Adhocracy

The Basic Idea

Imagine strolling into your work office around 10am, wearing jeans and a T-shirt – and it’s not even a Friday. You sit down at a communal table instead of a designated desk and start your work. In the corner, you see your colleagues on their laptops sitting in bean bags, and other coworkers taking advantage of the cereal breakfast bar. One of your bosses comes up to you, also wearing jeans and a T-shirt, and reminds you of the office ping-pong tournament happening this Friday. He tells you he just stocked up the Friday beer fridge in preparation for the event.

That scenario might sound vastly different to your own experience of going to work (in a pre-pandemic time), but those work environments do exist for some. The relaxed, startup-like environment often goes hand-in-hand with a particular kind of business management style: adhocracy.

Adhocracy management emphasizes individual initiative, which means there is limited formalization of employee behavioral expectation.1 That is why employees might be allowed to wear what they feel comfortable in, work hours that are suited for their work ethic, and why a boss might feel more like a colleague than a superior.

In an era where we all try to model incredibly successful Silicon Valley companies, more and more businesses are embodying adhocracy. It is the opposite of bureaucracy, which relies on clearly defined rules and hierarchies. It is thought to be the most suitable forms of management for our fast-paced, ever changing modern world.

Any form of organization that cuts across normal bureaucratic lines to capture opportunities, solve problems, and get results. In an era of accelerating change, organizations, and national economics, most likely to succeed are those with the ability to adjust and adapt … [T]his sort of innovation must become a way of life for business organizations across the board. What is needed is an environment that fosters the use of an ad-hoc problem-solving technique, in effect, an -adhocracy- that functions outside the often initiative-stifling bureaucracy.

– Business management practices expert Robert H. Waterman Jr.’s book Adhocracy: The Power to Change2

Key Terms

Bureaucracy: a form of business management that opposes adhocracy. The systems and procedures in a bureaucracy are designed with an emphasis on maintaining uniformity and control. To achieve these goals, the business organizes itself on principles of hierarchy and set roles and methods.3

Meritocracy: an organization where people get promoted based on their demonstrated abilities and merits. A hierarchy still exists, but there is more flexibility for moving between ranks.4

Matrix Organization: A business structure that adhocracy sometimes adheres to. Instead of having one manager that oversees every aspect of a project, there are multiple managers that employees report to.5 This means that there is a less strict hierarchy and that skills can be shared across a department.

Competitive Advantage: A competitive advantage allows a company to produce goods or offer their services at a cheaper price than their rivals, which makes it more appealing to consumers and enables a greater profit margin.6 Adhocracy can allow companies to have competitive advantage by adapting to the needs of the market.

Specialization: In a business management context, specialization refers to the fact that employees concentrate on becoming an expert in a particular area. In adhocracy, specialization is not tied to formal training1 but instead, individuals (no matter their job title) have authority within their specialized area.

History

Adhocracy was coined by Warren Bennis, an organizational consultant, and sociologist Philip Slate, in 1968.The two predicted that expert specialists would begin to assemble for specific projects. Workplaces would become built around specialization rather than being predicated on strict, rigid roles. However, it wasn’t until Alvin Toffler began to talk about adhocracy that the term was popularized.7

Alvin Toffler and his wife, Heidi Toffler, were incredibly intuitive American thinkers who were able to predict the effects that the rapid developments in technology would have on people, businesses and governments.8 Alvin is often referred to as the “most famous futurologist of his generation”.9

He is perhaps most famous for coining the term ‘future shock’ which describes the fact that when too much change happens too quickly within a society, normal decision-making processes break down. Future shock is also known as choice overload. 10 However, he also popularized ‘adhocracy’ in 1970, realizing that with so much change in our society, changes in business structures would occur as well. He believed that businesses would cease to have the formal structures people had come accustomed to, as they would no longer adhere to a strict hierarchy. Flexibility was a key aspect of Toffler’s conception of adhocracy, and he predicted there would be horizontal structures instead of vertical hierarchies.10 He believed that adhocratic structures would better enable creativity and adaptability, important features in an increasingly fast-paced society.

In 1979, renowned Canadian management theorist Henry Mintzberg more fully elaborated on adhocracy. In his book, The Structuring of Organisations, Mintzberg identified four categories of organizational structures, which he divided under complex or simple and whether they were stable or dynamic.7

  1. Professional bureaucracy, in which processes and procedures are flexible, but leadership has final say on control of quality and process, is complex and stable.
  2. Machine bureaucracy, in which there are rigid hierarchical structures and set processes to follow, is simple and stable.
  3. Adhocracy, defined as a flexible structure that adapts to meet needs, is complex and dynamic.
  4. Entrepreneurial startup, with centralized decision-making in a flat structure, is simple and dynamic.7

Mintzberg’s book therefore formalized adhocracy as an organizational structure and his four models continue to be used today when it comes to business management.

Consequences

Company culture, defined as the “values, beliefs, and norms that influence the thoughts and actions (behavior) of people in organizations” (27) 11 is an important factor when it comes to how successful a company is.

