Almost all businesses are primarily hierarchical. This means that almost every worker is governed by someone in an authoritative position above them. Picture a pyramid. The board of directors governs the executives, the executives govern the vice presidents, the vice presidents govern the managers, the managers govern the other workers. Is this the most effective way to structure a corporation? I don’t think so. So what is a good alternative and what should an entrepreneur in control do?

A logical alternative to a typical corporate hierarchy would be a heterarchy. A heterarchy is like a peer to peer structure where the people are on the same level. They can all make decisions for themselves. However it is clear that there does need to be some policy in place that governs these workers. The question is how detailed of policy?

Theoretically it is policy that ultimately rules above all job functions except the creation of policy. So why is it that people are separated out from each other in a pyramid structured fashion? Why not pool everyone together in one big heterarchical group and let policy dynamically create the right virtual separation of people needed to function as a bright, light, and tight system?

I really do think a peer to peer entrepreneurial setup is the better way to structure a corporate organizational system. However, this opinion is of an ideal world and in the real world it doesn’t work so easily. Why? I think it seems to work much better for small businesses rather than big businesses. Once you start stacking hundreds, thousands, and tens of thousands of people into corporation it gets overwhelming a lot of times to keep every step in sync, even for the leaders who know best how things should work together. Many imperfections constantly arise in the functioning of the corporation. These fundamentally include workers not following policy when they know it, workers not knowing or understanding policy, absence of policy in business situations, and poorly performing policy. When these occur what is needed to be present to straighten situations out? People with organizational authority. Hence a big reason why we are a primarily hierarchal society.

I think the two major things that limit corporations from being able to upgrade to an entrepreneurial heterarchy are the overall quality of its policy and its people. To give a computer analogy… Better policy is like creating better software and better people is like installing higher performance servers. Do you have to physically structure the computers in a hierarchy to achieve the system you need? No. You can just hook them all up to the same network and control process hierarchy through software. Then when you need to change things around you don’t have to physically move the computers (people) around. You just change the software (policy). Creating better policy is a technical logical thing. However, creating better performing people is a psychological thing. I think these days corporate policy is more advanced than the body of people working in most large corporations. If a sizeable company really wants to make a true entrepreneurial heterarchy happen for themselves and actually work then they will most likely have to master personal development within their organization.

If a company wants to extract benefits of an entrepreneurial heterarchy then it doesn’t have to fully convert to it on every level. It can become a hybrid and have both hierarchy and heterarchy. Maybe it would be something like having a board of directors, vital executives, and then a big pool of workers. It could look like whatever anyone pleases.

So should an entrepreneur take the plunge and build a peer to peer corporation? Not so fast cowboy! You got to really understand what you are getting into. You would be fighting the deeply engrained hierarchical mindset of society. You’ve got to consider the unique specifics of the business you are in. If you want to make your company bigger than a small business then how will your system perform at 100 employees, 1,000 employees, 10,000 employees? If you convert your business from a hierarchy to a heterarchy or visa-versa then how will that affect it?

I think an entrepreneurial heterarchy would be great for most self-employed type businesses with very few employees. I think my plans are going to be to go with a hybrid approach with my empire corporation looking more like a traditional corporate hierarchy in the beginning and moving more towards an entrepreneurial heterarchy as my leverage to do so goes up. With my subsidiary companies, I will probably primarily stick to a traditional corporate hierarchy structure until Watkins Corporation is extremely strong and dynamic.

What a well performing entrepreneurial heterarchy does is shift many resources of the corporation from the bloated process of managing flesh to efficiently managing logic.