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Holacracy – Utopia or a real possibility?

By now we have all read articles that a company has transformed to holacracy. One of the biggest retailers, Zappos, is changing their organization structure towards holacracy. But how possible is holacracy really?

Holacracy is about breaking down organizational structures, flattening them to create self-organized teams that can make autonomous decisions. There are many challenges when it comes to holacracy. First and foremost, transforming a decade’s old organization with a set structure to become holacratic isn’t easy. Zappos is taking several years for the process, and they are still a new business in a sense. But apart from practicalities, is holacracy really something for big multinational conglomerates?

The power of holacracy shouldn’t be underestimated either. It has the ability to truly transform the way we work and create workplaces where employee engagement is extremely high. Where the hierarchies are low, and accountability and responsibility are spread among the ranks.

But critics see a lot of reasons why holacracy, with its current framework, won’t work for larger organizations. Holacracy has often been described as the upgrade to an existing organizational operating system and in precisely this lies the big issue. Corporate systems can’t just be updated. Holacracy has more over the issue that it is highly complex and has many paradigms and rules. Also, it’s hard for big organizations to change their organization form. Zappos, one of the front-runners when it comes to holacracy, has 1.500 employees and other companies who are having a holacratic organization form are Medium and GitHub both companies of the ‘new economy’ if not to say hipster startups. Zappos has based on the strategic decision of their CEO taken the route to holacracy. But have they?  According to the theory of holacracy, there should be no reporting lines and managers. But Zappos is an entirely owned Amazon daughter and thereby a stock listed company, which needs to have reporting lines to stay compliant. To ensure this compliance, Zappos is keeping the reporting lines in their HR system but invisible to the people. It remains to be seen how this affects the holacratic development at Zappos. Lastly, there is often cited a big issue with holacracy: it’s the people. Nobody likes to change the way they have worked for many years, and holacracy wants just that. An operating system is just downloaded on a computer, and the computer can read the ones and zeros and run it. People are not machines, and the power of habit cannot be underestimated.

In the end, holacracy can be seen as the final state, and it’s not this last state that makes the biggest difference but the organizational transformation along that way. I a sense holacracy is like democracy. We cannot take a concept, for example, democracy, and implement it one to one to another country; we have all seen this process fail all too many times in the past years. The same goes for holacracy; there is no one size fits all organization structure that can be pushed to any which organization. Instead, organizations can learn from the principles of holacracy and work on finding ways how to make these principles work in their surroundings.

Download our eBook to find out what holacracy means for work 4.0.

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