When adhocracy was first introduced just shortly before the 1970s, it was difficult to conceive of a management structure that so vastly opposed the traditional bureaucratic principles. However, it was quickly adopted and popularized because adhocracy has some key advantages in a society where technology develops quicker than we can keep up with. Adhocracy became the new norm for a society quickly moving away from the industrial age to the information age.

Adhocracy enables organizations to work in a flexible manner which allows them to adapt to any changes that are thrown their way and to adjust their service or product to adhere to growing trends. This is particularly important in fast-changing industries, such as social media platforms or tech companies. These competitive advantages help businesses that employ adhocracy to enjoy more success.

Since adhocracies shy away from formal structure, it means that employees have more freedom to pick and choose how and when they work. For example, filmmaking teams are often adhocracies. Freelance camera men and producers will be hired for a particular project because they are well-suited to that project and these teams will dissolve after the project is complete.12

Adhocracy also enables employees to take greater initiative. While in bureaucracies, each employee has a specific role to play and a particular skill to fulfill, in adhocracies, there is greater collaboration and individuals can take the lead on projects which they are suited for. That kind of freedom allows for more creativity and can lead to unique products and services.

All these advantages of adhocracies means that they are widely adopted by various companies today. That means your work life and environment might feel very different to what your parents or grandparents have experienced.

Criticisms

Revolutionizing a management structure that was taken for granted in the 1960s definitely meant that adhocracy faced its share of criticisms. While adhocracies can quickly adapt because of their flexibility, the lack of formal structure can also mean that adhocratic work environments are very chaotic.1 Sometimes, people might not know exactly what their role is within the company.

That might mean that someone drops the ball, not realizing that a particular aspect of a project was their responsibility. It also can mean that employees do not know who to go to for advice or help, since there are less clear hierarchical structures. That can also have an impact on quality control. Another concern is consistency; if individuals have the freedom to work as they please, timelines might not be adhered to.

Adhocracies are not well suited for all kinds of businesses. For example, governments often need to follow strict protocols. Bureaucracies are more suitable government management structures because we need to rely on governments to ensure procedural correctness, irrespective of the particular circumstances or goals at hand.3 We would actually hope that in government settings, employees have less freedom to do things as they want, because we want to ensure that government procedures are consistent and objective.

Adhocracy should therefore not be considered a ‘one size fits all’ for business management, but merely one consideration for what might help a business succeed. Additionally, some people argue that there need not be such a stark divide between bureaucracies and adhocracies; the ultimate model might actually be a hybrid of the two, known as bureau-adhocracy.1

Adhocracy Enables Companies to Dive Into New Markets

One of the advantages of an adhocratic business management style is that since there are no strict procedures and protocols and the overall structure of the company is more flexible, the company can branch out into different sectors.

These days, a company is much more than a provider of a product or a service. Companies are brands. We don’t just buy an iPhone; we buy into Apple’s brand. In particular, the Big Five tech giants, Facebook, Amazon, Apple, Microsoft and Google, are tech companies that have enjoyed tremendous success because they diversify their brand.

Adhocracy is all about experimentation. In a bureaucracy, when faced with a decision, employees turn to authority. In a meritocracy, people turn to data to make decisions. In an adhocracy, there is no right or wrong answer – so people are encouraged to try something out, see if it works, get feedback and tweak the product or service until they get it just right.13 With that kind of freedom and wiggle room, adhocracies can try to deviate from their traditional products and see if alternative products will stick.

For example, Amazon’s CEO, Jeff Bezos, who recently reclaimed his title as the world’s richest person14, ensures his company’s success through experimentation. Amazon was initially created as a marketplace to trade products but has since grown immensely and now creates some of its own products as well. Bezos experimented with products like the Kindle, which have been successful, while others like the Amazon phone, have not.13 Even when products aren’t successful, because of an adhocratic business model, the company is able to adapt and focus their energy elsewhere.

Adhocracy allows businesses to coordinate their activities around opportunities. Bezos identified that as our world continued to transition online, there might be an opportunity to create a device through which to read eBooks. Bezos was able to respond to the market opportunity and come up with a profitable solution.

Adhocracy in NASA’s business model

We might not think that the National Aeronautics and Space Administration (NASA) would be a suitable business for adhocracy. When dealing with space matters, we would think that there are strict procedures that must be followed and that rigid protocols help keep astronauts safe.

Yet, NASA actually often employs adhocracy in their business management structures – and have been doing so for a long time. Over 50 years ago, the Apollo 13 space mission encountered an issue on their way to the moon: an oxygen tank ruptured.15 The mission quickly became a rescue one.

