Introduction

According to two systematic reviews (El Khoury 2021; Mattelin-Pierrard et al. 2020), the liberated company (LC) concept was coined and introduced by Getz (2009) in an article published in the California Management Review’s symposium on organizational design (Beckman 2009). Mattelin-Pierrard et al. (2020) used the following definition of LC: “An organizational form in which employees have complete freedom and responsibility to take actions that they, not their bosses, decide are best” (Getz 2009, p. 34). LC is typically situated within the research and practice field of less-hierarchical organizational design (Lee and Edmondson 2017).

LC has emerged in the last decade as a prominent research field in the French-speaking world.Footnote 1 It has been the focus of one systematic academic literature review of close to fifty publications (Mattelin-Pierrard et al. 2020) and a second of almost 150 publications (El Khoury 2021), special issues in academic journals (Revue Internationale de Psychosociologie et de Gestion des Comportements Organisationnels, Rappin 2017; La Revue des Sciences de Gestion, Jaouen and Sammut 2020), academic conferences (in Clermont Ferrand, France in 2016; in Laval, Canada in 2021), five workshops between 2016 and 2021 (in Paris, Grenoble, Rennes, Strasbourg, and Rutgers University, USA), case studies in a world-leading business school collection (Godart et al. 2017), as well as in leading European equivalents (Auger 2021a, b; Gilbert et al. 2017a, b; Kleinsmith et al. 2018), and scholarly monographs (Getz 2016a; Granata and Jaouen 2021; Sferrazzo 2020). Academic research centers have been created to study LC, doctoral students have completed their PhDs on it—some subsequently being hired by leading French business schools—or are pursuing their doctoral research on the topic. One sign of LC’s increasing prominence in France is found in the methodological articles on approaches to studying it (Gilbert et al. 2018; Gilbert and Teglborg 2021). Papers which draw theoretically and/or empirically upon LC to discuss their own lines of research (Chêne and Le Goff 2017; Dietrich et al. 2021; Gilbert et al. 2017a, b; Mattelin-Pierrard and Dubouloz 2019; Pastier 2023) are yet another sign of its prominence. After systematically reviewing the literature on LC, El Khoury (2021) concluded that the concept has established itself as a paradigm, with numerous research opportunities.

Another sign of LC’s increasing prominence in France resides in its impact on corporate transformation practices. According to the business media and anecdotal evidence, there are around 400 organizations which function along LC principles, most having explicitly used the LC concept to enact transformation (e.g., Bardot 2021; Carney and Getz 2018; Zobrist 2020). For a more thorough assessment of the corporate impact of LC, we provide—for the first time—a list of companies and institutions identified as LCs by scholars (see Appendix).Footnote 2 Though limited, the list is highly diverse, ranging from multinationals and their business units (BUs) to SMEs, from public and private companies to public service institutions, and from multinational LCs to those operating in just one country.

From the above, it may be concluded that the theoretical concept of LC organizational design is quite prominent in France while it is mostly unknown to English-speaking scholars. The theoretical concept appears to nonetheless benefit from the current trend of “Englishization” of management studies (Gordin 2015; Tietze and Dick 2012), making the penetration of management theories from the non-English-speaking world into English-language journals easier. Thus, after Getz’s (2009) introduction of the LC theoretical concept, which he called F- or Freedom-form organizations,Footnote 3 initial English-language papers published on this theoretical concept drew on established theoretical frameworks, such as Getz (2011) with the responsible scholarship framework, Salovaara and Bathurst (2018) with Follett’s power-with-leadership, Picard and Islam (2020) with the Lacanian psychoanalytical framework, Sferrazzo and Ruffini (2021) with Amartya Sen’s capability framework, Hummels and Nullens (2022) with the Levinasian approach to agape, and Mládková (2023) with the community of practice framework. Next—and several years later—papers began to appear in English on LC itself (Battistelli et al. 2023; Corbett-Etchevers et al. 2019; Daudigeos et al. 2021; Islam and Sferrazzo 2022; Nobles 2019; Ramboarison-Lalao and Gannouni 2019; Rétaux 2019).Footnote 4

From the above background review of LC, it can be seen as an increasingly prominent theoretical concept in France, both in research and in practice, and has begun to penetrate English-language research. That said, after 15 years of studying LC, several important issues have been raised. The remainder of this article examines what we believe to be the five most pressing issues: (1) the definition of LC; (2) whether it is a management theory or a model; (3) LC’s contribution to leadership fields; (4) sources and proximate theories with regard to LC; and (5) how to evaluate its usefulness to organizations. Based on the results of this examination, the final section discusses how LC definition can be updated, how LC can meet the “intimidating complexity of design” challenge (Foss and Klein 2023a), and how the impact of the LC concept on the organizational transformation practice can be enhanced.

Issue 1: How to define the “liberated company”?

Getz (2009) defined LC as an organizational form in which employees have complete freedom and responsibility to take actions that they, not their bosses, have decided are best. He further explained that employees’ sense of responsibility to take actions derives from “owning” the shared company’s vision within the perimeter of their operations, and that the freedom of actions is bounded by this responsibility previously assumed by their direct supervisors.Footnote 5 This definition—with, at times, slight variations—was also retained by several other studies (Chabanet et al. 2017; De Ridder and Taskin 2021; El Khoury 2021; Fox and Pichault 2017; Gilbert et al. 2017a, b; Hauch and Loufrani-Fedida 2020; Jacquinot and Pellissier-Tanon 2015; Poli 2020; Poli et al. 2023). Furthermore, some studies discuss LC without providing any form of definition, apparently assuming that the research community is already familiar with the concept. Finally, some authors (Chabanet et al. 2017; Fox and Pichault 2017; Gilbert et al. 2017a, b; Mattelin-Pierrard et al. 2020) have criticized Getz’s definition as being overly broad.

The lack of a fixed set of features in LC is unusual in the organizational design field and may have been one reason for the ongoing debate over the definition of LC. Acknowledging it as unusual for an organizational design definition, Getz explained that, like architects who define a bridge according to its function (enabling an obstacle to be crossed) rather than its structural features, LC is similarly defined by its function (offering freedom and responsibility to take actions) rather than a set of design features. That said, Getz (2009) does mention certain organizational features he observed in his sample of close to twenty companies studied, but not in the sense of a fixed set of features.Footnote 6 However, as he notes, the organizational features built into LCs are not arbitrary: they all aim to meet the LC function of freedom and responsibility to take actions. It is therefore logical that during the LC co-construction process, employees remove existing organizational features they may perceive as subordinating (limiting their freedom to take actions) and controlling (limiting their responsibility for taking actions) and adopt the features they perceive as supporting their autonomy and showing them trust.

Another Getz (2009, 2012) finding that contradicts the presence of a fixed set of organizational features is that in the companies observed, concrete LC designs were continually evolving, with some features removed and others added.

A final observation of the absence of a universal set of features occurred in multinationals that entered into LC-type transformations. These multinationals allowed their BUs to create the features they felt were best for their employee freedom and responsibility for taking actions. In 2013, for example, Michelin launched its transformation along the LC lines subsequently adopted by over 60 BUs worldwide and several corporate support units, each implementing its own features (Getz 2019). In 2014, in another large multinational, Decathlon, the president and the CEO encouraged all the BUs to transform into an LC, with several of them volunteering, and each deciding on the features to be implemented (Carney and Getz 2018). In two other multinationals that we have directly observed, Airbus and Carrefour, the LCs were launched in 2014 by the local head or CEO in only one BU/division of each company. These concrete LCs have not inspired other BUs/divisions within these multinationals to launch their own LCs. However, should these business units or divisions undertake this initiative, given their heterogeneity and the locally driven transformation dynamics, the specific set of LC features of each business unit or division would partly overlap but also differ to reflect their unique local contexts. Of course, given the tendency to construct features that reduce subordination and control, thereby fostering freedom and responsibility to take action, and considering the interaction between the BUs involved, certain specific features were identified in each of these multinationals’ BUs’ LCs when more than one had been established. Concurrently, many features were idiosyncratic, reflecting the BU employees’ perceptions of what features limit their freedom and responsibility to take action and how best to redesign them.

