Say Goodbye to the Pyramids

by Keith McCormish

The “pyramids” are history. The ones in Egypt may survive for eternity, but businesses with the same top-down structure are not likely to fare as well. The pyramid business structure is becoming a dinosaur, and more adaptable businesses who listen to customers, employees, and competitors are quickly taking over the marketplace. The change agent is the information age, with instant comparison of products, prices, and quality available to consumers.

While the much-feared “Y2K bug” hardly created a ripple when the millennium ended, much more profound forces were changing the way business works. The information age came into its own, turning traditional business upside-down. Internet auction sites were creating marketplaces where people, not companies, decided what they would pay for commodities. Consumers could bid on thousands of items on-line, and offer feedback on what they thought of the products. Savvy traders were making a profit on everything from automobiles to air travel.

It wasn’t just the new “dot.coms” that were changing with the information age. Websites like E*Trade challenged old-school stockbrokers, forcing them to offer similar on-line services. Even stodgy financial institutions broke down and began offering services on-line, allowing people to compare rates for mortgages, car loans, and banking services. Car dealers established their own websites, putting pictures and prices of vehicles on-line to compete with the auction and private-seller websites. Auto manufacturers began offering on-line shopping, allowing buyers to purchase a car without haggling over price with a salesperson.

Clothing, sporting goods, and other catalog suppliers put their entire inventories on-line, allowing customers to compare prices and quality on thousands of items. Even if they didn’t buy from the on-line companies, consumers were armed with information when they hit the retail stores.

Cable networks were charging customers for television, with premium services such as HBO, and movie channels extra. They were providing better content than traditional broadcast networks, which suffered from loss of revenue. Sports packages allowed fans to watch their favorite teams anywhere in the nation. Now TiVo and Replay Networks are providing television on-demand, with the option of skipping commercials.

What in the name of commerce is happening? Where will it all end? The answer, of course, is that it won’t end. The genie is out of the bottle. The information age has proven, once and for all, that knowledge really is power for consumers. Anybody with access to a cable or phone line can find whatever they want at the best possible price. They can share their likes and dislikes about products and services with the whole world. Knowledge is expanding away from the center and out toward the edges of the market place. More power now resides with the customer. They are more informed and better able to compare products and prices.

Pyramid business structures have a hard time adjusting to the new environment. They can’t beat the revolution, and don’t want to join it. Simply put, information can no longer reside primarily with people at the top of the pyramid. Anybody with information that is valuable to your company is important in the new information age. The more information you can retrieve, the better, and the faster your company can act upon the information, the better your market share will be.

Today’s businesses need to adopt an information-age philosophy. Valuable information may come from a satisfied customer, a disgruntled customer, or someone who chooses a competitor’s product. It might come from a “top-level” employee (using the old pyramid terms for a moment), a “bottom-level” employee, or even someone who decided to work for another company instead of yours.

The important questions are: what information do they have that could make your company better? How can you find out? What will you do about it? Don’t just ask management these questions. Ask everyone, from the maintenance man to the CEO, and give them an easy way to respond. As scientist Linus Pauling once said, “the best way to get good answers is to get a lot of answers.” You will be amazed at what you find out once you start to look at the responses.

Does this mean that management will lose control? The answer is both yes and no. Yes, management will lose some of the secrecy and arbitrary decision-making typical of pyramid business structures. Say good riddance to those things. Everyone in the company likely knew your secrets, anyway, they just didn’t let on. Arbitrary decisions usually turn out to be bad decisions, which come back to haunt you anyway.

The skill and charisma of a small group of people at the top of an organization is no match for the collective knowledge of customers, employees, and the rest of the marketplace. Smart managers realize they will have to harness this power and hang on for the ride. Nobody really knows where the information age is taking business. You have to either lead it, follow it, or get out of the way.

The most effective organizations in the future will be “peer-to-peer,” in which anyone can ask a question, or put forth an idea, and anyone else can respond to it. People in such organizations feel free to discuss and rate the quality of everything that is happening within the company, and within the marketplace. The company will act upon the solutions that make the most sense to the most people. People with the best answers begin to emerge as natural leaders. People whose only answer is “because I am the boss” begin to emerge as dinosaurs from the pyramid age. The issues that are most important to the company will become apparent, not from the Board Room, but from the Chat Room.

Don’t misunderstand this approach. It’s not just about technology. It’s about how your organization “feels” and responds to employees, customers, and the market. If you don’t care about such things, your employees will know it. Talented and creative people will not stay at a place where their opinions are not valued. Next, your customers will figure it out. Customers will share this information quickly, and will find other suppliers who are more responsive and dedicated to their satisfaction. All it takes is the flick of a mouse. Finally, the market will know, and you might as well put a fork in your company, because you’ll be done.

If your company is losing talented people and market share right now, think about whether you are trying to stay at the top of a pyramid organization. If the answer is yes, and you want to stay in business, give some thought to changing the structure. Flatten things out, find talented people who understand the new business philosophy, and help share knowledge and power with everyone in the organization. Learn to be responsive to new ideas, and learn to change quickly. If you don’t get rid of the pyramid, it will eventually get rid of you.

Is Your Company a Pyramid?

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