History books are filled with numerous examples of its success. Whenever large groups of people worked together toward a common goal—whether in armies, factories, or entire kingdoms—the pyramid structure seemed indispensable.
This was especially true for businesses, and it's no surprise why: The classic hierarchy excels at reducing complexity within a system. It provides clarity. Within this structure, everyone knows their role, and large tasks can be efficiently divided among different parts of the organization.
If traditional hierarchies have worked so well for so long, why should that change now?
Not too long ago, most organizations operated in relatively stable environments. Of course, there were technological upheavals fifty, a hundred, or two hundred years ago as well, but the pace of change was not as rapid as it is today. When external conditions around an organization remain relatively constant, and when business models last not just for weeks but for decades, the pyramid structure provides the necessary internal stability. It is effective at ensuring that everything stays the same. In stable times, this is a significant strength.
Today, organizational environments are in constant flux. New competitors emerge every week, while others disappear from the market. Companies must navigate these conditions to remain competitive. While the pyramid is quick and efficient when it comes to executing plans, it is slow and cumbersome when it comes to adapting to change. This makes it ill-suited for the present.
When something changes in the external world of an organization, it usually doesn't reach the headquarters first. The first to notice are often the employees on the periphery of the company: salespeople, drivers, cashiers, and anyone in direct contact with the outside world, who experience firsthand how the customer’s world is evolving.
In the old pyramid structure, when such a "sensor" detects a change, the information must be sent up the chain of command to where decisions are made. But by the time this information reaches the top, weeks, months, or even years may have passed. And even when the need for change finally makes it through and a decision is made, it must then cascade back down the entire chain of command before any real change in the organization's behavior occurs. This process neither benefits the organization nor does it serve the people working within it.
In a classic hierarchical organization, employees are expected to carry out tasks delegated from above. They have a fixed position with a clearly defined scope of responsibility, and anything happening outside this scope does not fall within their purview. However, in a constantly changing environment, companies urgently need well-trained employees who can recognize and respond to changes, think critically, seize opportunities, and are willing to continually learn new things. Such employees can only be attracted by offering them real autonomy and genuinely delegating responsibility, rather than just talking about it.
If companies fail to do this, they have no chance of surviving in turbulent environments. The young, well-educated individuals who are so urgently needed today are increasingly unwilling to work for companies that do not provide responsibility, flexibility, and opportunities for learning.
A picture is emerging in which companies essentially have only two options: either continue as they have been and accept that this will lead to a dead end, or confront the significant challenge of transformation.
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