Nonetheless, focusing on LC aspects that are not typically viewed in the literature as organizational features but rather as aspects pertaining to corporate culture, Getz (2009) identified two common aspects. The first aspect he found in all the companies he qualified as LCs was an inspiring vision. It had either been devised by the company’s leader or co-devised with volunteer employees and then shared with everyone else in the company. While vision is prevalent in many corporate cultures, it is not always inspiring which plays a critical role in LCs. Employees adhere more readily to an inspiring vision and this in turn allows their direct supervisors to transfer to them—or their teams—the responsibility for taking actions to optimize this vision. For example, during its transformation, Harley-Davidson conducted a two-year Joint Vision Process with volunteer employees which, after various tweaks, led to the following vision for the company: “We fulfill dreams through the experience of motorcycling—by providing to motorcyclists and to the general public an expanding line of motorcycles, branded products, and services in selected market segments” (Teerlink and Ozley 2000, pp. 89–90). It allowed everyone to “ask and answer two key questions, ‘Where are we going?’ and ‘How can I help?’” (Teerlink and Ozley 2000, p. 90). In other words, the inspiring vision allowed Harley-Davidson employees to assume the responsibility for taking actions to optimize it.

The second common cultural aspect that Getz (2009) found in the companies he studied is behavioral values, largely devised by the volunteer employees or most of them. For example, in a large French payroll service provider, GSI, almost 300 employee group meetings in virtually every part of the company worked on the question: “What values do you want to be driven by?” (Carney and Getz 2009/2016). While shared values are prevalent in many corporate cultures, they are not always behavioral (see such common to business non-behavioral values as innovation, excellence, quality, or safety). In LCs, the emphasis on values as behavioral norms is crucial. Following Getz’s analysis (Getz 2009; Getz and Marbacher 2017), the freedom within an LC is not unconstrained—it is not anarchy. It is, instead, fundamentally bounded by two key factors: (1) the above-mentioned employees’ responsibility to act in the best interest of the company’s vision—rather than their personal or their department’s interests, and (2) their adherence to the self-devised and agreed-upon behavioral norms (referred to in some LCs as ‘the rules of life’). This latter adherence becomes a critical precondition for supervisors to relax controls and allow employees—or their teams—freedom to take actions. For instance, in the French foundry FAVI, the adherence of most employees to the company’s four core values—goodwill, good faith, common sense, and good mood—allowed the removal of the time clock and the reliance on employees’ self-discipline to arrive on time. The same values dictate employee responses to situations like a teammate’s tardiness. Instead of immediate reprimand, the initial team’s reaction involves understanding potential health, family, or commuting problems. Only in the absence of a valid reason does the team remind the individual, invoking the value of goodwill, of the expectation to be punctual. As the nineteenth-century British philosopher John Acton observed, “Liberty is not the power of doing what we like, but the right to do what we ought.”

Despite the inspiring vision and behavioral values cultural aspects present in all LCs, the absence of a fixed set of organizational features led to the claim that Getz’s (2009) LC definition is not a theoretical concept but an intellectual brand. With respect to intellectual brands, Alvesson et al. (2019) argue that they help by “clearly signaling” the affiliation of a specific study to a scholarly tradition. On the other hand, intellectual brands may obstruct the theoretical clarity and interpretive capacity of studies associated with them. These authors consider institutional theory, discourse, and strategy-as-practice to be examples of such intellectual brands. Given that the uptick in LC research in France occurred after 2016, less than a decade of even a large number of studies would not amount to a scholarly tradition. Nonetheless, the claim that LC is an intellectual brand warrants further examination.

Mattelin-Pierrard et al. (2020) examined the above question using Gerring’s (1999) concept adequacy framework. Gerring suggested that a “good concept” formation involves trade-offs between different criteria from the following standard set: (1) familiarity, (2) resonance, (3) parsimony, (4) coherence, (5) differentiation, (6) depth, (7) theoretical utility, and (8) field utility. Using her systematic literature review on LC, Mattelin-Pierrard et al. analyzed the LC concept in depth against Gerring’s set, concluding that LC “cannot be reduced to a simple brand [and] can be considered a 'good' concept since a right trade-off between the eight criteria is evident, five of them (familiarity, resonance, parsimony, coherence, and theoretical utility) being well fulfilled, while the other three being partially fulfilled” (p. 40).

To summarize, although LC is not an intellectual brand but a theoretical concept, it remains a little-known one, at least beyond the French-speaking countries. Moreover, being defined around a function rather than around a fixed set of features and linked to the common aspects pertaining to corporate culture found in concrete LCs, the definition of LC concept appears vague. We thus attempt to update its definition in the last section.

Issue 2: Is LC a theory or a model?

Some authors call LC a model (Antoine et al. 2017; Daudigeos et al. 2021; Gilbert et al. 2017a, b; Marmorat and Nivet 2019), while others call it a theoretical form of organizational design or concept/theory (Fox and Pichault 2017; Getz 2009), and still others (Getz 2017) refer to it as a philosophy. Mattelin-Pierrard et al. (2020) resolved this epistemological ambiguity by distinguishing one theoretical and several concrete organizational designs of LC. They retained Getz’s (2009) definition of LC for the theoretical organizational design form, accepted it as a philosophy, and listed several concrete forms of its implementation in companies—by a company leader and employees co-constructing their specific organizational design or, occasionally, by a company leader and consultants applying the fully specified organizational model called Holacracy (Bernstein et al. 2016; Robertson 2015) or the partly specified model called Teal (along with some principles of self-management Teal details the organizations’ structure, processes, and practices; Laloux 2014).

This distinction between a theoretical form and its concrete implementations is not new and has been useful in the past. For example, Theory Y was defined by McGregor (1960) as a set of managerial attitudes towards employees and the implications of these attitudes on managerial practices. In distinguishing from this theoretical form—appropriately called “Theory”—McGregor (1967) pointed to its concrete implementation in companies, such as the Scanlon Plan (Lesieur 1958). Similarly, Deming (1982) defined continuous improvement as a management philosophy based on 14 principles, while providing many concrete examples of how these principles have been implemented to improve companies. Finally, Hock (1999) formulated the chaordic organization philosophy, while describing its concrete implementation in Visa International.

However, a difference must be made between a theoretical concept’s concrete implementation as company-specific organizational designs and its trivialization into a replicable one-size-fits-all model. Using a theoretical organizational design concept to build a concrete organizational design in practice is painstaking, prone to errors, and uncertain both in terms of duration and results. For example, it took years for W.L. Gore and AVIS (Carney and Getz 2009/2016) to partially incorporate McGregor’s Theory Y into their own concrete organizational designs. However, neither of the two companies’ leaders considered these concrete designs as universal models, but rather as inspiration for others to design and co-construct their own concrete organizational forms. Compare that to other leaders, often assisted by consultants, who seek to trivialize theories into one-size-fits-all models expected by many. As one CEO told us: “All I need are 2–3 simple features I can implement in order to transform my company.” Though simplistic, we saw hundreds of similar statements by corporate leaders expecting simple one-size-fits-all sets of new features—such as the elimination of time clocks or reserved parking spaces, flattening the organization chart or inverting it in an upside-down pyramid, changing the HR director’s title into Chief Happiness Officer, the post-COVID work from home scheme, or a 4-day week—that would transform their company. Given these corporate leaders’ widespread belief in and demand for one-size-fits-all models, the trivialization of management theories is not surprising, and popular theories may quickly become a cottage industry of such models pitched to companies. In other words, instead of trying to articulate the original LC theoretical concept in the complex external and internal contexts of each company, many practitioners—CEOs and consultants alike—trivialized it into a replicable one-size-fits-all model.

