Networks and Hierarchies

Traditionally everything was done as a hierarchy. Decisions were pushed down from the top. What has happened in the 21st century, though, is that networks are displacing hierarchies. Fred Wilson brought this up in a blog post today and I thought it worth remembering.

Networks are replacing hierachies as we enter the information era.

I also like what William Mougayar said in a comment to the post:

I’m going to take a shot at defending this claim “Networks are replacing hierarchies as we enter the information era.” People are mis-interpreting it, because of the word “replacing”.

Maybe it’s a long shot to say “replacing” now. But Networks are emerging in parallel to existing systems. They may not be replacing them, but they are growing alongside these incumbents, and gradually taking a bigger share, such they will become more dominant over time. Networks are emerging in new areas that didn’t exist before.

So, Networks are making hierarchies less relevant, as we enter the information era.

My questions: How far can we push this? Can all systems and software be network-driven instead of hierarchical? Is the usage network or the software itself? What does network-driven software look like and can it be done for non-open source solutions? Does a focus on the network give that company an advantage over the hierarchically-oriented company? Are there places where hierarchy still wins? Can systems be both at the same time and, if so, how does an organization decide how much of each and when?