adhocracy

What is an adhocracy?

An adhocracy is an informal but flexible type of business management or organizational culture that favors employee intuition, initiative, and empowerment.

Understanding adhocracies

The term “adhocracy” was coined by Warren Bennis and Philip Slater in 1964 in response to the emergence of networks of diverse expert specialists assembled for specific projects.

In 1970, the concept was popularized in the book Future Shock, with author Alvin Toffler envisioning flat organizational structures with project teams that formed and reformed as required.

Business management expert Robert H. Waterman Jr. would later define adhocracy as “any form of organization that cuts across normal bureaucratic lines to capture opportunities, solve problems, and get results.

Canadian academic Henry Mintzberg then posited that it was a complex and dynamic organizational form and a natural evolution of the formal hierarchical structure.

In essence, adhocracies enable organizations to become more flexible. This makes them effective in most modern businesses, particularly those that operate online or in dynamic industries where rapid responsiveness is rewarded.

For employees, adhocracies promote initiative, intuition, and empowerment. Personal mastery is encouraged and employees tend to focus on meaningful work.

It is also a structure that favors decisive action over formal authority or knowledge. Instead of deferring to a more senior colleague (hierarchy) or collecting more data (meritocracy), the default response in an adhocracy is to take a new course of action, collect feedback, implement changes, and review.

Three key elements of an adhocracy

Three key elements separate adhocracies from the various other types of organizational structures. These include:

1 – Coordination of activities around opportunities 

In an adhocracy, coordination coalesces around discrete opportunities and not on rules, procedures, routines, or the flow of information.

At GlaxoSmithKline, for example, the pharmaceutical company’s drug discovery operations are separated into 40 distinct units that compete for funding.

The ability of an adhocracy to coordinate workers in this way enables them to be kept closer to the action, which reduces the time they could potentially waste in deliberation.

2 – Decision making via experimentation

Employees in an adhocracy are not told what to do in a hierarchical chain of command. Instead, the decision-making process is based on experimentation with a conscious effort to limit deliberation and rapidly iterate to receive customer feedback.

This is certainly not a new idea, but many businesses nevertheless rely on more formal procedures rather than risk the release of an unproven idea into the market.

Project Marlow was a project run by Costa Coffee that involved a new self-serve vending machine that engaged each of the five senses.

The project was agreed upon with a handshake in January 2012, the first formal meeting occurred in April, and a beta version released in September of the same year that was on time and on budget. 

To move the project forward, small teams made purposeful decisions on a 24-hour cycle. Teams were also encouraged to focus on results instead of activities and to ask for forgiveness instead of permission.

3 – Employee motivation through recognition and achievement

Adhocracies also focus on setting employees a challenge while providing them with the necessary resources and autonomy to achieve success.

Returning to the Costa Coffee example, it’s important to note that teams were handed an almost impossible deadline.

However, each team member had a vested interest in the potential upside of the vending machine project and was thus more motivated.

Team leaders also made the explicit connection between exacting standards and grueling milestones with celebratory moments every time a milestone was hit.

Adhocracy examples

Let’s conclude by taking a look at some specific adhocracy examples.

Amazon

amazon-business-model
Amazon has a diversified business model. In 2021 Amazon posted over $469 billion in revenues and over $33 billion in net profits. Online stores contributed to over 47% of Amazon revenues, Third-party Seller Services,  Amazon AWS, Subscription Services, Advertising revenues and Physical Stores.

Amazon’s innovation-centered culture is based on an adhocracy that is customer-centric and flexibly structured.

This is furthered by the company’s belief that failure is an inevitable (and crucial) part of success, with decentralized power enabling small, flat teams the creative freedom to make mistakes in pursuit of the correct solution.

Amazon has also implemented many initiatives to ensure it remains competitive and is able to solve complex problems. One of these is the two-pizza team, a rule which states that no team should be so large that it cannot be fed with two pizzas.

This number equates to around 6 employees, but irrespective of the exact team size, the two-pizza rule allows teams to be more nimble, avoid competing distractions and priorities, make quick decisions, and stay close to the customer at all times.

At the head of each two-pizza team is a manager known as a single-threaded owner (STO). These individuals protect the team from unwanted distractions and ensure that at least one person at Amazon travels to work each day with the sole focus to drive a critical initiative forward.

