How Startups Are Killing Off Bosses

The most innovative tech companies today are building work cultures that fly in the face of tradition.

At companies like Valve and Github, gone are the managers who boss people around and expect servile compliance.  In their place is a flat organizational structure where individuals manage themselves and each other to build awesome things through peer management.  These are companies without bosses.

I know what you’re thinking.  “How does anything get done?”  I admit that I had the same reaction when I first heard about bossless companies.  But as I worked with and studied innovative companies like Zappos and up-and-comers like Wistia more closely, I saw how their focus on company culture drove productivity and motivation without hierarchy and authority.

What’s at stake can’t be understated, and it’s as Github's Zach Holman recently put it: “The product is the byproduct.” If you get the “people, process, and technology” right at your company, innovation, motivation, and self-directed engagement will result as a byproduct.  It won’t be something you’ll need to cram down your employees’ throats.

Trust is paramount, but it’s also the biggest hurdle to overcome

Effective peer management relies on individuals having accountability and autonomy, and none of that can happen without trust. People who are stuck on the concept of the traditional hierarchical structure as the gold standard, or even a necessary evil, once a business has aged sufficiently and successfully enough to be “established” are buying into a system of a lack of trust, which drives the need to control. Instead, peer management works by entrusting and empowering individuals to control themselves.

A bossless or managerless company doesn’t mean it’s directionless. Peer management is guided by accountability, transparency, and work culture. The result is the autonomy and agility to carry out initiatives, and because of that freedom, those initiatives are very often creative and help mold the stand-out success of a company.

1. Every individual in the company must be accountable

In peer management settings, individuals steer themselves and others, and with that power comes great responsibility to be accountable. Companies can provide tools to help wield that great responsibility, such as accounting for peer feedback and even peer compensation. At Valve, employees crowdsource rates of pay, and at Shopify, peers give each other monthly bonuses that come out of company profits as a fun way to recognize good work.

Skillshare uses a system called Objectives and Key Results (OKRs), where objectives are broken into key results, to help carry out accountability and alignment within teams. OKRs provide a measure, at every week, month, and quarter, for individuals to evaluate their performance. One of the building blocks of inspiring tech companies, OKRs go back to Andy Grove’s reign at Intel in the 1980s and continue today in smaller companies like Skillshare to larger ones like Google and Zynga. Zynga CEO Mark Pincus sleeps better at night knowing that OKRs “keep everybody going in productive directions when you’re not in the room.”

2. Unblock your information flow.

The essential ingredients of peer management like trust, accountability, peer feedback, and decision-making autonomy rely on transparency of information. The problem with old school, hierarchical companies is that managers end up operating as obstacles for spreading information freely within a company.  And this only becomes a bigger problem as your company grows.

As the saying goes: “Do things, tell people.  These are the only things you need to do to be successful.”  Opening an effective channel to “do things, tell people” is the surprisingly simple solution, distributing necessary information, including news of accomplishments, results, and feedback, to get stuff done.  

The snippets system that Google uses is a way to do things and tell people. Every week, you get an email asking what you did in the previous week and what you plan on doing in the next. Responses are stored in a public space and distributed automatically the following day by email. The value of snippets is in creating an open channel to communicate what you’re getting done over which you’ll receive feedback.  

This progress data and information-sharing are the fuel and food of peer management environments, driving dynamic, agile, and effective performance and building a culture of meritocracy and incredible individual professional fulfillment. Rising star companies like Shopify and Harvest track and celebrate their accomplishments in a similar way with a daily email system from us here at iDoneThis.

3. Strengthen your culture with every new hire.

Fit is paramount in peer management. Fit can require tactics more familiar to dating when trying to match candidates to a unique company of highly autonomous individuals. Stripe applies what they call the “Sunday test”: “ If this person was alone in the office on a Sunday, would that make you more likely to come in just to hang out with him? We only make a hire if the answer is a strong yes.” Having taken such effort to build a team they believe in, Stripe also allows everyone a veto for candidates.

Stripe, Github, and Skillshare also take time to acclimatize new hires with an on-boarding process, cementing fit in those awkward first days of work and aligning them with the company culture and vision. Github has an induction week of social events and assigns a buddy to help people settle in, while Skillshare welcomes new hires by cooking them breakfast. Stripe has newbies float through different groups in the first few days to meet people, familiarize themselves with work, and set up the ability to be mobile later on.

Chris Savage, co-founder and CEO of the rapidly growing business-video hosting company, Wistia, finds that the interaction of culture and fit become “a competitive advantage.” As Wistia grows with an eye toward whether candidates will mesh with its quirky culture, the company itself advances, because “we’re hiring for values that the company believes in, and people with those values should make it stronger.”

Doubters have said that these companies will inevitably become hierarchical and bureaucratic, but that hasn’t happened even as Valve and Github get into the hundreds of employees.  What’s startling is that these innovative companies retain this flat structure as they grow out of the fledgling startup phase, reinventing how businesses are built and organized by recognizing the role of peer management in their continued success.

The bottom line is that innovation and information has trouble traveling through hierarchies and managers, and so the most exciting companies today have chosen innovation over predictability. As Andy Grove put it, “Let chaos reign, then rein in chaos.”  

With peer management, accountability isn’t to a boss or supervisor, it’s to each other, your team, your company, your customers — and because of the level of autonomy and personal engagement with your work and objectives, it’s to yourself. That’s way more motivating than being told what to do. Using peer management to build a culture that enables motivation, autonomy, and purpose makes work fulfilling and joyful, and yields innovative results.

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