Update on an Interesting Structural Alternative for Organisations

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In September last year, in one of my blogs Holacracy – an insightful approach to leadership or an interesting experiment? I shared a new approach to structuring and leading organisations that had been adopted by a number of organisations, particularly growing start-ups. I am always curious about new approaches because it seems ever y 10 – 15 years we search for alternative ways to replace hierarchies/top down leadership as this approach is often cited as an outdated relic.

Holacracy is one of the latest challengers. To recap what a Holacracy is, it is a structure and leadership model in which authority and decision-making are distributed throughout self-organizing circles rather than being vested in a management hierarchy. It removes accountability from a management hierarchy and distributes it across clear roles, which can be executed autonomously by various teams. This value of such an approach is it offers a fluid structure, evolving roles, a hands-off rather than hands-on executive approach, and strong customer centricity.

Over the last fifty years there have been strong arguments advanced for a range of alternative models; the Matrix Organisation, Total Quality Management (TQM), Self-Directed Teams and a move to flatter structures. I am not saying these have failed, however, while elements have been picked up and used successfully in a range of organisations none has completely replaced the traditional hierarchy model.

In the last year not a great deal has been reported on the progress of the Holacratic approach , now Rebecca Bloomfield writing in Bloomberg Business earlier this week provided some insights that this model may be faltering. Companies such Medium and others who had embraced the concept cited a number of challenges with implementation:

  • It is difficult to co-ordinate efforts once an organisation moves beyond a certain scale.
  • A perception that Holacracies are viewed as cultish by some.
  • Over and above the normal recruitment and induction costs, considerable investment in resources (particularly time) is required in additional education to move mindset from the traditional hierarchical model to the Holacratic model. It appears those people used to hierarchical models find the mindset change challenging.
  • It requires careful preparation, commitment, and dedication at every organisational level (without exception).
  • In the context of other business pressures and performance demands it difficult to execute.

Notwithstanding these challenges there are many who see merit in this approach and believe that in the long-term it will be successful, however, right now some doubt exists that the return on the investment is there.   On-line shoe store giant Zappos was an early adopter and founder Tony Hsieh believes adopting the Holacracy model was strong contributor to their growth and success.

Many still believe that hierarchy and bureaucracy are slowly dying, however we still lack the clarity of what will replace traditional current structures. Maybe it will be a Holacratic model or some variation of it. What is clear is that it will take sustained investment over a longer period, probably much longer than the early adopters were counting on.


 

 

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