Holacracy: Chaos, or Way of the Future?

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Earlier this year, Zappos announced that it would move from a traditional management hierarchy to a “Holacracy,” with decision-making authority spread out among teams.

At least on paper, Holacracy allows big companies to maintain a startup-style nimbleness, by freeing employees to quickly move between teams (referred to as “circles”) whenever needed, and by giving teams considerable influence over the overall direction of the organization. “A person who just takes phone calls can propose something for the entire company,” one Zappos employee told The New York Times in a July profile of Zappos CEO Tony Hsieh. “It’s empowering everybody to have the same voice.”

According to NPR, Holacracy has spread far beyond Zappos, with more than 300 organizations either using the technique or testing whether to adopt it.

But how does Holacracy work out in the real world? Early reaction is mixed; Zappos employees told multiple news sources that the adjustment has been a slow process, with lots of confusion over how teams actually work within the new paradigm. Nor is it easy for many of these recent adopters to learn tips and tricks from firms with mature Holacracy implementations; even the longest-running practitioners of the technique have only been using it for a couple of years at most.

In a posting on Medium, Diederick Janse, who coaches companies on implementing Holacracy, recommends that companies pause to “review the coherence” of the organization, and “use domains to clarify ownership and authority.” Purpose is king, he added: A weekly meeting to review that purpose can give employees within a Holacracy a more proactive approach to assuming responsibilities.

At its heart, a Holacracy seems to demand that its employees utilize a superior self-awareness, the better to navigate through an organization that lacks the rigidity of hierarchy. That sort of self-awareness is easy to find in startups, where employees must sense and deal with obstacles and challenges on a daily basis; but in a large organization with a lot of moving parts, a weakening of hierarchy, unless properly managed, can lead to chaos. The ultimate success or failure of Holacracy will ride on companies’ ability to push through that potential for mayhem.