06/02/2011 04:19 pm ET | Updated Aug 02, 2011

Going Flat: Creating the Freedom to Succeed

Business leaders often state they're going flat because they want employees to "think outside the box." I want to "push back" on their reasoning. I resist the urge to "push back" because I'm trying to eliminate concepts associated with traditional organizational structures from my leadership vocabulary.

What if leaders of flat organizations invested as much effort in inspiring people to build cultures without "boxes" by constructing a new mindset for the behavior they want as they invest in deconstructing the vertical and functional restraints that limit space in hierarchical structures?

My own company, LRN, is working to answer this question on our own flat journey.

Tearing down our vertical structure was easy. Building a new self-governing mindset is where the real work begins. The right balance needs to be struck between governance, leadership and culture, one that provides enough of each to guide crucial decisions such as who gets to spend money (how much) and who gets rewarded (how).

As we studied other flat journeys, we saw a need to strike a "Freedom From/Freedom To" balance. Eliminating old structures gives organizations freedom from micromanaging, lengthy approval processes and other obstacles -- it creates space. But maximizing the value of this space means giving people the freedom to collaborate, to make quick decisions, to innovate and much more.

This freedom to self-govern requires behaviors, derived from shared values, that align to achieve a shared mission.

These days, many companies share the belief that a flat structure is a necessity in a flattened world. David de Wetter, a senior organizational alignment consultant with Towers Watson, reports that the use of flat, or "matrix," organizational structures is growing. Yet, de Wetter also notes that these organizations often contend with a "matrix tax." This tax manifests itself in the form of slower and less effective decision-making due to the lack of a clearly defined mission and objectives.

Constructing Self-Governance

How can leaders dodge this tax and construct a self-governing mindset? It takes time, deliberate work and a lot of attention to the following activities:

How we lead: Relinquishing traditional modes of control often feels uncomfortable to leaders. Along different stretches of our flat path, I certainly have felt vulnerable. While the deconstruction represents a top-down effort, the construction of a self-governing culture is an "everybody effort." At LRN, four democratically elected councils have joined our executive council as the primary shapers of our new approach. These teams are deciding how our company will organize and behave.

Despite occasional leadership discomfort, we have found that leaders should continue to believe in, project the vision for, and support the evolution toward a flat structure and a self-governing mindset as an essential way of thriving amid 21st century business conditions.

How we speak: The uncertainty that accompanies the move to a flat structure and self-governing mindset -- as well as ongoing external uncertainty -- increases the need for language that conveys with certainty that individual efforts are aligned. In our company, we are trying to replace hierarchical language (e.g., "superior," "need-to-know basis," "employee," "customer") with terms that support a self-governing mindset (e.g., "collaboration," "colleagues," "partners"). This attention to language extends to a new approach in which "functions" have been replaced with "mindsets" that describe how we are helping our organization achieve our mission, rather than identifying our specific expertise and seniority level. For example, our "Enable" mindset (previously called IT, HR, finance, etc.) focuses on the valuable internal collaboration needed to keep our business moving forward.

How we manage performance: One of our colleague councils developed a new performance review standard in which colleagues select their own leaders and networks of colleagues to assess their performance. While we offer guidelines for selecting these leaders (e.g., they should be colleagues who have led a team you were on and who are most knowledgeable about your work), the decision resides with our colleagues.

How we recognize and reward performance: Jason Fried, co-author of Rework (Crown Business, 2010) and co-founder of Chicago-based software firm 37signals, notes that his company values "horizontal ambition" over "vertical ambition." The flat company values employees who love what they do and who continually strive to improve upon their passion. To live this value, the firm rewards high-performing employees with additional responsibilities in their area of interest rather than with management positions.

It also helps, Fried reports, that the company pays above-market salaries and gives people "plenty of freedom to make their own decisions about the projects they're working on." Yet these rewards would not help stimulate desired behaviors if Fried did not complement 37signals' flat structure with this self-governing mindset.

Achieving the kind of mindset that enables flat structures to succeed requires a lot of this type of thinking. No boxes at all, just freedom to pursue our highest and best work.