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Holacracy: the ultimate management-free organization, or just feel-good puffery?

Posting in Technology

There's been quite a buzz about a new management term or philosophy that has entered (or re-entered) our lexicon, ostensibly used to described a management-free organization. When Zappos, the online footwear company, announced last month that it was squishing its management hierarchy in favor of a "holacracy," everyone cheered -- then immediately went to Google or online dictionaries to see what the heck a holocracy is.

So, is a holacracy the ultimate form of management-free organization, or just feel-good puffery? There is actually an entire "constitution" posted that explains the principles behind holacracy. To summarize this lengthy document, Holacracy.org defines the practice 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."

This concept codifies an evolution that has been underway for several decades now, attempting to push decision-making down into the ranks. It has had a variety of labels, ranging from "participative management" to "flattened hierarchies" from "quality circles" to  "employee empowerment," from "employee ownership" to "economic democracy."

The question is: do these efforts pay off?  Also, how often is it more lip service than actual management-free workplaces? Past attempts to flatten hierarchies and push decision-making down to rank-and-file employees have achieved mixed results. Disappointments were not the result of a problem with the concept, but rather, a lot of corporate hot air and not enough actual empowerment at the employee level.

Dan Pontefract, for one, has seen it all -- and he's not impressed with all the current fascination with holacracy. 

"Holacracy will not solve your organizational disengagement issues. Don’t be fooled. Getting rid of titles, managers/bosses and spraying empowerment across your employees doesn’t fix the core issue of today particularly in long-standing organizations with a history of disengagement. Some might say it’s pouring water on a tire fire."

Why won't the holacracy fad fix our corporate ills? As Pontefract puts it, holocracy is not a "silver bullet." The "core issues in today’s organization don’t require the eradication of bosses per holacracy or the creation of overlapping, self-governing circles. What it requires is for employees — bosses or not — to simply become humane."

Simply treating employees with respect and fairness? That tops any management theory or fad. "That’s it," Pontefract concludes.

What Pontefract is driving at -- and what we've seen time and time again since the 1980s -- is management attempting to put these efforts through as "programs" foisted on the rank and file. After the talk and back-patting wears off, it's often back to business as usual, with employees' ideas ignored.

When it comes to distributing power to employees, a couple of things far more substantive than programs or corporate edicts have been turning the business world upside down -- and often haven't required any formal programs or management memos:

Technology -- especially social media, "bring your own" devices and cloud applications -- has been leveling the organization like nothing before it. This is enabling the growth of networks that gel together to collaborate on opportunities and challenges, then just as quickly move on to something else. In a networked organization, the CEO and CMO communicate on the same level as line employees. (Even though they still get paid more.)

An entrepreneurial startup culture is pervading through some organizations, and is the ultimate form of independent initiative. Employees are increasingly being given the opportunity to innovate, create and build on their ideas. Organizations are recognizing that the bureaucratic feel-goodness of holacracies are no match for fired-up entrepreneurs. There are entrepreneurs fighting to get out of every business unit or division, and once unleashed, their potential to move organizations in profitable new directions is powerful. (They and their organizations need to be willing to also assume risk as well.)

(Photo: ICANN.)

— By on January 16, 2014, 2:21 PM PST

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure