Today, Big Chief organizations are primarily seen in start-up companies and with small business owners . Some of these small businesses desire to remain small, while others desire to grow larger. This discussion will emphasize the latter type. Big Chief organizations are all characterized by the same properties. Though perhaps rich in intellectual capital, energy flow into the company in the form of money and information tends to be either overwhelming in its abundance or terrifying in its absence. Even worse , the company might be information rich but cash poor, or cash rich and information poor ”in any case, the circulation rate of energy within the organization is low, static, inconsistent, or all three. It does not possess a complex-enough structure to help moderate and control the energy flow, which is not consistently high enough to allow more complex management structures to emerge.
When growth is substantial enough for managerial systems and structures to emerge, the entrepreneurial founder or leader, the Big Chief, must be willing to let go of control and step aside to allow the integrated managerial structures to emerge. Only in this way can the organization jump the threshold to a more sustained type of organizational activity.
Big Chief organizations need to establish the following types of integrated systems:
People systems, including management, communication, and reporting systems
Reward systems, including all compensation systems for pay, benefits, and bonuses
Work systems, including economic strategy, market environment, and tactical systems
An excellent example of the successful transition from a Big Chief to a hierarchical organization is the Internet company Yahoo and its bright young founders, Jerry Yang and David Filo. Yang told Fortune ("Capitalist Century" 2000) that he did not really feel qualified to run Yahoo: " ˜People always ask me why I took myself out of the day-to-day operating responsibility. But that's never what I wanted to do, and besides, I knew so little about business that I didn't want to slow things down when the company began to scale up. " (F-8I)
Technology systems, including all the support and accounting systems required to run and sustain a company
When these systems are in place, growth can be better supported and sustained, and the future of the organization is more secure. Of course, when most companies make the transition from a Big Chief to a hierarchical organization, they carry over with them the rank-based thinking of the myth of leadership. The negative effects can be ignored for quite some time if the organization remains successful, but the negative effects won't go away, and the organization will eventually have to face them. This is precisely what was happening to the company I was consulting for.