Have you been running into this word, "holacracy" and are wondering what the heck it actually is? Well, this article...

Have you been running into this word, “holacracy” and are wondering what the heck it actually is? Well, this article…

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Have you been running into this word, “holacracy” and are wondering what the heck it actually is? Well, this article is a fairly good overview of the basic ideas. 

“Holacracy is closer to what political scientists call epistemic democracy, where decisions are based more on persuasion and expertise than majority rule. There’s lots (and lots) of discussions in holacracy, but elected individuals are given permission to act how they please until they screw up.”

In case you hadn’t heard, the amazingly innovative folks at Zappos are in the midst of turning their company into a holacracy this year. I don’t have a lot of heroes in the corporate world, but I guess I would have to say that Zappos CEO Tony Hsieh gets about as close as I go. Earlier this year, I was at the Wisdom 2.0 Conference in San Francisco and heard him spell out his vision for how Zappos connects with downtown Las Vegas, where they are headquartered. Here’s a link to his talk, in case you’re interested. This guy’s way ahead of the curve: 

Zappos and Downtown Project: Tony Hsieh

Several years ago, I tried to implement something very close to what holacracy is in my own firm. In the end, it proved just too hard and we settled on a modified, highly flexible hierarchy. I actually spoke with Brian Robertson (the founder of this management approach) about the holacracy approach back then, but he was still getting started, and I decided to forge my own path. In hindsight, it would have been great to have benefited from the wisdom they were then catalyzing. 

Here’s their website: http://holacracy.org/

Critics are inevitable when it comes to new approaches like this, and just last week, The Economist gave what I thought was a fairly weak critique. Yep, management fads come ago, and yep, this approach won’t work for every firm: 

http://www.economist.com/news/business/21606267-latest-big-idea-management-deserves-some-scepticism-holes-holacracy

I’ve no idea whether holacracy truly is a real breakthrough in management science, but I think it’s headed in the right directions. That’s why I’m sharing this with you. I think it’s worth understanding better.

P.S. Thanks to a ping from Thomas Beckett over on Twitter, I’ve just learned about Sociocracy, which is a much older articulation of these ideas:

http://en.m.wikipedia.org/wiki/Sociocracy  

The Vox article was brought to you via a tweet I saw by Jeffrey J Davis 

#holacracy   #management   #zappos  

http://www.vox.com/2014/7/11/5876235/silicon-valleys-latest-management-craze-holacracy-explained

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  1. who “signs the paychecks”  so to speak? 

  2. I still wonder about fundamental differences in practice between holacracy and a well run boundaryless organization.  I will continue to monitor the Zappos  experiment as it is very relevant to the scalability of the concept. 

  3. Stefani Banerian, they still have a great deal of accountability built into the system, so there are definitely people charged with doing payroll, janitorial services, etc. 

  4. Good question, Jeffrey J Davis. In the end, whatever system one chooses, you still need great people to run it. That’s why I was happy to see the folks at Zappos taking this on. Doing this kind of organizational structure is harder, much harder, to run actually. I really earned some bruises and had quite a lot of frustration trying to make something similar work. And, as you also note, they have the scale to really test where it might break down. 

    Medium is of course using this too, but they’re much smaller. 

  5. Thanks to a ping from Thomas Beckett over on Twitter, I’ve just learned about Sociocracy, which is a much older articulation of these ideas:

    http://en.m.wikipedia.org/wiki/Sociocracy

    (post updated to include that link)

  6. Thank you Gideon for this interesting article. I was researching traditional bureaucratic administration so it took my attention immediately. But what I see still very undefined in “holacracy” is the way how to pay for employees. If the employee is member of more “circles” and has a more than one “skill” or talent, supposed to be paid for every of those skills. In reality there are many talented people who left typical corporation because they performed more than was written in their job description and was not paid for that. Let’s say openly – human resources make the highest expenses but also they are the most “squeezable” expenses. So in the view of this, if “holacracy” will just use the additional abilities of employees but do not pay adequately the whole idea of new management will just fail.

    The second note which I would like to say is that this way of organization cannot be applied to every company nor to all of the departments. The “holacracy” expects all of people to be self-aware and self-disciplined, open to a growth and self-improvement. But this is not the case of all people. You are right, great people do great things. They do it because they want not because there is a “suitable” organization. 

  7. Good article.

    A couple other examples of alternative management structures that actually work and are close to holacracy:

    The Morning Star Company: One of the largest processors of tomatoes in the world. No managers. See http://morningstarco.com/index.cgi?Page=Self-Management and I, Tomato: Morning Star’s Radical Approach to Management

    Semco: A company in Brazil that makes marine pumps, among other things. http://www.agreatsupervisor.com/articles/lessons.htm Since this article they have changed to a parntership/holding company, according to their current website. I don’t know how the structure described in that link applies to current work. It is still an interesting read and case study, including information about salaries and profit sharing, Gabrielle de la Fair.

  8. I’m commenting so I can read this later. I’ve always been very impressed with Zappos – even if I’m not a customer of theirs! I enjoyed reading “Delivering Happiness”, which was about their company. They’re very progressive. I’m looking forward to reading this – thanks as always for sharing, Gideon.

  9. Thank you, Jean Egan. I feel the same way, and I loved reading Delivering Happiness too. Great book. Long story, maybe for a later day, but I was part of the team at Microsoft that acquired Tony Hsieh’s first company) LinkExchange, and it most definitely was not like Zappos. He even talks about that experience in that book. I think it was a real lesson for him in what not to do. And I can tell you from personal experience, that that group was not a lot of fun to work with….

  10. I work in a traditional bureaucracy, and frankly have no hope for improvement, due the huge political pressures.

  11. Unfortunately, Stefani Banerian, I think that’s more the norm…

  12. Hi Gideon Rosenblatt  and thanks for this post. I work with HolacracyOne and am regularly looking at what folks say online about #Holacracy . There’s a lot of misunderstanding and misinformation about Holacracy in the press and online in general — which is to be expected for a system like Holacracy that really requires a minimum of immersion to understand it in any kind of depth. To frame the discussion, I’d like to point to our 45-min high level overview video at http://holacracy.org/intro ; it will leave you with lots of questions, but it’s a good first step to open a more informed discussion about Holacracy IMO. Hope you find it helpful. All the best!

  13. Thanks, Olivier Compagne, and it’s good to see you monitoring the social media waves for these kinds of discussions. Thanks for the pointer to the video. Will check it out later. 

  14. The more I am hearing about this, the more I wonder how our government would be if Senators looked directly to their constituency in a similar fashion.

  15. Jean Egan Dare to Dream…..

  16. OK. You just pointed me to something I’d not heard of before, Mark Bruce. How had I not heard of DACs before. They remind me of the companies that the characters in Charles Stross’ Accelerando  spool up to carry out certain tasks. A very interesting idea, and something that is very aligned with some thinking I’m doing these days. 

    Thank you. This is where G+ just rocks. 

  17. Awesome. I’ll check it out, Mark Bruce. Thanks.

  18. This sounds like trying to scale the dynamics of startups to much bigger organization. One important aspect that’s lacking is democratization of the $$$. In a startup everybody has an economic stake in the success. Here, that’s not the case. Nevertheless I do believe it could work. And probably the best chance for the philosophy to prove itself is if a small company grows like this, so it’s part of the culture from the start. Forcing it top-down by dismantling existing structures and basically expecting the culture change will just be so appealing to every body and so successful is very very ballsy, kudos to Zappos!

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