If you're sold on our way of thinking, then feel free to skip this section. But if you're wondering why the hell bother with all this, and why not just make a standard hierarchical org chart and be done with it, read on.
I simply don't have much faith in hierarchies. I think they solve a limited subset of problems, but as a whole they are a rather undefined system. It solves promotions, performance reviews and accountability very well. But that's roughly all that I think a hierarchy is good at. It's a static system. A one-size-fits all solution to an always changing set of challenges--that's not a good start. The communication lines are also rigid and often result in plain stupid communication chains. What about when Lukas wants to work with Sabrina, because they both have an eye for design and that's important for a particular project and they both have some time available, but they're in different divisions? What if Leon wants to lead a team but he hasn't done that at 9Y before? What if Eva (an engineer) wants to try her hand at some design work? Those things happen naturally and often in a company. A hierarchy doesn't define a common ruleset for how to handle those things, and so with a hierarchy you create a system that has to be intentionally subverted by the team for them to be effective. That's crazy. Moreover, being good at that subversion requires being good at politics, and we don't really want to subsidise that.
If the system has to be bypassed to work, then what kind of clarity does that create? It doesn't. You have to fall back to asking your boss for direction all the time.
Speaking of your boss, what if in your opinion he's not performing well, and you talk to him and make the case for a better way, and he shuts you down? How do you fight for what's right without causing instability? OK, you drop an anonymous note in the suggestion box, but what if the decision to implement that befalls upon your boss, who ignores it? In all likelihood, he's not even being intentionally malicious, he may be busy and may have other priorities. He may have even thought about your suggestion but his worldview doesn't allow him to fully appreciate it, so he dismissed it out of (innocent) ignorance. In this situation, how do you go about recruiting people that your boss respects who can provide him with the right perspective to fairly evaluate your suggestion, and form a useful discussion group? You have two choices: a) you don't, or b) you stir shit up with politics. And even if there's a feedback avenue for this, like a company all hands meetings where all suggestions are welcome, you can't morally suggest it now because you've already spoken to your boss and he's said no--it would be sub-ordinance. Ok so you don't go to your boss at all and you use the feedback method straight away--now your boss is upset with you because he doesn't understand why you didn't come to him with this first as he feels like that's what he's there for in the first place. It's a lose-lose-lose-lose situation.
Hierarchies are just too stiff and blunt for a lot of things. Personally, I think it's better to frontload some complexity and figure out how to work in a new atypical system like ours and be effective in the long run, than to dive straight in on day one but suffer with a lot of small frictions forever more.
But if hierarchies are so bad, then why are they so common? To be honest I don't know. If I had to guess, I'd say it's because they're a very simple system to implement, and that as humans we intuitively and instinctively form hierarchies so it just happens emergently. They are also quite stable, both against local disturbances (a troublemaker is soon put back in their place by the group) and they scale well (they behave predictably as a group grows from 2 to 20 to 100 to 500 members). Also, the people who create hierarchies are typically the ones that end up at the top of them, so there might be a certain bias at play here in that those who are empowered to implement a hierarchy are the ones who occupy a position in the hierarchy that is far from the median.
In any case, I want to believe that there are better ways to structure collective decisionmaking and resource allocation.
I believe that the concept of a hierarchy, when thought of as a "technology for organising groups of people", is kind of like the hammer in a workman's toolbox. A hammer is a great tool because you can solve pretty much everything with it. The problem with the hammer though, is that, while yes you can use it for everything, there is usually a task-specific tool that will be better for that particular task. For some tasks, a screwdriver is better. For other tasks, a brush. And so on. I'm biased here, but I believe that our concept of Activities/Teams/Clans/School/Gameplans represent the equivalent of the workman's toolbox that is full of various task-specific tools. You should read the Roles at 9Y and Gameplans in detail, but the basic idea behind them is that these represent a cohesive and non-hierarchical system that empowers roles (= people who hold roles) to get things done autonomously with minimal bureaucracy. And these should cover most of the day to day activities of the company. These also codify communication channels that are directly role-to-role, such as PM-to-HoF, that bypass classical top-down hierarchies (so it's not PM→HoP→CEO→HoF). Crucially: this all happens in a structured and predictable manner.
Make no mistake about it, Clans and Schools are hierarchical. Because Teams and Roles aren't enough. I've mentioned some why's already. We also need a fallback when the Teams and Roles system is under-defined. We also need a meta system to oversee and help drive improvements to the Teams and Roles system itself. And finally, a hierarchy is actually a pretty good tool for solving the problem of performance reviews and compensation--a hammer may be a bad choice if it's your only tool, but sometimes you happen to run into a nail and a hammer may be exactly what you need.
Credit and Origins
Why all of this? I admit that our system is a bit esoteric. Credit where credit is due, a lot of inspiration comes from other governance models, such as Agile Organisations and Holacracy. There are some great ideas in there. Our system is also partly an evolution of those practices. In my opinion, there are some shortcomings with those models, that I'd like to iterate on. E.g. the glaring one with holacracy is: who's responsible for performance reviews and who looks out for your career development?
We've also taken inspiration from great companies like GitLab, Zappos, Spotify and Netflix. As well as smart individuals along the way.
But most of our model is the result of a ground-up analysis of what we as a company do, how we like to work, and the act of discarding prejudice and preconceived ideas for a second. Our governance model is very tailored to our company DNA, and the type of people who work here.
You should know that everything we do has a reason behind it and consideration and thought has gone into it. Don't get me wrong. That doesn't mean that everything about our model is great. Admittedly, some of these ideas can trace their roots to conversations I've had with random strangers that I met while walking my dog. Others have come about as a consequence of implementing "the generally accepted wisdom" and then seeing how that failed. So while not everything about it is necessarily great, none of it is pulled out of thin air and every concept has a reason behind it.
If this all sounds good to you, then great! But if you're unsure, and you think it's madness, I just ask for a little faith to follow the system and see for yourself how it works. That doesn't mean that you have to like it, in fact you are encouraged to vocalise your dislikes early and often.
All I'm trying to say here is that there is a method behind all of this madness, and it certainly isn't for the sake of "just being different".