Return-to-office edicts and productivity anxieties are reviving the oldest argument in management: who gets to decide, and how. Many leaders flirt with “flat” structures to grant autonomy without inviting drift. The risk is not chaos. It is something quieter and harder to fix: stalled work, hidden bosses, and decisions no one can make when time runs short.
What self-management promises, and where it stops
Self-managing organizations are not just companies with fewer titles. The canonical definition is sharper: they decentralize authority in a radical, formal, and systematic way across the whole enterprise, eliminating the manager–subordinate relationship as the governing unit of work (Lee and Edmondson, 2017). The management literature they synthesize is clear on the trade-off. Traditional hierarchy performs well when tasks are known and environments stable. It falters on complex, cross-functional problems that demand adaptation and continuous learning, in part because rigid status differences suppress voice and development (Lee and Edmondson, 2017).
That is why networks attract reformers. They promise speed across boundaries and greater local judgment. But those benefits do not remove the need for clarity about who can decide, when, and with what teeth. The absence of a manager of record does not suspend the need for enforcement. It merely moves it somewhere else, often out of sight.
The cost of pretend flatness
The best contemporary contrarian evidence comes from firms that prided themselves on having no bosses. Flat or bossless models can function under stable conditions, yet they tend to struggle in dynamic and time-sensitive settings that demand innovation at scale and sustained coordination over time (Foss and Klein, 2022). What frequently happens is not the abolition of hierarchy but its migration. Formal hierarchy is replaced by informal hierarchy, with real power accruing to veterans, star contributors, or savvy political actors who can steer resources without accountability in the org chart (Foss and Klein, 2022).
Valve, a celebrated case of radical flatness, illustrates the hazard. By 2013, inside the company the creative lull had a name, The Wilderness. Foss and Klein report that Half-Life: Alyx eventually required management intervention despite the firm’s bossless stance, and that the company lacked dedicated customer support and marketing departments as a consequence of preserving its flat structure (Foss and Klein, 2022). None of this proves that distributed power cannot create enduring value. It shows that removing formal bosses does not remove the functions bosses perform when stakes are high: prioritizing, sequencing, and, above all, enforcing.
Zappos and the return of enforcement
The most visible corporate experiment with Holacracy, Zappos, began with evangelism and ended with pragmatism. In 2016, Harvard Business Review reported that Zappos was the largest firm to implement Holacracy, and urged observers to move past polarized “pro” or “con” takes toward a more balanced view of self-management’s promise and limits (Bernstein, Bunch, Canner, and Lee, 2016). Four years later, Quartz reported how the story turned. In 2015, CEO Tony Hsieh gave employees an ultimatum to fully adopt Holacracy or take a buyout, and 18 percent exited. The company then pared back the system’s bureaucratic rituals and reintroduced managers, leaving only a circular hierarchy as a remnant (Groth, 2020).
By 2017, Zappos replaced Holacracy with an internal market. Teams operated like small businesses with their own profit and loss statements and traded with one another at market prices, a shift motivated by sizable challenges in business metrics and critiques that Holacracy was too inward-looking (Groth, 2020). This is not an anti-autonomy verdict. It is a governance verdict. Zappos did not abandon distributed decision-making. It installed stronger enforcement through prices, P&Ls, and managerial oversight when needed. The mechanism changed so that choices had consequences visible to all.
What enforcement looks like without heavy hierarchy
Managers matter, not as ceremonial signatories but as carriers of concrete functions. Foss and Klein describe those functions in four words: design, organize, encourage, and enforce. They also distinguish between two types of authority. “Mark I” authority covers the hard rights to hire, fire, and instruct. “Mark II” authority is the subtler power to lead, structure, and build consensus without commanding by fiat (strategy+business, 2022). Many self-managing settings aspire to maximize Mark II and reserve Mark I for clear breaches or emergencies. That aspiration is sensible. It is not self-executing.
If you want a network to move at the speed of its environment, install enforcement that fits its culture and risk profile:
- Name the non-negotiables. In Lee and Edmondson’s synthesis, self-management is formal as well as radical. Spell out the decisions that remain centralized, the standards that cannot be waived, and the domains where local choice is sovereign (Lee and Edmondson, 2017). Ambiguity here breeds the very informal hierarchies that self-management seeks to avoid.
- Define escalation triggers. Flat teams often stall on interdependencies. Create explicit criteria for when a dispute or delay must escalate, who convenes the decision, and how the outcome binds the parties. This is enforcement by process rather than by person.
- Appoint rotating referees. Preserve distributed leadership while ensuring timeliness by designating context-specific referees with time-boxed authority to make the call when consensus fails. Rotate the role to avoid permanent power centers. This is Mark II authority with a clear timer, reserving Mark I for violations, not disagreements (strategy+business, 2022).
- Tie autonomy to external reality. Zappos’ internal market was an attempt to expose teams to price signals and P&Ls so choices had crisp feedback loops (Groth, 2020). Market mechanisms are not a cure-all, but they are a way to enforce consequences without resurrecting layer upon layer of bosses.
The practical implication is simple. Autonomy requires design. The question is not whether your organization is “flat” but whether everyone can see how decisions get enforced when it matters. The most credible scholarship on self-management shows that decentralization can remove the drag of status and rigidity, which helps creative, cross-functional work flourish. It also shows that when environments change fast, organizations that refuse to formalize enforcement discover it anyway, only later and in rougher form. Install the referee upfront.
Sources
- Lee and Edmondson (2017). Self-managing organizations: Exploring the limits of less-hierarchical organizing. Defines SMOs and synthesizes when hierarchy helps or hinders, grounding the argument that autonomy must be formal to work. https://www.sciencedirect.com/science/article/abs/pii/S0191308517300059
- Bernstein, Bunch, Canner, and Lee (2016). Beyond the Holacracy Hype. Reports the polarized debate and identifies Zappos as the largest Holacracy adopter at the time, framing the governance challenge. https://hbr.org/2016/07/beyond-the-holacracy-hype
- Foss and Klein (2022). Who's the boss? The persistence of entrepreneurial hierarchy in flat organizations. Shows how flat models breed informal hierarchy and documents Valve’s creative inertia and need for intervention. https://link.springer.com/article/10.1007/s41469-022-00132-8
- strategy+business (2022). Can bossless management work? Summarizes Foss and Klein’s view that managers perform essential functions and distinguishes Mark I vs Mark II authority, informing the enforcement design. https://www.strategy-business.com/article/Can-bossless-management-work
- Groth (2020). Zappos has quietly backed away from holacracy. Details the 2015 ultimatum with 18% buyouts and the 2017 shift to an internal market with P&Ls, illustrating enforcement returning in a new form. https://qz.com/work/1776841/zappos-has-quietly-backed-away-from-holacracy