How to build a better company without managers

(Editor's note: This is the second of two parts. Read Part One: Why it's time to get rid of your managers.)

In short, replace every five to 10 managers with one leader, to whom no one reports directly, and who exists to serve, champion, guide, train and connect others with the resources they need to be successful.

Remember, managers were invented just over a century ago. Leaders have been around for thousands of years. We conflate the two, when in fact they are radically different. Businesses that run without managers have great leaders, and a lot fewer of them. They don't hire, fire, or solve problems like managers. And they lead only because people are following, not because they have a title that demands people follow them. Here are a few clear distinctions between managers and leaders:

If you want great creativity, leadership that serves the team, higher profitability, the highest employee retention in your industry, and the most tightly run processes, you just need to give everyone their brains back. They will create a better system that runs without managers.

Dispelling the myths

1. This isn't new or a fad–many companies, of every size, have been doing it with smashing success since the 1950s.

2. It isn't chaotic–every managerless company I know runs with tighter processes, better communication, and greater stability and longevity than their managed competition, which only makes sense since they have more committed and engaged people at every level.

3. It isn't for specific industries–there isn't an industry out there that hasn't been doing it for decades.

4. Management still exists–self-managed people manage themselves.

Why your company isn't doing this yet

So why aren't all companies running without managers? Because the only ones who have anything to lose in the transition are the managers, the ones with the power to make it happen. They fear they will lose control and be shown to be unnecessary. And because they are presently in control, it is the managers who must either make the transition, or get out of the way. And it is not in their nature to get out of the way.

Tony Hsieh has recognized that managers have been holding back his company. On its way to being managerless, Zappos has just offered all its managers a severance package if they leave by the end of April. Hsieh says the company should have done this sooner. The nature of managers is to build fiefdoms to demonstrate their value and to justify their promotion to bigger fiefdoms. In contrast, the nature of leadership is to serve and train others, then get out of the way.

It's inevitable

The data is too compelling not to join the emerging managerless work world. But it threatens a 150-year-old legacy system that won't go down without a fight. Those who want control and authority will continue to resist this, even though it's better for everyone, including them. But managers who want to become leaders will run to, and embrace the emerging work world of the Participation Age, and thrive. Those who don't will be left behind. Your choice.