The document discusses organizational structures used by 4 top startups: - Zappos initially adopted a holacratic structure but later reintroduced some hierarchy due to implementation challenges. - Buffer tried a fully flat structure but found it overwhelming and brought back some guidance; they now use flexible "task forces". - Zapier implemented management early and uses small autonomous teams and transparency between teams. - Basecamp focuses on flexibility over structure, using 6-week project sprints without project managers. Overall the document advocates for flexibility and transparency over rigid hierarchy for startups.

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January 21, 2022
How 4 Top Startups are Reinventing Organizational
Structure
process.st/organizational-structure
Adam Henshall
January 21, 2022
Remote Teams, Tech & Startups
As we’ll see, certain elements which we consider part of the normal workplace are being
abandoned by experimenting companies in favor of new models.
But why are they being abandoned?
For some, it’s about reducing overhead. For others, it’s about finding new ways to combat
the traditional problems a growing company faces. It could be about opening up a broader
talent pool, increasing adaptability, or navigating uncertain economic environments.
The ultimate goal is to make the company more successful.
Here at Process Street, we have our own thoughts on that looming forebearer, hierarchical
structure, so we thought we’d check out what the Jones’s are up to. This post will look at
the organizational structure of four of the most successful startups out there and why
they’ve opted to make the long-established hierarchical structure on its head.
Let’s get to it.

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The rise and fall of flat organizational structures
Flattening hierarchical structures sounds really cool. It has that whole rebellious/pushing
boundaries/innovative feel startups love to embrace in their cultures.
The stereotypical tech company is often portrayed in the media (sometimes without
exaggeration) as having unusual work practices: pizza for all, table tennis in every room,
and beanbags instead of chairs.
The key to all of this is removing middle management and letting your employees self-
organize and self-manage. Basically, free-range workers with few (if any) boundaries on
what they do with their time.
While this scenario sounds like the utopian ideal of workplace structures, many of flat
structure’s early advocates are now saying it doesn’t work. And by “doesn’t work” I mean
“doomed to fail and take your company with it.”
Is that really the case, though? Well, let’s find out.
Zappos’ (sort of) holacracy
Back in the halcyon days of 2013, CEO Tony Hsieh announced the company would
transition to a holacratic model.
For those not on the cutting edge of business ideas from nearly a decade ago, holacracy is:
Holacracy is a new way of structuring and running your organization that replaces
conventional management. Power is distributed throughout a concrete organizational
structure – giving individuals and teams freedom while staying aligned to the organization’s
purpose.
Essentially, holacracy is the anti-structure of organizational structures.

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If you check out Zappos Insights, they’re still very much on the holocratic bandwagon.
Some not very strenuous digging, however, reveals that the company has been quietly
adjusting its approach. As it turns out, people don’t tend to work very well if they don’t
know what they’re supposed to be doing. Go figure.
Zappos says this “evolution” is due to the fact that holocracy is designed to focus on work
while Zappos “is *all* [sic] about people.”
Rather than an organizational free-for-all, Zappos now utilizes “leaders” who hold
employees accountable, communicate clear goals and expectations, and enforce company
rules and guidelines.
You may draw your own conclusions.
Buffer: Transparency, task forces, & “fully distributed teams”
By November of 2015, Buffer had grown enough that it was time to start seriously
thinking about its organizational structure. As a result, they implemented some of the
traditional hierarchical elements, but that didn’t really work, either.
Then Buffer learned about Zappos’ holocracy experiment and Frederic Laloux’s book,
Reinventing Organizations.
Buffer jumped headlong into a completely flat structure without a second thought.
According to co-founder Leo Widrich:
“We just let loose, and the message was, “Everyone go figure out what you want to do and
work on, without too much guidance or leadership.”
Flattening the company’s structure involved:
Removing all managers
Stopping 1:1s and mentorship sessions

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Getting previous managers more involved in day-to-day roles and tasks
Letting people freely choose what project they want to get involved in
This did not go over well. Buffer, like Zappos, ran into the issue of too much self-
management. Widrich describes the lack of guidance or accountability “pretty
overwhelming” for employees.
Ultimately, Buffer decided that a little bit of hierarchy can be a good thing. They brought
back 1:1s and mentorship sessions, switched from teams to “task forces”, and
implemented a policy of absolute transparency.
The solution Buffer found to their organizational woes turned out to not be holacracy,
hierarchy, or a permanent structure at all. Instead, Buffer opted for flexibility. Instead of a
diagram, it uses a table to provide clarity, order, and communication but allows that
structure to be as fluid as it needs to be.
Zapier: Remote before remote was cool
Unlike many of its counterparts – particularly its remote counterparts – Zapier
implemented a management structure early.
According to Wade Foster (co-founder and CEO), building that structure when you only
have 10 or so people establishes expectations, creates trust, and prevents culture shock
down the road when you really need to put that structure in place.
Zapier is a bit cagier than others about their exact structure, but it’s something like a
process-based structure. It credits its success with three important things:
Teams
Tools
Processes

