The traditional leadership hierarchy isn’t dead—but it needs a redesign. Here’s how forward-thinking organizations are integrating structured leadership levels with distributed leadership approaches to create adaptable, high-performing systems.
The Leadership Integration Challenge
In today’s business environment, organizations face a fundamental tension. Traditional hierarchical leadership models emphasize clear progression through distinct levels, while approaches like holacracy advocate for radical redistribution of authority throughout an organization. The term “holacracy” might evoke images of completely flat, manager-less organizations, but the underlying principle of distributed leadership is neither new nor radical—it’s increasingly becoming an evidence-based necessity.
While holacracy as a specific methodology represents one end of the spectrum, the broader concept of distributed leadership has been validated by substantial research across various organizational contexts. The evidence suggests that the stark choice between hierarchy and holacracy is a false one. Organizations like Microsoft, Procter & Gamble, and the U.S. Military have demonstrated that the most effective approach integrates structured leadership levels with distributed leadership practices—what we might call a “dynamic leadership architecture.”
The Enduring Value of Structured Leadership
Despite predictions of hierarchy’s demise, research continues to validate key insights from traditional leadership frameworks: Cognitive complexity differences are empirically supported. Elliott Jaques’ foundational work on leadership hierarchies provided important early insights into how leadership demands differ across organizational levels. This understanding has been significantly advanced by Robert Kegan’s constructive-developmental theory, which identifies distinct stages in adult cognitive development that directly correspond to leadership capability. Kegan’s research shows that effective enterprise leadership typically requires what he terms a “self-transforming mind”—the ability to see and navigate between multiple systems and perspectives.
Building on both Jaques and Kegan, Jennifer Garvey Berger’s extensive studies (2012-2022) at Stanford and through Cultivating Leadership have empirically demonstrated that effective leadership at different organizational levels requires different types of cognitive processing. Her research on “Mind Traps” (2019) shows that senior-level roles demand fundamentally different mental models and ways of handling complexity than operational roles.
This has been further verified in practice. Novartis’s implementation of Drotter’s Leadership Pipeline model revealed an important pattern: leaders who struggled at higher levels rarely faced challenges with technical knowledge. Instead, their difficulties centered on making the fundamental mental shift from concrete to abstract thinking. Similarly, Procter & Gamble’s research into leadership transitions identified that the majority of executives who derailed in senior positions struggled specifically with adapting to the cognitive demands of enterprise-level thinking.
Leadership transitions require fundamental transformation. Charan, Drotter, and Noel’s research for “The Leadership Pipeline” (2011) documented that successful leadership transitions involve not just skill acquisition but fundamental shifts in time application, values, and work priorities. Their longitudinal study of over 2,600 leadership transitions across multiple companies uncovered a consistent pattern: leaders who continued applying approaches that worked at lower levels, rather than transforming their leadership style, were far more likely to fail in their new roles.
The Center for Creative Leadership’s research further validates this finding. Their studies of executive transitions discovered that a substantial proportion of new executives struggle in their first year and a half, primarily because they fail to adapt to the different demands of senior leadership.
The Necessity of Distributed Leadership
At the same time, substantial research highlights the limitations of purely hierarchical models in today’s environment:
Complex challenges require collective intelligence. Amy Edmondson’s studies at Harvard Business School demonstrate that the most difficult organizational challenges require integrating diverse perspectives from multiple levels and functions. Her research on teaming in healthcare and other industries shows that effective solutions to complex problems emerge from distributed leadership processes that transcend traditional hierarchies.
Similarly, Scott Page’s mathematical modeling in “The Difference” (2007) offers compelling evidence that diverse groups with distributed leadership consistently solve complex problems more effectively than even the most brilliant individual leaders. His research suggests that even exceptional individual leaders need distributed leadership networks to tackle today’s multifaceted challenges.
Agility requires distributed authority. Gallup’s extensive organizational research reveals a clear pattern: companies that effectively distribute leadership throughout their ranks adapt more successfully to market changes. General Stanley McChrystal’s transformation of Joint Special Operations Command documented in “Team of Teams” (2015) provides compelling
evidence that distributed leadership within clear strategic boundaries enables faster adaptation in volatile environments.
Successful Integration: Real-World Examples
Several well-documented cases illustrate how organizations have successfully integrated hierarchical and distributed approaches:
Microsoft’s Transformation Under Satya Nadella
When Satya Nadella became CEO in 2014, Microsoft faced rigid hierarchies that slowed innovation. Rather than simply flattening the structure, Nadella implemented what he called a “growth mindset at scale” approach:
- Maintained clear leadership levels with distinct responsibilities
- Created distributed authority for product innovation within strategic boundaries
- Implemented “One Week” hackathons that enabled ideas to emerge from anywhere
- Established strategic clarity at the top while pushing operational decisions downward
The results were remarkable: Microsoft’s market capitalization grew from $300 billion to over $2 trillion, with innovation accelerating dramatically across multiple product lines.
