Is it Time for Holacracy?

I was doing some research last weekend on Holacracy for a course I’m developing for University of California - Irvine Extension. I have been teaching for them for about 8 years now and I’m helping update their agile class offering.

Holacracy really turns the industrial revolution style of organization on its head. Rather than leadership making the decisions for the workers to execute, the decision making is really pushed down to the people doing the work. The traditional hierarchy is thrown out the window. No more managers reporting to department heads reporting to business unit managers reporting to Vice Presidents…you get the idea.

Instead we have circles. For example, IT may be a circle. In it, each role has a description that gives clear direction on the responsibilities for that roll. There are simple rules that guide people, what they can and can’t do. It is a form of a complex, adaptive system. Everyone focuses on the purpose of the organization, which goes beyond making money.

So what can Holacracy do for us now? With Covid-19 and work from home, the landscape of the work environment has changed. Will Covid-19 be the forcing function that changes the leadership model at companies? Does a remote workforce change how decision making occurs in an organization?

When companies first tried the work from home approach a number of years ago, there were often strings attached. Companies would use the instant messaging app to track when people were at their desks, showing a lack of trust in employees. Are companies ready to stop monitoring output (hours at a desk) and start looking at outcomes?

Holacracy isn’t for everyone. Medium moved away from it when they felt it didn’t scale like they needed. After Zappos moved to Holacracy, they offered employees a severance package. Some of those that took it cited holacracy as the reason they were leaving. Today, Zappos has moved away from a pure Holacracy (article). They are still self-organized, but in a slightly different way.

Amy Edmondson and Michael Lee wrote a paper on the topic of Self-Managing Organizations. One of the quotes from the paper was this: “Longstanding research tradition suggests that managerial hierarchy functions more effectively in stable conditions, but faces serious challenges in dynamic conditions.”

In the latest update to the Scrum Guide, Jeff Sutherland and Ken Schwaber have moved from saying self-organizing teams to self-managing teams. In his book Reinventing Organizations, Fredrick Laloux provides several models of companies in some form of self-managing. So maybe Holacracy isn't for everyone, but it seems like organizations are moving to more self-managing models.