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Reaping the benefits of Holacracy – without the drawbacks

September 1, 2015 | By Steve Dool

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As entrepreneurs at the helm of startups have taken up a comfortable position as thought leaders in the business world, the various, often radical and revolutionary corporate structures – and the cultures dictated by those structures – are continuously dissected, examined and duplicated. It’s why the New York Timesrecent exposé on the grueling environment at Amazon was enough to launch a thousand think pieces. There’s a fascination with how these companies are often setting the bar for success by building a completely new set of rules.

Perhaps the most closely scrutinized alternative organizational structure is Holacracy – a somewhat mysterious-sounding system invented by the entrepreneur Brian Robertson that removes managerial positions, and instead relies on self-management with a clear set of goals around roles, rather than people. Therefore, it comes along with some fairly New Age-y tenets like allowing anyone to set meeting agendas and eschewing a traditional organizational chart for circles of responsibility.

Although it’s been adopted by other forward-thinking companies like Medium and David Allen Consultants, the most famous proponent of Holacracy is Zappos, whose CEO Tony Hsieh was also the subject of a recent NYT feature, one that discussed in depth the somewhat bumpy road to adopting the “operating system.” (FTF also took a closer look at Holacracy at Zappos, and lessons to be learned from the company’s experience with it, here.)

“At Zappos,” the Times‘ David Gelles wrote, “Mr. Hsieh seems to regard Holacracy as a way to revive the close-knit community feeling that made the company so special 10 years ago, when it was just a few hundred people taking on the giants of e-commerce… If only it were so simple. Holacracy has been met with everything from cautious embrace to outright revulsion at Zappos, but little unequivocal enthusiasm.”

But Greg Satell, writing in the Harvard Business Review, has some good news for companies who are hesitant about the upheaval taking up Holacracy could cause: you don’t need to adopt the system outright in order to reap some of its benefits.

Here is Satell’s argument in a nutshell: “I realized a lot of Holacracy is just codifying many of the informal elements of good management. By getting beyond the particulars of adopting Holacracy and taking a deeper look at the issues it addresses, we can see that problem isn’t that hierarchies have somehow become illegitimate, but that they are slow and the world has become fast.”

For companies looking to solve the problems that Holacracy seeks to answer, Satell has outlined four questions managers should be able to answer.

What is your mission? Your company’s mission should drive the strategy you adopt and serve as your organizing principle. “Instead of standard job descriptions listing qualification tasks and reporting responsibilities, [Holacracy] assigns roles, which spell out exactly what is supposed to be achieved, and those roles are updated at regular governance meetings,” Satell writes. With or without Holacracy, your company should have a clearly defined mission that all employees can articulate succinctly.

How does work really get done? If your company’s rules for how work is meant to get done differs wildly from how it is actually completed, managers have a major problem that depletes trust and morale and can ultimately derail a company’s mission. Satell believes that “frank and honest leadership is usually enough” to keep your company’s output on track.

How would someone sell you a transformative idea? Technology often outpaces organizational planning, leaving even the most carefully structured company reeling. By nature, Holacracy is adaptable to new technological developments, since roles are constantly being updated. One way to address this is to consider how a new idea would be implemented at your company, and examine the ways in which your enterprise is set up for a “culture of change.”

How do you balance cohesion and diversity? “Without cohesion, there is no common purpose, but without diversity, groupthink will set in and eventually that purpose will lose relevance,” Satell says. “So you need a healthy amount of both.” Balancing that can be a tremendous asset – and it’s often the influence of leadership that allows for that balance to be achieved.

For more on Holacracy, visit holacracy.org – and click here for more of Greg Satell’s counterpoint.

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