Why do companies revert to hierarchy?

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A question that I’ve asked myself many times over the last couple of years has resurfaced in light of the recent GitHub restructuring. Why do companies resort to hierarchy? So many set out with the grand ambition of keeping a flat structure – and many manage for a long time. People are happy, they are respected, communication is good and everyone can contribute to the future of the company in meaningful ways.

But with almost predictable inevitability it is at some point decided that structure is required to make the company more efficient. Whether it’s at 50, 100 or 500 people (which is a surprising spread of company sizes), visibility decreases and communication falters in a way that seems to say “we need structure” – but why; and is it even true?

So many traditional business experts seem to consider the way that start-ups organise themselves to be cute or naive and, whilst potentially fun, doomed to failure. Is there only 1 sensible way to structure a business? Or is there something significant we should be learning from the new generation of young companies desperate to prove that it can be done another way?

From my own experiences I know that it’s easier to go with the status quo. But I can’t figure out the reason why the flat structure becomes too much hard work. If there is a clear understanding of responsibilities and an efficient communication channel why can we not have a company made of many small teams that are themselves still operating as a start-up would?

Maybe it’s just a pipe dream but I’d be interested in finding out if anyone has made it work, or understands why it fails…

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