Karen Stephenson, a leading network theorist and practitioner, wrote an article Neither Hierarchy nor Network: An Argument for Heterarchy, examining how heterarchies, that bring together elements of networks and hierarchies, are the most relevant organizational structures for our times.
Leading people in the field were invited to respond to the article, with responses from Edgar Schein of MIT, Robert Eccles of Harvard Business School, Charles Handy, Tracy Cox of Raytheon, Patti Anklam, Barry Frew of Center for Executive Education, Art Kleiner the editor-in-chief of Strategy+Business magazine, and Ross Dawson of Advanced Human Technologies (me :-) ).
My response is below. If you are interested in how organizational structures can be more effective in a connected world, I strongly recommend reading the full article and responses – this is an extremely topical issue.
Heterarchy: Technology, Trust and Culture
Stephenson is absolutely right to emphasize both the rapid rise in interconnection that individuals, organizations, and societies are currently experiencing, and the resulting interdependence that stems from that. Relatively few have yet grasped that the degree of interdependence generated in a global connected economy significantly changes the drivers of individual and collective success. Central to these drivers are the organizational structures that coalesce value from disparate participants.
Certainly understanding that heterarchy is a better organizational form than current alternatives is an important first step. But for that, it is important that ‘heterarchy’ is a term that can be used with clarity and common understanding. Unfortunately there appears to be no consistent definition of heterarchy available from standard dictionaries, and the term is in fact used differently in social sciences and biology.
The definition for heterarchy offered by Stephenson in her footnotes is “an organizational form somewhere between hierarchy and network that provides horizontal links that permit different elements of an organization to cooperate whilst individually optimizing different success criteria.” While this is a useful definition, this needs to be understood and accepted by others before the argument for heterarchy can proceed to action. A more commonly used definition is that used by Carole Crumley, who suggests that heterarchy is “the relation of elements to one another when they are unranked or when they possess the potential for being ranked in a number of different ways.” This evokes both the reality of multiple levels, and the communication between levels that is critical in transcending the dysfunctions of pure hierarchies.
It is valuable to remember that organizations are intrinsically systemic. Systems theory and its progeny have helped us to understand how some characteristics of systems and organizations can be self-sustaining. As such, shifting from hierarchies to heterarchies can only be done effectively by viewing the interrelated entities as elements in a system, which very likely will incorporate mechanisms that make structural change difficult.
In this context, Ashby-Ross’s law of requisite variety  suggests that organizations (or sets of organizations) cannot be controlled or managed if they do not have as much flexibility as their environment. In an intensely connected world, this degree of organizational flexibility is very difficult to achieve. However the shift to a heterarchical structure will create many additional dimensions of flexibility, as information flows become less constrained. As such, heterarchical structures are extraordinarily relevant today.
The challenge is both in “understanding, measuring and implementing heterarchy,” as Stephenson describes, and even more pointedly, in understanding the interventions that facilitate the creation of effective heterarchical structures. Organizational network analysis is by far the most relevant tool to uncover these patterns. Yet we have far to travel in effectively working at the intersection of technology, trust, and culture that is required to succeed in this transition.
 Heterarchy and the Analysis of Complex Societies, Carole L. Crumley, Archeological Papers of the American Anthropological Association, Volume 6. Issue 1. January 1995
 An Introduction to Cybernetics, W. Ashby Ross, Chapman & Hall, 1956