On one of my daily commute runs last week I was listening to a radio program and an interesting ‘business-minute’ commentator talked about Holacracy, an innovative approach to organizational management and structure. It really interested me because it has been adopted by Zappos, a US based company that is highly admired for its entrepreneurial tenacity and its creative and innovative approaches to business. It is a company I have studied and admired from its boot-strapping start-up in 1999.
Holacracy is an organizational system in which authority and decision-making are distributed throughout a group of self-organizing teams rather than being vested in a management hierarchy. Authority is distributed throughout the organization and there is much more autonomy for the individual. The traditional hierarchy is done away with but surprisingly, the system is much more structured. As someone who has spent a lot of time managing hierarchical structures, this certainly sounding intriguing to me.
In doing a little research, I found that Zappos CEO, Tony Hsieh, has embraced this system to enable his employees to encourage entrepreneurial thinking and productiveness. He states it this way:
“Research shows that every time the size of a city doubles, innovation or productivity per resident increases by 15 percent. But when companies get bigger, innovation or productivity per employee generally goes down. So we’re trying to figure out how to structure Zappos more like a city, and less like a bureaucratic corporation. In a city, people and businesses are self-organizing. We’re trying to do the same thing by switching from a normal hierarchical structure to a system called Holacracy, which enables employees to act more like entrepreneurs and self-direct their work instead of reporting to a manager who tells them what to do.”
While this approach not be for every organization I know I will be watching to see just how it plays out.
