New research looks into the real effects of flattened firms and comes up with results that will surprise you.

In the world of start-ups, flatter is generally better, and middle manager is almost a dirty word. Want examples? GitHub managed to make it to 60 employees with "no managers," while gamemaker Valve has generated huge buzz with its radical employee manual describing its leaderless organizational structure.

These may be among the more extreme embodiments of the flattening impulse, but they speak to a real fervor for flat structures as up-and-coming companies try to keep their teams cohesive, responsive, and agile.

Does this enthusiasm for flattened companies hold up to careful study, though?

That's the question asked by Julie Wulf in a new Harvard Business School working paper. Through quantitative research and more qualitative interviews and CEO time-use surveys, Wulf and her team looked into the actual effects when larger companies eliminated layers of management.

She concedes that the impulse behind this delayering sounds sensible. By pushing decisions downward, flat companies aim not only to boost accountability and morale but also "to remain competitive in the face of increased competition" and "pursue a streamlined, efficient organization that can respond more quickly to customers."

The only trouble is that things don't work out as advertised. In fact, the effect of flattening an organization is, in many ways, the opposite of these stated intentions. Wulf writes:

In line with the conventional view of flattening, we find that CEOs eliminated layers in the management ranks… But, using multiple methods of analysis, we find other evidence sharply at odds with the prevailing view of flattening. In fact, flattened firms exhibited more control and decision-making at the top. Not only did CEOs centralize more functions, such that a greater number of functional managers (e.g., CFO, Chief Human Resource Officer, CIO) reported directly to them; firms also paid lower-level division managers less when functional managers joined the top team, suggesting more decisions at the top. Furthermore, CEOs report in interviews that they flattened to “get closer to the businesses” and become more involved, not less, in internal operations. Finally, our analysis of CEO time use indicates that CEOs of flattened firms allocate more time to internal interactions.

When middle management is stripped away, then, the powers it once held don't necessarily flow down to frontline team members. Instead, these decisions often get relocated to the very top of the organization. Or, in other words, flattened firms often look less like a democracy of empowered citizen-employees and more like a monarchy, with "a more hands-on CEO at the pinnacle of the hierarchy." The findings may have come from studying large companies, but small-business owners and founders are probably not immune to these unintended effects.

If you're interested in reading more about flat organizations, several other studies have also looked into the idea and found there are often negative consequences when firms go flat.

Have you ever experienced CEO control freakery masquerading as a flat organization?

All the greats know one thing: Nothing prepares future business leaders better than learning to survive and thrive under adverse conditions.

We tend to think of stress, competition, and adversity in a negative way. If you have no aspirations or happen to live in Utopia, you might get away with that. But if you want to go places in the real world, you'd better learn to embrace those concepts.

It's often said that successful executives and entrepreneurs thrive in highly competitive and high-stress environments. Indeed, they do. But they're successful because they learned to survive and thrive under adverse conditions, not the other way around. Nothing, and I mean nothing, will prepare you better to lead.

I was just reading an article that points out this interesting dichotomy. Working at technology companies like Apple, Amazon, and Intel can be highly demanding and stressful, but employees seem to thrive there.

In fact, many of those same companies are sited as great places to work. Young up-and-comers flock to them. Why? Because they know they're breeding grounds for the entrepreneurs and executives of tomorrow.

The cause and effect relationship between adversity and leadership doesn't start at work. Leaders often attribute their success to their upbringing or conditions where they grew up. New York City, for example, has spawned far more than its fair share of success stories.

Of 23 secondary schools that produced two or more Nobel laureates, nine are in the Big Apple. My high school in Brooklyn alone accounts for three Nobel Prize winners, not to mention dozens of famous executives, scientists, engineers, athletes, musicians, actors, and politicians.

Why? The ultracompetitive environment. Everybody was a character. We were always fighting for positions on sports teams, to stand out, or just to fit in. Also, we didn't grow up with much. If you wanted more out of life, you knew what you had to do. You really had to be tough. You had to be a winner.

Loads of successful executives and entrepreneurs started with nothing--except perhaps adversity. Starbucks founder and chief executive Howard Schultz grew up not far from where I did. So did Goldman Sachs CEO Lloyd Blankenfein's. His dad was a postal worker. So was mine.

Steve Jobs and Oracle founder and CEO Larry Ellison were both adopted by working class families. Former Verizon CEO Ivan Seidenberg started as a cable splicer's assistant right out of high school. AT&T CEO Randall Stephenson's first job out of school was working in Southwestern Bell's Oklahoma IT department.

And this isn't just an American phenomenon, either. Masayoshi Son, the founder and CEO of Softbank and Japan's second richest man, grew up in an illegal shack in southwest Japan. His Korean parents used a Japanese surname to hide their heritage and avoid discrimination.

