Flattening hierarchies: Nvidia's bold new blueprint for leadership
Managing a company with hundreds or thousands of employees typically requires a hierarchical structure. For instance, an effective hierarchy makes people in power accountable for results, and sometimes when they make a major mistake, they are replaced through internal promotion.
But there is one leader who is now known for doing away with hierarchical structures in his company. Nvidia CEO Jensen Huang, whose semiconductor company reached a value of more than US$1 trillion in 2023, has said in an interview with Joel Hellermark that he avoids hierarchical communication.
Huang said he prefers flat communication, avoids 1:1 meetings, gives direct reports, and prefers group communication where everyone is on the same level, starting from the top. “I give you feedback, right there, in front of everybody,” Huang said in an interview. “I’d rather torture you into greatness,” he said at the Stripe Sessions 2024.
Under Huang’s guidance, Nvidia has reached a staggering 10-year compound annual growth rate (CAGR) of 70.82 per cent. According to Huang, everyone in the company has access to information, from the entry-level employees to the VPs. His philosophy revolves around the idea that if there’s a strategic decision to be made, why limit the information to only a select few?
"If there is a strategic direction, why do you tell one person? You tell everybody, and so after, we are swimming in the soup of strategising and how to formulate the path to the future,” Huang said. “When the time comes, I will send it out to everybody at the same time, or I will tell everybody at the same time, and people will give me feedback, and we will refine it."
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The advantages of Jensen Huang’s leadership style
Huang believes that transparency fosters collaboration. By sharing the company's strategic direction with all employees, he encourages diverse perspectives and feedback. This inclusive approach leverages the collective intelligence of the organisation, resulting in more refined and effective strategies.
Huang eschews rigid long-term plans, believing they can stifle adaptability. Instead, his company embraces a flexible approach, continuously re-evaluating strategies based on evolving business and market conditions. This is especially crucial in the fast-paced AI field, where agility is paramount.
Huang employs a unique approach to feedback, conducting a single meeting with all 60 of his direct reports where he delivers individual feedback publicly. While this might seem intimidating, Huang believes it fosters a culture of transparency and collective learning.
He argues that private 1:1 feedback sessions deprive others of valuable insights and learning opportunities. When executed effectively, this public feedback model can be both empowering and impactful, promoting growth across the entire team.
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Weighing in on ‘flat’ organisations
While the allure of a flat, non-hierarchical organisational structure is strong, promising increased autonomy and collaboration, it's crucial to acknowledge the potential downsides that can accompany this organisational model.
One of the most significant challenges is the potential for ambiguity in roles and responsibilities. Employees may struggle to understand who is accountable for specific tasks or decisions. This can lead to confusion, duplicated efforts, and critical tasks falling through the cracks.
While collaborative input is valuable, the absence of a final decision-maker can slow down processes, especially when faced with time-sensitive issues or conflicting viewpoints. This ambiguity can also create a lack of direction and accountability.
Scaling a non-hierarchical organisation presents another set of challenges. As the company grows, maintaining effective communication and coordination without a clear structure can become increasingly difficult. This can lead to organisational chaos and inefficiencies.
Additionally, traditional career paths often rely on climbing a hierarchical ladder. In a flat structure, employees may perceive limited opportunities for advancement, potentially leading to dissatisfaction and increased turnover.
While collaboration is encouraged, the increased interaction and lack of hierarchical authority can also increase the potential for conflict. Without a clear structure for resolving disagreements or mediating disputes, interpersonal conflicts may escalate and negatively impact the work environment.
It's also important to recognise that this type of structure may not suit all personalities. Some individuals thrive in environments with clear hierarchies, defined roles, and a sense of order. A non-hierarchical structure can leave these individuals feeling uncomfortable and unproductive.
Ultimately, the success of a non-hierarchical structure hinges on a variety of factors, including the company culture, the nature of the work, and the individuals involved. While it can foster innovation and agility, organisations must carefully consider these potential disadvantages to ensure they are prepared to address the challenges that may arise.