In today´s VUCA world, hierarchic organisations are in crisis. They aren´t able to tackle dynamic changes of the context an organisation is operating in. Hierarchy isn´t attractive for employees, it doesn´t enable creativity and is totally dependent on the abilities of the leaders.     Heterarchy is an organizational structure where the elements of the organization are unranked (non-hierarchical) or where they possess the potential to be ranked a number of different ways. In social sciences, heterarchies are networks of elements in which each element shares the same “horizontal” position of power and authority, each playing a theoretically equal role. The concept was first published in a modern context by Warren McCulloch, an American neurophysiologist and cybernetician, known for his work on the foundation for brain theories and his contribution to the cybernetics movement. Carole L. Crumley summarised his thoughts as follows: “He examined alternative cognitive structure(s), the collective organization of which he termed heterarchy. He demonstrated that the human brain, while reasonably orderly was not organized hierarchically. This understanding revolutionized the neural study of the brain and solved major problems in the fields of artificial intelligence and computer design.”

Richard B. Wells describes the development towards heterarchical organizations as follows: “The hierarchical organization found almost universally among business entities is at least as old as civilization itself and grew out of ancient political organizations dating at least as far back as the city-states of ancient Mesopotamia. Hierarchies are generally pyramidal in structure with higher officials placed over lower ones on down to a base population. In more modern times there has been some tinkering with a few organizational details, the most typical example of which is the so-called “matrix management” structure introduced in the days of the U.S. Space Program and later adopted by a number of large industrial conglomerates. However, matrix management is not the radical reformation of the traditional systems of pyramidal management structure some claim it to be. It retains the basic principle of monarchy / oligarchy governance prevalent in almost all industrial conglomerates, and its retains the basic form of a managerial pyramid while partially formalizing a slight degree of heterarchy at the lower levels of the basic pyramid. Many people who have tried the matrix management approach are very critical of its shortcomings in comparison to simpler traditional pyramids. Some others regard it as an improved system of management, particularly in regard to situations such as large government contract work in which numerous subcontractors (independent conglomerates) must have their work coordinated. This latter case can be regarded as a circumstance in which multiple free-standing pyramids must have “bridges” built between them to coordinate their efforts… Heterarchy is neither unknown nor untried. The word itself literally means “multiple rule” and heterarchical elements are often found in law and accountancy firms, strategic alliances among divers business firms, and even to some degree in the Roman Republic.”

Heterarchical organizations, networked or shared-power structures, are emerging everywhere, in business, the creative sector, not-for-profit organizations or communities. In agile organizations and projects they are urgently needed, but often hindered by the embedding (hierarchically structured) organization. Within a heterarchical organization, interdependence, consensus and collaboration is key for success. Heterarchical organizations represent a structure that is neither market nor hierarchy. Whereas hierarchies involve relations of dependence and market involves relations of independence, heterarchies involve relations of interdependence.

Source: Berntson, Gary; Norman, Greg; Cacioppo, John T.: Laterality and Evaluative Bivalence: A Neuroevolutionary Perspective – Scientific Figure on ResearchGate. Available from: https://www.researchgate.net/Hierarchical-and-heterarchical-organizations-A-heterarchy-differs-from-a-hierarchy-in_fig2_254089716 [accessed 25 Nov, 2018]

Heterarchical organizations constitute special characteristics:

• Power and decision making will be shared among the members of that organization
• Communication will increase and acts as the “glue” of the collective organization
• Collaboration and informal networks play an important role for the success of the organization
• Conflicts and crisis aren´t a threat but serve as a catalyst for growth and further development
• Individual participation and engagement is encouraged and will support the organization
• Individuals see the benefits of their engagement and allow others to participate as well
• The organization will be more adaptive to changes of the internal as well as external context
• The need for a variety of leadership styles will increase, servant leadership or holocracy are preferred

Which examples of heterarchical organizations are applicable? Sociocracy and Holocracy are often mentioned in the context of heterarchy. Brian J. Robertson claims in his famous book “Holocracy” that it´s a revolutionary management system that abolishes hierarchy. Holocracy replaces the management hierarchy with an explicit and lightweight ruleset that sets clear expectations and makes transparent the decision-making authority at every level in the organization. Making the ruleset explicit eliminates the guesswork of how work gets done, undercuts hidden power dynamics, and create cleaner working relationships.  Finally, it´s clear who should make the decision – the person on the frontline has that authority –  and the organization succeeds by adapting swiftly to pursue its purpose. Zappos, WaTech and Springest are examples of organizations having adopted Holocracy.

Peach organizations are another variant of heterarchical organization. Groups in the periphery deliver value in direct exchange with the outside world (customers, partners, communities, municipalities etc.) steward the monetary resources and steer the organization. The center provides internal services to support the organization. Domains are linked as required to flow information and influence, and to support collaboration around dependencies. Niels Pfläging advocates in his publications to (re)vitalize work and make organizations fit for a complex world.

Cooperatives are another form of heterarchical organization. It may be defined as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. Cooperatives traditionally combine social benefit interests with capitalistic property-right interests. Cooperatives achieve a mix of social and capital purposes by democratically governing distribution questions by and between equal by not controlling members. Democratic oversight of decisions to equitably distribute assets and other benefits means capital ownership is arranged in a way for social benefit inside the organization. In Germany, some financial institutions, consultancy and IT agencies are organized like cooperatives.

Network-centric organizations are an answer to the rapid change and uncertainty. Organizations need to continually renew, reinvent and reinvigorate themselves in order to respond creatively. The network-centric approach aims to tap into the hidden resources of knowledge workers supported and enabled by information and communication technologies, in particular social technologies. Essentially though, a network-centric organization is more about people and culture than technologies. A network-centric organization can be embedded in a traditional organization or can cooperate with external partners. For example, crowd-solving or open innovation networks are levering their mutually beneficial talents to a next level solution. Volunteer engagement across organisations or business units may help to make use of know-how and enable organizational learning. Communities of Practice are an example of internal network-centric organizations.

Will heterarchical replace hierarchical organizations? One size does not fit all purposes of an organization. There may be still organizations that require a rather hierarchical organization and a directive leadership style. It will depend on the situation, the demand of the market, the employees, the work and the phase of the lifecycle, it will depend on cultural context, values and beliefs, the capabilities of leaders and employees, the governance norms and regulations and many other factors. Observations proof that organizations tend to move away from hierarchical forms of organizations and try new, rather heterarchical forms. The future will show, how far we will go with this trend.