Hola-what? What Holacracy Could Mean for Organizations and Your Career

Spend Matters welcomes another guest post from David C. Wyld of Southeastern Louisiana University.

As a management professor and consultant, I’m a big believer in the adage “good artists copy, great artists steal” that is usually attributed to Pablo Picasso. A fairly well-known executive by the name of Steve Jobs who ran a fairly successful outfit in Apple was also an advocate of this concept. And so, whether you call it benchmarking, adopting best practices, or just plain copying what works and whatever your position in the organizational hierarchy may be, it’s a great career move to try and stay up on the latest management ideas that may be “adaptable” to your organization.

And so in that spirit, today’s buzzword is an idea that is truly a new concept for organizing - a concept that should make any manager at any level of any organization a bit to a lot nervous. And when you read a headline in the Washington Post that reads: “Zappos says goodbye to bosses,” if you have a C as the first letter in your job title, you may well feel your heart rate go up a bit.

The concept is holacracy. What does that mean? Let’s go the source, as there’s already an organization called HolacracyOne, devoted to this emerging concept. They describe it as “a comprehensive practice for structuring, governing, and running an organization. It replaces today’s top-down predict-and-control paradigm with a new way of achieving control by distributing power. It is a new ‘operating system’ that instills rapid evolution in the core processes of an organization.”

In a holacratic organization, work is organized around the tasks that need to be done, with employees filling roles, none of which being explicitly managerial. Thus, any semblance of a traditional hierarchy of managers and subordinates is eliminated and power is distributed throughout the organization. However, it’s not a “wild and free” environment, as there is an explicit governing process to make sure expectations and responsibilities are met throughout the company. As HolacracyOne put it:

“Holacracy places the seat of organizational power in an explicit process, one which organizes around an explicit purpose. This allows emergent behavior of the whole system, without being controlled by either a single heroic leader or even the collective group.”

The process of a holacracy is based on the Holacracy Constitution, which “documents the core rules, structure, and processes of the Holacracy Organizational Operating System. It enables an organization wishing to use the Holacracy system to anchor that intention concretely and in detail, and ensures everyone has access to the ‘rules of the game.’”

The Zappos story has garnered a great deal of media attention for the holacracy concept because of just who is involved in it. The firm’s current CEO, Tony Hsieh, has been regarded as a maverick leader who has been allowed to nurture a unique and innovative culture within Zappos, even as it is owned by Jeff Bezos’ Amazon. But is has also been a big story because the company has vowed to fully implement holacracy in its organization by the end of 2014 - meaning no more “managers” by the end of the year.

In the Washington Post story, John Bunch, who is leading Zappo’s holacracy transition as an advisor to Tony Hsieh, explained that as the company grew, bureaucracy was impeding Zappos’ ability to get things done. So, the decision was made to implement holacracy, making Zappos the largest company to date to commit to this new way of organizing. As Bunch said, “While people have latched on to the idea that Zappos is getting rid of managers, what the company is actually doing is decoupling the professional development side of the business from the technical getting-the-work-done side.”

To be certain, Zappos’ move to wholeheartedly embrace holacracy will be a “must watch” business story, and the degree of success or failure - and actual speed - the company finds in moving to this new form of organization will likely be a huge influence on whether the concept will go mainstream or not. In other words, will it become a best practice to be copied from organization to organization? From the consultant/professor side, it will be interesting to see the degree to which holacracy will become an accepted way of organizing not just companies, but also health care and - dare we say it - government agencies.

Yet, to me, the real story here is the fact that leaders such as Tony Hsieh have the - how do I put it delicately - cojones - to make such bold decisions. There are countless great stories in business about leaders who have made similar decisions that are “bet the company”-level risky moves, moves that are even made bolder when taken not at a time when the company was doing badly, but when it was doing fairly well by most conventional measures. And so you must ask yourself: Would you be able to make a similar move that would (hopefully) pay off for you and your organization? And secondly - but just as importantly - are you giving your employees the encouragement - and space and support - to do so themselves? Maybe not for such “big picture” moves, but certainly for the little areas of discretion in which one worker, one group, one team, etc. can make a difference in the way any organizational function - from IT to procurement to sales to HR to heck, housekeeping - is done.

I’m not just talking about large for-profit firms that choke off innovation and prevent any meaningful change from occurring. There’s also the problem of rewarding status quo managers who do nothing more than making certain that there is an unrelenting emphasis on order over excellence and achievement.

No doubt, saying “Let’s change our structure to a holacracy” is the “double reverse fake punt” of managerial moves. It may be regarded as a gamble by many, but for others, it may be regarded as a smart play - especially if it builds on the good practice. In the meantime, let's see if this big play works out for Zappos.

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