The Wall Street Journal recently wrote about some tech companies that had no managers, or at least very few. The software company 37signals, for example, has been around for 14 years. It's small, sells products for collaboration among remote workers (I've used one in the past and it worked reasonably well), and is leery of having managers:
[Co-founder Jason] Fried previously oversaw the company's main product, Basecamp, in addition to looking after other products and setting strategy. But he was stretched so thin that key decisions about the project-management software, which serves as a hub for workers to share messages, collaborate on documents and discuss ideas, were sometimes left hanging for weeks or months.
Instead of managers, the company looks for people who can direct their own work and actually produce something, rather than watch others produce.
The idea isn't new, at least in tech. Video gaming company Valve has 400 employees and no bosses. Instead, it uses a model called anarcho-syndicalism:
Anarcho-syndicalism is an economic theory with roots in the early 19th century that articulates a form of government in which self-organized cliques of labor work together to directly achieve goals. In essence: socialism minus centralized government plus trade unions.
The way this manifests at Valve is that, after an endogenous process in which a self-organized committee hires a new employee, he or she is free to join and freely move around any of the company's myriad of projects. Where Google boasts 20 percent free time for its employees, Valve boasts 100 free time.
Before you get too excited...
Before you rub your hands together, cackle "Hot damn!," and fire all your managers, though, there are some big issues you'll have to consider.
Although this has been applied in tech, there is no intrinsic reason why a manager-less structure couldn't work in other industries. Get people focused on what creates value for the company, reward them with similar value, and learn to stay out of the way.