Holacracy: Is this the logical step for the evolution of the organization?

There is quite some buzz about a specific organizational governance approach these days – the “Holacracy” model. This week Zappos announced the implementation of this model and now the expert community is arguing about the pros and cons of the approach. Especially as it is labeled to “replace today’s top-down predict-and-control paradigm with a new way of achieving control by distributing power” the Holacracy model seems to be the organizational approach the social enterprise community is asking for so long. It seems to be somehow a logical next step, but we’re not quite there yet.

For most companies a Holocracy is either a very scary or a very unobtainable model. Let me explain.

Holacracy – the governance model for a Holarchy!

Source: http://www.integrating-perspectives.de/wp-content/uploads/2011/10/IMG_0691-edit.jpg

So, what is a Holacracy? In a nutshell, it is a governance approach for a purpose driven structure where tasks are defined in service of that purpose. People serve the purpose and themselves.

In essence, it is based on the concept of self-directed work teams. By eliminating the conventional structure (no managers, no job titles, no hierarchy) and placing people in self-governing circles, a company is said to become increasingly agile, efficient and innovative. Accountability falls directly to the person responsible for the task, and there is nowhere to hide due to the (extreme) transparency.

The idea is similar to a command-and-control structure which is fed by its business objectives.

By the words of Brian Robertson:

“The root of the word “Holacracy” is holarchy. Holacracy is governance (-ocracy) of the holacracy (hola-), and a holarchy is a hierarchy of increasing wholeness or increasing embrace, where each layer is a whole autonomous entity in its own right, and yet part of a larger whole. Like, for example, our human body is one great example of a holarchy. We have cells, and each cell is autonomous. It’s not just directed and controlled from the outside. It has its own governance process, a regulation process; it has its own boundary, and it’s an autonomous entity. And yet it’s also part of an organ. And our organs themselves are whole autonomous units with their own functions, and yet they’re part of our whole system.”

See this neat little video of Brian explaining the core concept:

So in the Holacracy everybody is a part and the whole of the company, a holon. Eliminating top and bottom or left and right entirely.

The way I see it, you need quite an open minded, flexible and progressive working culture to even think about such a change.

Zappos tries to enforce its evolution in a holocratic way!

The well known, and somewhat rebellious Zappos announced that it would transform its corporate structure into a holarchy and implement the Holacracy model as a management model in the company. In the process they are kicking up a (social) dust cloud about what appears to be a new way of having a corporate structure. Or rather, a complete lack of a corporate structure.

The idea behind this transformation is not to bog the company down in bureaucracy. This is done by creating ultimate transparency.

The holocratic approach has been around for quite some time though, and Zappos is not the first to implement its governance derivative, the Holacracy. Although, they are the biggest yet. The announcement has stirred up quite some discussions – while the whole “future of work” community is very much enthusiastic about this move, there are also some ressentiments in regards to the approach:

Business Insiders’ Alison Griswold is refering to Jan Klein, a senior lecturer at the MIT Sloan School of Management and pointing out the following issue:

People just didn’t self-regulate as well as the companies had hoped. Teams weren’t good at disciplining themselves either. “We’re human beings; we just don’t do that,” Klein says. “We’re social beings, and social issues get in the way of logic sometimes.”

I would argue that a Holacracy is the ultimate form of a Social Business. It is what we aim to achieve in its purest form. And in regards to the mentioned pitfalls it might even be the supporting, collaborative technology that is now the missing link for the organizational approach.

In the search for the truth about the Holacracy model

As I am not the expert on organizational design models I have asked a few friends for their take on Holacracy idea..

Jon Husband, expert on organizational design and intellectual father of the term “wirearchy”:

“Over the next decade or so there will be more initiatives such as this one .. maybe even many more.  It’s likely that a few will work well, some will work well enough to maintain momentum and progress and that many will struggle or fail.

What is certain is that the Web, networks, software and apps and mobile devices won’t go away.  The choices and possibilities will only increase.  It creates a challenge that involves fundamental technological, social and business logic, decisions and dynamics, and must account for fluidity and persistent change.

Holacracy is an branded approach to seeking and shaping coherence in this environment, and is based on several core OD principles about inclusion, participation, and decentralization of accountability.

It is one example of design constraints derived from established organizational behaviour principles.  There will be more … there will be an ongoing search for approaches or methods for bringing or extracting productive coherence from the waves of information flows and mediated human interaction that increasingly characterizes today’s working environment.

Whatever emerges from this search and becomes more widely accepted needs to be based on a foundational set of assumptions about what are the consistent elements of effective organizing-for-purpose-and-productivity in a networked era.  And the famous ROI question .. it will eventually need to demonstrate tangible benefit and value.”

Larry Hawes, thinker, adiser and GigaOM analyst:

Research and experience show that organizations need different structures and governance models at various points of their life. Those needs are fairly predictable in a stable world, but are emergent in a volatile, networked business environment, like the one we’re in now.

Holacracy is likely to be a viable model for some organizations at certain points in their existence, particularly fast-growing small businesses. However, it is not likely to be a beneficial rip-and-replace alternative to traditional hierarchy in most existing large organizations.

Lee Bryant, social business evangelist and founder of Postshift:

I think Holacracy is an interesting model that provides a structural template for organisations wanting to try manager-free working but don’t know how to begin. It is no surprise, then, that is it the go-to model for firms like Medium and Zappos. However, it is a complicated and in some ways quite demanding model when fully applied and I think organisations should ideally take what works works for them and make it their own rather than obsess about full compliance with the model. In that way it reminds me of agile, which if implemented in an overly-ideological way ends up favouring those who know the ‘system’ and can become slightly ridiculous.

