Organizations that lead with rank-based assumptions, logic, and practices ”in a phrase, the myth of leadership ”can take one of two forms. One is the charismatic and personal command-and-control style of a company in its early stages, where all power and authority seem to rest with a single individual, usually the founder/owner ”I call this form the "Big Chief" organization. The other is the hierarchical command-and-control style of a more mature organization ”I call this form the hierarchical organization. In either form, rank-based thinking dominates the organization, and the myth of leadership provides the justification for it.
In the start-up phase, or with small companies, control is centralized in one individual, frequently the entrepreneur (or entrepreneurs) who founded the company, and who occupies what is really the only position of unquestioned authority and power in the organization: the Big Chief. This entrepreneur will generally want to keep a tight rein on everything that happens and monopolize all decision making. Even if the entrepreneur wants to delegate authority, there is often no process in place to systematize and make such delegation effective.
Positions and jobs are created and dissolved on the fly, in an almost ad hoc manner as the company continually faces new and constantly changing situations. It is very difficult to find the time to create the integrated management structures that will be necessary for future growth. So it tends to be structured simply, with only a few welldefined roles and positions , and with little or no divisional and functional specialization.
Hierarchical business organizations evolve naturally from Big Chief organizations. Power and control are still rank based and flow in only one direction, but now, instead of being administered by an individual, they are administered by a bureaucratic hierarchy. Not a lot changes in terms of understanding control, power, and management, but a corporate structure has emerged that can better handle the demands of the higher and more consistent flow of information through the organization. Even with a benevolent autocrat, given the expectations of unilateral power, most employees will adopt a strategy of compliance and make themselves dependent on their manager. These deliberate top-down, rank-based management structures are very time consuming. Yet, when business conditions are changing constantly, it's essential to respond quickly ”something hierarchical organizations do very poorly. Both of these rank-based forms of organization produce characteristics that will produce failure in an information-based network economy.