Why Flat Organizational Structures Drive Innovation in Startups

For startups and midsize organizations, flat structures allow you to be efficient and innovative

Some people say flat structures cause chaos in organizations. And while that can certainly be true, my experience has been different. After years of working for horizontal and vertical hierarchies, I realized I prefer the former. At Nokia, for example, agreeing on the simplest matters involved several offices and many meetings.

Since I’ve always wanted to found a tech company, when I did it back in 2005, I opted for horizontal management. Ten years later, I started another company with the same organizational style, and I never looked back.

While flat organizational structures are not for everyone, they do work. In this article, I’ll explain what makes a successful flat organization structure, who thrives in it, and share examples of positive business outcomes.

Why it works

Flat structure organizations allow employees to have a say in how they do the work and provide more opportunities to showcase their talents. And that’s exactly what motivates people from within. According to self-determination theory, all of us have innate psychological needs for autonomy, competence, and relatedness. And we can fulfill those needs, we feel happier and can sustain our motivation for a long time.

Looking back, I see how the principles of autonomy, competence, and relatedness are reflected in our corporate culture. These might be the very foundations of a successful flat-structure organization. Let’s dig deeper and see how each principle contributes.

Autonomy

Flat structure organizations give people much more autonomy in their jobs. Autonomy leads to increased accountability, making employees feel more important and involved in their company. While it’s not always possible to allow employees to choose tasks (after all, someone has to do the grunt work) or the people to work with, we can give them freedom over how and when they complete them. I’m not the leader who tells employees how to do their jobs: they’re the experts, so they should know better. As long as they can deliver results, I don’t care what their workflow looks like.

I also believe employees’ schedules should be flexible. Let them work when they’re most productive or have an opportunity. They are humans. They may need that slow morning walk with their dog to improve their mental health.

Competence

The human urge to improve and learn is another intrinsic motivator. People are motivated by the sense of accomplishment and progress they experience as they develop their skills.

Because a flat structure organization has few levels of middle management or none, it’s easier to recognize team members’ talents. As a result, managers can assign projects that speak to the team members’ strengths while encouraging growth.

Employees can also easily champion their ideas. An engineer who has been with us for several years felt a little stagnated in her role. She proposed sharing her testing expertise on YouTube to HR. The marketing team jumped in on the same day. By the next week, we released our first video. This wouldn’t have been possible if our organization was an unwieldy bureaucratic machine where teammates were reluctant to promote ideas from the bottom up.

Relatedness

Fulfilling employees’ needs for relatedness is about making them feel supported, appreciated, and involved. That’s when they feel like what they do is significant to the rest of the team and organization.

Unlike hierarchical models, flat organizational structures eliminate rigid divisions, encouraging open communication and collaboration. Team members feel valued as contributors, not cogs in a machine. This fosters a sense of belonging and teamwork.

How we do it

It’s important to note that a flat structure doesn’t work for everyone. It does for us, but we do have to have the following in place:

1. Crystal clear job titles and descriptions There’s no confusion about whom to contact and who’s accountable for what. We’re not a holacracy where roles are flexible. While there are no department heads at Redwerk, we do have some employees in managerial positions. This helps keep things in order and reduces the number of people messaging me, the founder, for trivial matters.

   
   

2. Well-documented workflows While they can change with new people bringing fresh ideas, it’s important to document these innovations and ensure there’s an up-to-date and easily accessible resource hub.

   
   

3. Being selective about who we hire Hiring becomes more difficult because you need experts with particular soft skills, such as self-reliance, initiative, and superb organization. When we hire, we look for those who are comfortable managing their time and workload without a supervisor constantly checking in.

Final Thoughts

Flat organization structures are a great fit for startups and midsize businesses that want to be fast and innovative. They offer a natural breeding ground for the principles of autonomy, competence, and relatedness that are key for keeping your employees committed long-term. But they come with a catch, and it’s up to you to tackle or forgo it.