Once more, the phenomenon is not new. Just a few years after Theory Y’s publication, Schein (1967) wrote how disappointed McGregor was that his theory had been trivialized by many into a model prescribing a set of managerial techniques. A similar fate awaited Deming’s management philosophy, trivialized by many practitioners into a set of “lean manufacturing” tools. It was in reaction to this trivialization that defenders of Deming’s philosophy coined the phrase “a fool with a tool is still a fool”; while the creator of Toyota’s Production System, Taiichi Ohno, who was inspired by Deming’s management philosophy to devise a Toyota-specific organizational design and methods warned: “Stop trying to borrow wisdom and think for yourself. Face your difficulties and think and think and think and solve your problems yourself.”

With regard to LC, many practitioners in France have indeed trivialized LC into one-size-fits-all models. According to Mattelin-Pierrard et al. (2020), over 200 business articles have been published on LC since 2015, many of which have offered such trivializations. A case apart consists of several LC descriptions such as the detailed and replicable Holacracy model, mostly implemented by consultants. Of course, Holacracy is not a trivialization of LC and emerged independently. That said, Holacracy arrived in France several years after LC had become popular in the corporate world, and Holacracy consultants often advertised it as “the operating system” needed to implement LC. This may be one reason why Mattelin-Pierard et al. (2020) considered all companies that implemented Holacracy as LCs. In terms of satisfaction with either the trivialized model or the fully specified Holacracy, some French business papers have described cases of French leaders’ satisfaction with them. Others, however, have described their disenchantment with either one-size-fits-all models not achieving the desired transformation or with Holacracy’s rigidity and over-formalization [see Growth (2020) for a discussion of Medium, which halted the use of Holacracy, and of Zappos, which distanced itself from this model; for a similar conclusion on the reasons for Zappos’ complications with Holacracy, see Martela (2023), while for different interpretations, see Foss and Klein (2022), Romme (2019)]. Given the confusion over replicable one-size-fits-all models with the original LC theoretical concept, this has also spilled over into certain French research papers. We discuss this point further in the last section.

To conclude, using Mattelin-Pierrard et al. (2020) terminology, the theoretical concept of LCs is distinct from dozens of concrete organizational models that adopted LC in specific companies (see Appendix) for two main reasons. First, as noted, the definition of the LC theoretical concept is based on a function and not on specific design features which are conceived through the idiosyncratic process in every company’s specific model-building. Second, unlike all the concrete company-specific LC models, the definition of the theoretical LC concept does not evolve over time.Footnote 7 However, these two reasons are not enough to qualify the LC concept as an organizational theory. Indeed, organizational theories are typically propositional and expressed in terms of contingencies, i.e., specific organizational features leading to specific performance. Since LC is expressed in terms of an implicit rather than an explicit contingency, its definition only partly meets the contingency epistemological criterion. Indeed, LC is defined through an implicit contingency that employee freedom and responsibility for taking actions will result in the higher employees’ engagement, which in turn will lead to their higher performance, and thus, higher overall optimization of company’s vision. In the last section, we discuss how this implicit LC contingency can be evaluated. Nonetheless, given practitioners’ tendency in France to trivialize the theoretical LC concept into one-size-fits-all models as previously noted, as well as the lack of an explicit contingency in LC definition, we attempt to update the latter in the last section.

Issue 3: What is LC’s contribution to leadership fields? The six transformation-guiding principles

Most LC-related studies are situated within organizational fields. However, LC is also discussed in leadership fields. Thus, Getz’s (2009) seminal paper on the LC concept contains leadership in its title: “Liberating leadership: how the initiative-freeing radical organizational form has been successfully adopted.” Several other studies have clearly situated LC within the transformational leadership field (Holtz 2017; Picard and Islam 2020; Salovaara and Bathurst 2018). Despite these indications of LC's potential contribution to leadership fields, such a contribution has not been clearly examined in the research so far. To address the issue, we first discuss how the LC concept was developed and then, describe six organizational transformation-guiding principles that specify the LC’s contribution to the transformational leadership field (Bass 1985).

As noted earlier, Getz (2009) was unable to identify organizational features common to all the companies he studied. Rather, he found that the choice of their specific features was guided in a seemingly empirical manner by “adding features that increased employee freedom and responsibility and rejecting features that did not” (p. 36). His research thus focused on identifying common principles that may have guided the addition or removal of features during the transformational processes. He suggested that there were three such common design-guiding principles: intrinsic equality, growth, and self-direction of employees. Getz (2009) grounded these three principles in the psychological theory of self-motivation and self-determination by Deci and Ryan (1985). Deci and Ryan’s theory of a “nourishing, non-controlling environment for self-motivation” postulated that such an environment meets three universal and innate human needs of relatedness, competence, and autonomy that Getz (2009) renamed in a more appropriate to corporate context terms of intrinsic equality, growth, and self-direction needs of employees. In addition, as noted earlier, Getz (2009) identified two common cultural aspects found in all concrete LC companies: inspiring vision and behavioral values.

Getz (2009) did not go beyond the three design-guiding principles and two cultural aspects common to the LCs he studied. However, with the emergence of dozens of new transformations towards concrete LCs in France, Getz took part in regular meetings with their CEOs in a form of engaged scholarship (Getz 2011; Sharma and Bansal 2020). In engaged scholarship, researchers bring their conceptual frameworks to the table, while practitioners bring their challenges and the organizational contexts of using such frameworks. As a result, (Getz 2017; Getz and Marbacher 2017) derived the following common principles guiding the transformational processes that resulted in concrete LCs where most employees enjoyed freedom and responsibility to take actions.

All these successful transformations were initiated by the CEO (or the head of a BU)

The idea of constructing an LC was sometimes introduced by an HR director, another executive, a manager, or even trade unions, but the only person who had the power of decision to launch the transformation process was logically the CEO or the head of a BU. For example, in Thales, a world leader in avionics, the head of a 70-person BU successfully co-constructed an LC (Bardot 2021; Poli 2020, 2022). However, once he was promoted to second in command of a much larger 5000-person Thales division, he failed to co-construct an LC there, a failure he attributed to his lack of a mandate for transformation, since he was not this division’s head. Another, much earlier example involves Robert Townsend, who, as the CEO of AVIS, spearheaded its transformation by implementing an organizational design that allowed employees freedom and responsibility in taking action. After leaving AVIS, Townsend accepted an important assignment at IBM, aiming to replicate AVIS’s organizational transformation. Despite his prior success and expertise that he detailed in his bestselling book (Townsend 1970/2007), he was unsuccessful due to his lack of ultimate decision-making power in IBM.

Furthermore, a transformation towards LC cannot succeed if the CEO is not initiating and leading this process. For example, David Kelley, the founder of the industrial-design firm IDEO, qualified by Getz (2009) as LC, stated that he started the transformation when he realized that his key role as a CEO was to be “the one who designs a culture” (Carney and Getz 2009/2016, p. 253).

CEOs began the transformation ‘silently’

The CEOs acted rather than talked, removing, for example, the organizational features that made employees feel intrinsically unequal, that is, mistrusted, disrespected, or disregarded. For example, in Michelin, the initial invitation of employees to suggest things they wanted to change in order to work better was not done under the banner of organizational transformation (Getz 2019). The wisdom behind this was to earn the employees’ trust so they would volunteer for the co-construction of LC organizational features later. Contrary to this ‘silent’ start were the public kick-offs to transformation that made the LC promises public, creating high expectations that were impossible to meet in the short term and led to employee frustration. We observed several such cases where CEOs launched the transformation to LCs with this type of kick-off in front of normally distrustful employees. Although the CEOs intentions were sincere, the premature kick-off in fact slowed down the transformation and, in extreme cases, when mounting frustration from unmet promises led to a CEO’s ouster, froze the process altogether.