During the Apollo 13 rescue mission, astronauts in the space capsule did not adhere to strict roles and neither did the support personnel on the ground. Different problems required different people with different skill sets to address them. Leadership on-and-off the spaceship continuously changed as everyone worked together to try and ensure the astronauts would land back on Earth safety. The astronauts even took turns piloting the spacecraft.16

The scenario shows how adhocracy allows people with different specializations to occupy leadership positions when it is their area of expertise. The adhocratic model of the Apollo 13 mission might very well have saved the lives of the astronauts, who were able to safely touchdown back on Earth a week after their launch.15

Apollo 13 is just one example of adhocracy in NASA. In the first eight years of the Manned Space Flight Center, the formal structure of the center changed 17 times. There was never a clear organizational chart because it was changing so frequently. Policies and protocols were temporary, used when they worked and changed when they did not. Even peoples’ titles and responsibilities were flexible.16

NASA’s use of adhocracy demonstrates that the business management organization cultivates a problem-solving environment, which is needed in a fast paced line of work where people have to quickly make life-or-death decisions.

Related TDL Content

AI, Indeterminism and Good Storytelling

The rapid development of technology is one of the primary reasons as to why adhocracy has become a popular business management organization. We might think of adhocratic systems as indeterministic systems, as both operate in a kind of feedback loop. In this article, our writer Brooke Struck examines why people tend to feel so uncomfortable with indeterministic models and narratives that do not have a clear structure.

Automation At Work Will Change Our Home Lives

It seems almost within human nature to fear about the progress of technology. Will humans one day become obsolete as machines take over the world? The fact that technology does change our work environments might mean that adhocracy is the most suitable model for the 21st century. Our writer, Natasha Ouslis, examines trends in manufacturing and the employment of rural workers, as these two groups are susceptible to automation taking over their jobs. As Ouslis suggests, the answer might be in a greater degree of flexibility and creativity that can allow these people to roll with the punches.

Sources

  1. Kenton, W. (2020, August 24). Adhocracy. Investopedia. https://www.investopedia.com/terms/a/adhocracy.asp
  2. Lib Quotes. (n.d.). Robert H. Waterman Jr. Quote. Retrieved March 20, 2021, from https://libquotes.com/robert-h-waterman-jr/quote/lbw7d6c
  3. Banton, C. (2020, September 5). Bureaucracy. Investopedia. https://www.investopedia.com/terms/b/bureaucracy.asp
  4. Merriam-Webster. (n.d.). meritocracy. Dictionary by Merriam-Webster. Retrieved March 20, 2021, from https://www.merriam-webster.com/dictionary/meritocracy
  5. Matrix Organizational Structure: Advantages and Disadvantages. (2020, November 11). Indeed Career Guide. https://www.indeed.com/career-advice/career-development/matrix-organizational-structure-advantages-disadvantages
  6. Twin, A. (2021, March 8). Competitive Advantage. Investopedia. https://www.investopedia.com/terms/c/competitive_advantage.asp
  7. Clayton, M. (2018, May 29). ADHOCRACY: ORGANISATIONAL STRUCTURE WITHOUT STRUCTURE. Management Pocketbooks. https://www.pocketbook.co.uk/blog/2018/05/29/adhocracy/
  8. Toffler Associates. (n.d.). The Toffler Legacy. Retrieved March 20, 2021, from https://www.tofflerassociates.com/about/the-toffler-legacy/
  9. Alvin Toffler. (2008, August 15). The Economist. https://www.economist.com/news/2008/08/15/alvin-toffler
  10. Ryan, K. J. (2016, June 30). 4 Things Futurist Alvin Toffler Predicted About Work Back in 1970. Inc.com. https://www.inc.com/kevin-j-ryan/4-things-futurist-alvin-toffler-predicted-about-work-in-1970.html
  11. Flamholtz, E. G., & Randle, Y. (2012). Corporate culture, business models, competitive advantage, strategic assets and the bottom line. Journal of Human Resource Costing & Accounting, 16(2), 76-94. https://doi.org/10.1108/14013381211284227
  12. Army92f. (2017, April 20). What types of organizations are best suited to the. Course Hero. https://www.coursehero.com/file/p6hoibu/What-types-of-organizations-are-best-suited-to-the-adhocracy-form-of-structure/
  13. Birkinshaw, J., & Ridderstråle, J. (2015, December 1). Adhocracy for an agile age. McKinsey & Company. https://www.mckinsey.com/business-functions/organization/our-insights/adhocracy-for-an-agile-age
  14. Palmer, A. (2021, February 16). Jeff Bezos overtakes Elon Musk to reclaim spot as world’s richest person. CNBC. https://www.cnbc.com/2021/02/16/jeff-bezos-reclaims-spot-as-worlds-richest-person-from-elon-musk.html
  15. Carter, J. (2020, April 10). Apollo 13: A ‘Successful Failure’ Or A Triumph For Science? Why You Need To Think Again. Forbes. https://www.forbes.com/sites/jamiecartereurope/2020/04/10/apollo-13-a-successful-failure-or-a-triumph-for-science-why-you-need-to-think-again/?sh=251128627728
  16. What is the Creative Culture (Adhocracy) in Franchising? (2014, November 1). Zorakle. Retrieved March 20, 2021, from https://www.zorakleprofiles.com/what-is-the-creative-culture-adhocracy-in-franchising/

Read Next