The Art of Management by Doing Nothing

05/05/2014 10:52 BST | Updated 02/07/2014 10:59 BST

I was always a fan of the late General "Stormin' Norman" Schwarzkopf, the US Army general who led Allied forces in the first Gulf War with the battle cry; "When in command, take charge!" And yet I've started to come across an increasing array of competent leaders doing the exact opposite. To be clear, I'm not talking about leaders who delegate and empower those lower down the food chain. What I'm talking about is the total abrogation of conventional forms of authority.

In this new business model, employees apparently decide which products to launch and which ones they want to work on (Seattle software company Valve), how their shift patterns are organized, whom they recruit as peers and even how much they pay themselves (Brazilian engineering company SemCo). When the boss of SemCo, Ricardo Semler, wrote his second book 'The Seven Day Week-end," he was maybe thinking along the same lines as the folks at Netflix who allow their people to determine how much holiday to take. There is literally no Netflix policy on vacation taking and it's one of the reasons their Human Resources strategy has been downloaded five million times on YouTube. W.L Gore, the Delaware membrane manufacturer, has been eschewing conventional forms of organization and management since the mid 1950s. Work teams are created organically around new products and leaders emerge democratically from amongst the workforce. In this new world order, it seems that the lunatics are given the keys to the asylum and expected to run the establishment with considerably more skill than the local health authority.

What's really interesting is that companies like Gore and SemCo are essentially family businesses, which means that their owners could be deemed to have more right to autocracy than most CEOs. It's fascinating that they choose to exercise this droit de seigneur by giving more power to their subordinates rather than less. And it must be a great relief to them when this gamble pays off. The life of an entrepreneur can be a lonely one, when he feels that every day he must lead the way, stay at the very top of his game and inspire everyone else to doggedly follow in his footsteps. How much more enjoyable to relax in the knowledge that your wealth doesn't just sit with you but is an objective for a whole group of people, working willing and well on your behalf.

But if no-one's in charge, how on earth does anything get done? Surely there is some penalty to fractional decision-making? Centralised authority isn't necessarily all that it's cracked up to be. People of a certain age will remember the Piper Alpha North Sea oil production platform that exploded with fatal consequences in 1988. It was a tragic event that cost 167 oil workers' lives. There were many factors that contributed to the accident but two stick out as particularly unhelpful. The first that the platform was fed by two further rigs that continued to pump oil and gas into the conflagration. Workers on the Tartan and Claymore rigs felt unauthorized to shut down production and literally added fuel to the very flames that were killing their friends. Meanwhile, the majority of the supervisory staff who would normally have organized the Piper evacuation had been killed in the initial control room blast, leaving the remaining staff disoriented and leaderless. If all parties had exercised their own best judgment and acted accordingly, it's likely the tragedy would have been modest by comparison.

There is, of course, a limit to organizational anarchy. You can't invest in a new production line if you haven't agreed in advance how many cans of dog food you're likely to sell to pay for it. That means sales forces have to come up with projections, engineers with designs, procurement folks with component supplies and bean-counters to make sure that the arithmetic works. But once the production line is installed there might be surprisingly little upside to a system of "clocking on" to tightly regulated shift patterns. It was exactly this realization that dawned on the 21 year old Ricardo Semler, as his surveyed his father's 'mixer and agitator' business, wracked by conflict with Union bosses in Sao Paolo - and it was a seminal moment in organizational thinking.