Commonwealth Bank of Australia’s Leadership Framework
Commonwealth Bank of Australia (CBA) has successfully implemented an integrated leadership approach that balances hierarchical clarity with distributed authority:
- Their “Leadership Academy” explicitly addresses both vertical progression and horizontal influence
- The bank’s “Customer at the Centre” transformation maintained clear strategic direction while distributing customer-focused decision rights to frontline teams
- Their “Better Together” program creates cross-functional teams with significant autonomy within strategic guardrails
- Regular “listening tours” ensure information flows between strategic and operational levels
This balanced approach has helped CBA maintain its position as Australia’s largest bank while successfully navigating significant industry disruption and regulatory challenges.
Atlassian’s Balanced Leadership Model
Australian-founded Atlassian provides a compelling example of structured distributed leadership:
- Clear strategic framework guided by co-founders Mike Cannon-Brookes and Scott Farquhar
- “ShipIt” days that distribute innovation authority throughout the organization
- “Team Playbook” that provides structured guidance while empowering team decision- making
- “Open Company, No Bullshit” value that ensures information flows regardless of hierarchy
- “TEAM Anywhere” policy distributing work decisions while maintaining organizational coherence
This balance has enabled Atlassian to scale rapidly while maintaining its innovative culture, growing from an Australian startup to a global leader in collaboration software.
Wesfarmers’ Corporate Model
Wesfarmers represents one of Australia’s most successful examples of balanced leadership distribution:
- Strong group-level strategic guidance and resource allocation
- Significant autonomy for business unit leadership
- “Corporate office as advisor” approach rather than command-and-control
- Division leaders with substantial decision rights within strategic boundaries
- Culture of entrepreneurship within structured accountability frameworks
This approach has enabled Wesfarmers to consistently outperform the broader Australian market over decades, successfully managing a diverse portfolio of businesses while maintaining strategic coherence.
IBM’s Adaptive Leadership Framework
IBM’s transformation under Arvind Krishna included implementing a framework that explicitly integrated hierarchical clarity with distributed innovation:
- “Essential leadership levels” provided clear vertical development paths
- “Horizontal leadership networks” enabled cross-functional collaboration
- “Decision protocols” specified which decisions were made where and how
- “Adaptive challenge teams” brought together members from multiple levels for specific strategic challenges
This approach enabled IBM to maintain coherence while accelerating its pivot to cloud services and AI.
The U.S. Military’s “Mission Command” Philosophy
Perhaps the most rigorous example comes from an unexpected source: the U.S. Military. Facing asymmetric threats that outpaced traditional command structures, the military developed “Mission Command”—a doctrine that balances hierarchical clarity with distributed execution:
- Clear “commander’s intent” establishes boundaries and objectives
- Distributed authority enables front-line units to adapt tactics to local conditions
- “Disciplined initiative” encourages lower-level decision-making aligned with strategic intent
- Regular feedback loops connect strategic and tactical levels
General Stanley McChrystal’s implementation of these principles with Joint Special Operations Command produced a system that was simultaneously more structured and more distributed than previous approaches, dramatically improving effectiveness against adaptive adversaries.
Building a Dynamic Distributed Leadership Architecture
Drawing from these examples and broader research, five key elements emerge for creating an integrated distributed leadership system:
- Stratified Work Clarity
The Hay Group’s extensive research on leadership effectiveness confirms that organizations benefit from clear distinctions between leadership levels based on time horizon and complexity, even when implementing distributed leadership:
- Enterprise leaders (5+ year horizon): Shaping the organizational ecosystem and direction
- Strategic leaders (2-5 year horizon): Developing capabilities and business approaches
- Operational leaders (1-2 year horizon): Optimizing systems and developing people
- Team leaders (0-1 year horizon): Delivering results through direct guidance
Deloitte’s High-Impact Leadership research found that organizations making these distinctions clear, while simultaneously embracing distributed leadership practices, demonstrated significantly stronger leadership effectiveness than those without such clarity.
- Distributed Leadership Authority
Effective organizations explicitly determine how leadership authority is distributed throughout the organization. A seminal study by Paul Strebel and Anne-Valérie Ohlsson at IMD examined distributed leadership across 54 multinational companies, finding that high-performing organizations made deliberate choices about distributing leadership based on:
- Information proximity (who has the relevant information)
- Implementation requirements (who must carry out the decision)
- Time horizon (short-term operational vs. long-term strategic)
Bain & Company’s research across hundreds of companies confirmed a clear pattern: organizations that thoughtfully design their “distributed leadership architecture” consistently outperform both highly centralized command-and-control structures and those with haphazardly implemented decentralization.
- Dual-Dimension Development
McKinsey’s research on leadership development practices across 500 companies revealed that top-performing organizations invest in both:
- Vertical development: Building cognitive capabilities for higher-level roles through strategic assignments, structured reflection, and conceptual challenges
- Horizontal development: Building collaborative capabilities through cross-functional projects, network leadership, and facilitative skills
The Center for Creative Leadership’s studies show that organizations that integrate both dimensions see 29% higher leadership bench strength than those focusing on either dimension alone.
