TL;DR: Allow middle management to fight wars of independence against upper management.

Note from the author: implementation of ideas in this article can be potentially disastrous. I do not want to become the second Karl Marx.

Currently there are projects who] are trying to democratize corporations by putting the decision making directly in the hands of stake holders. After all, if we value democracy in our government why should we accept anything else in our work place. This way we can protect both the rights of workers and the equity of investors.

Here is the hard truth with direct democracy, the form of government that puts power directly in the hands of stakeholders, is very rare. The only modern day examples of this form of government is Switzerland. Almost every other democratic nation has a form of representative democracy, where our elective representatives make decisions for us.

It's just really hard to keep an organization functioning when there is no one who's full time job it is to organize it. And we eventually come to see those people as our bosses. Now, that is not to say direct democracies cannot be successful. Ancient Athens upheld this system through out its entire history. Even in the business world some smaller companies are owned and managed by their employees (see law firms). The problem is that direct democracies does not scale.

Having said, why don't we try to implement representative democracy in our work place. Well, functioning democracies cannot pop into existence out of thin air; see post independent colonies as an example. They must naturally form over time as people become accustomed to them.

Here is a very simpled historical path that many modern European nations have taken:
Absolute Monarchy -> Feudalistic Oligarchy -> Representative Democracy

Here is how this is parallel in companies:
1. First when the company starts it's basically an Absolute Monarchy. The founders have a lot of freedom to run their business as they see fit.
2. When companies go public they transform into a Feudalistic Oligarchy. The CEO is held accountable to to the board of directors who serve as king makers.
3. And many executive have their own little kingdom / departments which fight against each other.

In fact, this parallel is so strong that many on the internet who work in mega corporations compare their positions akin to the serfs of old. And while unions are collective bargaining have been tried as a solution to protect workers, in recent times their power has been dwindling (in no part thanks to the effort of upper management). And although government regulation is somewhat more successful at protecting workers rights, there is still much to be desired.

When it seems like we already have feudalism, and it isn't helping many people. So whats missing? Well, rebellions.

Feudal lords to the most part were independent, they upheld their own armies, collected taxes, and passed judgment. Feudal kings were under constant threat of rebellion. To a certain extend this kept kings in check. So how would rebellions work when it comes to corporations?

There is the old adage, fight fire with fire. Well we can fight upper management with middle management. Essentially I would allow different subsidiaries of companies declare independence from their parent corporation while holding the same employee and share holder structure.

How will workers rights be protected, well the middle management would have to convince workers to go along with his plan. Perhaps using incentives and more freedom, company structure or different business direction. This is a very temporary form of a union, and workers will sure as hell hold their bosses accountable to that, especially since they are the ones who suggested it.

But what benefit might the departments have to break away. The most profitable departments might choose to break away from the company to capture a larger share of the profits. This will also prevent one department from subsidising another, preventing predatory pricing. They might also choose to start a new direction for the company without the bureaucracy of upper management.

Of course there are still many problems with this that also plagued unions. What if some workers did not want to be separated from the parent company. Although traditionally if a merger / breakup does happen it's not like they have a choice in the matter either.

How do companies go along with splitting assets and liabilities. As investment bank's know the cost of company breakups are huge, many times the cost of mergers, which are not easy either. What if the entire company has one HR department?

There are some problems with this idea, if you become known as the guy who rebelled against upper management it becomes really hard to convince another company to let you climb the corporate ladder. You have damned yourself to becoming an entrepreneur. Although they could also be hired as a threat to upper management.

Wouldn't this make businesses less efficient as they become smaller? This may not be the right idea, but I believe it is a step in the right direction. Many companies have been broken up and have done better. Take PayPal and Ebay, or the Standard Oil Company

Companies be be built from the ground up to accommodate such a change. This will also help with anti monopoly cases. A large number of small companies will help income inequality more than one large company, Although it might have some downsides (see Germany) Also, companies can just move their headquarters.

This is a seed of an idea, I welcome any input.