It seems to me that there are two very different common schools of thought on how organizations are structured. They have been competing for at least ten thousand years, since the agrarian movement started getting into conflict with the hunter-gatherers.
In American culture today, the hierarchical theory of organizations is so deeply ingrained that many people are completely unaware of it. This theory represents social structures as pyramids, with the serfs on the bottom and various layers of leaders leading up to the supreme commander on the top. Examples are the Catholic Church and the armed forces.
Two of the assumptions in this model bother me:
In Illuminatus!, a satirical study of social pathologies, Robert Anton Wilson and Robert Shea brought out an important principal that causes trouble in hierarchies: the Snafu Principle. People tend to say what they think the boss wants to hear, especially if they have noticed that the practice of ``shooting the messenger'' is common. This means that the information passed up the pyramid is distorted at each level. Thus, each higher layer of managers tends to have less and less contact with reality, and near the top they are often completely out of touch.
The other model might be called the network model. People are connected, but not in pyramids. There is no ``alpha male'' at the top of the heap; there is not even any concept of higher and lower. Power is distributed much more evenly.
The best practical book I've seen on alternatives to hierarchies is Stewardship by Peter Block (Berrett-Kohler, 1993, ISBN 1-881052-28-1). This inspiring book gives a complete plan for building organizations that work. Block is not a dreamer; his principles were derived from real corporate war stories, and are being applied in highly competitive businesses with good results. His goal is to make our economy efficient and competitive. The results look equally promising for application to public organizations such as schools and regulatory agencies. The preface to this book makes an important point: why is it that in our supposedly democratic society, our workplaces are so often dictatorships?
Further up the organization by Robert Townsend (Harper & Row, 1984, ISBN 0-06-097136-3) is an older work by a famous hell-raiser and CEO that seems to presage Block's work in Stewardship. Another vote for redesigning the way our organizations work.
In the book In the absence of the sacred: the failure of technology and the survival of the Indian nations, Jerry Mander gives a deeply insightful history of the long-running conflict between the two world-views. His message is disturbing: the hierarchical culture is not indefinitely sustainable.
So how do we change institutions that aren't working? I think Gandhi had some pretty good ideas.
Practicing problem-solvers who are frustrated because some of their best work has been spoiled by organizational pathologies should read the work of William L. Livingston, especially Have Fun at Work.
Accidental Empires, by Robert X. Cringely (Harper Business, 1992, ISBN 0-88730-621-7), Hackers by Steven Levy (Dell, 1984, ISBN 0-440-13405-6), and The Soul of a New Machine by Tracy Kidder (Little, Brown, 1981, ISBN 0316491705) are good depictions of life in the world of Real Programmers that ring true based on my own experience. These books also have good insights into the strange world of startups: why they succeed or fail, and what happens to the people who propel them. Although Kidder's book sounds very upbeat, De Marco notes in Peopleware (see `Readings in human factors') that almost everyone left the company shortly after the period described in the book.