Does holacracy need leadership?

Though it’s been around for a decade, the holacracy doesn’t have much of a track record… it is pushed by tech companies like Tony Hsieh Zappos as ‘the hot management trend for 2014’.

holacracyA noun ‘-ocracy’ or ‘-cracy’ means a government / governance by a particular sort of people or according to a particular principle: democracy (by the people); meritocracy (by people with the most ability) and a ‘holo-’ is a prefix added to the start of a word meaning ‘whole’, ‘entire’. In the book The Ghost in the Machine Arthur Koestler argued that literally everything in our world, from chemistry to biology (atoms to molecules to cells to organisms), life forms, or even our cells that form an organ and organs form our body and society are nested hierarchies of entities, which, for lack of any existing word, he called ‘holons’.

atoms to moleculesIn organization holacracy is the concept of self-directed work teams. In business environment it is a rather new management practice that is floating around like ‘lean (manufacturing) organization’, ‘distributed authority’, ‘agile organization’, ‘Six Sigma excellence’ in times organizations need different structures and governance to get top competitive advantages. It differentiates from other practices by being perceived as (new) ‘open allocation’ management structures that (mostly) eliminate bosses.

Unfortunately, the notion that holacracy is non-hierarchical proved as a nonsense. Brian Robertson (Ternary Software) introduced holacracy to the world through a 2007 article as the idea how to put a lot of emphasis on consensual, democratic decision-making and getting everyone’s opinion. He defined it as a set of inward-looking hierarchical mechanisms that connect the teams or work circles. Then, a vertical hierarchy between those circles is still required within the organization. Instructions, information, decisions and guidance on how something has to be done should correspond to the purpose of doing business and is passed from above circle to the below one. Hence a hierarchy stands.

The notion “holacracy has no managers” is another misinterpretation. It is true that in holacracy there is a lack of titles but there are ‘roles’ that are, in every respect except the name, ‘managers’ or ‘leaders’. The explanation that any employee can take a special role for a special task and work on it until successful completion (or failure) is a dangerous simplification. The work in nowadays organizations is (mostly) done by a team or group or a circle and not (rarely) on single employee’s level. Therefore communication and coordination is a must. Each group, team or circle has a designated leader with the authority to appoint and make decisions within the circle… and people follow him. Obviously, leaders or managers are present.

team or group“Ninety of approximately 100 branded management ideas I’ve studied so far have lost the popularity within a decade or so,” wrote Julian Birkinshaw of London Business School in the May issue of the Harvard Business Review. Where will the holacracy be in a decade from now? Mr. Pfeffer notes a paradox: in small firms or startups where holacracy is mostly implemented, the only thing stopping them to revert to a traditional hierarchy is the entrepreneur or benign-dictator CEO, whereas in a long-established company with many levels of hierarchy, the boss is the one to be the biggest obstacle to adopt holacracy. Most probably we should wait some more time to tell the real impact and outcome of this new management tool.

With all of the above my question about implementation of holacracy is: “Do people self-regulate as well as the companies hope they do?”

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