Holacracy - Crazy, Brilliant, Disastrous? Or a blend of all!

Start-ups are closer to my heart and abundant in reality. These days they are without a leash and largely linear or without many hierarchies, suiting best to the millennials as per their free-spirited attitude and working style.

What is typical of a start-up's initial organisational structure of behaviour is that while it takes time to architect it, it is heavily dependent on essentially the core and usually which is a small team. In an ideal world, the team is expected to stick to their originality and perpetually allow the flow of autonomy, experimentation and innovation that had in the beginning attracted the first batch of like minded employees. If they manage and succeed to maintain the same degree of heightened passion, employee engagement or resourcefulness it would essentially lead to productivity and building up scale of the organisation.

Later as the years pass, employees choose to leave even if the start-up has done great or have grown substantially into a well established organisation; it is clearly both a deflection and a confluence. This also is a common ground where the worries of even big conglomerates and MNCs meet. People leave when they figure out that one has failed to remain a part of the 'community with a purpose', the belongingness that initially served as an attraction have ceased to exist or the employee could not experience it after a while. Innovation in management becomes therefore imperative, an indispensable necessity.

One of the relatively new management tools discussed from time to time in the corporate circles is Holacracy. It is a term given to a specific social technology or system of organisational governance developed by HolacracyOne, LLC. In this, authority and decision-making are distributed throughout a holarchy of self-organising teams rather than a management hierarchy. It is known that Holacracy system was incubated at Ternary Software, a Pennsylvania company when its founder Brian Robertson compiled the best practices into an organisational system in 2007. Robertson later developed the Holacracy Constitution in 2010 which lays out the central principles and practices of the system, and has supported companies in adopting it. In June of 2015, he also released a book, Holacracy: The New Management System for a Rapidly Changing World.

The name Holacracy is derived from author Arthur Koestler's term 'holon' in his 1967 book The Ghost in the Machine, which means a whole that is part of a larger whole very similar to concepts of sets and subsets in mathematics. A holarchy is a hierarchy of self-regulating holons that function both as autonomous wholes and as dependent parts. The term was also used extensively by American philosopher and writer Ken Wilber. The system Holacracy, is believed to have been adopted in many for-profit and non-profit organisations in Australia, France, Germany, New Zealand, Switzerland, the United Kingdom, and the United States etc.

Holacrats have roles, not job titles creating autonomy. It is about constantly evolving a network of self organising, overlapping circles of distributed authority supported by Glassfrog, a planning and discussion software platform designed by HolacracyOne. It is designed and intended to replace traditional organisation structure with circles and some more concentric circles.

Holacracy pertains to a quick review, in which everyone is involved in the project discussing issues or red flags or tensions that could come in way of completing the project. In tactical meetings, within 30 seconds or less than a minute, issues or lagging tasks that need to be resolved have to be spelt out and then assigned basis the role to one who is capable of accomplishing. Holacracry challenges the conventional methods like top down pyramid approach where aspirational needs of employees and command flows top down. It is suggested to replace pyramid with a rectangle that allows people to gain recognition for a particular kind of expertise that form circles of roles they can manage, execute or supervise well. Some consider it as 'evolution powered organisation', a series of highly structured governance and yet meant to be self driven.  

The main premise of creating 'flat' organisations were based on skill enhancement and self empowerment, in Holacracy it means much more than working as entre- or intra-preneurs, it is still subjective to an individual's willingness and conscious efforts to self motivate and self direct work responsibilities.

Another distinct feature is close coordination with outside factors. Working with inside factors of an organisation is easy most of the times, but it takes a while and some conscious effort of time and money to assess the outside influence and impact. Holacracy does not ignore the outside influences.

But the system comes with certain warnings and deficits just like any other. One it is that it is a detailed process with over 15,000 words comprising the Robertson's Holacratic Constitution and adhering to it seems extremely procedural. As it requires a lot of effort, deliberations and integrated levels of coordination within the circles, it may appear complex for managements and employees to follow and may not displace bureaucracy completely. While it may allow lot of individuality, transparency and equality, it may take away vertical bureaucracy and yet hold it horizontally. Many say it rather only 'hides' hierarchy and not 'eliminate' it despite the middle level managerial level being knocked off. This may look doubtful to especially larger organisations that need extensive capabilities and expertise at all levels failing which may affect performance. Also constant mentoring and guidance may not be compromised.