CEOs began the transformation by removing highly symbolic old workplace features

The company’s employees perceived such removals as irreversible. For example, the CEO of FAVI, Jean-François Zobrist, bricked in the glass wall of the first-floor plant manager’s office used to monitor operators on the shop floor, while, Jeff Westphal, on his first day at Vertex, Inc. as its CEO, removed the CEO-reserved parking lot sign and personally drove it to the landfill so it could not be recovered. Information about this type of action spreads through the company like wildfire, signaling to employees that a real transformation is taking place. As one CEO explained to us, starting the visible phase of the LC transformation process should be like “jumping with a parachute: you can’t climb back.” Employees need to see that the CEO really means it.

CEOs had no pre-established set of design features and proceeded empirically, learning by doing

Zobrist (2020), FAVI’s CEO, called it “doing while walking.” Specifically, this involves adding features that increase employee freedom and responsibility to take actions and rejecting features that do not, either at the CEO’s suggestion, or at the suggestion of the employee volunteer teams. In other words, the employee teams either approved or decided which existing organizational features to redesign in order to meet employees' fundamental needs of intrinsic equality, growth, and self-direction. Importantly, employees who chose not to participate in this process were not ostracized, but they could not oppose the volunteer teams’ decisions. The overall themes on which the volunteers were invited to work (e.g., decision-making process, work schedules, gain-sharing schemes) emerged either from themselves or from a major event like the World Café or Open Space to which everyone in the company was invited. For example, we observed the transformation of a 160-person pharmaceutical company, which began with a volunteer team choosing the renovation of the locker room showers as their priority. They were given the means to proceed as promised, but when the CEO visited the place several weeks later, he found that no work had been done in the showers. Asked why, the team explained that after further deliberation, it had decided to use the resources to build a snack corner instead, thus changing its priority of the first workplace feature to be redesigned. Later on, the volunteer teams decided to redesign organizational features, such as work schedules, controls over expense bill, etc.Footnote 8

Both the CEO and the employees showed wisdom in their co-construction process

Psychological research defines wisdom as “excellence in judgment in matters of life combining personal and common good” (Baltes and Kunzmann 2004). As such, wisdom is different from knowledge or intelligence (a capacity to process knowledge) as its problem-solving is holistic—taking into consideration all the ways in which a problem may be related to its surrounding context—and dialectical—integrating both sides of an apparent contradiction or paradox. Holistic thinking can be illustrated by the above example of a team deciding to switch their project from renovating the shower to building a food corner since they took the wider context into account (which often appears once a project has begun). Regarding the dialectical acceptance of paradoxes, for example, Zobrist, the CEO of FAVI, explained the central Taoist paradox of Wu Wei (non-action) that he made the cornerstone of FAVI’s concrete LC model, saying that acting without acting does not mean laissez-faire, but rather allowing things to happen on their own. Concretely, it meant in FAVI not designing a specific organizational feature in advance but waiting until the context required it and letting the employees decide how to design it.

Another example is the hidden costs paradox. During the transformation towards LC, there is an apparently paradoxical tolerance of the increase in visible costs (duplication of support services in autonomous entities, eschewing centralized purchases, etc.) as employees realize that it can lead to a drastic reduction in hidden costs (control costs, costs due to absenteeism, workplace accidents, turnover, costs due to poor responsiveness to customers, etc.).

CEOs became the new vision-and-values-based culture keepers

For example, Otikon’s CEO, Kolind (2006), wrote, “The more freedom… we as a company want to give to staff, the more clarity we must create about mission, vision, strategy, and values” (p. 209), although he ultimately failed in this role of culture keeper [among the companies he studied, Getz (2009), Appendix, singled out Otikon, SAS, and Zappos, as not qualifying as LCs; for an analysis of the Otikon organization, see Foss (2003); for a description of Kolind’s leadership, see Carney and Getz (2009/2016)]. To take another example, David Kelley, the CEO of IDEO, said that maintaining the culture “was the most important thing [in my job]: everything else was a distraction” (Carney and Getz 2009/2016, p. 249).

Furthermore, most CEOs perceived that the role of a culture keeper was a key criterion for selecting their successors. For instance, at W. L. Gore & Associates, all CEOs succeeding Bill Gore had emphasized this role as the primary responsibility of a CEO. Admittedly, in a typical company, it is the board of directors who selects the new CEO. Consequently, the board may not always prioritize a candidate's aptitude for culture preservation, which can endanger the sustainability of the LC culture already established (such nominations, exacerbated by the change in ownership, had been a key reason for LC abandonment in several companies listed in Appendix). However, W. L. Gore & Associates had implemented a unique organizational design feature to address this challenge: the CEO nominee was elected by approximately a hundred of the company's primary leaders through a process resembling an election without declared candidates, this nominee being then approved by the board. Some other LCs had designed processes for selecting incoming CEOs, focusing on a candidate's aptitude for culture preservation. However, the boards of directors did not always adhere to this criterion (as seen in FAVI or Harley-Davidson). Additionally, some LCs either failed to design such a process (as seen in AVIS, Carrefour, Imatech, Radica Games, or USAA) and/or underwent a change in ownership with a new board not adhering to this criterion (as seen in AVIS and GSI). These factors collectively jeopardized the continuity of LC in several companies (see Appendix).Footnote 9

To summarize, Getz (2009; Carney and Getz 2009/2016) began the development of the LC concept by searching for a fixed set of design features. Unable to find such a set, he proceeded to formulate the design-guiding principles common to all the companies observed: intrinsic equality, growth, and self-direction of employees. Next, Getz identified two cultural aspects built into all the LCs: inspiring vision and behavioral values. Finally, after observing additional transformations, Getz and associates formulated six transformation-guiding principles: the CEO as transformation initiator, the ‘silent’ initial phase, the early addition of a symbolic irreversible design feature, learning-by-doing, wisdom, and the CEO as culture keeper.

The above six transformation-guiding principles elucidate the LC’s contribution to the transformational leadership field. This contribution, should not, however, suggest that the theoretical LC concept is exclusively affiliated with the transformational leadership field. In fact, several elements indicate that the LC concept also pertains significantly to the field of organizational design. For example, while not offering fixed design features, the LC theoretical concept is based on a psychological micro-foundation explaining why certain features are added and others removed when companies co-construct their designs. As such, LC constitutes an example of a theoretical organizational design concept whose micro-foundation is rooted in a different discipline—experimental psychology—something called for in recent debates on less-hierarchical organizational designs (Mazzelli 2023; Weber 2023). In addition, as it is guided by common design co-construction process principles, it gives rise to concrete LC organizational designs that vary both between companies and, over time, within each company. Such designs constitute one way to overcome the “intimidating complexity of design.” Foss and Klein (2023a) call the latter a major organizational design field challenge, something we will return to in the last section. To summarize, while the six transformation-guiding principles of the LC align it with the field of transformational leadership, various other elements of the LC also associate it with the field of organizational design.

