This post was co-written with Davide Casali of Automattic. He’s @folletto on Twitter and writes on Intense Minimalism. rawn-folletto-1200x675

Have you ever wondered if a company without a management structure could even function? Without managers, you are essentially in a flat organization with the lack of any hierarchy of reporting. How can that even possibly work? Who leads the vision and direction for teams, departments and the whole organization? How does leadership take shape? Take a dive into this world through the eyes of both author’s own experience in working in actual flat organizations.

There has been an explosion of interest in new forms of management and organization reporting structures in recent decades, as many disruptive innovators have reshaped our basic convictions on how businesses should be run. The best management thinking (according to the Thinkers 50 biennial list) is squarely emerging in this space, particularly in how we run organizations. You can find excellent readings on the subject in Dave Gray’s Connected Company, Scott Berkun’s The Year Without Pants, Frederic Laloux’s Reinventing Organizations, Ricardo Semler’s Maverick, or the various articles on the trademarked model Holacracy.

Changing an entire existing company structure can be difficult, however, the fundamental teachings and models that allow these companies to flourish are good management techniques overall, and can be borrowed in any business. Like Semler’s own example of reinvention of the industrial equipment company SemCo in Brazil, we would like to take examples from how things operate in our own businesses, Automattic and Ethos.

To understand see how well these leadership lessons work, let us first frame the scale and scope of work of our organizations. Many people do not immediately recognize the name Automattic, but it is quite likely they have visited their web sites. Automattic is the company behind According to Quantcast, it is one of the top 25 web sites of the world, while the open source WordPress software platform itself runs 39% of web sites the world over.

Ethos VO Ltd is a small network organization with big impact aiming to improve our societies through building the future of work skills, health and wellbeing, and smart cities. Based in the U.K., it brings experienced people with skills and relationships across private and public sectors to solve complex multi-stakeholder societal challenges. It has brought to life projects like Team Army that is encouraging healthy mind and bodies for over 100,000 U.K. military active duty and veterans participating in sports; SkillsPlanner for the London construction industry is a big data platform bringing 30 stakeholders in the highly competitive construction industry in one the world’s largest active construction cities; and Ethos Smart which is investing in Internet of Things and predictive analytics to improve parking and transportation across many cities in the U.K.

First of all, flat organizations aren’t strictly flat. In order to grow, allow communication to flow, and projects to move forward, certain principles start to emerge. The flat terminology isn’t about grouping or structure, it’s how the decisions flow inside the company, which is more peer-to-peer and less top-down. A good way is to think of this model as a wirearchya  dynamic two-way flow of  power and authority, based on knowledge, trust, credibility and a focus on results, enabled by interconnected people and technology. This gives a better idea than the word “flat”.

These principles–leadership attitudes if you will–underlie how leaders begin to emerge out of the pool. Those who best understand these principles are often the most successful in such dynamic environments. Let’s take a look at five of these principles.

  1. Act: “You Already Have Permission”

This is a challenging guideline for many managers, because it means switching from direct control to a trust relationship with the members of the team. This allows entire teams to change and transform the product and the internal processes in a flexible way, to adapt to different goals and changing markets, and to be overall more innovative and competitive. Removing the worry of “I need to get authorization” from every aspect of the work can be challenging, but it rewards business and people’s health greatly.

This is embraced at multiple levels inside Automattic as a rule. While there is still a long term vision from the top, each person and team is left to decide what’s best for the work that has to be done. The goals of the organizations are collected and discussed, teams set their own roadmap, goals and milestones and individuals can start initiatives on their own; e.g., a successful series of interviews around leadership is currently organized by Simon Ouderkirk, while Anne McCarthy took the lead on creating

If there is enough trust in people, you should not even need to ask for forgiveness. At Ethos we have tried to get to that place where we can safely assume that people are working for the best interests of the group. Yet with new people entering and with people long used to hierarchical organizations, some still feel a need to get permission. We often have to reiterate that not only do they not need permission, but they don’t need to be forgiven either. So far, there has never been a horrible blunder.

What is important is to recognize that people will want to give feedback or add their own shape to the idea.

  1. Flow: “Every Idea Is Playdough”

Projects, proposals and ideas are intended to be moldable. Thinking should definitely not be concrete, meaning that it is fixed and unmovable. Each partner can bring their own input that may need the design to change. But they should also not be so volatile and fluid that they simply change with the slightest new breeze, or next new touch.

