The Unspoken Truth About Hierarchy for Scaling Startups
Many founders enter entrepreneurship fueled by idealized, romantic visions of startup life, and for most, it also serves as a deliberate escape from the draining, one-size-fits-all culture of large established corporations. They dream of walking away from suffocating bureaucracy, rigid top-down hierarchies, meaningless corporate policies, unfair power imbalances, and every other daily frustration that comes with working for a big company.
This urge to build something entirely new from the ground up hits especially hard for founders who frame themselves as rule-breaking maverick disruptors. If you believe you can reinvent a product, service, or even an entire industry, it’s only natural to extend that same innovative thinking to how you manage your people. Many legacy corporate management practices feel just as outdated as a VHS player in the age of on-demand streaming, after all.
Being a management maverick feels effortless in a startup’s earliest days. When your team is just a small group of co-founders and early hires that all share the same passion, goals, and drive, you can easily toss out every stuffy corporate playbook and run your business as an egalitarian, bureaucracy-free, high-performing unit. You’ll likely even celebrate yourself for being a disruptor not just of your industry, but of outdated management norms too.
But far faster than most founders expect, that anti-corporate freewheeling energy becomes impossible to sustain as you scale. If you stubbornly cling to full maverick leadership as your team grows, you’ll end up with a dysfunctional, unhealthy culture that often sparks deep, intractable conflict between co-founders and across your broader team.
It’s no surprise that maverick founders loathe the very idea of hierarchy. What could be a bigger dead weight on creativity and bold action than a rigid chain of command, where nothing moves forward without approval from someone above you? Hierarchy feels like it automatically breeds bureaucracy. Top leaders quickly lose touch with day-to-day work realities and the actual needs of your customers. Decision-making grinds to a halt, and teams get stuck in endless cycles of over-explaining work to deflect blame and filling out paperwork just to keep upper management informed. No founder wants their exciting new startup to devolve into that kind of sluggish organization.
One of today’s top organizational design thinkers, INSEAD’s Phanish Puranam, has explored the often unspoken reasons behind hierarchy’s widespread unpopularity. First, hierarchy directly contradicts the egalitarian ideal that all team members are equal, and implies that some people deserve more power and autonomy than others. It also pushes people into narrower, more specialized roles, leaving deep dissatisfaction among staffers who value variety in their work. It requires managers to build reporting systems to coordinate and align team efforts, but most employees experience these reports as tedious drudgery and unnecessary red tape, not a critical coordination tool. Finally, hierarchy pushes managers to do intangible, hard-to-measure work, unlike the visible, quantifiable output of writing code, closing sales, or shipping projects. Because tangible output is almost universally seen as more valuable, non-managerial team members often end up resenting managers as unnecessary dead weight.
Most people conflate hierarchy and bureaucracy—and for good reason, because the two tend to grow hand in hand. All else equal, a 50-person company with a layer of management will naturally have more meetings, documentation, and approval processes than a 5-person startup. Even so, it is entirely possible to leverage the benefits of hierarchy to help a growing startup hit its goals, without suffering the downsides of excessive bureaucracy. Maverick managers run into trouble when they ban all hierarchy entirely in the hopes of cutting bureaucracy, only to create unmanageable chaos instead.
Early in Google’s history, co-founders Larry Page and Sergey Brin experimented with an almost completely flat organization: they eliminated dedicated engineering manager roles and let a few hundred engineers report directly to a single VP of Engineering, Wayne Rosing. Their goal was to tear down barriers to rapid idea development and replicate the collaborative, collegial environment they’d enjoyed as graduate students. But this maverick management experiment only lasted a few months. Too many employees were bringing trivial minutia straight to the founders, from questions about expense reports to minor interpersonal conflicts. Projects that needed critical resources failed to get them, while overlapping redundant work became a widespread problem. Engineers also craved targeted feedback and guidance for their career development, which no one was available to provide. It didn’t take long for the whole team to realize that at least some degree of hierarchy is far more useful than it gets credit for.