One way to resolve this theoretical LC affiliation ambiguity is offered by management epistemology research. According to the described LC concept’s development, it appears to fit into the category of an observational concept (Osigweh 1989). Specifically, the LC concept emerged through a qualitative interpretivist study of several dozen concrete leader-guided corporate transformations, from which a coherent theoretical LC concept of organizing was inferred. Furthermore, LC seems to be what Sandberg and Tsoukas (2011) called a practical rationality theory or theory-as-elucidation. These authors noted that such theories are not less but are in fact more precise than scientific rationality theories since they preserve the “entwinement” logic of practice instead of breaking with it. In the case of LC, this logic of practice consists of transformations implementing concrete LC designs that underpin the theoretical idea of the LC concept. Based on these epistemological considerations, we propose that LC, as a philosophy of organizing, necessitates the integration of both organizational design and transformational leadership. This proposal concurs with Snow’s (2018) position that organizational design is concerned by “how organization ought to be” and “how organization can be redesigned and changed”, that is, a better design and how to put it in place are not separated but rather entwined. It also concurs with Martela’s (2019) argument about the relevance of leadership studies to organizational design and Martela’s (2023) emphasis on the key role of the leader (CEO) as a designer of less-hierarchical organizational forms. To account for this entwinement, we attempt to update the definition of LC in the last section.

Issue 4: What are LC’s sources and what is LC’s relationship with relevant proximate management theories?

All theoretical concepts stand on the shoulders of giants, and LC is no exception. Attributed to Bernard de Chartres and popularized by Newton, the metaphor underscores the cumulative nature of knowledge. It also applies to concepts that are novel to their fields. Thus, research on scientific creativity has shown that researchers coming up with new concepts are well versed in a critical mass of knowledge, though not in too much knowledge (Simonton 1997).

This dialectical relationship to sources can be readily applied to LC. First, as an observational concept, LC is partially informed by the theories read and cited by the transformational leaders observed (Getz 2012, 2016b). Specifically, these leader-CEOs cite theorists like Maslow, McGregor, Fauvet (2004), Covey, Senge, and Shiba (Shiba and Walden 2001) as inspiring their own transformational leadership. In particular, McGregor’s Theory Y—itself inspired by Maslow’s theory of human needs—reinforced many leaders’ intuitions and thinking about the type of organizational environment required for employee engagement and well-being. Next, such leaders successfully articulated these theories into their company-specific organizational designs, as observed by Getz (2009; Carney and Getz 2009/2016) in his qualitative interpretivist study. In an edited book, Getz (2016a) assembled both the theories that inspired the leaders observed and texts by some of these leaders describing their own transformational leadership and the specific organizational designs it helped to co-construct. Furthermore, Getz inferred his LC theoretical concept from the practices observed, grounding it in Deci and Ryan’s (1985) empirically based psychological theory of intrinsic motivation and self-determination.Footnote 10 In addition to providing this psychological micro-foundation for the theoretical LC concept, Getz further drew on Burns’s (1978) transforming leadership and Greenleaf’s (1977) servant leadership theories to conceptualize the LC’s transformational leadership dimension and, specifically, to conceptualize the principles that guide leaders and their followers in their co-construction of a concrete LC organizational design.

Next to its sources, it is important to emphasize LC’s relation with relevant contemporary theories. Indeed, specifying what a theory is not forms a key aspect of its definition (Osigweh 1989). While Getz (2012, 2016b) discussed the LC sources, he did not describe LC’s relationship with other relevant theories. Below, we first address LC’s relationship with relevant organizational theories, and then its relationship with relevant leadership theories.

In terms of LC’s relationship with relevant organizational theories, Lee and Edmondson (2017) offer a useful taxonomy in their literature review of close to 100 studies on less-hierarchical organizing. Importantly, these authors distinguish between incremental and radical approaches to less-hierarchical organizing. The incremental approaches relevant to LC are empowerment, participatory management, high-performance work systems, autonomous teams, hybrid organizations, workplace democracy, and continuous improvement.

In terms of LC-relevant radical approaches to less-hierarchical organizing (to which LC, allowing employee freedom and responsibility to take actions, also belongs), we used Lee and Edmondson’s (2017) three categories to detail them: post-bureaucratic organization approachesFootnote 11 include Sutton and Hargadon (1996), Hock (1999), Laloux (2014), and Hamel and Zanini (2018); humanistic management approaches include Koestenbaum and Block (2001), Miles et al. (1997), Nayar (2010), and Whitney (1994); finally, organizational democracy approaches include Robertson (2015), Romme (1999), and Semler (1993). LC shares some of its organizational design elements with each of them. That said, as noted when discussing Issue 3, the organizational theoretical concept and the transformational leadership process required to implement it into concrete organizational designs are entwined in LC. In this sense, the LC concept is distinct from most less-hierarchical organizing theories or approaches which either do not discuss transformational leadership or attach a subordinate role to it, since transformational leadership is considered subordinate to the design principles (e.g., Holacracy). Foss and Klein (2023b) question this position and, paraphrasing Drucker, note that “culture may eat organization design for breakfast” (p. 55). However, several books have been published by leaders practitioners who have captured this entwinement, rather than depicting transformational leadership as subordinate to organizational design (Davids et al. 2019; Nayar 2010; Semler 1993; Teerlink and Ozley 2000).

In terms of LC’s relationship with contemporary leadership theories, following Lee and Edmonson’s (2017) distinction between incremental and radical approaches to less-hierarchical organizing, a distinction can be drawn between incremental and radical approaches to leadership. The incremental leadership approaches relevant to LC include relational leadership (Uhl-Bien 2006), as well as distributed, plural, collective, and horizontal concepts of leadership (AlGhanem et al. 2019; Bolden 2011). Per the above discussion of the Issue 3, radical leadership approaches are even more relevant to LC (see Martela 2023, for a similar argument regarding less-hierarchical organizing in general). They include transformational leadership (Bass 1985), post-bureaucratic leadership (Bennis 1993), values-based leadership (O’Toole 1995), and authentic leadership (Pina e Cunha et al. 2010). Another group of radical leadership approaches relevant to LC are those which emphasize a leader’s self-transformation such as resonant leadership (Boyatzis and McKee 2005), post-heroic leadership (Crevani et al. 2007), and Type-IV leadership (Jaworski 2011), all of which consider the leader as an aspect of the system to be changed (Schramer 2008; Senge 1990). That said, despite LC’s proximity to the above radical approaches to leadership, none of them fully captures the LC’s view of transformational leaders as both radically transforming themselves and radically transforming the company in their collective effort with volunteer employees. Several leaders practitioners who led LC co-constructions have managed, however, to capture this dual LC view in their books (Davids et al. 2019; Staley and Nobles 2017) or communications.Footnote 12

To conclude, in terms of theories that have inspired the LC concept, its organizational dimension can mainly be found in the readings and writings of transformational leaders who have built LCs, while Burns (1978) and Greenleaf (1977) theories have inspired the LC transformational leadership dimension. In terms of theories proximate to the LC concept, several organizational design and leadership ones can be noted. However, the following facets of the LC concept make it a distinct body of thought: (1) LC constitutes an example of a theoretical organizational design concept whose micro-foundation stems from a different discipline, namely, experimental psychology; this differentiates the LC concept from most less-hierarchical organizing theories grounded in democratic, humanist, egalitarian, or spiritual values; (2) LC meshes organizational design and transformational leadership dimensions; this differentiates the LC concept from other less-hierarchical organizing theories or approaches which either do not discuss transformational leadership or attach a subordinate role to it; (3) the theoretical LC concept’s contingency implicitly focuses on the generation of social value and views economic value generation as a consequence; this differentiates the LC concept from other less-hierarchical organizing theories whose contingencies focus on economic value or on the multi-value proposition (this point will be examined in the next section); (4) LC views transformational leaders as both radically transforming themselves and radically transforming the company in their collective effort with volunteer employees; this differentiates the LC concept from other leadership theories which, even if they focus on leaders' self-transformation, do not specify how it interacts with constructing a less-hierarchical organizational design. Based on the above four facets, LC concept differs from other less-hierarchical organizing theories. This concurs with the conclusion of two systematic reviews (El Khoury 2021; Mattelin-Pierrard et al. 2020) that LC is a distinctive and innovative theoretical concept within the field of less-hierarchical organizing.