Don't get me wrong. I'm not saying that, to be successful in this world, you have to have grown up dirt poor. I'm sure that plenty of top executives didn't have to fight for table scraps. But if you had spent as much time in boardrooms and start-up companies as I have, you would know how competitive and stressful it is. It's just one crazy problem after another. You're always making tough decisions under pressure and with too little information.

The truth of the matter is this. If you want to succeed in that environment, if you want to become a successful executive, entrepreneur, or business leader, then you need to embrace or at least learn to deal with stress, adversity, and competition. One thing's for sure. Avoiding it won't get you there. If you're looking for a stress-free work life, as they say in New York, fugetaboutit.

How do you know when it's time to go? Check out these five instances in which you may want to question yourself.

The simple reality is that sometimes what your venture needs to get to the next level is not what you want to do nor is it what you’re good at.

But it is extremely difficult to accept the idea that you should walk away. Nevertheless founders volunteer to give up the CEO job and many of them stick around after their successor comes in.

So how do you know when it’s time for you to quit? Here are five tip-offs.

1. Can’t get customers.

You started your company because you saw an unsolved problem and you designed a product that you thought was the solution. You got some capital from your friends and family and you’re still working on getting your product right before you put in the hands of customers.

In the meantime, you are burning through your venture’s cash. And when people ask you what you’re doing to get customers, you tell them that once you get the product right, those customers will beat a path to your door and the cash flow problem will evaporate.

If this sounds like you, it may be time to hire a CEO who understands the technology and the market and also knows how to get customers to pay for a product that they find valuable. You can still be of great value to the company by thinking about the venture’s future product direction -- but only if you are willing to let go and give the new CEO a chance to run the company.

Otherwise, your investment in the venture will be better off without you there anymore.

2. Can’t raise outside capital.

If you started your venture, built its first product, and convinced customers to use it, you have performed a valuable service. But unless those customers have the prospect of paying for your product, then your venture is likely to run out of cash.

You can see clearly that your product has great potential. But when you try to convince investors, they ask questions that you don’t want to answer:

• How big is the market that you are targeting with your product?
• Why will customers buy your product?
• What market share do you think you can take and by when?
• How will that market share translate into profits?
• How much capital do you need in order to turn those projections into real numbers?
• How long before you can pay back that investment?

If you don’t feel like it’s worth your time to seek out potential investors, meet with them, and answer these questions, then you might be able to hire a chief financial officer who does.

3. Can’t attract and motivate top talent.

Let’s say that your venture has not only been able to get customers but it’s succeeded in raising capital as well. At this point, you might be thinking that you have what it takes to bring your company to the promised land--an initial public offering or a sale to a big company like Google.

That may be true, but only if you can attract and motivate top talent. However, if you are only able to hire B players and you have to do that by luring them in with higher salaries, then you have a class A problem. And if you are able to attract top talent, but those A players leave after six months, the problem may be with your leadership skills.

You could get help fixing your venture’s culture, or it might be time to leave and let someone else attract the talent that you are driving away.

4. Can’t let go of product design.

It’s not unusual for me to talk with company founders who stick with their ventures after a new CEO has come in. And most of those founders are excited to be around their venture and happy that they have brought in a CEO with the skills that these co-founders lack in performing tasks that they do not find interesting in the least.

You might be like these venture founders. They loved working on the design of the product. And as the company grew, they were always tinkering with the designs that their engineers were developing. And in the process, the founders were throwing wrenches into the carefully constructed time lines that their product managers had developed.

These founders had no interest in supporting the efforts of their product managers. They wanted to build the new generation of products themselves, not manage other people who were doing that. One of these company founders gladly took a new role training new hires to be valuable contributors.

And with a new CEO in place, he can help the company he co-founded in ways that he finds stimulating while letting someone else take primary responsibility for boosting the value of his venture’s equity.

5. Can’t adapt to change.

If you have developed a product that has taken hundreds of customers by storm, you might conclude that you are the greatest entrepreneur who ever lived.

But if your venture is losing ground because you are a one-trick pony, do yourself and your shareholders a favor and step aside.

Stepping away from your start-up is tough, but if you fit in one of these five categories, not doing it is sure to be more painful.

Here's how you can get your website found--even if you're not an expert in SEO.

A friend recently asked me to write about the difficulties that start-up owners go through to optimize their website and get found.

Without optimization, your website will be a tiny speck of salt in a vast--and rapidly expanding--cyber universe. Chances are, your market is probably packed with competitors, and any SEO consultant is going to ask for thousands of dollars a month just for the basic package.

Aside from dedicating every waking moment to understanding how SEO works, what new tactics are trending, and what Google really dislikes this year (coming in the form of Penguin and Panda updates), it's going to be quite hard to start receiving significant sales in the first months--or year--after you go live.

