow Agile teams to thrive. This perspective can be limiting and inhibit our appreciation of hierarchy’s value. In this post, I’ll examine hierarchy from the perspective of complexity and contrast it with the flatter structures we tend to prefer.
Agile vs. Hierarchy
Practically every Agile advocate has struggled with hierarchy. Agile teams tend to rub up against rules and structures reinforced by layers of hierarchical management. These rules often lack context and inhibit the effectiveness of teams, preventing them from reaching their full potential. For those in the thick of these struggles, established hierarchies can be a source of great frustration.
Encounter these dynamics often enough, and it becomes easy to assume that the nature of hierarchy itself is a problem. We generalize across our experiences and downplay the specific circumstances of each situation to conclude that hierarchy—as a general concept—is ineffective at meeting the challenges of today’s world. To survive, organizations must fundamentally transform. A new body of literature capitalizes on these feelings. Frederic Laloux’s book, Reinventing Organizations, is one of the most influential; he argues that we should aim for an enlightened organizational structure he calls “Teal” with distributed authority and naturally emergent hierarchies.
Several organizations have embraced this view. In recent years, Zappos has experimented with Holacracy. The results have been mixed, with numerous articles citing significant disruption and limited observable benefits. Now the company is moving to a Teal organization. The shift away from traditional hierarchy has created a vacuum, and in its place, new structures are emerging. This is intentional—Teal organizations are supposed to allow the emergence of new approaches—but the available information suggests that some of the new structures at Zappos might not be well-aligned with the organization’s purpose.
Identify Your Organization’s Purpose
Purpose is central to any discussion of hierarchy. Human organizations are complex adaptive systems. Complex systems self-organize around one or more specific objectives. In the natural world, this process is governed by energy flows. Hierarchical structures consistently emerge in natural systems to promote the efficiency of flow.
There are numerous examples. One of the most obvious is the way small streams and creeks naturally combine into larger and larger rivers, ultimately feeding lakes and oceans. Tree roots, and the veins of their leaves, are similarly structured. Our vascular and lymphatic systems take the same form. These hierarchical designs efficiently support the transmission of nutrients by channeling them into specific flows. In our bodies, as in other parts of the natural world, hierarchies have a specific purpose: to maximize the efficiency of energy flows.
We should expect hierarchies to emerge in human organizations as well, and for similar reasons. Hierarchies improve an organization’s ability to accomplish specific goals. The key is that the hierarchical structure should support and align with the espoused goals of the organization. The challenge we frequently encounter is that the established hierarchy is misaligned with the organization’s current focus. This is common during an Agile Transformation, when the organization is attempting to reconfigure its approach in light of changing circumstances.
Align Hierarchy with Goals
Organizations that can align their hierarchy with their goals are more successful. Agile approaches do this by stressing cross-functional teams with all the skillsets necessary for delivery. Teams become the operational unit, replacing the more traditional hierarchy of functional groups, such as development, testing, and business analysis. A historical precedent for this change is the U.S. Army’s experience in World War II. The advent of mechanized warfare triggered a shift away from a hierarchy based upon service branches—infantry, artillery, and tanks—and towards cross-functional “combat commands.” By 1943, each American armored division had three of these commands. They possessed a balance of tanks, infantry, and artillery. Depending on the division’s specific objectives, the commands could flexibly reconfigure, ensuring alignment between the hierarchy and specific operational goals.
Why does misalignment occur? If the hierarchy tends to naturally emerge to help promote an organization’s stated goals, the hierarchy should be beneficial, not a restrictive force. The problem is that context—the organization’s environment—often changes more rapidly than the organizational structure. Hierarchies develop an inertia. They can become a poor fit for new circumstances and misaligned with organizational goals. When this occurs, a company will be less successful and become ripe for disruption. An Agile Transformation is often a reaction to these circumstances, which explains why many Agile advocates struggle with established hierarchies.
The misalignment is the source of the difficulty, not the innate nature of hierarchy. Laloux implicitly recognizes this; the ideal of his Teal organization is not an absence of hierarchy, but the ability to dynamically reconfigure hierarchy as circumstances and organizational goals shift, not unlike the U.S. Army’s armored divisions in World War II. This is an excellent objective, but the kind of loose re-configurability he advocates comes with higher coupling costs. In some contexts, it will not be worth the investment, and organizations will be better served to orient their hierarchy towards their known objectives.
In those circumstances, the best approach is an adjustment to realign the hierarchy with the goals of the organization. It can come through a transformation, coaching, or other means. For those of us involved in the transformation, the key thing to remember is that hierarchy is not the enemy. It is a natural mechanism that can help achieve specific outcomes. Rather than fighting hierarchical structures, we must understand the goals they help achieve and how those can be brought into alignment with the organization’s current objectives. I have found this extremely useful in my work; I hope you do too.
 Daniel R. Brooks and E.O. Wiley, Evolution as Entropy: Toward a Unified Theory of Biology (University of Chicago Press, 1988)