November 22, 2013 5 min read

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Talented people don’t like to be bossed around.

Innovative startups are taking note and doing away with bosses in order to engage the best and brightest. From larger, more established startups like Valve to newer ones like Treehouse, getting rid of managers who boss people around is a deliberate tactic to build the kind of culture that pushes forward creativity and collaboration, with everyone leading rather than following.

How does it work?

When I first heard about the bosslessness concept, I was doubtful. It seemed so counterproductive to let everyone loose to do whatever they wanted, but I wasn’t thinking about how my own startup team would never be able to make progress fast enough if I or my co-founder had to give orders and approval at every turn.

Flatness doesn’t mean it’s a free-for-all. It still describes a structure, one in which people manage each other and themselves. Such peer management is a natural choice for startups with its small, quick-moving teams, but considering the characteristics of this alternative structure -- whether you have managers or not -- makes you focus on exactly the issues of communication, coordination and motivation that are so important for your survival as a company. You want to ensure that everyone is working smart rather than just working hard, and continuing to do so as you grow.

The way to do that is focusing not first on your product or service but, as GitHub’s Zach Holman explains, on your company’s “people, process and technology” which will drive its success. Flat and bossless structures work by building, evolving and finessing a working configuration of the right people, process and technologies -- relaxing certain traditional controls but making sure to harness that autonomy to useful effect.

Related: How to Give Employees Independence Without Losing Control

It’s like former Intel CEO Andy Grove once said, “Let chaos reign, then rein in chaos.”

Here’s how to maximize the benefits of bosslessness:

1. Open up the information flow.

Half the battle in getting anything done is making sure everyone’s communicating about it effectively. The problem with hierarchical structures is that they can create bottlenecks, convoluted channels and bureaucratic practices of bad memos, meetings and emails. And when you have an uneven distribution of information, you create islands that can lead to needless office politics, misunderstandings and inefficiencies.

Transparency is a powerful way to prevent islands. Foursquare and Buzzfeed use a communication tool called Google snippets, which takes the concept of status updates and makes them useful for everyone rather than just the manager. Everyone writes down what they get done regularly and makes it public within the company. Having started out at Google, snippets spread to Silicon Valley and beyond, largely because it’s a simple channel that enables people to move forward and get feedback without having to rely on gatekeepers.

2. Rely on and recognize your peers.

Traditional structures are built around levels of people rather than around the work itself, often creating artificial divisions and departments as well as distance from really knowing what’s going on. The result is that the company loses touch with both its people and the work.

Mobilizing people, process and tools can bring company, employees and work closer together and help do the job of peer management by providing ways to handle peer feedback and appraisal. Shopify, for example, built an internal recognition system called Unicorn that not only helps surface and celebrate great work but crowdsources monthly bonuses for its employees.

Related: The Pros and Cons of Peer Review

CEO and co-founder Tobi Lütke found that this allows Shopify to capitalize on the fact that “a company already knows more than its managers.” The people closest to the work have power to show appreciation for a job well done or reward acts of support and kindness that don’t always get considered in the individual performance rubric. Peer management is a redistribution of authority that affects everyday operation, rewarding the leadership of the many who step up and the support of those who lend a hand.

3. Boost your culture through your people.

When you have a bottom-up rather than a top-down culture, it’s all the more important to hire the right people to shape your company’s direction. You’re putting the business’s fate into your employees’ hands. Valve’s bossless handbook even states:

“Any time you interview a potential hire, you need to ask yourself not only if they’re talented or collaborative but also if they’re capable of literally running this company, because they will be.”

Finding a balance between freedom and responsibility requires finding people who bring that balance to the table. The challenge, then, is to engage people who are both autonomous and collaborative, who can make and manage comfortably and are willing to learn how to do them both well.

Chris Savage, co-founder and CEO of the professional video hosting company, Wistia, told me that culture -- composed of the people you bring in -- is something worth fighting for, because it’s a competitive advantage that’s boosted every time you add someone to the team. “The culture of the company should get stronger,” he says, “because we’re hiring for values that the company believes in and people with those values should make it stronger.”

Related: How to Create a Company Culture That People Will Be Excited to Join