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.

Concept OverviewAdhocracy is a term used in organizational theory to describe a flexible and dynamic type of organizational structure that is characterized by its lack of formal hierarchy and its emphasis on creativity, innovation, and adaptability. Unlike traditional hierarchical structures, adhocracies are more fluid and less rigid, allowing organizations to respond quickly to changing circumstances and opportunities. The concept was popularized by management theorists Warren Bennis and Philip Selznick in the 1960s and later by Alvin Toffler in the 1970s. Adhocracies are often associated with the pursuit of innovation and creativity within organizations.
Key Characteristics– Adhocracies exhibit several key characteristics: 1. Flexibility: They are adaptable and can easily change course to address new challenges or opportunities. 2. Decentralization: Decision-making authority is often decentralized, allowing for more autonomy among employees or teams. 3. Collaboration: Emphasis is placed on collaboration and teamwork to generate creative solutions. 4. Informality: Adhocracies tend to have less formal rules and structures compared to traditional organizations. 5. Innovation: Creativity and innovation are encouraged and valued. 6. Project-Based: Work is often organized around specific projects or tasks, and teams may be formed on an ad hoc basis.
Applications– Adhocracy can be found in various contexts: 1. Technology Companies: Tech startups often adopt adhocratic structures to foster innovation. 2. Creative Industries: Design agencies, advertising firms, and media companies may operate as adhocracies to encourage creativity. 3. Research and Development: Organizations involved in research and development often use adhocratic approaches to drive innovation. 4. Crisis Response: During crises or emergencies, organizations may temporarily adopt adhocratic structures to respond rapidly. 5. Task Forces: Project-specific task forces within larger organizations may operate as adhocracies.
Benefits and Impact– Adhocracy offers several benefits and impacts: 1. Innovation: Encourages creative thinking and innovation, leading to the development of novel ideas and solutions. 2. Rapid Response: Enables organizations to respond quickly to changing market conditions or emerging opportunities. 3. Employee Engagement: Promotes greater employee involvement and ownership of projects. 4. Flexibility: Adapts well to dynamic and uncertain environments. 5. Enhanced Problem-Solving: Facilitates problem-solving through collaboration and diverse perspectives. 6. Competitive Advantage: Provides a competitive edge in industries that require agility and innovation.
Challenges– Adhocracies are not without challenges: 1. Lack of Structure: The absence of formal structure can sometimes lead to confusion or a lack of clarity about roles and responsibilities. 2. Potential for Chaos: Without clear guidelines, there is a risk of projects becoming disorganized or chaotic. 3. Resistance to Change: Employees accustomed to more traditional structures may resist adhocratic changes.

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 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 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.

Key Highlights

  1. Definition: An adhocracy is an informal and flexible type of business management or organizational culture that emphasizes employee intuition, initiative, and empowerment.
  2. Origin: The term “adhocracy” was coined in 1964 by Warren Bennis and Philip Slater to describe networks of diverse experts working together on specific projects. It gained popularity in the 1970s through Alvin Toffler’s book “Future Shock.”
  3. Characteristics: Adhocracies are effective in modern businesses, especially online and dynamic industries, where rapid responsiveness is crucial. They promote personal mastery, focus on meaningful work, and favor decisive action over formal authority or knowledge.
  4. Elements of Adhocracy:
    • Coordination around opportunities: Activities are organized around specific opportunities rather than rigid rules or procedures.
    • Decision making through experimentation: Employees are encouraged to experiment and iterate rapidly based on customer feedback.
    • Employee motivation through recognition and achievement: Employees are challenged and given autonomy and resources to achieve success.
  5. Adhocracy Examples:
    • Amazon: Known for its customer-centric and innovation-centered culture, Amazon employs small, flat teams called “two-pizza teams” to stay nimble and close to customers.
    • Wikipedia: A collaborative platform with a decentralized governance system, Wikipedia relies on a large number of editors and administrators to manage content and policies.

Types of Organizational Structures

Organizational Structures

Siloed Organizational Structures


In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.



Open Organizational Structures




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.

Connected Business Frameworks

Portfolio Management

Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.

Kotter’s 8-Step Change Model

Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.

Nadler-Tushman Congruence Model

The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.

McKinsey’s Seven Degrees of Freedom

McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.

Mintzberg’s 5Ps

Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.

COSO Framework

The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.

TOWS Matrix

The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.

Lewin’s Change Management

Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.

Organizational Structure Case Studies

Airbnb Organizational Structure

Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

eBay Organizational Structure

eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

IBM Organizational Structure

IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Sony Organizational Structure

Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

McDonald’s Organizational Structure

McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Walmart Organizational Structure

Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

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