In a bid to create more like him, very recently Kishore Biyani announced his intent of putting 'Holacracy' system on trial within his companies. He ran a campaign 'Ban Jao Biyani' at the start of this year where nine entrepreneurial employees (intrapreneurs) were chosen from 450 applications (average age: 26 years) who are considered ideal to run parts of the company's business like their own. Not new, right? This may presumably seem a modification of age old SBU concept. He seemed to have adopted the popular concept as it brings forth roles that are flexible, authority is distributed and rules are clearly laid out and meant for all to follow. The strategic decisions will be made by these chosen entrepreneurs who will set their business targets and markets to operate long with product and marketing strategies. While they enjoy the autonomy, they have to still create a proper feedback mechanism to report on their progress and requirement for resources. The over the top objective is to integrate suppliers, partners and top level management and work together to bring down costs of the products. This cannot be just a flying thought of Biyani, a well thought out, post number crunching strategy to deploy 'Holacracy'.

There aren't too many apples to compare with or documented findings available even though over 400 organisations have already adopted the model so far at some stage of growth.

A popular US based shoe and fashion accessories retailer Zappos founded in 1999 and later went on to become a subsidiary of Amazon, have been vociferous about Holacracy model since many years, rather they also plan to make it available for management students and corporate to learn from its case study. There are some amazing details known of what Zappos has been able to reflect of itself through its day to day innovative people initiatives which substantiates and practically defines what Holacracy has been able to do for an organisation that started as a start-up some 15 years ago, and Holacracy came into being for them in 2004. The employees there claim of a less-diplomatic -authoritative -bureaucratic milieu in their company, though the ones who did not believe in the no-hierarchy system left sooner it was implemented, perils of asking to taste fresh out of the oven cookies!

The summer interns at Zappos launch its new e-tail platforms, apps or bargains pushing shopping experience in the trendiest manner. A basic version of '6pm app' gathered initial reviews from their customers and helped Zappos mobile development team to create a roadmap for future products. This may seem radically transparent, but they are fearless in establishing new business norms and ethos.

Fred Mostler, holds no official title, has been the part of the founding team of Zappos since over 17 years, recently announced his time to depart the company in June. He holds 12 different roles representing 12 different work areas. Along with Tony Hsieh, he discussed his exit work review and realised the benefits of Holacracy, easy transition at top level being one of them. The company can either hire few people to manage his roles or 12 different people to replace each of his function. Mostler himself had explained that he is still committed to Holacracy even after he leaves Zappos, he will remain its lead link for his future organisations, DTP Real Estate being one of them. The firm believers will take it to places they will go.

Although Zappos still cannot come out of the mired controversy the system adoption has created for them. It is believed that they lost nearly 1/3rd of its employees and fell off Fortune's ranking of the 100 best companies to work for (on the list for 7 consecutive years). Though for Hsieh, the Holacracy concept has proven over time that it has stood the test of time and scaled, ideal for longevity and scaling. Zappos has over 1,600 employees and 500 circles with one filling up multiple roles. Hsieh mentioned that every human in the company is like a sensor - a marketing person may see something different than the IT admin or the customer service representative and idea is to bring the feedback into an integrated system.

With adoption of newer management structures and behaviours, Leadership will have to brave more voices and certainly a leader will have a bigger and more crucial role to play. However, what remains constant is, the organisation will be arched by values - spelling out core values and their meaning in day to day operational tasks will be critical to organisation's success.

As it is evident, Holacracy will undergo vast changes from its present nascent form or early version. It may not change the world drastically though unless people become too much self driven and unaffected by fallacies or fantasies to need someone to motivate them - too often, till then with this, human resource management is in its beta testing mode.

The author is a veteran in consumer durables and retail, and is currently consulting with World Bank