Hierarchy is dead! Long live Holacracy! …Right?

“Sexual freedom, sexual liberation. A modern delusion. We are hierarchical animals. Sweep one hierarchy away, and another will take its place, perhaps less palatable than the first.” ― Camille Paglia

Hold on to that quote…

Bob Sutton (Stanford Professor and Co-author of SCALING UP EXCELLENCE) in Hierarchy is Good. Hierarchy is Essential. And Less Isn’t Always Better, says about hierarchies (and he’s not alone in this):

“…a well-managed hierarchy is among the most effective weapons for getting rid of the friction, incompetence, and politics that plague bad organizations…”

If a well managed hierarchy is good, then what is all the Holacracy® talk about? Well, according to what Brian Robertson (who developed the Holacracy Constitution) and his HolacracyOne partner Olivier Compagne write in a blog post “Holacracy Is Not What You Think” (a Response to Steve Denning’s “Making Sense of Zappos and Holacracy”):

“…the hierarchy that Holacracy uses is not one of people directing other people, but one of organizational functions defining boundaries around sub-functions…”

 Forgive me if I pulled it slightly out of context, but according to the founders, Holacracy is not without hierarchy? So why do so many articles on implementations of management-less companies being referred to as “eliminating hierarchy” mix that with Holacracy? Why would a company then need Holacracy? Take the Zappos gets rid of managers example – read on because there’s no mentioning of eliminating hierarchy. They are implementing a holacracy for a clear Purpose: they attempt to prevent bureaucracy from infiltrating Zappos, while maintaining a start-up culture within what is now, a quite large organization. They attempt to build Resilience against bureaucracy… It is what they believe to be needed to maintain a start-up culture.

I feel like I have to place things in better perspective… what defines “Hierarchy” according to wikipedia:

A hierarchy is an arrangement of items (objects, names, values, categories, etc.) in which the items are represented as being “above,” “below,” or “at the same level as” one another.

So can it be that Holacracy in cases where it makes sense is a hierarchy taking the place of another one which is swiped away? (thank you opening quote!)

It is a matter of a hierarchy of concentration of internal power and authority assigned to individuals versus a hierarchy of distribution of such “features” to (circles of) functions.

According to Lex Sisney (author of Organizational Physics – The Science of Growing a Business) in an inside look at holacracy:

“… Holacracy claims to design out these “features” by changing the concept of organizational structure from one that is autocratic and top-down to one that is decentralized, organic, and bottom-up. Ultimately, the vision of Holacracy is to allow the emergent, creative properties of the individuals playing roles within an organization to self-organize and flourish, much like human cells are organized into organs, which in turn are organized into bodies and minds, which in turn go forth into the world to express their purpose as humans.

Although Holacracy might feel unnatural (because we’ve been thought otherwise) its way to deal with hierarchy seems to be much closer to nature’s ways of working. Nevertheless from which angle you look at it: there still is hierarchy…

Next question then: when to apply what?

Coming back to Zappos, the company plans to have its 1500 employees organized in about 400 circles. That seems like a lot… It makes me wonder if there’s a limit to a company’s size for implementing Holacracy. For example my company, about 70.000 people across the globe, we would need what? A magnitude of ~18.000 circles? We sure that is still delivering efficient results? Can we ensure that no 2 circles eventually do overlapping work? Or is there some hybrid form possible…

John Kotter (Director of Research, Kotter International as well as Professor of Leadership, Harvard Business School) explains in this Huffington Post interview Danger of Hierarchy in a Fast-Moving World is something I wrote about in my MBA thesis back in 2009, and repeated in my previous blog post: companies need to be more and more ambidextrous! In his book Accelerate: Building Strategic Agility for a Faster-Moving World he presents a hybrid model (something that looks ambidextrous) where ‘classical’ hierarchy and network live in the same company. This may be an answer for big companies to Holacracy, if managed well this seems an excellent way to balance exploration and exploitation.

Image The volunteering cells format (network) is serving exploration. At the back-loop of the adaptive cycle the networked organization must be more dominantly present. Though the teams, volunteers, guiding coalition and the company must accept as well that there are times when exploitation must rule (the front-loop of the adaptive cycle). Any company needs exploitation periods where generating money to make exploration sustainable as ‘investment’ rules over mass exploration again. Governance, Policies and Structures need to be implemented to guide the balance between exploitation vs exploration activity. If implemented well, this hybrid model seems pretty well fit to build a more resilient company.

ImageResilient businesses? A must! Customers are changing, economical models are changing, climate is changing, basically everything in- and outside a company’s ecosystem is changing. And yes, those changes follow one another at still increasing pace. However, just because the world moves fast, hierarchies are not disposable. Hierarchies are there to stay, backed into the nature of interaction between items, people, functions, organizations alike, and we need them. We just have to learn how they work and organize them well to turn them into an (resilience improving) opportunity rather than a danger.

15 thoughts on “Hierarchy is dead! Long live Holacracy! …Right?

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  9. Business systems can no longer, credibly, be structured and managed to be ‘failsafe’…because our management tools and techniques lack the requisite variety of the systems we are endeavouring to control. The most successful [complex] systems are ‘safe to fail’ and are resilient because of their inherent ability to interact interdependently, to adapt and to survive in changing environments. They are dynamic, non-linear and self-organising. NOT good news if all you know is the hierarchical structure of business and management experts, whose lack of knowledge about living systems is a source of systemic risk. http://wp.me/p16h8c-wT

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      • You are most welcome Patrick. There is a great deal for ALL of us to learn but you are ahead of many having recognised the importance of a dynamic structure. I have written and commented of this and related (risk) issues but be warned, leaders in hierarchies perceive a change of thinking as a threat NOT an opportunity!



  10. @David, this “…leaders in hierarchies perceive a change of thinking as a threat NOT an opportunity!”, is one of the key reasons I started to write this blog… as long as I haven’t figured out a way to make them see this as an opportunity, my Blog is where I capture my thinking (my personal mental memory bank)


  11. Pingback: Searching for Sustainable, Profitable Growth? Become Ambidextrous! | Thinking Out Loud...

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