In early 2014, American online retailer Zappos announced they would be embracing a new management system known as Holacracy. As a result, the innovative and radical approach has been surrounded by a whirlwind of media hype. Pioneered by entrepreneur Brian Robertson in his software firm, the trademarked management system was first introduced in an article in 2007. Since then, it has been adopted by a handful of small organizations. However Zappos is the first large organization that has made an attempt to adopt the management system. As a result, the company has attracted an abundance of attention, and it’s no surprise that other large companies are now considering if Holacracy is right for them. Holacracy certainly sounds good on the surface, but like any business decision, should be approached with skepticism.
An Unconventional System
Instead of the traditional organizational layers, holacracy consists of self-governing “circles.” “A circle might wrap a specific project, product, department, business line, or a general function of the organization,” says Robertson. Within the circles, decisions are made democratically.
Though the emphasis of holacracy is on democratic decision-making, it is also rigidly hierarchical, with higher circles having complete authority over lower circles. Robertson took inspiration from the book, The Ghost in the Machine, in which Arthur Koestler argued that every aspect of life—from atoms to societies—are naturally arranged into hierarchies of entities he called “holons.” Thus, the word holacracy is derived from the word “holon.”
Why Choose Holacracy?
Robertson maintains that the usual “predict-and-control” management paradigm—where leaders set goals and design a plan for how to achieve them—is dated. He believes it cannot respond to increasingly rapid change, and that it fails to engage a new generation of workers that demand “greater meaning and purpose” in their work.
Holacracy’s democratic and fluid circles are meant to solve this problem. The end goal is to empower employees. Robertson asserts that holacracy results in “dramatically increased agility, transparency, innovation, and accountability.
Criticisms of Holacracy
In a widely read Forbes blog post, writer Steve Denning points out that by mistakenly focusing on its supposedly “management-less” structure, the media hype has actually obscured some of holacracy’s shortcomings. Though it’s true no one in a Holacracy system has the title, “manager,” it is far from freewheeling or structureless. Holacracy has cumbersome complex procedures—and potentially far more bureaucracy—than a traditional management system. Denning also points out that the emphasis of Holacracy is entirely on employees; the needs or wants of the customer do not factor into the system at all.
Take it a Step Further
You’ve read the article and recognize there’s room for improvement, now what? It’s time to talk to Dwight. In one phone call you can learn how the right Organization Design can benefit your organization.
 
