The only way to run a no-manager company is very publicly.
Ryan Carson broke the big news when he was presenting Treehouse’s latest numbers to investors. In the middle of the presentation, one investor stopped and asked, “Wait, who reports to who?” “My co-founder [Alan Johnson] and I just kind of looked at each other and laughed,” says Carson. Then they fessed up. “We said ‘No one reports to anyone.’”
Treehouse’s investors are used to workplace experiments like this. The online education platform that teaches its students a variety of programming languages is no stranger to the non-traditional work environment. The company is largely remote, and offers employees four-day workweeks, among other perks. More recently, however, the company opted for a completely flat org chart with all middle management removed.
Instead of advancing the company using top-down directives from leadership, the company organizes around projects proposed by employees using collaboration software. Employees propose the projects they want to see completed and, if enough coworkers join, they can get started.
It sounds crazy, but it’s a growing trend in business. A similar structure was adopted by Zappos earlier this year and has long been in place at Github, Valve, and other companies.
Since switching to the no-manager structure, Treehouse co-founder Ryan Carson says he gets less than 20 emails a day and believes worker morale has skyrocketed. We talked to him about how it all works:
Why do this?
My main tenet as an owner is to treat other people like I want to be treated. We look at our employees as adults. The basic premise is we all should be able to make adult decisions and take care of ourselves. Everything comes from there pretty easily.
What have you learned now that it is seven months in?
You have to have a communication tool like Flow and Convoy which are the two internal tools we built. Because you cannot do email. It just won’t work if you try to operate as normal with email.
Email by nature is private, and the only way to run a no-manager company is very publicly. Data cannot be silo-ed anywhere. The second thing I’ve learned is that sometimes it is hard to reach consensus. What is starting to happen is that people will end up not making a decision when they disagree on something. because no one has the authority to make that decision above anybody else.
My cofounder and I do not want to get pulled into and settle all the fights. Someone can say, “Guys, there are a lot of good arguments going on but there are no conclusions.” Someone has to be brave and say, “Okay, I think this is the consensus. I am going to tell the whole company of the decision.”
How does this jive with the traditional leadership ethos that concentrating all effort behind a very few amount of projects is the best way to move the ball the farthest?
The best description of a no-manager company, is that it is an ant colony. It looks really chaotic and it is sometimes hard to understand what is happening, but then a crazy structure gets built. Often. even as the CEO, I do not understand exactly what is happening on any one day. Entrepreneurs and CEOs are not saviors. They are not perfect. People look at the Steve Jobs brand and think that there is something magical going on, but I believe that is not true. It is not really in the best interest of Treehouse or any company for the CEOs to truly control its direction, because he is just one guy or girl.
We have 65 people at Treehouse, and it is better to have 65 individuals who are capable of making decisions and thinking and seeing things than one. So, we are less decisive, less coordinated than a traditional organization structure, but we are still crazy enough to get stuff done and everyone is extremely motivated. I think if you are going to pick one or the other, I would always go for more chaos, way higher motivation, and more innovation than more control.
Do you think that is because Treehouse’s business model is pretty well established at this point? You guys know what you need to hit for revenue. It is not as if you are a bootstrapped startup still trying to figure out kind of your market fit at this point.
That’s probably fair but you know at the same time, we are still very much trying to figure out our business. Yes we have revenue, but our primary revenue is probably going to come from stuff that we do not even do yet. I think it will be pretty hard for a company who does not know what its business is to operate this way.
You took VC funding in 2013. Typically this comes with a large amount of pressure to scale very quickly for a potential exit event. Is this chaotic no-manager approach appeasing your investors? Are they okay with this?
Our investors love it. We actually didn’t tell them until after it was done. After we explained it they said, “Oh gosh, of course that’s better. Everybody in the whole world believes their managers don’t actually do work and they pretty much despise them.”
Usually people use a management org tree as a way to advance their career. Is that possible here? I imagine your response to that is, “No, but you can then do much more cool stuff because no one’s standing in your way and that will advance you career more so than anything.”
And I love that. It kind of reduces all the political bullshit. I used to spend probably 50 percent of my time working on the org chart. Now basically it’s up to everyone to make themselves happy and make sure that they are enjoying their job. And if they don’t, then they can leave.
Has anyone left since you have been doing this?
When we made the change we let three people go and that was because we felt like they did not want to fit in with the structure. Since then, we have actually let two people go because they were not performing.
So how do you keep everyone accountable?
The way it works is, every quarter, you do an anonymous review with the people that you worked with. If you get negative reviews, it’s just a “one strike and you’re out” policy. You get one meeting and then after that you get let go. Unfortunately, we’ve let two people go this way. They were issued warnings and when they got another one, we had to let them go. The other good thing about no managers is there is nowhere to hide. If you don’t perform, everybody knows that and you can’t blame anybody.
Not only did you remove any managerial “cover” but everything is probably very exposed.
Yeah and when we enacted it, the managers immediately went back in the frontline work. It was as if we hired six people.
Are you familiar with the concept of “Dunbar’s Number?” It’s the amount of people supposedly we can keep a relationship with. People theorize it is anywhere between 120-150. If and when Treehouse grows past that, does that make the no-manager rule unsustainable?
It will be weird. I am definitely worried about that. W. L. Gore and Associates [creators of GoreTex] does it, with 9,000 or 10,000 employees and there have been no managers since 1958. The way they used to do it was by creating physical campuses. It’s going to be a challenge, but I guess I’d rather worry about that than all the political B.S. you know will be part of being big.
Is there any other thing you’re thinking about implementing that is non-traditional when it comes to company structure?
We’re thinking about exposing everyone’s salary, but that’s only because it will help everybody make a decision. For instance, if you want to set up a project and you add a bunch of people to it, you should have some sort of idea as to the cost of that. If you don’t understand that a developer is paid twice what a support person makes, you can’t make the decision unless you have all those facts.
Many startups have “perks” like food or games around. How does that compare to what you’re doing?
We figure, hey, if you can create a company exactly how you wish it would be, then why not do it that way? We find that not all the traditional cheesy stuff like ping-pong table and a cafeteria matters, really – worker satisfaction is more related to doing something important.
Photo credit: Financial Post