Horizontal organization

Horizontal organization is a company structure with few or no layers of middle management between frontline workers and top executives (Daft R.L. 2016, p.312)^[1]. The traditional hierarchy—CEO to VPs to directors to managers to team leads to workers—gets flattened. Decisions happen faster. Information flows without gatekeepers. But the boss might have fifty direct reports instead of five.

The structure gained traction in the 1990s when companies realized that layers of management slowed response times in fast-moving markets. Bureaucracy became a dirty word. "Lean" became gospel. Some organizations embraced flatness religiously. Others found it created as many problems as it solved.

Characteristics

Horizontal organizations share common features:

Few management layers. Where a traditional firm might have seven levels from CEO to entry-level worker, a horizontal firm might have three or four. Some extreme examples, like game developer Valve, operate with essentially no formal hierarchy at all.

Wide spans of control. With fewer managers, each manager oversees more people. Spans of 15-50 direct reports are common. This limits how much supervision anyone receives—by design^[2].

Decentralized decision-making. Frontline employees handle decisions that would require managerial approval in traditional structures. A customer service rep fixes a problem immediately rather than escalating through three levels.

Cross-functional teams. Work organizes around projects or processes rather than functions. A product team includes engineers, designers, marketers, and salespeople working together instead of in separate departments.

Open communication. Information flows horizontally between peers rather than vertically through the hierarchy. Anyone can email the CEO. Meetings include people across levels.

Rationale

Why flatten? Several motivations drive the choice:

Speed. Every management layer adds delay. A decision requiring four approvals takes four times longer than one requiring one. In markets where speed wins, that delay kills.

Innovation. Hierarchy discourages risk-taking. Employees don't propose bold ideas if they'll face multiple rounds of skeptical review. Flat structures put innovators closer to resources^[3].

Employee engagement. People prefer autonomy over supervision. They want to solve problems themselves, not wait for permission. Flat structures trust employees to perform without micromanagement.

Cost reduction. Middle managers cost money. Salaries, benefits, offices. Eliminating layers reduces overhead directly.

Adaptability. Horizontal structures reconfigure more easily than rigid hierarchies. Teams form and dissolve as needs change. New initiatives don't require new organizational charts.

Historical development

The horizontal organization concept emerged from several intellectual streams:

Business process reengineering. Michael Hammer and James Champy's 1993 work "Reengineering the Corporation" advocated organizing around processes rather than functions. This naturally reduced vertical layers.

Lean manufacturing. Toyota's production system empowered frontline workers to stop the assembly line when they spotted defects. Authority pushed downward. Western manufacturers adopted similar approaches in the 1980s and 1990s.

Knowledge work realities. As economies shifted from manufacturing to services and technology, the assumption that bosses know more than workers weakened. A software engineer might understand her code better than her manager ever could^[4].

Technology enablers. Email, shared databases, and collaboration software reduced the need for managers as information conduits. Workers could coordinate directly.

Companies like Ford, Xerox, and Kodak experimented with horizontal structures in the 1990s, with mixed results. The dot-com boom brought a new generation of flat startups that matured into horizontal companies like Google and Netflix.

Cross-functional teams

The building block of horizontal organization is the cross-functional team.

Traditional organizations divide by function: marketing, finance, engineering, operations. Each function has its own hierarchy, metrics, and culture. Coordination happens at the top, where executives negotiate priorities.

Cross-functional teams break this pattern. A product team includes representatives from every relevant function, all focused on a single objective. They share goals, meet regularly, and solve problems together without escalating to functional leaders^[5].

Advantages:

• Faster problem resolution (no inter-departmental handoffs)
• Better information sharing (everyone hears the same updates)
• Reduced silos (people build relationships across functions)
• Holistic thinking (decisions consider all perspectives simultaneously)

Challenges:

• Dual loyalties (team vs. function)
• Career path ambiguity (who evaluates performance?)
• Skill maintenance (specialists need peer communities)
• Resource allocation (who pays for shared services?)

The matrix organization—where people report to both functional and project managers—tries to capture benefits while managing challenges. But matrices add complexity and can create confusion about authority.

Famous examples

Valve Corporation. The video game developer operates with no formal management. Employees choose their projects. Desks have wheels—literally—so people can move to different teams. The handbook states: "We don't have any management, and nobody 'reports to' anybody else." Revenue per employee reportedly exceeds most companies by large margins^[6].

Spotify. The music streaming company organizes into "squads" (small cross-functional teams), "tribes" (collections of related squads), "chapters" (functional groups across squads), and "guilds" (communities of interest). This "Spotify model" has been widely copied, though Spotify itself has evolved beyond its original design.

Morning Star. The tomato processing company operates without managers. Employees negotiate "colleague letters of understanding" defining their commitments to each other. Disputes go to peer review. The company claims market-leading productivity.

