The concept of the peer-based organization is based on a strategic principle, not a moral one. Those organizations that value and reward peer-based thinking will be more successful in acquiring and maintaining competitive advantage and so achieve strategic success. As we have seen, creating a peer-based organization does not mean doing away with management positions or management structure ”work still needs to be managed. However, the governing leadership choices in the four key decision-making areas of strategy, tactics, operations, and people will be made not by the self-similar elites, but by councils of peers drawn from every level and function.
Indeed, today a higher consciousness is emerging in organizational thought that rejects rank as the chief element of organizing relationships. The new peer-based organization will only emerge on the periphery and eventually take over the center because corporate leaders at the center generally lack the courage and strength to dismantle their rank-based privileges. Change arising on the periphery has been the pattern for all evolutionary progress. It could happen at the center, if the majority of organizational members demanded it, but we lack sufficient historical precedent where this has occurred. The future belongs to peer-based organizations because individuals in these organizations behave more responsibly, more intelligently, more strategically, and more cooperatively than they would in traditional rank-based organizations.
Corporate governance must be reformed so that it rests not on the same old aristocratic class ”whether the corporate board or executive teams ”but with the employees of the company. Peer-based councils will make their organization more prosperous not only by being more creative, more flexible, and more dynamic, but also by being more internally and externally equitable and hence more socially responsible.
The myth of leadership sustains rank-based relationships and leads us to believe that there is no other way. In this chapter I have tried to show how to strategically design an organization that is not limited in its success by that myth. A peer-based organization is by definition one where participants have rejected the myth of leadership and practice peer-based thinking, where everyone in the organization has equal standing with respect to information and contribution to the decision-making process. There is not a single best way to organize a peer-based company, and there will be as many different designs as there are for rank-based companies.
Rank-based organizations are based on either the Big Chief or the hierarchical form of leadership. Peer-based organizations, on the other hand, use a very different model to become " open and leaderless." That is the topic of chapter 8.