Leadership. Is
it really essential to have leaders in an organization? For the past few decades, there have
been companies that have eliminated titles. There are no CEOs, presidents or managers. In some cases, there are no individual
owners. The employees own the
company. In today’s business
model, some call it a
Holacracy.
Holacracy, also known in some circles as Holawhat is a
business model that flattens organizations. “Holacracy
was invented by Brian Robertson, a 35-year-old former programmer with barely
any management experience. He created Holacracy in 2007 because he had a
“burning sense that there has to be a better way to work together,” he said in
an interview with Fast
Company.”[1]
Zappos is one of the companies that adopted Holacracy. CEO of Zappos, Tony Hseih, gave an
ultimatum to all employees. They
were to embrace Holacracy or leave.
He even offered three months severance to those who left
voluntarily.
With Holacracy, they have eliminated managers. They work in circles. Each circle is responsible for specific
outcomes. While there is a leader
for each circle, they do not have a title. In addition, members of the circle are not limited to making
requests for resources through their circle leader. There is usually a leadership committee.
With 4,000 employees, Zappos is the largest enterprise to
take on Holacracy. Other companies
like Medium and the David Allen Company are also proponents of Holacracy.
In Sweden, there is a 40-person company called Crisp that
has invented their own version of a flat organization. Like the Holacracy concept, Crisp has
structured the business with self-organizing teams. Part of that structure includes eliminating the CEO. After three years of implementing this
structure, they have realized great success and tremendous amounts of media
attention.
It seems the point of Holacracy and flattening the
organization is designed to increase collaboration and employee
engagement. Out of frustration, a select
few businesses have supposedly eliminated CEOs, managers and titles. Even a $2.6 billion construction
company has joined in. The company
is DPR Construction. “DPR was founded in 1990 by Doug Woods, Peter Nosler and Ron
Davidowski. Today, Nosler and Davidowski serve on the company’s board, while
Woods serves as one part of a seven-person management team.”[2]
Perhaps the real story is that
command and control leadership has died.
In the past, businesses grew out of an agrarian society. Aside from merchants, people were not
accustomed to self-organizing teams in an industrial capacity. Therefore, managers were necessary to
dictate work productivity.
Furthermore, because people were often coming straight from working in
the fields, they had not developed factory skills. At the very least they had not transferred team-building
skills they had developed working on a farm. As a result, layers of managers were needed to control labor
and output.
In a knowledge society, people’s
intellectual capital is part of their productivity. While people still complete work with their hands, it is
their intellectual capacity to figure out more efficient ways to produce
results that has become valuable.
Nevertheless, even in the
Holacracy or so-called flat organizations, people seek informal leaders. They need mentorship and people who
make the final decision when there is a deadlock. They need to know their career trajectory when it comes to
raises and promotions and they still seek guidance when they are stuck. These structures are often missing or
ambiguous in Holocracy or flat enterprises. As a result, “Zappos has suffered from almost a fifth of
staff being unable or unwilling to deal with the pressures of self management.”[3] It appears Holacracy has had greater
success in smaller businesses. The
company Medium has about 90 employees.
Except, they have not generated revenue yet.
With all this said, perhaps it is
not about creating complicated organizational structures. In interviews with Fast Company, “All of the confusing rules and terminology tend to scare
people, but that’s intentional. Obscurity, Robertson says, is part of a
strategy to hook the right converts. “My sales approach is to try to talk
people out of it,” he says. The Holacracy website doesn’t make it easy to
understand what a company might be getting into. The “in plain
English” version of the Holacracy
Constitution is multiple mouse scrolls long.”[4]
Perhaps it’s time to start looking at businesses as
people. Take away people and there
are no employees or customers.
Therefore, it is wise to set up organizational structures that are built
by people for the people. As much
as Holacracies and flat organizations attempt to demonize and eliminate
leaders, they have proven to still be necessary. In some organizations they still exist, with informal
titles. They still serve as the
person with the ultimate accountability or expertise. Instead of imposing complexities that no one understands,
empower people to use their intellectual capital to create self-sufficient
teams. Part of the way to do that
is to first engage them in transformational exercises. It is usually best to have someone from
the outside to walk them through a journey that shifts the prevailing
mindsets. With a new mindset, it
becomes easier for people to make changes themselves. More importantly, if they make the changes themselves, they
will own it and make it part of the corporate culture.
What do you
think? I would love to hear your feedback. And I’m open to ideas. Or if you
want to write me about a specific topic, let me know.
[1] https://www.fastcompany.com/3044352/the-secrets-of-holacracy
[2] https://www.forbes.com/sites/robasghar/2014/03/14/one-companys-success-story-who-needs-a-ceo-anyway/#2b3e1c335d73
[3]
https://www.icas.com/ca-today-news/can-a-company-cope-without-a-ceo
[4] https://www.fastcompany.com/3044352/the-secrets-of-holacracy
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