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Boundaryless Organizations: What are they and do they matter in 2021?

a group of people being happy together because of boundary less organizations

The term “boundary less organization” comes from a 1995 book (since updated multiple times) which argued that organizations were, in a sense, constrained by notions such as hierarchy, geography, and physical structure. The authors, partners at a consulting firm, wanted organizations to focus on a free flow of information instead of any internal politics or other factors. The timing of the book is interesting, because Google -- also predicated on a free flow of information -- would be founded in a Northern California garage just the next year. 

While the timing seemed right, boundary less organizations have some pros but a fairly wide slate of challenges and cons. Let’s investigate, and see if it could be applicable for your organization right now.

Table of contents
Jack Welch and the role of structure
Ideally, then, what do boundary less organizations look like?
The challenges of boundary less organizations
What might be a better path than the boundary less organization model?

Jack Welch and the role of structure

Jack Welch is a notably famous executive from General Electric, who pioneered a lot of modern management approaches. When he passed away, in March 2020, many heavily-praising articles were written, but some also noted the flaws in his approach; The Guardian even mentioned that he “embodied the flaws in modern capitalism.” 

While GE was mostly successful during his tenure, he also earned the nickname “Neutron Jack,” i.e. a neutron bomb, because he would often keep the physical buildings standing but get rid of the employees inside, i.e. layoffs. (Neutron bombs destroy the inside of structures but keep those structures intact.) In his first 10 years at GE, Welch eliminated 170,000 jobs.

Welch’s approach to GE in the 1980s helped drive the boundary less organizations thought process in the 1990s. To Welch, and some other leaders of the 1980s, every organization needed structure. The role of structure was, essentially, to:

  • Clarify roles and responsibilities
  • Determine who had power and authority to make certain decisions

While this made a lot of sense -- and it’s the bedrock of the hierarchical structure many of us work within today, where you have a boss, who also has a boss, etc. -- Welch also realized that it could hamper innovation and relationship-building both inside and outside the company.

He wanted to remove vertical, horizontal, and external barriers to focus on the needs of the customer and the growth of the business. In essence, he wanted to break down the barriers between different parts of his company and have it work better overall. That’s what a “boundary less organization” would be, in utopian terms: free information and everything in the interest of customers and business growth.

Ironically, though, Welch had a few notable missteps as CEO, including an over-focus on the GE Capital line of business -- and that almost tanked the entire company in 2008. His peak market capitalization at GE was $410 billion; today GE is significantly less than that, somewhere around $100B.

One of the reasons for his misses was the boundary less structure he had desired to create. 

Ideally, then, what do boundary less organizations look like?

Some of the core tenets include: 

  • Highly tech-savvy to enable communication from anywhere (sound familiar with COVID?)
  • Employees have their own projects and targets, and they are responsible for the path to them
  • There is essentially no managerial interference or guidance; employees work, and in fact, face-to-face communication is somewhat limited in general
  • Workforce is truly global
  • Flexible working schedules
  • Very limited supervision or hierarchy

One interesting concept here is that a lot of organizations resemble some aspect of boundary less organizations during COVID: there are more virtual connection meetings, orgs have had to redefine their tech stack, and (in some organizations) there is less managerial oversight and more project ownership at the employee level, simply because of everything going on and managers lacking the time to dive deep on every project. 

Has COVID scaled the idea of boundary less organizations, though? No. Many are still run in a very hierarchical, focused, process-driven way. 

In terms of staffing and growing these types of boundary less organizations: Because the employees are basically managers of themselves and their project load, a boundary less organization is best for highly-motivated, self-driven, independent thinkers who can prioritize and shift their own workloads without managerial guidance. It requires true top talent (or at the very least self-aware, self-motivated talent) to thrive. This is a blessing -- great employees -- but also a curse, as these types of people are often hard to identify within a standard hiring process. (Although if you use Fingerprint for Success assessments, it’s admittedly easier.)

Some of the characteristics of boundary less organizations are similar to holacracy, an en vogue term from 2015 or so. Holacracy is most associated with Zappos, acquired eventually by Amazon, and its founder, Tony Hsieh, who also died in 2020 like Welch. It was once called “the future of management,” and largely was rooted in less hierarchy, no managerial titles, and employees organized in “circles” instead of silos/org charts. 

Holacracy fizzled for some of the same reasons that boundary less organizations did, however.

The challenges of boundary less organizations

The major one is tied to human brains and how they perceive work and organizational structure. A lot of people are inherently comforted by process. They want rules and regulations that make sense, and they want to understand who their specific boss is, what silo they report to, and what needs to happen for them to get more opportunities. Those are all structures of work that have specific lines and boundaries. While hierarchy notably has many flaws, it does soothe the human brain into understanding where exactly you fit into your specific organization -- who should you contact with concerns or issues? Who can advance you? Who is “your tribe?”

Boundary less organizations don’t allow for that, and thus create some confusion in employees -- just as holacracy did.

Another similar issue is compensation. Without clear hierarchy or managerial bands, compensation can become confusing -- and confusion about salary is one way to drive employees up a proverbial wall. People want to understand who makes what and why, and even though it’s not always fair, they want a semblance of a process around it to contextualize it as fair in their own head. 

From a description of compensation models in holacracy:

“How do you compensate someone who’s on the phone 50% of time, works 20% in wellness, and 20% in a merchandising role with product?” says Delaney, who is now the lead link of the company’s senior HR circle, called People Ops. “There’s no market-based compensation for that person. Right now we’re trying to figure out what is that world going to look like, and how do we fairly compensate people in that system?”

In sum, boundary less organizations make sense at a high, utopian level -- the free flow of information and a customer-centric approach are things we all want -- but at the execution level, it’s much more challenging. People don’t necessarily understand roles, compensation models, and broader strategy.

What might be a better path than the boundary less organization model?

Focus on the strengths and needs of your employees -- and instead of bashing down walls between functional areas, aim for increased collaboration between them. Know what motivates your people. Design structures and processes where they understand how they can learn, grow, and gain more responsibility within the organization. Know the core tenets of team effectiveness. Help your employees adapt to change (like the modern moment).

A lot of these newer models and approaches, such as boundary less organizations (which admittedly has been around since the 1990s), don’t scale as well because ultimately, what people seek from work is psychological safety. They want opportunities to have their basic needs met, and they want to be surrounded by supportive teammates and have the ability to drive forward new ideas. When you introduce confusion into that equation -- “There are no boundaries now?” -- things can get harder, without the proper support systems in place.

Focus on the basics of what makes teams, and leaders, effective. Do this consistently and assess where you’re at constantly and you’ll design a great organization.

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