Holacracy, the future of organizational management

Zappos, the company founded by the revolutionary Tony Hsieh, and now part of Amazon.com although still independently managed, has announced its transition toward holacracy, a radically different way of organizing a company characterized by the absence of job titles, managers, or hierarchies. The workforce is divided into some 400 groups, taking on one or more roles within them, managing their work within a completely transparent environment. The company hopes to complete the process by the end of 2014.

Holacracy takes its name from the Greek word holos, a single, autonomous, self-sufficient unit, but that is, at the same time, dependent on a larger unit. The idea is to create an adaptable organization wherein progressive growth is not matched by increased bureaucracy, and where nobody can hide behind a job title. Management and the decision-making process are carried out through a fractal holarchy of self-organizing systems, rather than from within the upper reaches of a hierarchy. The result is an organization focused on everybody in the company exercising entrepreneurship and leadership from the position they have been assigned, facilitating flexibility, efficiency, transparency, innovation, and responsibility. At the few physical meetings that are held, the focus is on achieving goals and avoiding personality clashes. Such a structure requires extensive use of technology if all parties are going to be sufficiently interconnected.

Another company run on the same principle is Medium, co-founded and run by Evan Williams, who explains some of holacracy’s main principles in this interview, starting in minute 7.10

The so-called Holacracy Constitution has now reached version 4.0, a 27-plus page document with a Creative Commons license. Anybody interested in learning more about the fundamental concepts of this management concept should take a look at Holacracy.org’s blog, or at this collection of articles in Medium.

Holacracy represents a complete break with traditional management organization based on power structures, and has been coming for some time now; we will increasingly see many aspects of it applied to companies. One thing is clear: businesses whose management structures are based on the principles established during the industrial revolution are not adapting well to the fast-paced changes the world is undergoing, and will need to innovate if they are to survive. Zappos, which employs more than 1,500 people, has made client satisfaction its raison d’etre (Tony Hsieh’s book “Delivering Happiness is well-written and required reading). The firm is always high in the best companies to work for lists. Its decision will bolster support for holacracy still further, and all eyes will be on the company to see how things pan out.

(En español, aquí)