There are other aspects of how people can collaborate and get work done in an environment with E2.0 or social business platforms that are not strictly part of the model, and I think these are also worthy of consideration, but what Holacracy seems to get right is the pure focus on tasks and resolving tensions that get in the way of their fulfilment, which I find refreshing compared to models of bureaucratic management.

There is a wealth of new thinking around about radical management, new thinking on organisational design and culture and other areas, and it will be interesting to see how existing large firms attempt (or not!) to use this, as well as these ideas providing a new set of templates for companies just starting out on their journey.

Lee will also provide his input at the conference on the session  about Defining the Leadership Model and Design of the 21st Century Organisation – together with Bernard Marie Chiquet, a certified Holacracy coach from Paris. Therefore I am very much looking forward on this!

My personal thoughts on the Holacracy as the future model in the context of #e20s

During the Enterprise 2.0 SUMMIT there will be a lot of attention to facilitating change with the aid of social. A goal is to bring social into the fold, making it an integral part of the corporate structure, fully supported by the boardroom. Not something that happens on the sideline, run by enthusiasts and Corporate Rebels in their down time.

By any reckoning, a business cannot simply jump from an old school top down hierarchical culture to a full on Holacracy. There have to be some steps in the (very big) middle. This is Social Business as we know it now.

The future will tell if this is for the few or for the many. In my opinion, we’re not there yet. What are your thoughts on Holocracy?

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I'm a Social Business addict coming from the technical depths of IT and rising from these dark ages, through web and social, to the enlightened field of Social Business.
Also blogger, podcaster, talker and listener.

  1. Olivier Compagne says:

    Hi , cool article and appreciate the open inquiry. There are many misconceptions about Holacracy that have been relayed in the press lately, and if you’re interested in understanding Holacracy, I suspect you’d be interested in these two blog posts:
    – “Five Misconceptions About Holacracy” https://medium.com/about-holacracy/da84d8ba15e1
    – “Zappos at Holacracy”: http://rianschmidt.wordpress.com/2014/01/07/holacracy-at-zappos/

    All the best!

    • Rogier Noort Post author says:

      Thanks for the comment (and compliment) Olivier. Also, thanks for sharing those additional resources, the more information, the better.

  2. helen says:

    We think it’s a logical step at Gamevy! Zappos, Medium, Treehouse, Valve … there are a lot of companies trying radical business ideas. We write about other companies and our own experience in what we learn as we try the ideas in our own company: http://giantleap.me/

    • Rogier Noort Post author says:

      Yes Helen, certainly, for some companies it is the a logical next step, that’s what makes it so very interesting. They put themselves out there, do it, take that next step or take that leap. If it weren’t for companies like that, we’d still be stuck in the Dark Ages.

      Love the blog, by the way. Thanks for sharing your thoughts.

  3. Faly Ranaivoson says:

    I shall disclose I’ve been trained in the system.

    Thanks for this article Rogier. I particularly liked how you asked for insights among your friends.

    I think claims such as “replace today’s top-down predict-and-control paradigm with a new way of achieving control by distributing power” go a little bit far. Context is everything and a top-down approach is perfectly valid in a stable environment. There’s a key principle in complexity that says that an effective intervention in a system is coherent with where the system is at. Zappos is not your everyday organization and if I remember correctly, being a little weird is part of their culture. They are ready for this kind of approach. So, I would agree with you that for the large majority of companies, attempting to implement Holacracy would be very very scary and even inappropriate.

    I’d like to add a clarification though. When you write “So in the Holacracy everybody is a part and the whole of the company, a holon”, I want to point out that the system does not organize people but roles. Sounds like a small nuance but it’s actually a core distinction. Same, people are not placed in self-governing circles, rather it’s a holarchy of roles with widening scopes. Practically, you often fill multiple roles in an organization running with Holacracy. And you often fill roles in multiple circles. That’s one of the reasons why it makes no sense to talk about bosses in this particular context.

    Hope that helps. Would love to attend the Summit in February (I’m in Geneva). Make sure to bombard Bernard-Marie with tons of questions when you meet him 🙂

    • Rogier Noort Post author says:

      Thank you Faly for that extended comment. Your remarks are duly noted.

      For me personally, Holarchy is still waaayyy out there. I have never worked for a company where something like this, or even remotely similar, can even be considered.

      Stay online with Twitter, maybe you can ask the questions yourself, or, better yet, visit the Summit.

  4. Bernard Marie Chiquet says:

    Hi ,
    Love your post, questions and inquiry. I don’t know Holacracy is this the logical step for the evolution of the organization. I have discovered it 4 years ago and have been deeply tested it within iGi Partners and clients – this is for sure a disruptive technology – which get interests from many companies. Let’s see where this one will go. I am sure other will emerge or have already emerged that I even don’t know. We are at the very early stage of this technology and still wondering and discovering by experience which kind of companies are ready/willing to make such shift.
    I also agree with Olivier Compagne when he says that there are many misconceptions about Holacracy that have been relayed in the press lately. I love the Lex’s blog trying to figure out these misconceptions : “Five Misconceptions About Holacracy” https://medium.com/about-holacracy/da84d8ba15e1
    Holacracy is hard job to explain in some words as it is an emerging practice from experience, not a theory. I am happy to attend E20 and looking forward to meeting you in person.
    Best, Bernard Marie Chiquet

    • Rogier Noort Post author says:

      Thank you . Yes, from what I gather, it’s not as straight forward as one might hope. My guess is, it takes two (major) steps of understanding, firstly, wrapping your head around the concept of a flat (or no) hierarchy (the actual change), then the practice itself (the process).
      It’s like firstly realising people can actually walk on the moon, and then figuring out how to do that. Maybe a bit of a stretch for a metaphor, but I think for a lot of people, this is true to scale.

      Anyway.., would love to continue the discussion in February.