We also don’t use Lego’s metaphor of well defined reconnectable pieces, because honestly nothing in business is that deconstructable into such tiny pieces and easily reformed into something new. They may exist in theory perhaps but in my experience, rarely in operation.

If anything they are like playdough or clay. They begin by being moldable and put into a certain shape when the first person starts, and then poked and prodded into new ideas. After a while they do harden and become less moldable, and what you have is what you have. To alter it, you would need to work on it before it becomes so hardened into the overall system. Instead, you can take a new piece of clay and remold it to a similar starting form (i.e., reapply the basic design) but then alter it for a new context. It will eventually take its own shape.

Obviously if you hold the playdough only to yourself you can shape it however you like and let it harden before anyone else can. However, you want their input and their ideas and you need that shaping to happen in an open and transparent environment…

  1. Open: “Everything Is Transparent”

The fear of transparency comes from the fear of judgement, which translates then directly to intricate company politics, slow decision making and siloed teams and business units. Such fears of judgement may be associated with repercussions, competition for resources, and unwillingness to deal with competing ideas. It is hard to avoid judgement when being transparent. Our primal instincts create mental protection mechanisms that tells us not to share everything, making us emotionally vulnerable.

What should you be transparent about? At Ethos, for example, our team meetings are recorded for posterity and available for playback. Much of our work happens in our online collaboration environment–we use Citrix Podio for our online spaces–and these work spaces are open to all partners.

As a fully distributed company, Automattic relies almost entirely on the written word, from short conversation to deep analysis. Transparency is achieved by not having any kind of access control (except for the most sensitive personal data, of course). All the content produced is available to everyone that wants to read it. People from entirely different teams can chime in with experienced feedback even if they aren’t involved in the specific project, adding value, perspectives and raising the overall quality. The rule for us is simple: everyone can access everything.

More ideas coming from all your people do not mean that everyone involved will be able to process all the ideas, but they do create serendipity. We find this leads more people to suggest other connections or related activities that the proposer may not have known or thought of. Serendipity in turn can lead to new opportunities either for individuals or the business overall.

Being transparent also means that you are at the mercy of the input from many others…

  1. Accept: “It Isn’t Easy Being Green”

When everyone has the green or go light on giving you input on your project, it takes a lot of thought first before one is willing to put their idea out there. It also takes a lot of confidence, willingness to be challenged, and ability not to take offense. These are tough qualities to develop in a person, especially one with experience and expertise.

Kermit the Frog had it right, “it isn’t easy being green” and to be different from others. This goes for your ideas as well as input from others. Yet, real innovation can come from ideas that are radically different in nature or in execution. Often these ideas never make the light of day because people aren’t sure if they will be ridiculed for suggesting it.

Trust in your colleagues is necessary, but also develops out of this when people know each other well and are willing to recognize others point of view. We often find a sense of humor is necessary and a willingness to really ask if some of the component ideas are as vital as you might think.

This trust comes out of frequent communication…

  1. Share: “Communication Is Oxygen”

This is one of the key phrases of Matt Mullenweg, and part of the Automattic’s Creed. While it’s one of the foundational elements that make distributed companies work, fostering open conversations allows any kind of company to avoid blind spots, catch issues earlier and improve the quality of work of everyone in the company.

For Automattic communication is the other fuel that mixes with transparency. To make transparency work, there needs to be something to be transparent about. We push ourselves to communicate sensibly, even questions and proposals, and share ideas and drafts as early as possible. The content of our internal communication channels is constantly reviewed and refactored to make it more meaningful and effective in communicating, trying to achieve a good balance between under-communicating and over-communicating (no pointless documentation, no bureaucracy). Clarity is important, but also social interactions are, and we value these too. The value of people isn’t removed away in dry communication, but valorized as well through it.

The open workspaces we use in Ethos can create a bit of volume of information, but part of being active is understanding how to navigate through the spaces, and knowing where to find or put stuff. We also have external channels and public areas where we openly share what it is like to work in Ethos, what we are working on, and recent relevant people and news to our activities.

There Isn’t A Conclusion
Just like gist of the principles, there is no one conclusion because even these ideas might evolve over time. There are other principles as well but just starting with these will take time for the work culture to evolve. What you see is a theme of openness and assumption of risk on an individual level that really distinguishes it from highly structured processes and hierarchies. This risk in itself is what creates more engagement. If you have more at stake, you pay more attention to it as it lives. This quality overall is what helps to build strong employee-involved businesses.