Holacracy: A Fad or the Future?

Zappos

From time to time an organisation is held up to be a leader due to the way it manages its business. The latest company to fall into this category is an Amazon owned online retailer called Zappos. Its run by Tony Hsieh and he is replacing its hierarchy with a series of overlapping, self-organising teams who come together around a specific task. This structure is called a holacracy and its essential principles are as follows:

Energizing roles

The building blocks of holacracy’s organizational structure are roles. Holacracy distinguishes between roles and the people who “energize” them in order to express certain capacities or potentials, perform certain functions, and/or pursue certain results on behalf of the organization. A role is not a job description, as one individual can hold multiple roles at any given time.

Circle structure

Holacracy structures the various roles in an organization in a system of self-organizing circles. Each circle has the authority to create, execute, and measure its own processes in achieving its aims. Circles conduct their own governance meetings, elect members to fill roles, and take responsibility for carrying out work within their domain of authority. Circles are connected by roles known as links, which sit in multiple circles and ensure alignment with the broader organization’s mission and strategy.

Governance process

Each circle uses a defined governance process to create its own roles and policies. Holacracy specifies a structured process known as integrative decision making for proposing changes in governance and amending or objecting to proposals. This is not a consensus-based system but one that integrates relevant input from all parties.

Operational process

Holacracy specifies processes for aligning teams around operational needs, and requires that each member of a circle fulfill certain duties in order to work efficiently and effectively together. The inspiration of the idea came from Arthur Koestler‘s book, The Ghost in the Machine (1967) which suggested that the brain consists of holons which while they are autonomous depend on the brain as a whole. At Zappo’s there will be 140 overlapping circles linked by Hsieh himself. I believe that unless you have a start-up or much smaller organization then the complete absence of a hierarchy in a larger firm will likely lead to disaster.

What do you think? Can the idea of a holacracy flourish or is it just another fad which is doomed to failure? Leave a comment below:

Photo credit: Robert Scoble / Foter / CC BY


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