GitHub, like Valve and Automattic, has an "open allocation" management style:

At GitHub, people work on an open allocation basis. Unlike traditional companies where projects are assigned top-down, GitHubbers tackle whatever projects they want, without any formal requests or managerial interference. Sure, GitHub is only 175 employees, so there are limitations to this experiment, but Valve Software (400 employees) has grown to be a $2.5B company with a very similar open allocation structure. Is this too good to be true?

GitHub is 175 employees and no managers:

Imagine you could run a company on autopilot: no tier of “managers,” just people creating value by doing what they love and letting the rest fall into place. How much money would you save by eliminating all that bureaucracy? How much faster could you move? How much conflict could you erase? How much bigger could you grow? How much more creative would the culture be?

There is at least one company that has been experimenting to get closer to the ideal: GitHub.

GitHub is a very unusually run for-profit company. It has no managers.

They claim that having no managers makes their products better.

I'm trying to figure out why they believe that.

GitHub believes organizational structure and product quality go and in hand:

What GitHub has done is taken the practice of open-source collaboration--which is done on something akin to a volunteer basis--and applied them to the organization of their entire company. And the outcome has been a product that is universally beloved and relied upon among technology-industry types and university computer science groups, which are bunches of people who can be (ahem) somewhat picky. The question I was interested in when I started this story was: What is the connection between the structure of the startup and the quality of its product?

By allowing self-organization, Kami Richey and her team of three people have supervised the execution of hundreds and hundreds of GitHub events all over the country -- far more than they would have been able to if they planned everything themselves. Every part of these gatherings is produced internally; GitHub employees even perform the musical acts.

• Drink-up attendees in 2012: ~5,500
• Drink-up attendees in 2013 to date: ~3,000
• Hackathon attendees in 2013 to date: ~14,000
• Conference attendees where GitHub is speaking or sponsoring in 2013 to date: ~100,000 (in person - even more watch talks online)

Self-organization is the key to PR, too:

Everyone in the company has access to the company blog and the Twitter feed. It's just not me, it's actually everyone. But you can`t just post on the blog post and ship it. Just like sending anything else [at GitHub] you send a pull request. If I do a blog post, I would do the draft and I would call on someone else and say, “Hey, I have a blog post, I need you to check it out.” That way you get a second set of eyes, sometimes a third set of eyes, just to go over what you’re posting about, just to make sure that there are no grammar mistakes, or that you’re not announcing something before it’s ready to go out.

People say, “I want to tell you guys about this tweet, is it cool?” Then usually about five or six people will respond.

What’s fascinating about GitHub’s approach is that it applies a single innovation-centric model across the entire organization:

Since humans first figured out agriculture, we have been pondering what to do with surpluses. But the kind of surplus that most evades us is the surplus of creativity that exists in all our brains. Pundits have mythologized the topic, but only abstractly: There’s Google’s now-defunct concept of 20% time and Clay Shirky’s idea that free time leads people to create valuable things. But these concepts conflict directly with common sense. You can’t just let people do whatever they want all the time and expect to get anything valuable done. Right?

Well, as it turns out, these working conditions can attract some creative people. When I visited GitHub’s office at the end of the summer, I met a design and UX researcher named Chrissie Brodigan, who had recently been hired away fromMozilla, the free-software community that makes the Firefox web browser, to do a new, clever form of UX evaluation calleddeprivation testing.

When I spoke to employees, they told me the most attractive thing about open allocation was its accessibility--they liked the option to work with whomever they liked on something they thought was cool. (And that includes the specifications of the company’s uber-programmable new office, which they moved into this summer--but we already wrote that story here.)

In most extant companies, the people who move up the chain are selected by a competitive grading process -- Google’s internal 4.0 grading system and Microsoft’s stack ranking are two examples.

Philosophically the question is: How can a company best keep innovating?

Let’s say you’re a startup founder. You had a great idea and a pool of interested users, and through vigorous iteration, you managed to achieve product market fit. With money in the bank, you start hiring. With all your new resources, you want to keep reproducing the process that got you success in the first place. This is called “innovating,” a word that has begun to lose meaning, we hear it so often. I like this definition I found in an academic paper from 1986, back in the golden age of management theory:

The process of innovation is defined as the development and implementation of new ideas by people who over time engage in transactions with others within an institu- tional context.

In other words: How do you get the same old people in the same old company to keep cranking our novel, valuable things?

As soon as you try to reproduce your successes, you run into four problems, which are succinctly outlined in that same paper I linked above. I’ll paraphrase them here.

Managing Attention: People and their organizations are largely designed to focus on, harvest, and protect existing practices rather than pay attention to developing new ideas. The more successful an organization is, the harder it is for them to pay attention to new ideas, needs, and opportunities.

Creating Currency: While the invention or conception of innovative ideas may be an individual activity, it takes a whole company to execute--and it’s hard to get a big group behind a new idea because of social and political dynamics.

Getting Units To Work Together: As a new product or service comes to fruition, ideas, people, and transactions proliferate quickly, which means you need more people to pitch in and help. The more individuals get involved, the easier it is for them to individually lose sight of the whole innovation effort.

Institutionalized Leadership: Some innovations are so vital that they rightfully require the structure and practices of management to change radically. Most companies’ infrastructure isn't flexible this way, making it hard for structure to keep up with innovation.

