Startup Growth and Hierarchy - Is It a Good Match?

By Brunno Boaventura Ribeiro

The idea of scaling without hierarchy often appeals to maverick leaders, who are often driven by a desire for change and tend to reject strict rules or hierarchy in favour of more flexible and creative approaches.

Traditional organisational structures can feel awkward and rigid, with decision-making slowed down by multiple layers of approval and bureaucratic processes, as well as leaders becoming detached from both daily operations and customer needs.?

However, attempts to bypass hierarchy frequently lead to unintended chaos. While bypassing hierarchy is often motivated by a desire for agility, creativity, and collaboration, the absence of clear structure can result in confusion, inefficiency, and decision-making impasses.?

The criticisms of hierarchy are well-documented and we explore some of them in this article. One of the many objections is that it challenges the egalitarian belief that all individuals are equal, implying that certain people should have more authority than others.?

This conviction can disencourage those who value autonomy or task variety, narrowing their roles and introducing layers of oversight that are usually seen as an unnecessary bureaucracy by leaders and their teams.?

On the other hand, as stated in Harvard Business Review, non-hierarchical structures are attractive because they align with human preferences for equality and independence, though their economic benefits are not always clear.

One common misconception is that hierarchy and bureaucracy are one and the same. While hierarchy introduces structure, bureaucracy often grows in parallel, with larger teams requiring more meetings, approvals, and documentation.?

The issue arises when managers mistakenly believe that eliminating hierarchy will minimise bureaucracy, only to find that the absence of clear structure leads to confusion and inefficiency.

Google’s Case

Google’s early experiment with a flat organisation illustrates how the absence of clear structure leads to confusion and inefficiency. Founders Larry Page and Sergey Brin initially removed engineering managers, allowing hundreds of employees to report to a single VP. This experiment, intended to replicate the free flow of ideas from their academic experience, soon revealed its flaws.?

Without clear management, trivial matters escalated to the founders, and critical resources were misallocated. Hierarchy, at least in some form, was necessary to restore balance and operational efficiency.

When the company reinstated engineering managers, it provided a structure that allowed teams to channel their issues and requests through appropriate leadership levels, rather than burdening top executives with everyday operational details.

This ensured that managers could handle routine matters and allocate resources effectively, while the founders focused on higher-level strategic decisions. By having managers in place, teams also received guidance, oversight, and accountability, reducing redundant efforts and misaligned projects.?

The benefits of hierarchy, when properly managed, are clear: A healthy hierarchical structure helps reduce operational ambiguity, aligns teams with shared objectives, and ensures that conflicts are resolved promptly.?

Furthermore, the presence of effective managers promotes both team development and overall well-being. Research from Columbia and Wharton Business Schools confirms that complex, collaborative tasks benefit from leadership to guide decision-making.

Strategic Takeaways for Scaling Success

While adding layers of management slightly decreased customer ratings due to reduced cross-functional collaboration, it significantly boosted sales by reducing inefficiencies and keeping teams focused on strategic goals. For growing companies and startups, this highlights the importance of embracing a degree of hierarchy to drive productivity and meet critical milestones.

It’s important to note that hierarchy alone does not guarantee success. A balanced approach to hierarchy is necessary—one that empowers managers to make decisions while still allowing teams to collaborate and innovate freely.?

Over-centralization can repress creativity, while too much autonomy can lead to fragmentation. The goal is to implement a flexible, adaptive structure that can evolve with the company’s growth, ensuring both control and creativity thrive.

Moreover, modern hierarchical models are increasingly focusing on the integration of technology and data-driven decision-making to streamline processes. By leveraging these tools, organisations can maintain agility even as they scale, allowing for a more responsive and efficient approach to managing growing teams and complex operations.

In conclusion, while the appeal of flat organisational structures is understandable, especially in creative or startup environments, there is ample evidence that hierarchy — if implemented thoughtfully — can support a company’s growth by providing clarity, direction, and accountability. As organisations scale, balancing structure with agility becomes essential for sustained success.