W.L. Gore. The maker of Gore-Tex has operated without traditional hierarchy since its 1958 founding. Bill Gore believed in "natural leadership"—influence earned rather than assigned. The company has grown to billions in revenue while maintaining its structure.

Implementation challenges

Going flat isn't simple:

Overwhelmed leaders. Without middle managers filtering information and handling routine issues, executives get buried. The CEO who insisted on flat structure might find herself in back-to-back meetings from 6am to midnight^[7].

Unclear accountability. Traditional hierarchy clarifies who's responsible for what. Flat structures can create ambiguity. When everything is everyone's responsibility, nothing is anyone's responsibility.

Career path confusion. Ambitious employees in traditional firms climb ladders. In flat organizations, advancement means... what exactly? Bigger projects? Higher compensation? More influence? The path isn't obvious.

Informal hierarchy emergence. Officially flat organizations often develop unofficial pecking orders. The loudest voice in meetings wins. Founders retain disproportionate influence. These shadow hierarchies can be less fair than explicit ones.

Discipline problems. Managers serve quality control functions. Without them, underperformers may persist. Peer pressure sometimes fails where managerial authority would succeed.

Coordination costs. Instead of one manager coordinating ten people, those ten people must coordinate themselves. Meetings multiply. Decision-making slows when consensus is required.

When horizontal works

Flat structures succeed under specific conditions:

• Small size. Startups and small companies can maintain flatness naturally. Beyond 150 people (Dunbar's number), informal coordination breaks down.
• Skilled workforce. Self-direction requires capable, motivated employees. Not every workforce can handle autonomy.
• Stable environment. Paradoxically, despite claims about adaptability, some flat structures work best when the work is predictable enough that minimal supervision suffices.
• Strong culture. Shared values substitute for managerial control. Everyone knows what's expected without being told.
• Simple work. Complex interdependencies require coordination mechanisms. Flat works better when tasks are relatively independent^[8].

Hybrid approaches

Many organizations adopt partial flatness:

Flat within functions. Marketing might be highly flat while engineering maintains hierarchy (or vice versa).

Flat for some levels. Senior leadership traditional hierarchy; frontline teams operate autonomously.

Context-dependent hierarchy. Routine operations run flat; crisis response restores clear command.

Temporary flatness. Project teams form flat for specific initiatives, then dissolve back into hierarchy.

Pure horizontal organization remains rare. Most companies occupy a spectrum, flatter than 1950s bureaucracy but more structured than Valve.

The manager's evolving role

When hierarchy flattens, managers don't disappear—they transform:

From commanders to coaches. Instead of directing work, they develop people. Teaching, mentoring, facilitating growth.

From gatekeepers to connectors. Instead of controlling information flow, they help employees build networks and access resources.

From supervisors to servant leaders. Their job becomes removing obstacles for their teams, not monitoring output^[9].

This sounds nice in theory. In practice, many managers struggle with the transition. They earned their positions through individual contribution and traditional management skills. Now they're asked to lead differently.

Measuring effectiveness

Research on flat versus hierarchical structures yields mixed findings:

• Employee satisfaction often increases in flat structures
• Innovation output appears higher in some studies
• Efficiency gains vary dramatically by context
• Long-term stability concerns persist for very flat designs

The honest conclusion: structure should match strategy, culture, and work requirements. Flatness isn't inherently superior—it's a tool that works well for some purposes and poorly for others^[10].

Horizontal organization — recommended articles

Organizational structure — Management — Teamwork — Innovation — Leadership

References

• Daft R.L. (2016), Organization Theory and Design, 12th Edition, Cengage Learning, Boston.
• Hamel G. (2011), First, Let's Fire All the Managers, Harvard Business Review, December 2011.
• Hammer M., Champy J. (2006), Reengineering the Corporation, HarperBusiness, New York.
• Ostroff F. (1999), The Horizontal Organization, Oxford University Press, New York.
• Robbins S.P., Judge T.A. (2019), Organizational Behavior, 18th Edition, Pearson, Boston.

Footnotes

1. ↑ Daft R.L. (2016), Organization Theory and Design, p.312
2. ↑ Robbins S.P., Judge T.A. (2019), Organizational Behavior, pp.478-492
3. ↑ Hammer M., Champy J. (2006), Reengineering the Corporation, pp.45-67
4. ↑ Ostroff F. (1999), The Horizontal Organization, pp.23-45
5. ↑ Daft R.L. (2016), Organization Theory and Design, pp.334-356
6. ↑ Hamel G. (2011), First, Let's Fire All the Managers
7. ↑ Robbins S.P., Judge T.A. (2019), Organizational Behavior, pp.512-528
8. ↑ Ostroff F. (1999), The Horizontal Organization, pp.89-112
9. ↑ Daft R.L. (2016), Organization Theory and Design, pp.378-395
10. ↑ Hammer M., Champy J. (2006), Reengineering the Corporation, pp.156-178

Author: Sławomir Wawak