Issue 5: How can the impact of LCs be assessed?

As noted, organizational design theories aim to help change existing situations into better ones (Snow 2018). This concurs with Reinecke et al.’s (2022) highlighting of the emerging impact agenda for organizational theories, exemplified by the AACSB requirement for business school research to make a “positive impact to the betterment of society,” notably in the business world (p. 3). These authors identify seven impact pathways for organizational theories, with different pathways mobilizing different elements of theory. The two most relevant pathways to LC’s impact and the evidence from which this impact is assessed are: (1) the theory dissemination pathway with the impact assessed by a theory establishing itself as a dominant paradigm (in the sense of Kuhn 1970); (2) instrumental use of the theory pathway with the impact assessed according to the best corporate practices derived from the theory.

In terms of the theory dissemination pathway, as previously noted, the LC theoretical concept became prominent in France from 2014 onwards. Rather than being disseminated first in academia and then to the corporate world, it initially became prominent among practitionersFootnote 13 and only then became a paradigm for French-language scholars (El Khoury 2021; Mattelin-Pierrard et al. 2020). Early evidence of the impact of LC as a paradigm is the use of conceptual and symbolic LC language by practitioners (see Astley and Zammuto 1992). Specifically, numerous CEOs and executives shared how LC language had helped them in their transformational efforts as it gave them the terminology needed to comprehend and communicate their intuitions. For example, Michelin’s HR Director, Jean-Michel Guillon, declared, “The concept of the liberated company interests us because it allows us to return to the fundamentals of the company, which is people. Our historical motto is ‘become what you are.’” (Getz 2017, pp. 309–310). Other CEOs said that LC concepts such as ‘organizational environment built to meet employee universal needs’ or ‘freedom bounded by responsibility to do one’s best for the company’s vision’ helped them to think about and advance in their transformation efforts. Also, as noted, it has been taken to be trivialized by some CEOs and consultants, or even to disguise the absence of any authentic transformation through the use of popular LC language.Footnote 14

In terms of the instrumental use of the theory pathway, the impact is assessed by best corporate practices derived from the theory. Unlike with the dissemination theory impact pathway, where the theorists and the intermediaries play key roles, the key role in this pathway is played by practitioners who use it for their best practices. For organizational design theories in general, and for LC in particular, work practices based on a theory are expected to demonstrate “high performance” (Baum and Wally 2003; Miles et al. 1997). Accessing this high performance involves two sub-questions: What are the performance indicators?; What kind of performance are they compared to?

What are the performance indicators?

While most of the LC literature only addresses economic value (e.g., Gilbert et al. 2017a, b; Hauch and Loufrani-Fedida 2020), a few studies focus solely on the social value of LC (Picard and Islam 2020; Salovaara and Bathurst 2018). This division reflects the overall trend in studies on less-hierarchical organizing (Lee and Edmondson 2017) which tend to focus either on the individual/social benefits (e.g., greater motivation, job satisfaction, improved work and labor relations) or on the organizational/economic benefits (e.g., greater effectiveness, innovation, agility, and overall financial performance). That said, several influential practitioner-oriented approaches to management and organizing adhere to a multi-value proposition which takes economic, social, and environmental values into account (Elkington 1999; Mackey and Sissodia 2013; B Corps; Benefit corporations). Furthermore, Battilana et al. (2018) concluded that democratic organizations—one type of less-hierarchical organizing—are better adapted to the simultaneous pursuit of social and economic values compared to hierarchical bureaucracies. In terms of LC, several studies have focused on both economic and social values (e.g., Corbett-Etchevers et al. 2019; Ramboarison-Lalao and Gannouni 2019).

LC is both similar to and distinct from the above multi-value propositions. It is similar in the sense that LC’s implicit contingency promises to enhance both economic value (e.g., innovation, growth, reduction of hidden costs, profit) and social value (employee engagement and well-being). It differs from multidimensional value propositions as its implicit contingency focuses first on social value and views economic value not as a goal but as a consequence of the social value generation [for similar approaches in economic theory, see Kay (2012); in managerial theory, Martin (2011), Mayer and Roche (2021); in organizational design practice, Nayar (2010)].

Consequently, we go beyond the calls for LC to be evaluated for its long-term economic performance (Miles and Miles 2012), or simultaneously for its social and economic performance (Mattelin-Pierrard et al. 2020; Ramboarison-Lalao and Gannouni 2019). Specifically, we call for LC to be examined first for its social performance, and then for its subsequent economic performance, the latter potentially viewed not as a performance indicator but as a constraint (i.e., a socially focused company must make a fair profit to survive economically; cf. Martin 2011). This is in line with recent calls to transform companies and capitalism with only social value in mind (Getz and Marbacher 2019; Mayer and Roche 2021; Subramanian 2018). However, measuring social value is difficult. We will return to this point in the last section.

What kind of performance are they compared to?

In terms of performance comparison, several organizational studies have compared LC performance to that of traditional organizationsFootnote 15 without submitting it to a thorough empirical test (Corbett-Etchevers et al. 2019; Getz 2009, 2012). Such a test would require the performance of a representative sample of LCs to be empirically assessed against the performance of a sample of comparable traditional companies (e.g., Collins and Porras 1994). This is notoriously difficult to achieve, however, requiring a large pool of companies from which to draw the experimental sample, and inevitably prone to methodological challenges (e.g., an a posteriori selection which excludes companies that followed the experimental sample’s approach, but failed).

An alternative empirical methodology—consistent with practical rationality (Sandberg and Tsoukas 2011)—may be the natural experiment used in economics and life sciences. Applied to management, it would involve making performance comparisons within a same company which started out with a traditional organizational design, then built an LC, then “broke down” and went back to the traditional form, and then once again reverted to an LC. Such a methodology is compatible with the theory-as-elucidation view, in which temporary breakdowns in organizational design are normal, revealing its true nature and encouraging its improvement (Sanders and Tsoukas 2011). Of course, a natural experiment is empirically valid only if the company’s internal context—e.g., its market offer, technologies—and its external context—macroeconomic, social, political—remain stable. Inversely, if during the duration of the natural experiment, the context significantly evolves (e.g., a shift to a new technology, the 2009 financial crisis, the 2021 COVID crisis), then the natural experiment’s validity is compromised.Footnote 16

Getz (2016a) provides a narrative account of one such natural experiment that improved company’s performance after implementing an LC design, then impaired its performance after reverting to the traditional design, then improved its performance again after reinstalling an LC design. During the entire period, the company’s internal and external contexts remained stable. This case focuses on a small company, however. Given the recent surge in LC cases, other natural experiments with a range of companies can be available and would be worth exploring.

Another set of studies that examined LC performance features the transformational/relational/distributive/post-heroic leadership perspectives. They compared LC performance not to that of concrete traditional organizations but to an organizational ideal. For example, LC performance was compared to Mary Parker Follett’s power-with-leadership ideal (Salovaara and Bathurst 2018) and to the post-heroic leadership and enjoyment/happiness ideal (De Ridder and Taskin 2021; Picard and Islam 2020; Sferrazzo and Ruffini 2021). Similarly, some studies have criticized several transformational leaders as not measuring up to the ideal of a heroic leader (e.g., Pastier 2023).

It is common sense that any concrete organizational design or any concrete transformational leadership will be found wanting when compared to an ideal. Of course, if research shows that most concrete organizational designs or transformational leadership processes derived from a given theoretical concept are severely wanting with respect to their explicit or implicit ideal, then the concept’s fundamentals are called into question. In terms of LC, research is still far from this point: most studies show that LC’s concrete organizational designs and transformational leadership processes—although overcoming many obstacles during the radical transformation needed to implement them—tend towards the ‘idealistic’ promise of the LC theoretical concept (see the review by Mattelin-Pierrard et al. 2020). Conversely, several cases of concrete LC organizational designs failing to live up to an ideal may be useful to better understand the transformational process critical to successful LC implementation (Carney and Getz 2009/2016; Picard and Islam 2020). One way that may resolve the tension between the comparison of LC performance with the ideal performance involves the earlier mentioned focus on LC social performance and comparing the latter to the empirically highest levels of employee well-being.

