The buzz word Holacracy® has been batted around lately to describe a company structure that is not hierarchical in nature, but instead allows the managers to self manage and distribute authority to achieve company goals more efficiently. The term holacracy is derived from the term holarchy, first mentioned by Arthur Koestler in his 1967 book The Ghost in the Machine. Holacracy replaces the outdated strategy of top-down predict-and-control with a culture of achieving success by distributing power. I think of it as modern operating system for business operations similar to what cloud computing (distributed) was able to accomplish vs the office server (Hierarchical).
In a culture of urgency and rapid evolution Holacracy’s a core idea allows companies to pivot and evolve faster then traditional top down management. One of the reasons, I believe, is because in a hierarchical system top down managers are not in-tune with the issues at the core of their business. Employees at the bottom of the organizational chart may not feel empowered to present issues or are snubbed as troublemakers when they do.
A Holacracy takes the idea of a self managed company to a whole new level by insisting that teams regularly discuss successes and failures and work on solutions with a clear understanding on who has the authority to act. When Zappos decided to manage its company based on the highly successful Holacratic city system, they knew they had found a way to solve important issues with traditional management. In a normal city system, research shows, that as the city grows, innovation and productivity grows 15% but with hierarchical companies grow, employee productivity, urgency and innovation diminish. The Dave Allen Company, (of Getting Things Done GTD fame) learned that cities have been successful for millennia because innovation thrives within districts and entrepreneurship expands within neighborhoods. If they could create teams within divisions that had the authority of self-employed entrepreneurs, they could innovate faster and out smart the slower top down managed competition. The founders of Dealer Simplified (a provider of simplified software for car dealers) wanted their company be “self organized as in a city, by creating a culture of Holacracy, which allows their teams to act like entrepreneurs and self-manage their work instead of reporting to a disinterested boss.”