Holacracy – Moving Away From A Rigid Organizational Hierarchy !

(Image Credits : holacracy.org)

(Image Credits : holacracy.org)

Change is the only constant they say. The systems and process that we follow were designed to suit specific kind of businesses and as the nature of businesses change, so should the systems and the processes to execute these new age businesses. The newest topic widely being discussed these days is Holacracy – an alternative organizational structure.

Holacracy is a social technology or system of organizational governance which removes power from a management hierarchy and distributes it across clear roles, which can then be executed autonomously, without a micromanaging boss. The work is actually more structured than in a conventional company, just differently so. With Holacracy, there is a clear set of rules and processes for how a team breaks up its work, and defines its roles with clear responsibilities and expectations.

The Holacracy system was incubated at Ternary Software, an Exton, PA, company that was noted for experimenting with more democratic forms of organizational governance. The term holacracy is derived from the term holarchy, coined by Arthur Koestler in his 1967 book The Ghost in the Machine.

The video below best explains how Holacracy works.

A number of companies have adopted the Holacracy model of organization with Zappos being the largest company to have adopted the system.  According to report published by qz.com, Zappos CEO Tony Hsieh has compared running companies with Holacracy model to running cities. “We want Zappos to function more like a city and less like a top-down bureaucratic organization. When cities double in size they become 15% more productive, but when companies double in size, productivity declines. Look at companies that existed 50 years ago in the Fortune 500—most don’t exist today. Companies tend to die and cities don’t,” Hsieh has said. The transition to a Holacracy model has not been an easy one for Zappos and the company has seen some resistance from its employees in adoption of this model.

Holacracy.org reports that 300+ organizations are already running using the Holacracy model.

Like any new concept, Holacracy has also received a lot of criticism with a number of experts doubting the practicality of this model.  Whether or not this concept will work and to what organizations is the concept best suited for is something only time will tell.We at Techstory will closely follow the Zappos story to keep you updated about how the Holacracy implementation is going at Zappos.