To summarize, in terms of the performance value to be assessed, LCs should be assessed primarily for the social value they generate. In terms of the benchmark for LC’s performance, assessing it in a sample of LCs against a sample of traditional companies presents empirical challenges. Furthermore, assessing it against an organizational ideal is empirically impossible. In this context, a natural experiment might be a more appropriate methodology to empirically assess LC performance in comparison with the performance of a traditional organizational design, provided that the company’s internal and external contexts remain stable.

Discussion, the complexity of design(ing), and concluding remarks

Since the introduction of the theoretical LC concept in 2009, both LC research—and practice—became prominent in the French-speaking world, but remained little known in the English-speaking one. Our paper attempted to fill this gap by presenting the background to LC and examining five critical research issues that have emerged since its inception: (1) the definition of LC; (2) whether it is a management theory or a model; (3) LC’s contribution to the transformational leadership field; (4) sources and proximate theories with regard to LC; and (5) how to evaluate its usefulness to organizations. Examination of the first three issues revealed the need for a more comprehensive discussion and a potential revision of the original definition of LC. Following this revision, the section will discuss the LC approach to solving the “intimidating complexity of organizational design” challenge. The section will conclude on how LC implementation can be enhanced.

The definition of LC

As we saw earlier, Mattelin-Pierrard et al. (2020) analyzed whether LC is an epistemologically good concept or an intellectual brand. They concluded that it is a good concept as it closely adheres to five of Gerring’s (1999) criteria and partially meets the remaining three. With the aim of meeting even better the Gerring’s criteria, Mattelin-Pierrard et al. (2020) suggested an alternative definition of LC as “a new combination of a humanist philosophy, of an adhocracy-type structure, of processes that ensure autonomy and employee empowerment, and of democratic management practices based on trust” (p. 41). To our knowledge, this is the only alternative definition to that of Getz (2009) proposed in the literature to date. To discuss it, we draw on the epistemological work of Osigweh (1989) and Alvesson et al. (2019).

Osigweh argued that a good organizational concept or theory must specify the class of things it denotes and a set of properties that something must possess to be denoted by said term (p. 587). He added that concepts which designate a clear class with few properties are superior to concepts denoting many things with many properties. Osigweh called the latter “stretched concepts” and warned that they can shelter all kinds of ideas under their wide umbrella (p. 587). Since they include a disparate variety of research streams, stretched concepts may cease to function as a theory and instead become an intellectual brand. As noted, Alvesson et al. (2019) later argued that though intellectual brands help by clearly signaling the affiliation of a specific study to a scholarly tradition, they may obstruct the theoretical clarity and interpretive capacity of affiliated studies.

Getz’s (2009) definition of LC specifies one “class of things”—organizational design forms—and one property—a function that an LC organizational form must fulfill, namely, to allow employees the complete freedom and responsibility to take actions that they, not their bosses, decide are best for the company. As such, it fits in with Osigweh’s criteria of a good organizational concept. Concurrently, Mattelin-Pierrard et al.’s (2020) alternative definition denotes four classes of things: organizational philosophies, structures, processes, and practices. It thus corresponds to Osigweh’s stretched concept, with the risk of becoming an intellectual brand. This risk is not hypothetical. Indeed, the function-based rather than feature-based definition of LC, as well as LC’s popularity, has already attracted numerous heterogeneous studies on LC in France. For example, Cristofalo et al. (2019) qualified a health-care company as LC because it was inspired by the Dutch self-managing health provider Buurtzorg featured by Laloux (2014). Mattelin-Pierrard et al.’s (2020) stretched LC definition thus further increases the risk of the LC theoretical concept becoming an intellectual brand. For example, relying on the latter LC definition, Pastier (2023) qualified two companies as LCs because one of them implemented holacracy and another was inspired by Buurtzorg. Furthermore, Pastier considered that LC’s employee freedom and responsibility to take actions also covered corporate governance, something Getz’s (2009) original definition did not encompass.

To conclude, at present, Getz’s (2009) original definition of LC appears more valid than Mattelin-Pierrard et al.’s (2020) stretched alternative. At the same time, the latter authors’ suggestion of viewing LC as a philosophy, and the distinction they make between the theoretical LC concept and concrete LC implementation are very useful. Their ideas, together with the results of our discussion of the first three issues, help to strengthen Getz’s (2009) definition of LC. We thus propose its following update:

Liberated company is a philosophy of organizing whose concrete co-constructed implementations give employees the freedom and responsibility to take actions that they decide are best for a company’s vision.

It must be noted that since the above definition has no explicit contingencies, it is not one of a propositional theory. However, as Reinecke et al. (2022) argue, though the contingency-based theory is the dominant form of theorizing, other forms of theorizing exist, such as configurational or perspectival ones. For researchers, this definition implies that qualifying a concrete company as an LC requires in situ observation to ensure that: (a) most employees adhere to the company’s vision; (b) the co-constructed concrete organizational design gives them the freedom and responsibility for taking actions to realize the shared vision; and (c) the construction of the organizational design features involves both the CEO and the volunteer employees. To take the case of companies which used holacracy and which, according to Mattelin-Pierrard et al. (2020) and Schell and Bischof (2022), qualify as concrete implementations of LC, scholars may find that, using our updated LC definition, some companies that used holacracy qualify as LCs, while others do not. For example, the earlier mentioned Thales helicopter BU (Poli 2020) used some elements of holacracy in the co-construction of their organizational design, demonstrating aspects (a), (b), and (c); on the other hand, the holacracy organizational designs whose construction has been led by consultants and is based on the fully specified design, typically lacks aspect (c), and thus fails to qualify as LC. To take a non-Holacracy example, in 2010, we studied the Californian food producer, Morning Star, in situ and found aspects (a) and (c) there, but not aspect (b), as certain critical  operational actions were still conducted in a top-down manner.

On the complexity of design(ing)

At the end of the section discussing LC’s contribution to the transformational leadership field, we suggested that the LC-postulated common design-guiding principles, cultural aspects, and transformation-guiding principles may constitute a means to overcome what Foss and Klein (2023a) called the “intimidating complexity of organizational design” challenge. We expand on this proposal below.

While discussing the complexity of design, Foss and Klein (2023a) criticized “easy solutions with disastrous consequences for companies that follow them” (p. 8). Specifically, they criticized oversimplifying ‘bossless’ organizations, popularized in the practitioner-oriented literature in the past two decades. Furthermore, Foss and Klein (2023b) noted that oversimplifying solutions are also present in academic organizational design studies which often ignore other relevant disciplines such as economics, psychology, and culture research, among others. They noted that “these weaknesses threaten the relevance and applicability of the theory as organization designers may fail to take employee reactions to organizational design initiatives into account or misunderstand how organization design is influenced by the prevailing culture, whether in the organization itself or in the surrounding society.” (p. 55) They concluded that “organization design is not an engineering exercise decoupled from the ‘softer’ aspects of the internal and external environments, but on the contrary need to take these into account.” (p. 55). We add that the oversimplifying designs are not just one-size-fits-all solutions but “one-size-fits-all-all-the-times” solutions (see for the same position Martela 2023). In other words, they presume that the designing task can be finalized before the design implementation, which disregards the reality of the evolving internal and external environments. Foss and Klein (2022, 2023b) suggested that traditional organizational designs may be better able to take the above environmental contexts into account than the oversimplifying bossless models.

