It’s official: Holacracy and similar “flat organizations” are futile.
If you’re unfamiliar with the term (or concept), Holacracy is an organizational structure wherein hierarchy is out. You don’t have a chain of command; there are no level-2 staff or middle management. It’s effectively a company’s way of saying, “We’re all adults, let’s get the work done.” Teams drive productivity, and there are no traditional “managers” to speak of.
Conceptually, it’s awesome. You won’t have random people who are technically senior to you assuming they’re your boss, and you’re free to work unfettered and dip into projects that may have once required permission from an equal.
Unfortunately, Holacracy just doesn’t work. The Evolutionary Leadership theory posits that large groups just aren’t effective without leadership, and leaders aren’t effective without the ability to manage smaller groups. Top-down management may be critical due to our behavioral heritage.
Zappos is the most notable example of Holacracy gone awry, but it’s far from the only tech firm to give a flat structure a shot; Buffer, Medium, and GitHub all tried some variation on the theme. Holacracy doesn’t always work well for larger teams, and doesn’t allow for easy growth. From Medium… about Medium’s attempt:
Our experience was that it was difficult to coordinate efforts at scale. In the purest expression of Holacracy, every team has a goal and works autonomously to deliver the best path to serve that goal. But for larger initiatives, which require coordination across functions, it can be time-consuming and divisive to gain alignment.
Holacracy also requires a deep commitment to record-keeping and governance. Every job to be done requires a role, and every role requires a set of responsibilities. While this provides helpful transparency, it takes time and discussion. More importantly, we found that the act of codifying responsibilities in explicit detail hindered a proactive attitude and sense of communal ownership.
GitHub’s experience with Holacracy was worse. By at least a small measure, it likely aided in one of the company’s most notable developers feel discriminated against. Former CEO Tom Presot-Werner and his wife (who did not work at GitHub) were accused of harassing Julie Ann Horvath into leaving in 2014, when the company was small and utilizing Holacracy. It’s hard to imagine a CEO and his spouse doing the same in a more traditional environment, where there are several layers of control and management between the people at the top and the mid-level people getting things done.
Both GitHub and Medium have moved away from Holacracy.
Valve has long been a shining example of a flat structure working for larger firms, but the patina is wearing thin. Rich Geldreich, who worked for Valve from 2009 through 2014, recently took to Twitter to denounce companies that flatten.
Though he doesn’t name Valve, strong evidence points to his tweets as directly referencing the company. He describes Valve’s structuring as leading to “company-legalized extortion,” given how Valve apparently tied responsibility and performance to results: Assuming responsibility for a project meant you were its owner, and if it failed, so did you.
PCGamer points to a Glassdoor review of Valve that suggests there’s a clique of decision-makers rather than a formalized, top-down management structure. Furthermore, “No matter how hard you work, no matter how original and productive you are, if your bosses and the people who count don’t like you, you will be fired soon or you will be managed out.”
Holacracy and “flatness” are fine for smaller companies that want to use such buzzwords to attract talent. If the startup you’re applying to utilizes such a structure, there’s likely no reason to panic. Small teams need to be nimble, and Holacracy lends itself to that.
But it’s an experimental relic for larger firms. Once rapid innovation is less critical, the business of being a business comes into play. For most tech companies, Holacracy just doesn’t work.