Rachel Feintzeig reports in the Wall Street Journal:
For founders of upstart companies, reinventing management is often another way to prove that they can do business differently. “Everyone became too passive and collaborative,” he says of his team, whose members were located in France and the U.S. “It was too much democracy.”
This spring, employees at tech firm Treehouse Island Inc. got something they hadn’t had in years—a boss.
Since 2013, the Portland, Ore., online coding school had been something out of an office drone’s fantasy. Under co-founder and CEO Ryan Carson’s leadership, staff worked four-day weeks, pitched in only on projects they felt like doing, rarely had to send email and had no direct bosses.
But as the business grew, enrolling upward of 100,000 students for its online courses and employing about 100 workers, some projects weren’t being completed and employees were unsure of their responsibilities. While it wasn’t weighed down by bureaucracy, Treehouse was stalled. And Mr. Carson, one of the most vocal cheerleaders for managerless companies, was forced to re-evaluate his allegiance to an organizational approach he had espoused in blog posts and interviews.
“That experiment broke,” Mr. Carson says. “I just had to admit it.”
For founders of upstart companies, reinventing management is often another way to prove that they can do business differently. Companies like Web retailer Zappos.com Inc. have made big bets on systems that allow workers to manage themselves without the aid of middle managers, while software-development methods like Lean and Agile place rapid problem-solving and empowered teams over traditional work hierarchy. But as they hit growing pains, some firms are rethinking the way they work.
Without managers to coordinate projects and supervise workers—cheering a job well done or doling out blame for missed deadlines—Treehouse employees weren’t as productive as they could have been, executives said. For a company that delivers courses in programming languages like PHP and Python to students interested in becoming software developers, that meant losing ground to competitors.
“There’s no real reason to push hard because no one knows about it,” Mr. Carson says. “We almost had some of our best people sort of getting used to the fact that not as much was expected of them.”
Dave McFarland was initially excited about Treehouse’s flat structure when he joined in March of 2014 as a teacher of JavaScript programming. Since the company allowed employees to pitch projects to the staff, he eagerly proposed things that interested him, such as a tool to evaluate what students had learned in their courses. Too few workers wanted to tackle the project, though, and without a champion in management, it went nowhere.
He ultimately stopped proposing ideas. “You just kind of felt like, ‘I can’t get these things done,’ ” says Mr. McFarland, now one of the company’s new managers.
Endless discussion sank other decisions, in part because employees on the company’s chat system weighed in on initiatives outside their area of expertise.
Questions about which subjects to teach would spark plenty of analysis and chatter but resulted in few answers or plans, says Michael Watson, the company’s finance and operations chief, estimating that decisions about things like Treehouse’s website design took twice as long as they should have. Mr. Watson adds that constant questions from staff on small-bore issues like expenses—questions they would have asked a direct boss, had there been one—ate into his time for strategic work.
Middle managers are often vilified as symptoms of corporate bloat, but things fall apart without them, according to Quy Huy. A professor of strategy at Insead’s Singapore campus, he’s studied middle managers at over 100 organizations and found that midlevel bosses deliver employees the resources they need for work and keep staff motivated and on task in uncertain times.
Employees “want people of authority to reassure them, to give them direction,” he says. “It’s human nature.”
That is what Mac McConnell learned after rolling out Holacracy to his 12-person marketing team at tech firm Bonitasoft Inc. in December 2013. He thought the management practice—in which employees form teams called “circles” to tackle work—would empower far-flung reports to push projects forward. The opposite happened.
“Everyone became too passive and collaborative,” he says of his team, whose members were located in France and the U.S. “It was almost too much democracy.”
Seeking formal leadership, employees couldn’t resist going to him every time they had a problem, he says. Meanwhile, big projects like an overhaul of Bonitasoft’s website proceeded slowly, resulting in workers scrambling to meet deadlines.
Heeding staff frustrations, Mr. McConnell put managers back in place in August of 2014. He later left the company, a decision he says wasn’t influenced by the Holacracy experiment.
Not all forays into self-management go awry. California tomato processor Morning Star Co. has no formal management, and employees rely on data points such as tons of tomatoes harvested per man-hour to remain assured that employees are doing their jobs, according to Paul Green. A longtime Morning Star employee, he now studies organizational behavior at Harvard Business School and observes the company for research.
Morning Star’s bossless workers are happy, according to Mr. Green, who adds that “it would be a stretch to say [it] has this perfect organizational system worked out.”
During a recent visit, he observed employees hesitating about shutting down a clogged machine; they sought input from more colleagues until someone seen as an important decision maker made the call, he says.
Treehouse’s executives say the company’s new bosses have brought benefits. Revenue has increased since Mr. Carson made the switch, as has the number of minutes of video courses the company produces, according to the CEO. Mr. Watson says the time it takes customer support employees to respond to students who have questions has dropped to 3½ hours from seven hours. (Employees still work four-day weeks.)
Shifting to different forms of communication from the company’s homegrown messaging system has also cut down on what Mr. Carson describes as “black hole” discussions about decisions. With roles now defined and managers tracking assignments, email is proving useful.
Craig Dennis, a teacher at the company, says he likes having a manager to give him direction and praise for a job well done. He sometimes misses pitching colleagues on a cool project, but says life with a boss is “light years better.”
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