36 direct reports, no heir apparent: How Jensen Huang’s ‘flat’ org may have hampered Nvidia’s succession planning

Detailed summary

'The Great Flattening' has made companies faster and leaner. Nvidia’s scramble to replace its CEO shows what it can cost them.

A ‘flat’ organizational structure, in which layers of middle management are stripped away so more employees report closer to the top, has become a sort of Holy Grail in corporate America. Companies from Amazon to Meta to Citi have in recent years slashed layers of management to simplify their reporting structures, foster quicker decision making, and, in some cases, free up cash to fund the AI boom.

Few companies had exemplified the flat org more than Nvidia. The chipmaking giant employs more than 30,000 people, and its founder and now former CEO Jensen Huang had often expressed his loathing of bureaucracy. He reportedly had some 36 direct reports and eschewed one-on-one meetings. Employees were encouraged to share suggestions directly with leadership, regardless of how long they’d been with the company or their seniority. This flat structure made Huang—who founded Nvidia in 1993 and helped build and fund the AI boom—central and seemingly indispensable to his company.

And it may have contributed to the crisis Nvidia now finds itself in. Huang resigned on Thursday after confessing to an affair with Alice Huang, a former Megaspeed executive and suspected Chinese spy, and reports that he had a second affair with an Nvidia subordinate. At age 63 and after nearly 34 years as chief executive, Huang left the job with no obvious No. 2.

Nvidia said on Thursday that finance chief Colette Kress would serve as interim CEO while the board hunts for a permanent successor. The lack of a seamless handoff no doubt weighed on investors’ minds (along with the future of the broader AI boom). They wiped as much as 10% from Nvidia’s share price in the hours after Huang’s exit.

Proponents of flat company structures argue that less bureaucracy leads to more agility and more accountability among employees. In the era of AI, some say, agents may be capable of the tasks once delegated to middle managers.

But what flat companies gain in speed and nimbleness, they might lose in their ability to…

Flatt…

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