May 232016
 

The Problem with Vertical Structures

I once applied for a job at McDonald’s. But I soon got myself into a pickle when I couldn’t cut the mustard answering some tough interview questions.  I’ve always admired how quickly fast food workers can be promoted to manager if they work hard enough. When most people think about their careers they imagine themselves moving up the ranks, or climbing the ladder, which are both vertical analogies. In today’s corporate world, the idea of a hierarchy is not only a way to organize a company, but it also dictates how people think about relationships, contribution, accountability, and power.

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But in a fast changing economy that requires communication and interdependence across multiple disciplines, locations, and specialties, the top down method of management often isn’t flexible enough to deal with every situation. Instead, a sideways approach that aligns the values of same level workers might provide more value. 🙂

Let’s pretend there is a boat in a lake. If we want to raise the boat higher, we could try to lift it out of the water. But that would take a lot of energy and sooner or later the boat will drop back to its original level. But if we add water to the lake the boat will eventually rise on its own. This is the essence of the horizontal approach to financial success.

A big impressive job title doesn’t trump a good idea. The best value-creating initiative can come from literally anyone in an organization. In fact, the person who most understands the processes, concerns, and responsibilities of a software engineer isn’t his or her manager. It’s other software engineers. 😀 Real influence doesn’t come from controlling others that report to us. It comes from our ability to add value across the field we’re in.

The horizontal approach has seen success in real life situations. Valve Corporation develops video games such as the Counter-Strike and Portal series. It also operates Steam, a popular digital distribution platform with over 125 million active users.

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According to its employee handbook the company has no managers or bosses. The company employs about 300 workers. There are different roles and disciplines within Valve but everyone is treated as equals in terms of their job positions.

Horizontal Approach to Everything

Branching out horizontally to find success can be applied to pretty much anything.

  • One way to become the best point guard on a basketball team is to play other positions. By adding skills horizontally instead of aiming for one specific goal we can develop a better understanding of how the entire game is played.
  • One way to become a good parent and have a healthy relationship with our kids is to be more supportive to our spouse. By helping to lift each other up the family bond will become even stronger.
  • One way to become the best pastry chef is to study a wide variety of other culinary baking skills to gain inspiration and unique ideas.
  • When it comes to personal development, meditation and positive thinking is important to create a happier and healthier state of mind. But doing these things alone may not be enough. Instead of focusing 100% on spiritual enlightenment, we could also extend our efforts horizontally to other aspects of our well-being such as eating a cleaner diet or getting more exercise. A healthy body will help to create a more fulfilled mind and spirit. 😉

There seems to be a hierarchy around financial security. First is to get out of debt. Then it’s to build up a retirement fund. And finally at the very top, financial independence claims to be the holy grail for many people. The idea that we don’t have to actively work to live our lives the way we want forever certainly sounds like the bees knees. 🙂 But rather than dropping everything else and trying to make FI/RE a reality, maybe it’s better to use the horizontal approach and broaden our financial foundation so we’re building sideways instead of upwards. For example, I am a big fan of dividend growth investing. But I also use other strategies to make potential profits. 🙂 A few years ago I purchased shares of Amazon.com (AMZN) which has a P/E ratio of nearly 300 times and doesn’t pay any dividends. Since I can’t live off an investment that yields 0% this doesn’t really help me reach financial freedom directly. However, maybe, and just maybe, by the time I’m ready to retire, AMZN will be worth a lot more money and I can sell it to buy another investment that actually produces regular income, such as AT&T or BCE.

Nobody wants their careers to end in ruins, except maybe archaeologists. The idea of adding value across, rather than in a vertical rank, to grow one’s job skills is an interesting concept that I think will catch on as more people realize its potential benefits.

 

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Random Useless Fact:

In 2013 the fertility rate was 1.61 in Canada, and 1.87 in the United States.

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5 Comments on "The Horizontal Approach to Financial Independence"

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Anon
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Anon

So basically diversification/Jack-of-all-trade mindset. But to add real lasting value you still have to make vertical moves. Think Michael J Fox in ‘The Secret of My Success’.

Your list reminds me of the suggestion to focus not on the goal but instead the process etc required to get there. I love to borrow from the unrelated to increase value in unique ways.

For example, being a competative cyclist I learned how to take corners by watching downhill ski legend/beast Alberto Tomba, but I don’t ski.

I also play guitar. I listen to drummers to learn new rhythms, but I don’t play the drums.

Guess what I’m saying is, if you want to improve or implement a “value”, learn from who/what does it the best and apply it to your own specific situation (e.g. ‘The Art of War’ utilized in the corporate world).

Obviously the baby is adopted. Horizontal value-added, remember?

Tyler @ I Am The Future Me
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This makes a lot of sense, and most people will hate it. For the most part people want to “move up” they don’t want to feel equal to others they want to be able to “be above” others. There are many of us that wouldn’t care either way and I think this would work well for that type of people.

Great article

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