Summing Up
When and Where Will Holacracy Work Best?
Holacracy, or self-management, is an interesting concept and not entirely new. It can work, but only under the right conditions. And its applications will be limited. That's what one might conclude from reading responses to this month's column.
The more thoughtful of them provide a primer on applying the concept. Deborah Nixon's comment echoed several others when she said the idea has been around a long time in other forms, by other names. "The larger an organization becomes, the tougher one model is to implement. The time has always been ripe for self-management and there are always people who will poke up their heads and insist on managing themselves. But it isn't a quick fix." Others cited its long-time application in the London taxi system (Andrew Campbell), the hospital ER (M Iqbal Gentur B), and even Aboriginal societies in ancient Australia (Kai Akerberg).
Stephens Jr., who loves the idea, said, it does not come without extensive time, cost, and involvement in employee development. "I not only say yes (to the question of whether the time is right for self-management), but 'it's about time.'" Dyan Porter added, "Holacracy strikes me as a positive way to manage professionals, especially in flat organizations where job advancement is limited." Brooks Tanner commented, "Regardless of its level of success at Zappos, this form of organization is the way of the future. The rapidly increasing complexity and unpredictability of our world is such that only a highly distributed decision-making structure will be able to adapt and respond effectively, she continued. "Most of us don't think a centralized planning type economy makes sense. Why should it make the most sense for organizations?"
Others saw limited potential in the concept. As Edward Hare put it, "There are some people capable of managing themselves in a larger organization … but many who can't… This strikes me as another of those 'ideas' promoted by consultants and academics. " Frank Fabela added, "Holacracy in its form of each individual taking responsibility for their own self-management is absolutely necessary, however it is the responsibility of 'managers ' to ensure effectiveness of the organization through coordination of those objectives. Pure holacracy … absent management is destined to fail." Krishnan Mak was more succinct when he said: "Culture will eat Holacracy for breakfast."
Many comments addressed conditions under which Holacracy might work best. "It might not be for everybody," wrote Maria Rosa Serra, "but if you hire employees aligned with your values and pay them fairly, it seems an interesting proposal for both the company and the individual." Juan Manuel Salas Guevara commented that the challenge in Holacracy "is a strong communication process from the top level of the organization that enables each member to understand the company's vision." Charlie Efford added that "The key to self-management becoming embedded is changing the mindset of the management team. Most corporations haven't made this shift." Denis Collet suggested "it's all about clear goals and deliverables, and the metrics for success. Absent of these it's bound to fail."
These and other comments provided grist for the question: When and where will Holacracy work best? What do you think?
Original Article
Recently it was reported that Zappos.com, the online clothing retailer, is in the process of implementing "self management" under a program called "Holacracy," a concept being adopted by several hundred other firms. Instead of being led by managers, associates along with their former managers are encouraged to define their own jobs ("energize their roles" in the language of the initiative) and form teams ("circles"). The guidelines for the effort are spelled out in a 30-page "Constitution" used as the basis for orienting associates to the new form of organizing work.
Self-management is not a new idea. For example, it was adopted at Taco Bell 25 years ago under John Martin when a long-term strategic plan was put in place that called for the company to distribute its products through more than 100,000 locations of various kinds. The 25-fold increase in the number of distribution points called for more managers than the company could possibly hire and train under then-accepted principles of multiunit retail management. As a result, the company raised the number of units for which a manager was responsible from one to ten or more. By necessity, managers could do little more than provide minimal oversight and occasional problem solving. Store associates, with some coaching, were given responsibility for hiring, training, and disciplining each other as well as such things as scheduling and cash management.
The results were remarkable.
Teams of associates worked out new methods. For example, they trained people new to their jobs during slack business hours. When the meal-time rush hit, each associate moved to a job at which he or she was most accomplished-something they called "Aces in Your Places." Within minutes productivity rose 60 percent to accommodate the rush. Sales targets were met at self-managed units, associate turnover dropped 29 percent, and customer satisfaction scores actually improved when compared to conventionally managed stores. The effort stalled only when the planned strategy was scaled down and Martin's successor halted further expansion of the initiative.
Interest in self-management was later stimulated by Gary Hamel's book, The Future of Management, in which he described innovative efforts to enable employees to define their own jobs and shape their work at companies such as Google, Whole Foods Market, and W. L. Gore & Associates, Inc. The idea may have particular appeal to Millennials who are thought to have high levels of self-confidence, non-traditional work habits, and, at least in their early careers, an interest in personal development that exceeds their desire for high wages.
Change, of course, is difficult. At Zappos, 14 percent of associates have left. Presumably, a number of these are former managers, although it's not clear what Holacracy had to do with the departures. (In anticipation of possible departures, a circle called "Reinventing Yourself" was formed at Zappos for former managers.)
Even though Zappos is only several months into the initiative, its leader, Tony Hsieh, urges patience. He is quoted as saying, "It's a gradual process. It's not a light switch."
How successful do you think the initiative at Zappos will be? Why? Regardless of its potential for success, does it and efforts like it presage an important trend? Is the time ripe for self-management? What do you think?
References
Gary Hamel with Bill Breen, The Future of Management (Boston: Harvard Business School Press, 2007).
Leonard A. Schlesinger and Roger Hallowell, Taco Bell Corp., Case No. 9-692-058 (Boston: Harvard Business School Publishing Division, 1991).
Rachel Emma Silverman, Going Bossless Backfires at Zappos The Wall Street Journal, May 21, 2015, pp. A1 and A10.