Welcome to strategy+business. Here’s what’s new.
strategy+business: Corporate Strategies and News Articles on Global Business, Management, Competition and Marketing

The Audacity of Holacracy

Ted Kinni

Theodore Kinni is a contributing editor of strategy+business. He also blogs at Reading, Writing re: Management

 

 

 

 

These days, utopianism is rife in the business world. Perhaps it presages an evolutionary leap to a brave new paradigm. Perhaps the proliferation of pie-in-the-sky thinking is a reaction to the unsettled times, driven by environmental threats, shifts in the global power structure, technological disruption, and economic disparity. Perhaps it’s a cyclical outbreak — an overly exuberant bubble of dissatisfaction with business as usual that will naturally deflate over time. In any case, there seems to be a notable increase in proposals aimed at transforming business from a heartless profit mechanism into a force for good that empowers people and enriches lives.

One of the most radical of these proposals has been put forth by Brian J. Robertson, computer programmer, entrepreneur, and, most recently, management messiah. In Holacracy: The New Management System for a Rapidly Changing World (Henry Holt, 2015), Robertson, without a shadow of doubt and with little due diligence, calls for a fundamental revamping of how businesses are run.

You’ve probably heard of holacracy by now. The controversial management concept has received a lot of media attention because Tony Hsieh has been adopting it at Zappos for the past couple of years; back in April, almost 15 percent of the online shoe-retailing company’s then-1,500 employees took a live-it-or-leave-it buyout offer rather than stay the course and commit to holacracy. That’s a pretty notable number because Zappos is known for its culture of empowerment and its highly engaged employees.

However, most of the Zappos coverage doesn’t really get to the radical and utopian nature of holacracy. For that, you need Robertson’s book.

It’s a sneaky read. One minute, you’re immersed in the minutia of vocabulary and etiquette that governs this alternative “social technology.” The next, you realize that Robertson’s rules of order are intended to do nothing less than completely replace the hierarchy of managerial power and authority on which all large companies are structured.

How does he propose to overturn millennia of top-down organization design and custom? By reshaping it. Briefly, holacracy requires redrawing the organizational pyramid as a circle. This “anchor circle,” which encompasses the entire organization, contains a bunch of smaller subcircles, each of which contains a bunch of related roles. Every circle is connected to anchor circle via two links — a “lead link” that is appointed by the anchor circle and a “representative link” that is appointed within the circle itself.

Every role within every circle is imbued with the authority needed to perform it and is accountable for that performance. “When you fill a role,” writes Robertson, “you gain authority to take any action you deem useful to express that role’s purpose or energize one of its accountabilities, as well as you can with the resources available to you, as long as you don’t violate the domain of another role.” If you need more resources or need to encroach on another domain to fulfill your role, you go to your circle and apply for the resources or authority. When you ask, the people who are fulfilling the roles in the circle are supposed to vote to grant your request as long as it doesn’t “cause harm or move the circle backwards.”

No more marching orders from the Olympian heights. According to Robertson, decisions — even strategic decisions — will bubble up and across the organization, rather than flow down from the top. An employee will sense a “tension” — an unaddressed need in the market or a bottleneck in a process, for example — and will seek to resolve it. No need for performance appraisals or managerial oversight to ensure accountability. Employees won’t drop the ball because they don’t want to let their circles down.

If it seems that the author advocates creating an entirely new system that has never been tried before — except in a few communes, perhaps — that’s because he does. Accordingly, holacracy also requires a very specific language and the adoption of a set of rules that every employee must learn and use. These rules are codified in a “constitution.” Oh, by the way, says Robertson, “the very first step is for the CEO to formally adopt the holacracy constitution and cede his or her power into its rule system.”

I don’t mean to be cavalier or snarky about any of this. Hands down, Holacracy is the most audacious business book I have ever read, and I’m very impressed by the degree of thought and effort that have gone into developing this system. It’s on a par with the job the founding fathers did on the Constitution of the United States.

But I have no idea if holacracy can work in a large company. Robertson tell us that it is working in a few hundred small companies (including his own firm, which helps other companies adopt the system). He’s also holding up Zappos as a case study in progress, implying its success will prove that holacracy can work at scale. But we don’t know if it will be a success. And even if it is, a company whose payroll numbers about 1,300 (as Zappos’s did after the buyouts) isn’t a big company. The real question is whether a company the size of Amazon, Zappos’s parent, with more than ten times as many employees, can operate as a holacracy. Wouldn’t watching a self-described control freak like Jeff Bezos cede power over the organization he has built in his own image be something to see?

Comments

 
The Audacity of Holacracy