Return-to-office mandates, AI-fueled product cycles, and rolling restructurings have put power back on the agenda. Executives want speed and accountability. Employees want agency and purpose. Many firms reach for a simple answer: flatten the chart or double down on command. That is a false choice. The record suggests a contingent design problem, not a culture war.
What self-management really is (and is not)
Michael Lee and Amy Edmondson offer the reference definition. Self-managing organizations decentralize authority radically, formally, and systematically across the company. Their distinguishing feature is the elimination of the manager–subordinate relationship as a basic unit of control (Lee and Edmondson, 2017). This is not a vibe or a set of slogans. It is a structural bet that authority can live in roles, teams, and explicit rules instead of in bosses.
The same review synthesizes decades of management theory with a clear trade-off. Managerial hierarchy excels at reliable execution of known tasks in stable environments. It falters when work is complex, non-routine, and spans functions, tending toward rigidity and status dynamics that stunt people’s development (Lee and Edmondson, 2017). The point is theoretical, not experimental, and deserves to be used as such. Still, it gives leaders a simple diagnostic: if your core work is tightly coupled, predictable, and safety critical, hierarchy earns its keep. If your core work cuts across silos and changes often, networks of self-governing teams have an edge.
The popular debate has rarely managed that nuance. As Ethan Bernstein and colleagues argued when Holacracy fever was high, observers split into cheerleaders for bossless utopias and skeptics who saw naïveté everywhere. Their call was for a sober accounting of what self-management can actually deliver, not a referendum on vibes (Bernstein, Bunch, Canner and Lee, 2016). In 2016, Zappos remained the largest firm to adopt Holacracy wholesale, which made it the emblem of the argument itself (Bernstein, Bunch, Canner and Lee, 2016).
When flat meets the clock
The romantic version of “no bosses” tends to meet its match in time-sensitive, high-uncertainty settings. Nicolai Foss and Peter Klein document why. In dynamic environments, firms that claim to be flat often struggle with innovation at scale and with longevity. Formal hierarchy gets replaced by informal hierarchy rather than eliminated, a shift that hides power instead of clarifying it (Foss and Klein, 2022). Valve’s celebrated flat structure is their cautionary tale. By 2013, insiders labeled the firm’s creative state “The Wilderness,” and the development of Half-Life: Alyx required management intervention despite the bossless creed (Foss and Klein, 2022). The lesson is less about video games than about latency. When stakes and timelines tighten, someone must integrate, prioritize, and decide. If you do not specify who and how, those roles surface anyway, just harder to see and harder to challenge.
Zappos, the movement’s most visible corporate case, also complicates the myth. In March 2015, CEO Tony Hsieh gave employees a choice to fully commit to Holacracy or take a buyout. Eighteen percent took the offer (Groth, 2020). Over the next two years the company stripped out much of the system’s meeting machinery, brought managers back, and in 2017 replaced Holacracy with an internal market where teams operated like small businesses with their own P&Ls and traded with one another at market prices. Leaders cited big challenges in business metrics and a critique that Holacracy was too inward-focused (Groth, 2020). None of this makes self-management a failure. It shows that power needs to be designed for external results, not only for internal process purity.
Choosing structure by the work, not the fashion
If leaders want a reliable rule, they will be disappointed. The better stance is contingent. Strategy+business, summarizing Foss and Klein’s broader argument, notes two things worth keeping in view. First, firms that are almost bossless do not show generally superior performance compared to traditionally organized peers, and there are few of them to begin with. Second, managers matter in concrete functions: designing, organizing, encouraging, and enforcing. Authority can be expressed in different modes, from hard rights to hire, fire, and direct, to softer roles that structure work and build consensus, but it does not disappear (strategy+business, 2022). That framing helps reconcile the theory and the cases.
Put the strands together and a practical pattern emerges. Use networked, self-governing teams where the primary challenge is problem solving across boundaries, rapid learning, and local adaptation. Make the authority explicit, in roles and protocols that let decisions be made close to the information. That is the core promise of self-management as defined by Lee and Edmondson, and the theoretical case for it is strongest in non-routine domains (Lee and Edmondson, 2017). Then add minimally sufficient hierarchy where the work is tightly coupled in time, capital intensive, or safety critical, or where the cost of delay outweighs the benefits of consensus. Foss and Klein’s account suggests that if you do not do this explicitly, informal bosses fill the gap anyway, often with worse transparency and fairness (Foss and Klein, 2022).
Designing visible power
The implementation details matter more than the label on the org chart. Four moves help, and they follow directly from the record.
- Make decision rights legible. Map who decides, who is consulted, and what the escalation path is. This keeps authority visible if you run a network, and it curbs bloat if you run a hierarchy. Foss and Klein’s evidence on informal hierarchy is a warning against ambiguity as a policy (Foss and Klein, 2022).
- Tie structure to external results. Zappos’ pivot to an internal market, and its earlier retrenchment from Holacracy’s process load, was a response to business metrics and an inward-focus critique. The signal came from outside, then the design changed inside (Groth, 2020).
- Choose managers for functions, not status. The strategy+business synthesis emphasizes managers as designers, organizers, encouragers, and enforcers. If a role does not need those concrete functions, do not assign a manager to it. If it does, do not pretend a committee will handle it under pressure (strategy+business, 2022).
- Match governance to task type. For cross-functional exploration, use self-governing teams with clear roles and accountabilities. For time-critical integration, specify a decider and the criteria they use. This applies Lee and Edmondson’s theoretical trade-off directly to design choices (Lee and Edmondson, 2017).
The close is simple. Power will exist. You can hide it behind flattened charts and hope the network manages itself, or you can design it so people can see it, use it, and question it. The firms that get this right will not argue about hierarchy versus network as an identity. They will operate both, on purpose.
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 piece’s contingent design argument. https://www.sciencedirect.com/science/article/abs/pii/S0191308517300059
- Bernstein, Bunch, Canner and Lee (2016). Beyond the Holacracy Hype. Frames the polarized debate and situates Zappos as the prominent case, supporting the call for a balanced assessment. 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. Provides evidence that informal hierarchy persists and details Valve’s struggles in a flat model, underscoring limits of bossless design. https://link.springer.com/article/10.1007/s41469-022-00132-8
- Groth (2020). Zappos has quietly backed away from holacracy. Documents the 2015 buyout, the retreat from Holacracy, and the 2017 shift to an internal market tied to business challenges. https://qz.com/work/1776841/zappos-has-quietly-backed-away-from-holacracy
- strategy+business (2022). Can bossless management work? Summarizes Foss and Klein’s view that near-bossless firms are not generally superior and clarifies functional roles of managers, reinforcing a contingent view. https://www.strategy-business.com/article/Can-bossless-management-work