Hierarchical organizations are recursive and lead to command and control behaviors

This is certainly not my first choice for a transforming agile company.

In a hierarchical organization, small groups tend to be calved off the larger organization until there is an entire tree structure of pods of people with like backgrounds and objectives. Modern management theory suggests that one person can adequately control/manage no more than 10 individuals, so for larger organizations, trees are built such that each has about 10 people and an manager, who is themselves an individual in someone else’s group.

These pods are typically like talents because the approach to management has evolved to be a high touch interface where the manager has frequent interaction with the direct reports or both status and planning of both their activities and their growth (we must note that growth usually takes a back seat unless the individuals do it on their own. Given the high touch, it is equally unrealistic for the organization to assume that the individual will participate much in actual work. Granted this, we tend to note about a 25% drop in productivity for every level of hierarchy that a manager has to manage – A first line manager will have a maximum throughput of 75%, second line: 56%, and so on. After this, it is really silly to expect that a manager will really be able to be productive at anything other than management or control.

Based upon this, it is clear that the flatter the organization and the stronger your self organization and management capability is the more productive you will be as an organization. When you couple the fact that managers tend to make more than their staff, and 3rd line and above do not do productive work, becomes clear that you lose economical edge to the flatter org as well.