The Steward and the Satrap

I’ve had the privilege of working in and building up an understanding of teams and organizations as part of leadership roles in the last few years. Inevitably, I find myself thinking of it as a systems problem. Naturally, that is not the whole of it, but in trying to understand a problem I simplify for my tiny brain.

Broadly speaking, I see two types of organizational structure at the extreme; flat or hierarchical. The Computer Scientist in me exclaims that they’re simply N-trees with different N. Fair enough, but they are trees with very different heights, and that matters.

Organizational Structure affects Ownership

Why does it matter?

Because structure affects ownership and decision-making ability. Consider that an organization with one person has 100% ownership and decision-making ability vested in one person. Naturally, as the Owner vests this power in different functions to free up themself for ‘higher purpose’, this power is diluted across the organization, and the structure of the organization dictates the dilution.

Why does that matter?

Because higher ownership tends to correlate with better outcomes. People who feel they own part of the organization are also people who will fight tooth and nail for its survival and success. People who feel they are simply hired hands will disappear when times are tough.

Ownership is a weird word in most organizations. Even with equity, most employees - even the CEO - can be unilaterally fired. In many, even the founder could be fired!

For the purpose of this article, let’s describe Ownership as ‘the ability to make decisions and share in the consequences (good and bad) of those decisions’. This is not the same as Autonomy, which is only ‘the ability to make decisions’.

Flat structures work well in organizations where the culture and people are genuinely oriented toward ownership. Hierarchical structures are better suited to organizations where no single individual can be accountable for an outcome, or where the organization is so distributed that sharing context efficiently and transparently is simply not possible.

Leadership requires Ownership

A leader - in my definition of leadership - necessarily sees themselves as an extension of the Owner. A steward, to use a biblical term. They may or may not own a part of the organization, but are entrusted with the authority to make decisions, and are invited to share in the outcomes.

This is where I think there is a big difference in leadership brought about by organizational structure; if ownership is needed for leadership, then strong ownership also correlates to strong leadership.

Leadership in a flat organization relies on transparency, trust, and a common vision that motivates and guides organic action.

Leadership in a hierarchical organization relies on a clear chain of command, boundaries, and effective management of tasks.

To be clear, both types of leadership and organizations are necessary; there is a reason why they form in this way! A military unit is not the same as a startup, and their organizational structure and leadership styles will reflect that.

Why do some leaders fail?

The problem arises when a leader from one kind of organization lands in the other. My hypothesis is that a leader from a flat organization going to a hierarchical one will just be frustrated. But a leader from a hierarchical organization going to a flat one can destroy the flat organization’s momentum and culture.

Think of the flat leader, thriving on ownership, accountability and autonomy, but placed in a deep hierarchy with no autonomy. They are easily frustrated by the friction, the slow pace, the many alignment meetings… It can feel draining and hopeless, and they may exit early.

On the other side, you may have a hierarchical leader who thrives on political maneuvering, shifting responsibility, placed in a flat organization with a lot of autonomy and accountability. Now they have to take responsibility, there is no one to shift work to, and politics just don’t mean as much with fewer people to cajole.

It’s not to say that either type of leader is bad, I just think that different leaders are suited for very different organizations.

If you lead a flat organization, you need to gather all these organic resources toward the right focus at the right time. The flat organization tends toward a swarm, and the job of a leader is to shepherd.

If you lead a hierarchical organization, you need to direct the structured resources under your command toward a carefully considered target. The hierarchical organization tends toward a ship, and the job of a leader is to steer.