When I was the CEO of Semco, I swung a sledgehammer at my own company. It worked, and the company grew from 110 employees to thousands.
I looked at the corporate pyramid and saw a machine made to slow things down so executives could get rich. I replaced it with the Round Pyramid and compressed management down to three tiers. We started with small teams of around 10 people, radical transparency, compensation tied to value rather than title and the notion that adults, handed autonomy, will mostly behave like adults.
If you’re a corporate leader itching to put the Round Pyramid into practice, allow me to offer some hard-won advice before you start swinging the sledgehammer, so you don’t bury yourself in the rubble:
Change Doesn’t Like to Be Managed
If you try to do this, you will upset people. Some will call you irresponsible. Others will say you are naïve, reckless or “not realistic.” Middle managers will feel attacked. Lawyers will frown. HR will clear its throat nervously. A few people will quit in protest.
Good. That means you’re doing it right.
Forward-thinking CEOs and board members will recognize the wisdom of this path. I have yet to meet an intelligent CEO that didn’t understand this solution. They are just afraid that this will conflict with the short-term and budget goals that are forced upon them, so they’d rather “leave it for later.”
Sorry. Revolutions can be revolting. Doesn’t mean they’re not necessary. This is not about “change management,” because I have never believed in managing change. Change does not like to be managed. It likes to be unleashed, argued with, tested and occasionally laughed at. This is a survival guide for facilitators with the nerve to help organizations claw their way free of the pyramid once and for all.
Above all, this is not a touchy-feely approach, and it is not a socialistic experiment. It is about survival through restructuring before it’s too late. For most companies, given AI, generational change, robotics and the means for rapid growth of unknown competitors, time is up. They must change NOW or perish.
This is a new concept. A network of cohorts—employees, independent contractors, gig workers, boutique service providers and a lot of AI—all communicating and setting goals together, leaving everyone to deliver results without worrying about how they do it. Leadership earned and re-established by the consent of the led. An absence of hierarchy allowing for quick, transparent information transfer. Available knowledge driving individual autonomy. The freedom to become an independent contractor or to step down as leader of a cohort and continue in a team role.
With these changes, organizational reaction time skyrockets. Gone is the counterproductive push to climb the pyramid to make more money. A six-monthly stint as leader generates a bonus, but if things don’t go well, the leader can return to the team without the result hanging over his or her head. The only people who don’t benefit are control-addicted executives, manipulative consultants and board members out of a job. Everyone else watches while agility, imagination, incentives and human creativity lift the business to unprecedented heights.
Who should (and shouldn’t) do this: You are qualified to do this work if hierarchy makes you itch, if you can sit in a room where people disagree loudly without rushing to “fix” it and if you believe most employees are smarter than their job descriptions. You must also be willing—this is crucial—to make yourself unnecessary.
Here is my favorite test: If your employees and direct reports voted tomorrow to eliminate your role entirely, would you be okay with that? If the answer is no, you are not facilitating liberation. You are auditioning for power. Stop reading and back away slowly. If you’re still on board, this is a step-by-step guide to Round Pyramid transformation.
Month One: Demolition Before Design
Every transformation fails for the same reason: people try to decorate the prison instead of tearing down the walls. The first month is about demolition—not of people, but of illusions. It begins with honesty from the top. Not a strategy deck. Not a town hall with rehearsed questions. A human being speaking plainly about why the old system no longer works.
When a CEO says, “I’m scared too,” something remarkable happens. People lean forward. They stop pretending. They tell the truth back. On the first day, you will need to do three things:
- Explain why you are doing this.
- Name what about it scares you.
- Open the books.
Yes, open the books. Nothing infantilizes employees more than hiding the numbers. When people see a profit-and-loss statement explained in normal language, they stop thinking like victims and start thinking like owners. At Semco, once our people understood the numbers, they argued fiercely about costs, pricing and salaries, which was exactly what we hoped for.
