Firms in rapidly changing environments face increasingly complex strategy horizons where, at the extreme, there is uncertainty even about what product the firm will be producing in the near future. To cope with these uncertainties, instead of compartmentalizing the search for new products and processes to research and development units, in some firms the functions of exploration are generalized throughout the organization. Nearly every unit becomes engaged in innovation. These developments increase interdependencies between divisions, departments, and work teams within the firm. But because of the greater complexity of these feedback loops, coordination cannot be engineered, controlled, or managed centrally.
Management becomes the art of facilitating organizations that can perpetually reorganize themselves.
The solution is to minimize hierarchy. Authority is no longer delegated vertically, but emerges laterally. The complexity of the modern firm is characterized not only by increasing interdependencies across work teams but also by increasing complexity within teams. Organizations with minimal hierarchy often display organizational heterogeneity. They are sites of the diverse worldviews of different professional identities, each with its own distinctive values.