Here are a few things you can do to get started:

Optimizing Your Page Titles

Adding meta titles to your pages is the first and simplest thing you will need to do to let search engines know, "Hey, I'm out here, and I'm relevant for this keyword".

Every SEO expert will tell you that prior to beginning, they will need to find what the relevant keywords for your site are. Truth be told, this is something you can also do yourself. If your industry is particular (or specific), you probably know it better than any consultant.

Do some research, and find out what the most relevant keywords for your site are. Look at your competitor's page titles, for example. Aside from this, I would focus on "long-tail" keywords, which involve phrase-like words and are more specific to a particular topic (3 or 4 words). Long tail keywords convert better, and are easier to rank for.

"Natural" Link Building

Everyone that has a website has heard about link building, which essentially entails getting other websites to link back to your site. How to do this, however, has changed dramatically in the past few years, and doing it incorrectly can actually hurt you.

Recently, Google's algorithms were created in a way to detect "unnatural" links like certain paid links, overdone anchor texts, etc. This can get complicated for a freshman SEO strategist, but the bottom line is, links should not be forced. They should happen organically, and the way to solicit them and be successful at getting good links has a lot to do with the content you create.

Great ideas for natural link building involve writing guest posts on interesting blogs, successful social media activity (and building followers), and associating yourself with other bloggers with relative interests. A high-traffic blog is only as good as its content, otherwise readers wouldn't visit it often. If your cause is interesting--and related to a topic fellow bloggers care about--chances are, they will want to talk about you.

Fascinate With Content

Aside from writing content on other blogs, you also need to write interesting content on your website. In the old days, writing content on your website could include a bunch of gibberish and bad grammar. As long as the targeted keywords were jammed in there somehow, you would have good rankings on search engines. Those days are gone. Nowadays, creating fascinating content is the one distinguishing factor that can be unique to you.

From info graphics to video blogs to inspirational stories, you have to put yourself out there. Say something bold. Write about things that people care about. Put out an inspirational image. Make your audience laugh, cry... make your readers identify with your experience. This is my strongest suggestion for any aspiring ecommerce start-up: start with a daily blog, build your followers, and then blend in your ecommerce shopping cart onto your site. If you apply the analogy of the chicken and the egg, content is definitely the egg, which comes first in my book.

Once you get these three points down, you should start seeing an increase in traffic, a deeper interest in your products, and eventually, it should transfer into sales. As soon as your sales start growing, reinvest your earnings on expanding your traffic-building strategies. From PPC campaigns, to affiliate marketing, to an SEO consulting firm, they're all options I recommend--once you have an initial following.

I still look back at the early years of doing business and think that the grassroots strategies we came up with back then--in the guest bedroom of my old condo--were far more brilliant and exciting than what we do now. It's hard, but doable! After all, what that's worth it, isn't?

Even if you have only a handful of paying customers on board, those people are your best source of information about how to get more customers to sign up for your app. Because they’re willing to hand over money, they’ve committed to your success on a certain level — those customers want you to continue offering your application so they can continue using it. Of course, just how deep their commitment goes depends on how important they consider what you’ve built. An application that keeps their business running from day to day is going to mean more to a user than a casual game. But, in either case, there’s enough of a connection to ask some questions.

A Crash Course in Survey Development

Writing a survey isn’t as easy as it seems — at least, it isn’t if you need really reliable data. The big problem most people face is that it’s very easy to write questions that are ambiguous. You need to make sure that your questions are as clear as possible so that you get exactly the data you need and that they actually ask for the right information. You need to:

• Write out the information you’re hoping to gather: Don’t start with the questions themselves, but rather the details you need.
• Write questions that you expect would get you the information that you want: You don’t need to ask about anything other than what you really need to know. Keep it to a minimum of questions or people will be less likely to complete the survey.
• Test your questions on real people, even if they aren’t your survey audience: Without having real people try to answer your questions, you’re not going to be able to tell if they make sense.
• Tweak your questions to make more sense: Getting the right questions can require some back-and-forth of tweaking and testing. Consider surveying to be a TDD environment.

You Don’t Need to Reinvent the Wheel

While it’s always tempting to build a whole new function from scratch and make it so much better than all those commercial options out there, surveying is one of those fields that it’s just not worth it for. There are great surveying tools out there, from Google Forms to SurveyMonkey. Go with whatever tool will let you get your survey up and running the fastest — you should be spending your time crafting great questions.

Don’t Have Customers Yet? You Can Still Survey

If you don’t already have customers in place, it will be harder to get information through a survey. There’s just not an incentive for your survey subjects to help you. You can add incentives, like a giveaway, to drive survey responses. However, you’re going to need a much higher rate of response — such situations often result in a lot of junk responses that just won’t be helpful. If you need information from prospective customers, a survey may be the best option, even if it’s not easy to collect the data.

Image by Flickr user Josh Davis