You should also expect chaos. Expect productivity to dip. This is not failure. It’s withdrawal. People are detoxing from decades of being told what to do. It’s inevitable that many will wander in the wilderness for a while before they find their bearings.
Let People Choose Their Leaders
The fastest way to expose the fiction of hierarchy is to let people choose who leads them. When teams vote for their leaders, two things happen immediately. First, some managers lose. That’s inevitable. Leadership without consent is theater.
However, the leaders who win also have an adjustment to make. They discover that authority feels very different when it can be taken away. Before the vote, talk privately with any managers who may not survive it. Be honest. This will feel like cold comfort, but it’s true. Some managers will find better roles. Some will leave. Treat both outcomes with dignity.
Teach Everyone the Numbers (Quickly)
Financial literacy shouldn’t require an MBA or bore people into madness. At Semco, we taught finance using lemonade stands, factories and real numbers. People learned because it mattered to their lives and talked about things with which they were familiar.
Once employees understand how money flows, they may start to question expenditures that executives never noticed. They may start to propose cost savings ideas without being asked. They may stop demanding raises during bad quarters and insist on profit sharing during good ones. These are good developments. Money, when discussed openly, becomes less toxic.
Tell the Truth About Leaders
When employees evaluate their leaders publicly, without sugarcoating out of fear of reprisal, culture changes overnight. Weak leaders improve or step aside. Strong leaders become humbler. Nobody needs to whisper anymore. That’s why low leadership scores are mirrors, not punishments. Give leaders time to improve, support them and then let the team decide again.
Month Two: Design by the People Who Do the Work
This is where most consultants get nervous, because there is no master plan. Salaries become transparent. People propose their own pay, justify it with data and review it with peers. Is it uncomfortable? Of course. So is inequality. At least this discomfort leads somewhere useful.
Next, kill the org chart. Run over it with your car. Feed it to the dog. Fixed roles are going bye-bye. Replace the old structure with projects, or what we at Semco called satellites: small, autonomous teams with real budgets, real goals and real consequences. People choose where they contribute. They move around when they are bored. No permission required. No bosses, either.
Set work hours disappear, too. What remains is responsibility and relevance. Teams decide how to coordinate and when and how to meet. Most discover that fewer meetings and an abundance of trust work better than rules ever did.
Share the Profits—Together
Do not announce a profit-sharing system. Design one collaboratively with everyone’s input. Announcing it feels like you’re giving people a gift out of the goodness of your heart. You’re not. They give you the gift of their brilliance and passion, so bring them into the conversation.
• Debate the profit-sharing percentage.
• Argue about fairness and guidelines.
• Simulate outcomes.
• Then commit.
At Semco, we shared nearly 23 percent of profits with employees. The formula was simple, and that was the point. When people trust the system, they don’t try to game it. It also meant they could double their salaries in a good year. That was pretty popular.
Month Three: Lock It in and Tell the World
Thomas Jefferson knew it: Freedom disappears if it’s not protected. Create clear governance rules about which decisions require votes, which decisions belong to teams and which ones individuals can make on their own. Then tell the story…loudly. Let employees document the mess, the breakthroughs, the doubts. Publish everything. Transparency is a powerful defense against regression.
Finally, measure what changed. Not just profits, but trust, engagement and retention. Track it all, assign numbers to it and provide receipts. Then, celebrate! (Also, name what still doesn’t work and make a plan to fix or abandon it. Honesty did not get you here just to be abandoned at the end.)
When (Not If) Things Get Messy
Chaos is not the enemy in this transformation. Phony order is. When someone says, “This isn’t working,” ask what exactly isn’t working and fix it, because the people who say that are probably right. When productivity drops, don’t overreact. Remind people they are unlearning blind obedience. They’ll get it. And when you’re exhausted, step back. Freedom does not need constant supervision.
If you succeed, something strange will happen. Employees will start improving the system without you. And yes, you may still get fired. But if you do, you will leave behind something far more dangerous to outdated organizations than any consultant ever could: people who know they don’t need permission anymore. Plus, you’ll have done something really cool. You’ll have changed everything.