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“Good processes let you get work done in the absence of all else. It provides structure and
direction for getting things done.” – Wade Foster
As Foster points out (and we have stated many, many times), good processes aren’t static.
They change. If a process isn’t meeting your needs anymore – change it. If a process isn’t
being used – get rid of it. Processes allow you to measure the progress of your employees
and your company.
At Zapier, this means keeping their teams small. Each team has 3-8 people with differing
skill sets who have a singular task (or mission, which sounds way cooler) to complete.
That team works entirely autonomously, fully responsible for their success or failure.
For accountability, each team regularly posts their projects and progress to the whole
company. That may sound like a horrible way to shame employees who haven’t made
enough progress, but that’s not the aim here. The aim is to provide transparency and
overcommunication.
When everyone knows what everyone else is doing, knowledge spreads faster. You never
know who will have the answer to your question or the solution to your bottleneck.
Company transparency means that, not only do you gain the knowledge you need, but so
does anyone else who runs into the same problem.
Zapier’s goal is to get things done and get them done fast, accurately, and in a way that
keeps the people doing those things at the forefront.
The message from Basecamp
Basecamp, like Zapier, is more focused on the how of getting things done than who sits
where and what hat they wear. Which, for many of us, is the whole appeal of working at a
startup.

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For Basecamp, every decision has been about maintaining simplicity and a calm
environment. While most startups are in a frenzy to scale, grow, and just do more,
Basecamp stuck to one product.
“We’ve decided to stay as small as we can for as long as we can.” – Jason Fried and David
Heinemeier Hansson, It Doesn’t Have to Be Crazy at Work, page 214
Simple and calm doesn’t mean unprofitable, though; Basecamp has maintained
profitability for a continuous 15 years, which is no small feat.
Similar to the other examples in this post, Basecamp opted for flexibility over one of the
traditional organizational structures. Teams of three are assembled around specific
projects based on people’s interests and they work on that project for a six-week sprint.
There’s no project manager per se, but the designer tends to play the role of team leader.
They don’t track hours, either. The team has six weeks to finish the project, and however
they choose to organize their time is up to them.
All updates and communications are centralized in one tool where everyone gets a good
view of what’s happening in the company. When you know what other teams are doing,
you can make more informed decisions about your own projects, or offer feedback, or see
an angle you hadn’t thought of.
Transparency really does make the startup go ‘round.
The Process Street path
It’s pretty obvious by now that traditional organizational structures are not a good fit for
startups, especially remote startups. We may not have pizza parties and ping-pong tables,
but startups do actually do things differently.
And what about Process Street? To be honest, we do a combination of methods that have
been covered so far. Technically, we have a hierarchical organizational chart and we have
traditional hierarchical job titles, but that’s where the traditional stuff stops.
Sure, I’m more likely to get a faster response from my team leader than the department
VP, but that doesn’t mean I can’t go directly to the VP if he’s the one who can answer my
question. It’s a waste of everyone’s time for me to ask the team leader to ask the
department manager to ask the VP to ask the VP of another department a question that I
could easily ask myself through a Slack DM.
We follow the values of transparency, overcommunication, ownership, and – obviously –
the importance of strong processes. Every person in the company is responsible for – and
actively encouraged – to improve existing processes, or even find new ways of doing them
entirely.

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Like Basecamp, we follow sprints. Teams pitch ideas to leadership who decide which ones
to pursue, and those ideas are worked on for 4-6 weeks (depending on department). But
we also get “free” time to work on projects or research that we’re passionate about. This
could be a feature prototype, an entirely new process, diving into cutting-edge research –
anything you can imagine, basically.
And we stay flexible, as individuals, as teams, and as a company. Roles shift and change as
people start new initiatives or take on new responsibilities. New teams are formed from
existing teams.
Whatever happens, we just roll with it.
How you can do what we do, too
At Process Street, we employ a number of the organizational structures and philosophies
mentioned throughout this article, including but not limited to:
Remote working and a dispersed team
Collaborative creation of processes and policies
An emphasis on self-development and a promotion of good work-life balance
Focused development practices
At the center of the Process Street operations is the platform itself. All our processes are
documented and accessible to all. This allows staff to jump into new tasks easily and
efficiently.
We also play with elements of internal entrepreneurialism, launching related products
like Inside SaaS Sales which records and shows the sales and marketing cadences
of top SaaS companies; a product we were interested in and know can service the
needs of our user base well.

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Utilizing Process Street allows your employees to document their processes simply and
easily, creating organic structure within your company’s operations. The Pages feature, in
particular, is great for creating a centralized knowledge base for your teams that lives
side-by-side with your process workflows.
Create the right organizational structure for your business
So is flat organizational structure a thing of the past?
Well, it depends.
Perhaps a better word for it is horizontal. A flat organizational structure comes across as
static – stagnant even. A horizontal structure is always looking ahead. It can be a straight
line or one that zigzags around obstacles.
How you structure your business depends on the size, the industry, and the existing
culture.
There is no one right answer.
However, if you’re thinking of experimenting with organizational structure, be sure to
consider that you’re doing it for the right reasons and with the right reasoning.
To make as drastic a change as Zappos has requires supreme confidence in your model,
and it does mean accepting a large increase in risk.
The Basecamp organizational structure, on the other hand, pulls from effective proven
structures while simultaneously promoting the kind of ethos apparent in experimental
elements like Buffer.
Whichever you go for, we at Process Street will be here to support you and your business
on the journey.