To the commenters here who notice there may be an upper limit on the number of employees David's approach is valid for, keep in mind that the subtitle of the article identifies "small business" as the scope. Thus the counterexample of Google seems unfair. That said, the legal definition of "small" in the U.S. for most nonmanufacturing businesses is that the business must have less than $7 million in annual receipts (http://en.wikipedia.org/wiki/Small_business#Size_definitions). It would be interesting to know if David feels there exists an upper limit on the number of employees in order for a flat structure to work, and if so, what that number might be. Since large organizations, if they are designed well, are just a latticework of small organizations maybe it's possible there is no upper limit.

Regarding David's larger point I would add that having a boss tends to make people feel slavish and subservient to a certain extent. This creates an unhealthy work environment compared to the ideal in which all employees are truly on equal footing as regards power. One of the tragedies of working for a manager is that nervous feeling you get when you ponder how much control this one person wields over your career. A superior organizational design is one that takes care to hire people who are great at managing themselves and entrusts them with the power to do so.