Can you please elaborate as to what causes that hidden power structure (i.e. what goes wrong)? In your opinion, is the idea of flat management inherently flawed or is it just hard to execute? Curious to hear your thoughts as someone who's actually tried it.
> Can you please elaborate as to what causes that hidden power structure (i.e. what goes wrong)?
I think it is human nature to certain extent. Take any number of people, put them in a room give them a task. After a while you'd observe some will start to tell others what to do and so on. Sometimes it is those with experience, sometimes it is just those who are loudest. By default the groups won't necessarily settle into a democratic, egalitarian sort of state.
I imagine flat probably works for smaller groups. A few owners + a team of 5. Everyone works directly for the owners, they settle into a set of roles and so on. Everyone sees and communicates with each other often (ideally). There is no need to call employee #2 assistant general manager or employee #4 programmer V and make him report to #2 and so on.
But as the company grows, it stops being flat really. Owners start listening to employees they play golf with. Older employees want to feel special so they'd tell new employees what to do and act as managers. Potential candidates will detect this type of environment and if they are good at manipulation and social engineering will gravitate and want to work in such a place, because they'll know they'll thrive in there (so it attracts certain personalities perhaps as well).
On a more practical level. This system is also used as an advertising tool "oh look we are flat, we don't have titles, we are better than BigCorp". That has worked rather well at recruiting from what I've seen.
It also works in another ways -- such as to supress wages. Because everything is flat, it is easy to justify not giving raises.
That might sound overly negative but I just listed all the bad things I could think of. There were many good things too. I think it can work, but it requires a significant effort on both owners and everyone to keep everything in check, to have more communication, more transparency, and so on. It is a harder balancing act so to speak. That is why in most cases I can see this failing after a while.