The LC approach to the intimidating complexity of design strongly resonates with the above critique by Foss and Klein and offers a way to address it. Specifically, the LC takes the complex internal and external contexts into account, but instead of doing this during the design phase, LC suggests doing it in the transformation process. Furthermore, the LC approach facilitates practitioners’ selective interpretation of (theory-based) knowledge during its application to their unique and evolving context (Van de Ven and Johnson 2006). In other words, the LC shifts the intimidating complexity of design from the prior-to-transformation design into the transformation process itself. This process can take complex and evolving contexts into account and lead to complexity-integrating organizational designs thanks to the following LC facets. First, LC does not specify a fixed set of design features in its definition, but only the function, allowing the design features to reflect the internal and external contexts at any given moment. Second, LC proposes a set of design-guiding principles based on an empirically robust motivational psychology micro-foundation. This allows the addition/removal of design features to account for the internal context of employees’ fundamental psychological needs for intrinsic equality, growth, and self-direction and their evolving expressions (e.g., the baby boomers express their need for growth differently from the generation Z). Finally, LC argues for the necessity to devise the cultural aspects of inspiring vision and behavioral values. This allows the typically outward-looking corporate vision to account for complex external contexts and the inward-looking behavioral values to account for the company's internal human context. It should be noted, however, that these LC facets do not amount to a fully specified organizational transformation methodology.Footnote 17

Implications for the organizational transformation practice

As noted earlier, Snow (2018) suggested that organizational design is concerned by “how an organization ought to be” and “how an organization can be redesigned and changed.” Here, we reflect on whether research on the LC philosophy of organizing has contributed to redesigning better organizations.

Has the LC philosophy fared better in comparison to many less-hierarchical theories of organizing in terms of its impact on the organizational transformation practice? The answer is yes and no. On the one hand, almost seventy LCs as recognized by scholars (see Appendix)—including a dozen multinationals—and over 400 LCs as recognized by practitioners, have been launched to date. Most of them are in French-speaking countries, which means that these numbers could be tenfold if similar dynamics existed in just English- and Spanish-speaking American countries alone. On the other hand, even in French-speaking countries, the number of LCs is tiny in comparison to the overall number of companies. It is arguable that less-hierarchical organizing poses disadvantages for companies that could outweigh its benefits, generally speaking (Foss and Klein 2022). To ascertain whether this argument is pertinent to LCs specifically necessitates a bigger number of companies to implement this philosophy of organizing. In this context, while focusing primarily on CEOs, we explore additional reasons for the relatively low number of such implementations and make suggestions how to enhance their prevalence.

Reason 1: CEOs lack a convincing business case for LCs

As mentioned earlier, the authority to launch an organizational transformation belongs to CEOs alone. Given their overall corporate responsibility, they will use it or not depending on whether they are convinced that such a transformation is the right thing to do. In France, this has not been the case, and among the thousands of CEOs exposed to the prominent LC philosophy of organizing, only a tiny fraction has launched transformations in their companies. We believe that one reason is because CEOs lack a convincing business case for such transformation. Entrusted with their company’s economic success, CEOs need such cases in order to be fully convinced themselves as well as to win over their board of directors (or for the heads of BUs, their corporate board).Footnote 18 Specifically, even if CEOs focus on the social value, they need a business case that shows how this value will crucially impact their company’s economic performance.

Most research on less-hierarchical organizing has failed to give practitioners convincing business cases, but has instead advanced the democratic, humanistic, egalitarian, and even spiritual values to convince them (Foss and Klein 2023a). In CEOs’ parlance, the design proposals based on such values are perceived by the boards as a “nice thing to have” rather than a crucial necessity. Alternatively, advancing a case based on social value, measured by indicators such as absenteeism, turnover, or workplace accident rates, may be more convincing. Indeed, there is significant empirical literature on the general costs of these indicators and their impact on business performance (e.g., Kim and Park 2021; Park and Shaw 2013; Podsakoff et al. 2009). A business case of this type, which promised improved economic performance within a two-year timeframe, successfully convinced the boards at Michelin (Getz 2019) and at two other multinationals we are familiar with to start their LC implementations. However, we believe that a convincing business case should detail both the specific expected benefits for a company of engaging in organizational redesign and the specific costs of not doing so.

The empirical literature on methodologies capable of measuring such costs and benefits is limited. Nevertheless, there is one significant empirical approach that achieves this: the “hidden costs method”, also known as the socio-economic management control method, developed in the 1970s by French researchers and originating in the accounting field (Cappelletti and Voyant 2018; Savall 2003). Since 1974, this method has been applied through engaged scholarship interventions across 1854 organizations. It enables the assessment of a company’s hidden costs, which, in the studied organizations, ranged from approximately $22,000 to $77,000 per employee annually. Importantly, it assists in changing traditional managerial practices and structures, leading to a reduction in hidden costs by 35% to 55% in the organizations involved. While the managerial changes recommended by researchers did not always result in less-hierarchical organizing, some did. In terms of LC, the reduction in hidden costs has been highlighted in its literature as a key economic benefit of LC implementation. In particular, Carney and Getz (2009/2016) reviewed the literature on work stress and its hidden costs for traditional organizations in terms of absenteeism. Drawing on psychological research, which suggests that a fundamental cause of work-related stress is the lack of perceived control over one's tasks,Footnote 19 the authors hypothesized that LC will significantly mitigate these stress-induced hidden costs in the workplace. In this context, the hidden cost method shows potential for assessing the concrete impact of implementing the LC in a company. Specifically, it enables the evaluation of specific hidden costs in a traditionally organized company and provides estimations of specific economic benefits if LC-type managerial practices and structures are implemented there. Consequently, this dataset could potentially constitute a convincing business case for CEOs deliberating on the implementation of LC in their companies.

Reason 2: CEOs who have launched LC feel isolated

Beginning with the Asch (1955) experiment, social psychology has repeatedly shown that a significant proportion of people will renounce a solution they believe is right if the majority says it is wrong. From our interviews with CEOs who launched LC transformation in their company, many said that they felt strong social pressure to abandon it. This pressure originated from various sources, including their corporate auditors, consultants, external corporate attorneys, peer CEOs, and some spouses, all of whom disregarded LC (the notable exception to this trend was their executive coaches, who predominantly endorsed LC).

Remarkably, the fact that some of the CEOs would point to popular practitioner-oriented books or articles which inspired them tended not to help. Instead, it aggravated the social pressure and the feeling of psychological isolation since most of their environment was unfamiliar with these publications. That said, in France, in order to break their isolation, some of the CEOs reached out to the authors of these publications. This led to the idea of creating a CEO community of shared LC transformation practice (Getz and Marbacher 2017). To use the California-based Berkana Institute’s terminology (Wheatley and Frieze 2020), a dozen French-speaking CEOs engaged in transformation towards LC were connected and ‘nourished’ within an LC pioneer community (through regular joint workshops, continuous dialogue, reading, learning expeditions, etc.) in order to enhance their transformational activities. Most of them advanced towards robust LCs (all listed in Appendix). They finally tried to ‘illuminate’ other CEOs and to inspire the latter to engage in the LC transformation of their own companies.

However, the aforementioned illumination efforts have achieved limited success to date. One solution could be to replicate what has already worked or, more specifically, create many more communities, with around a dozen geographically close CEOs leading LC transformation in each community. This would not only resolve the CEOs’ isolation problem, but would also enhance their LC transformation efforts. Such a solution concurs with the Berkana Institute’s methodology used for numerous systemic change programs. These shared practice communities could help a larger number of CEOs engaged in LC transformations to withstand the social pressure to halt their efforts and, instead, provide the LC transformation with a level playing field in demonstrating its social and economic value-generation promises.