STOs also serve as an important link to broader organizational objectives with requirements, resources, and priorities discussed by teams at the start of every year. Team goals that are aligned with broader objectives are also defined. 

Since Amazon’s industry moves quickly, the company conducts weekly, monthly, and quarterly business reviews. It also performs roadmap views and program reviews so the STO can audit strategy deliverables and update the plan accordingly.

Note that STOs understand company objectives in detail and are comfortable permitting autonomous, independent progress toward them. They’re also free to make important tactical decisions themselves.

Wikipedia

how-does-wikipedia-make-money
Wikipedia is sustained by the Wikimedia Foundation, which is supported mostly by donations and contributions, which in 2021 amounted to over $153 million. Wikipedia is among the most popular websites on earth, and it is, as of these days, an open, non-profit project, on which other twelve projects have been developed.

Wikipedia’s governance system has been the subject of much debate. Some have likened its structure to a private business, while others believe it is more akin to a state-run public organization with the typical associated bureaucracy. 

Studies have also described Wikipedia as an anarchy, with nearly everyone able to contribute to the maintenance of the site irrespective of their qualifications. For those who believe founder Jimmy Wales and his volunteer army of sheriffs have the most control over the organization, Wikipedia is classed as more of a monarchy.

In truth, Wikipedia’s management style and culture mix aspects of each of these various structures. But the one which it most closely resembles is likely to be an adhocracy, an idea first put forth around 2010.

The English version of Wikipedia has almost 45 million editors with around 115,000 making edits to the site every month.

Marshalling these troops is a cohort of 1,030 administrators who have the power to delete articles, upload files, protect or unprotect pages, and block or unblock users.

Within this sizeable group are teams with specific purposes. Some review content, while others review administrator requests or decide which articles will be featured on the Wikipedia homepage.

Project management is also extremely decentralized and leadership is based on the requests of respected editors. In the process of Wikipedia becoming the behemoth it is today, the company’s leadership, policies, and procedures have emerged organically as opposed to being consciously crafted. This is a key feature of adhocracy.

To ensure this decentralized model works across multidisciplinary teams on a much larger global scale, some degree of control is exerted by a hierarchy of levels including administrators, developers, and editors.

In Wikipedia’s case, control is exerted via reward and punishment schemes based on promotion to a superior authority level or the removal of privileges for those individuals who contravene the rules.

Key takeaways:

  • An adhocracy is an informal but flexible type of business management or organizational culture that favors employee intuition, initiative, and empowerment.
  • Adhocracies enable organizations to become more flexible and rapidly respond to dynamic markets to secure a competitive advantage.
  • Three core elements separate adhocracies from other types of organizational structures. These include the coordination of activities around opportunities, decision-making based on experimentation, and employee motivation via recognition and achievement.

Connected Business Concepts

holacracy
A holacracy is a management strategy and an organizational structure where the power to make important decisions is distributed throughout an organization. It differs from conventional management hierarchies where power is in the hands of a select few. The core principle of a holacracy is self-organization where employees organize into several teams and then work in a self-directed fashion toward a common goal.
u-vs-m-form-organizational-structure
A U-form (unitary form) organizational structure describes a company managed as a single unit along functional lines such as marketing and finance. Conversely, an M-form (multidivisional) structure describes a company divided into multiple semi-autonomous units. Financial targets from a central authority control each unit.
flat-organizational-structure
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.
matrix-organizational-structure
A matrix organizational structure generally describes a business with multiple managerial accountability and responsibility. The main types of matrix structures comprise the strong matrix (authority lies with a project manager who has a senior role within the company), balanced matrix (it equally distributes power to both the project and functional manager), and weak matrix (where power lies with the functional manager completely).
sociocracy
Sociocracy is based on mid-nineteenth-century ideas around applied sociology. Initially, a sociocracy was defined as a government applying what it had learned from sociologists to create a society that benefitted everyone. As a result, societies could avoid autocratic rulers who would only act in their own best interests. Sociocracy therefore is a governance system that helps organizations self-govern based on values of equality.
t-shaped-skills
a T-shaped profile is a person that has a deep understanding and expertise in one or two areas and a broad knowledge of several other areas

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