Github is fortunate in being one of the few companies that their customers are the same type of people as their employees. This allows them to get a lot of what traditional management is needed for "for free" and allows radical freedom in their management structure:

There are a number of companies that have this 20% rule where employees are encouraged to work on stuff they are personally excited about outside of their main responsibility 20% of the time. I think in some ways you can say GitHub has a 100% rule, which is basically always be working on stuff you are personally excited about or that you find fulfilling. Find ways to make it fulfilling and exciting or allocate your time on stuff that you feel excited about.

GitHub encourages its people to self-educate and self-train.

An open allocation company needs good communication tools:

There are a few logical leaps between company structure and innovative products. After poking around GitHub, I realized that once you have an “open allocation” management structure, you still need something else: open, easy-to-use internal platforms and stellar communication.

If anyone can join any project, then workers need readily accessible training materials and documentation--otherwise, switching projects comes with too much friction as the new person struggles to get oriented.

...

Good communication also makes it easier to start new, adjacent businesses. When word of a cool new project reaches the top of the company, the leaders can use it to make a course correction, which is then redistributed throughout the network so that everyone is made aware that “New Initiative X” is now part of the business.

As one GitHubber will talk about later in this story, this process was exemplified when the company bought a 3-D printer and he slowly began spending all his time with it. Now his main project involves making GitHub repositories better handle 3-D file collaboration. He’s even spent some time connecting the 3-D printer to Hubot, the company’s internal chat bot (also open source here), so that GitHubbers can ask Hubot to 3-D print things or update them on the status of a print job.

Communication isn’t just key to self-organization -- it also solves or simplifies a bunch of other hurdles that growing companies face:

1. Training is easier. When communication--not hierarchy--is the glue that holds businesses units together, it’s easy for new employees to be themselves and feel like their interests, projects, and initiatives belong at the company, and it allows them to start creating valuable work right away.
2. Marketing collateral is a natural by-product. When your company communicates internally with polished, clear, and well-produced content, it is easy to and repurpose that material for external communications. The kind of communication that is required for self-organization will end up producing all the events, schwag, and content you need to build and publicize an authentic brand. (More on how that works at GitHub below.)
3. Hiring becomes more focused. Instead of trying to find a candidate with exact skills to fill a specific role, open allocation management allows people who are hiring to select for only one essential attribute--the ability to be a self-starter.

In every company, there's a lot of totally boring, unattractive stuff that needs to get done nevertheless. With open allocation, who does that?

Zach Holman has an answer on Quora on this:

http://quora.com/GitHub/How-does-GitHub-handle-tasks-that-nobody-volunteers-for 

The rest of this monstrous, 8,000-word piece consists of interviews with GitHub employees and founders about how open allocation takes care of innovation, training, marketing, and hiring -- with far less overhead than might be required in a traditionally organized company. This results in what is known as an “emergent organization.”

The full article:

http://www.fastcolabs.com/3020181/open-company/inside-githubs-super-lean-management-strategy-and-how-it-drives-innovation

Comments on Hacker News:

https://news.ycombinator.com/item?id=6576698

I like this lesson: Be Able To Summarize Your Company’s Purpose In Just A Few Words

Tom Preston-Warner: We focus a ton on communication in this company. And all of the tools that we build are really about enhancing communication; that’s what GitHub itself is all about. It’s about enabling communication between a broader set of people than would otherwise be efficient.

It’s a fan-out structure of strategic communication, so that each individual team leader knows, well, where is the company trying to go? It’s gonna be pretty much impossible to convince someone in this company to do something that they don’t think is legitimate, that they don’t agree with, that they don’t think is a good idea. So, so much of this [strategy] is about convincing people that the direction you want to go in--the strategic vision--makes sense.

There’s a lot of internal pitching and selling on what you’re trying to accomplish, and I spend a lot of my time doing that. I do that every Friday at our all-hands, that we call “beer-thirty.” It happens at 4:30 p.m. every Friday, and that’s a chance for me and some other people to communicate to the entire company what we’re thinking about, from a strategic perspective, how we think about culture, how we think about hiring, how we think about approaching business, all of these things.

And GitHub truly values storytelling:

GitHub also does something called “lightning profiles” of each of its new employees, because it allows them to get to know one another in a standardized, repeatable, scalable way. The first step of communication is an introduction; we’ve all been at parties where people mill about each other awkwardly, not feeling open to conversation because they weren’t introduced.

...

There is another documentary series called Passion Projects. I don’t know if you’ve heard about this, but a [GitHubber] named Julie Ann Horvath spearheaded a series of talks hosted by GitHub that basically profile awesome women in the Valley and in technology who are entrepreneurs or developers or engineers or coders or who are doing awesome stuff in tech.

In addition to this talk series we are producing some mini documentaries about these women where we kind of look at what’s their Passion Project, what are they working on, how did they get into it. I think one of the goals is to inspire other women or girls to look at stuff in tech and engineering.

I’m shipping probably three to five lightning profile videos per week. We’re doing our all-hands meeting every week. We have the Passion Projects once a month. I’d say we’re, in terms of different types of content, there’s probably like a 400% increase from last year to this year.

GitHub describes its management style not as flat, but as networked.

If you only absorb one thing from this 8,000-word piece, it’s that the people at the top of the company need to clearly present the message behind its product--the mission, the problem you are all solving for the people who are going to use your product. Your message is your hypothesis about how the world should be different, and how you plan to make it that way.

Once employees have bought into the message, let them go about spreading it proudly in their own way, through their own work, and you might end up with a product that is as beloved by its users as GitHub.