On the surface, Holacracy might seem radical — almost like a complete subversion of hierarchy. That’s what online shoe retailer Zappos famously intended when it became an early adopter of this management philosophy. Zappos adhered to a “let’s get rid of all the bosses” ethos that it believed would revolutionize company oversight. And it did. But this system of organizational governance involves more than simply breaking down traditional barriers.
So what is Holacracy?
To put it simply, Holacracy is a way to govern a company. It’s a set of rules based on a constitution, and this system utilizes behaviors that create structure, transparency, and clear expectations. At its core, Holacracy aims to eliminate bureaucratic entanglement from the decision-making process. Power is spread throughout Holacratically-run organizations, which translates to increased effectiveness.
When Holacracy Works (and When It Doesn’t)
Holacracy has gained a lot of steam in recent years, but this doesn’t mean that its principles didn’t exist in the workplace before the system came to be. Some of its tenets were at play in self-managed environments long before it was invented. In 1987, for instance, empowered self-managed teams at the Volvo plant in Sweden reduced defects by 90%.
It goes without saying, then, that Holacracy has its fair share of benefits — but the system doesn’t work for everyone. Sometimes, this is because of misconceptions surrounding what Holacracy actually is. In the quest to incorporate Holacratic principles, some business leaders try to retrofit Holacracy to something they already understand. That’s just human nature. But it means they inadvertently morph their exciting new system into something completely different.
I first heard about Holacracy after our leadership completed a half-day workshop on it. Our leaders thought it was intriguing and fit naturally with Pariveda’s people-first values, so they invited other staff members to complete the same fast-paced workshop. I also attended that workshop. And in all honesty, my initial reaction wasn’t the best. When I tried to understand how Holacracy would be a “better” way to work, I just couldn’t connect the dots. I felt frustrated.
As I did more Holacracy training and began to understand the reasoning behind its principles, though, I began to view the system much differently. Looking back, that was key. I had to see this philosophy for what it requires: shifting deeply ingrained thought processes. And anyone wondering how to implement Holacracy should examine it very closely, too.
What to Know Before Diving In
Again, Holacracy can be a highly effective tool for improving productivity, but it doesn’t always work perfectly right out of the gate. We’ve certainly experienced this issue at Pariveda. Holacracy might require a big, sweeping change from your current ways, and factors like company culture, team size, individual motivations, and ability to accept and adapt to change matter. Keep those things top of mind when considering a switch to Holacratic management.
Here are a few other guidelines you’ll want to remember as you make the move toward Holacracy:
1. Play by the rules first.
For the best chances of success, make sure you don’t rewrite Holacracy’s rules before you even try it. The rules are there for a reason, and understanding them before making big changes is essential. First, play the game as it’s written. When you’ve mastered that version (which might take years), pinpoint what you might tweak to fit your company’s quirky version of the game.
2. Get leadership on board.
If your company’s leadership (or a majority of the people at your company) go in with a skeptical attitude, it’ll be harder to make the system work. If you’re playing to win, your leaders have to give Holacracy a shot.
How might you turn a pessimist into a cautious optimist? Keep pointing back to why your company is interested in a Holacratic organizational structure. Its ability to foster a self-managed, empowered, and well-attuned workforce might be one reason. Regardless, adopting Holacracy is hard. Remind leaders that they can either join the team pushing the rock up the hill or be the stumbling block beneath that team’s feet. Which is the faster path to success?
3. Set realistic expectations.
Holacracy isn’t a panacea, so go into the change with realistic assumptions and goals. Any organizational system can set boundaries and give people guidance in their work, but Holacracy relies on trustworthy team members to function correctly. If your organization has some bad actors on its payroll, Holacracy won’t fix that.
4. Start slow and build a consensus.
If you research Zappos’ organizational structure, you’ll find its Holacracy implementation strategy was pretty abrupt (and not without aggressive overtones). When CEO Tony Hsieh sent out the long email announcing the switch, he gave his team members an ultimatum: either they were on board with the transition or they were out of a job.
Pariveda didn’t do it that way. We’ve been gradually adopting Holacracy for nearly four years, and we don’t regret our pace. Slower is better, we think, because the changes involved are big ones. Remember: If you want to go quickly, go alone, but if you want to go far, go together. Start with the most receptive areas of the organization, discover the benefits and hardships, talk about both things openly, and make sure your people are fully engaged in the process.
It might seem that you’re splintering your team by disseminating authority, but you still need to be a team to effect positive Holacratic change. Holacratic organization isn’t a perfect fit for companies that aren’t in tune with Holacracy’s goals. When it’s implemented wisely, though, the results can be astounding.