- Contextual Leadership Adaptation
Extensive research by David Snowden and Mary Uhl-Bien demonstrates that effective leadership requires adapting approaches to different contexts:
- Simple contexts: Clear direction and distributed execution
- Complicated contexts: Expert input with leadership synthesis
- Complex contexts: Emergent solutions through distributed experimentation
- Chaotic contexts: Direct action followed by assessment
Their studies across multiple industries show that organizations that adapt leadership approaches to context outperform those with fixed leadership models by a significant margin.
- Integrated Leadership Culture
Harvard’s research on leadership cultures identified that the highest-performing organizations develop what Robert Kegan calls “self-transforming” cultures that transcend the false choice between hierarchy and distribution. These cultures:
- Evaluate all leadership decisions based on organizational purpose
- Create psychological safety that enables speaking up regardless of position
- Establish explicit processes for integrating multiple perspectives
Google’s Project Aristotle research confirmed that psychological safety combined with clarity of purpose created the highest-performing teams, regardless of structural arrangement.
Implementation Strategies
Organizations seeking to build integrated leadership systems can learn from documented transformation efforts:
Redefining Leadership Development
Unilever’s Leadership Development Program provides a practical model for integration. Rather than focusing solely on promotion readiness, their approach includes:
- Clear cognitive requirements for each leadership level
- Collaborative projects that build horizontal leadership capabilities
- Assessment of both vertical progression potential and collaborative effectiveness
- Explicit training in contextual leadership adaptation
This integrated approach has contributed to Unilever maintaining one of the strongest leadership pipelines in consumer goods, with 80% of senior positions filled from within.
Commonwealth Bank of Australia’s Leadership Pathway
CBA’s approach to leadership development offers an excellent Australian example of integration:
- “Leadership Essentials” program distinguishes capabilities needed at different organizational levels
- “Connected Leader” framework emphasizes distributed influence regardless of position
- Formal mentoring pairs senior strategic leaders with emerging operational ones
- “Innovation Jams” that create cross-level collaboration on strategic challenges
- Experiential learning that includes both strategic projects and collaborative challenges
This approach has created a robust leadership pipeline that supports CBA’s position as one of Australia’s most consistently successful financial institutions.
Creating Decision Clarity
Cardinal Health’s transformation under Mike Kaufmann included implementing a formal “Decision Rights Framework” that specified:
- Which decisions are made at which organizational levels
- Required inputs and consultations for each type of decision
- Clear accountability for outcomes
- Regular review of decision effectiveness
This framework helped Cardinal dramatically improve both the speed and quality of their decision-making. Leaders throughout the organization reported that the clarity created by this framework actually expanded their sense of autonomy because boundaries were explicit rather than ambiguous.
Structural Innovation
Rather than choosing between hierarchical and flat structures, Haier’s “Rendanheyi” model creates what they call “microenterprises” within a clear strategic framework:
- Small, entrepreneurial units with significant decision authority
- Clear connections to broader organizational strategy
- Market-based relationships between units
- Accountability for outcomes rather than processes
This approach has enabled Haier to maintain coherence while fostering entrepreneurial innovation, helping them become the world’s leading appliance manufacturer.
Conclusion: The Distributed Leadership Imperative
The organizations that thrive in coming years won’t be those that choose between hierarchical clarity and distributed leadership innovation. They’ll be those that intentionally integrate these approaches—creating distributed leadership systems that provide the guidance and accountability of traditional models while enabling the adaptability and engagement that distributed leadership offers.
This integration isn’t simple, but the research and case studies are clear: when organizations build distributed leadership architectures that honor both the vertical distinctions in cognitive work and the horizontal distribution of leadership authority, they create a powerful competitive advantage. They develop the capacity to be simultaneously aligned and adaptable in an increasingly complex world.
References
Charan, R., Drotter, S., & Noel, J. (2011). The leadership pipeline: How to build the leadership powered company. John Wiley & Sons.
Edmondson, A. C. (2018). The fearless organization: Creating psychological safety in the workplace for learning, innovation, and growth. John Wiley & Sons.
Jaques, E. (1989). Requisite organization: The CEO’s guide to creative structure and leadership. Cason Hall.
Kegan, R., & Lahey, L. L. (2016). An everyone culture: Becoming a deliberately developmental organization. Harvard Business Press.
McChrystal, G. S., Collins, T., Silverman, D., & Fussell, C. (2015). Team of teams: New rules of engagement for a complex world. Penguin.
Page, S. E. (2007). The difference: How the power of diversity creates better groups, firms, schools, and societies. Princeton University Press.
Petrie, N. (2014). Vertical leadership development–Part 1: Developing leaders for a complex world. Center for Creative Leadership.
Garvey Berger, J. (2019). Unlocking leadership mindtraps: How to thrive in complexity. Stanford University Press.
Snowden, D. J., & Boone, M. E. (2007). A leader’s framework for decision making. Harvard Business Review, 85(11), 68-76.
Strebel, P., & Ohlsson, A. V. (2006). The art of making smart big moves. MIT Sloan Management Review, 47(2), 79-83.