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Could your company embrace Holacracy?

By the end of this year Zappos will have a completely flat (or as completely flat as the law allows—there have to be people in charge of the business by law) organizational structure. Zappos is moving towards _ Holacracy_—no managers, no forced hierarchy, just people coming together into groups or teams as needed to get things done. Zappos isn’t alone, W. L. Gore (makers of Gore-Tex), 37Signals, Valve, Evan Williams’ Medium, and other companies all have flat organizations based on Holacracy. Is this an idea that your company should look at too?

What is Holacracy?

From Wikipedia:

It has been described as: “essentially a set of inward-looking hierarchical mechanisms that connect ‘circles’ (of staff). Each circle is required to be run democratically and openly, with exhaustively detailed procedures on how things like meetings are to be managed and how decisions are to be made.

So, in practice, companies should be more self-organizing on what needs to get done and less about the various levels of management. Soon after Tony Hsieh made the announcement of Zappos adopting Holacracy this year, Forbes had a short article about how some successes with the practice. Not a lot of detail in the article, and I think many of use will be interested to see how Zappos makes the transition. Beyond who is trying or using Holacracy, it’s equally important to know that Holacracy is a concept owned by—this isn’t just a management practice born out of business school—it’s a business of its own.

Continuing from the Forbes article:

“There is a growing body of evidence that shows organizations with flat structures outperform those with more traditional hierarchies in most situations,” wrote Tim Kastelle in the Harvard Business Review.

A recent study from Texas A&M researchers, for example, found that teams of factory workers who managed themselves outperformed workers organized in hierarchies. Flatter organizations empower employees, giving them more power to make decisions — from what project they want to work on to which of their co-workers deserve the highest compensation.

Flat structures work best when a company’s main point of differentiation is innovation, said Kastelle. They also work well when teams need to be more nimble to respond to a rapidly changing environment, and when the organization has a shared purpose, he added.

It sounds like Holacracy might be just the ticket for a company that wants to be more innovative or break the bonds that hierarchy have shackled them with. Make people more responsible for themselves, though not exactly leaderless, to make the company successful. But…

Is this something your company could adopt?

Experiment or all-or-nothing?

One of the key questions I have, and I’m sure many others would have as well, is whether to get the benefits of Holacracy do you have to go full-bore and switch the entire company or could you start with a small part of the company first? For a small company like a 10 person startup; Holacracy would be easy to pull off for everyone. But as you scale, as there are different areas of responsibility, the transition becomes more complicated. However trying Holacracy with the art department or even your developers could prove to be just the boost that’s needed.

Managers or Leaders?

One of the misconceptions of Holacracy is that it’s without leaders, but in reality it’s just a system without _managers_—people who just delegate what needs to be done and less actual doing. Expanding on this idea is the work of Dr. Jeff Sutherland who is the co-creator of the Agile Scrum method. In an article from OpenView partners, managers (in the traditional sense) are an endangered species that needs to adapt or die. Dr. Sutherland makes the case that just having people manage others isn’t nearly as efficient as having people lead others. Just set things out that need to get done—and get out of the way.

Many of us are tied up in titles and “being managers”

In North America we’ve been taught that the top-down, hierarchical model of business is the right one to follow. It worked great for militaries around the world, it should then work for business too. That might have been true in the past, but maybe today we need to look at other approaches to getting work organized and done in our companies. Perhaps going to a full-fledged Holacracy is too far, but maybe the first step is asking yourself if your people are too tied up in titles than actually just getting things done.

Worth a thought.

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Inscape Consulting Group
Greg Nichvalodoff, BSc. BM (Honors), MBA, PCC, CMC
Office: 604.943.0800
Mobile: 604.831.4734