Attention CEOs: Would you dare turn your company over to self-directed teams?

07/21/2014 10:39 PM

07/22/2014 9:32 PM

Holacracy …

Now there’s a new word for you.

As you can puzzle out from the ending, Holacracy has something to do with organizing groups of people to carry out tasks and meet goals.

In fact, it’s a relatively new management system. In implementing Holacracy — it’s trademarked — the CEO and top executives turn management over to self-organized teams.

And it’s not just an idea on the pages of the latest business best-seller. Most notably, Zappos, the online shoe emporium, just adopted it wholesale, apparently the first big company to do so.

Its roots go back a bit.

Start with the term “holon,” from Greek. Holons are autonomous units, but units that depend on the greater whole of which they are a part.

The term “holarchy” was coined by Arthur Koestler in his 1967 book, “The Ghost in the Machine.” In the nonfiction work, Koestler grapples with the longtime philosophical questions prompted by the notion that the mind is at once a whole yet still merely a part of the body.

A holarchy apparently was first put into practice at Ternary Software in Exton, Pa. The company had experimented with democratic forms of management, and in 2007 its founder, Brian Robertson, developed the holarchy organizational scheme.

In 2010 Robertson came up with a “Holacracy Constitution,” stating its principles and practices. The constitution has been refined into version 4.0 and can be found at, which advocates for the system and educates companies that want to use it. The system has been adopted by smaller for-profit and nonprofit organizations in the United States and in several other countries.

More practically, how the heck does it work?

In one sense, Holacracy is just an amped-up version of a decades-old push by many companies to flatten their organizations and give more authority to the people actually doing the work.

But to go full-bore requires a deeper commitment on the part of the CEO and executives.

The CEO first has to formally relinquish authority to the Holacracy Constitution and let decentralized teams take over. Employees can decide which teams to join, based on their expertise and ambitions. And the teams can choose their roles and goals.

The teams, called circles, then decide who their leaders are in occasional “governance” meetings. The managers of the circles are called lead links because they then coordinate the circles’ goals and tasks.

There can be sub-circles. Or circles can assign members to super-circles.

The teams hold running conversations. The lead link appoints someone to facilitate the conversation, and in a meeting everyone on the team, going clockwise, offers an opinion, volunteers for a task and helps set goals. Circles identify “tensions” in the company, not problems, and work to ease or eliminate them.

No one is allowed to summarily dismiss an idea. The constitution says that a “valid objection” must “arise from known data.” Another valid objection could arise to an idea that the company wouldn’t be able to modify “before significant harm would be done.”

Of course, there still needs to some ultimate authority. But in Holacracy it’s — you guessed it — another circle.

In this case it’s called the Anchor Circle, which would get its members from all the other circles and would be run in the same all-inclusive manner.

The purpose of the Anchor Circle is, in the words of the constitution, “the Purpose of the overall Organization.”

It helps discover and clarify “the deepest creative potential the Organization is best-suited to sustainably express in the world, given all of the constraints operating upon it and everything available for its use in such expression, including its history, current capacities, available resources, partners, character, culture, business structure, brand, market awareness, and all other relevant resources or factors.”

Advocates contend that Holacracy is the best way to fully tap the “deepest creative potential” of a company and speed innovation. (Of course, dictatorships can be innovative, too. Just consider Apple under Steve Jobs.)

But in Holacracy, ideas aren’t tamped down prematurely. Meetings won’t come to a dead stop because dominant participants brusquely shoot down proposals.

Of course, all this probably takes more time, but the payoff in finding and developing a gold-mine idea is huge.

Advocates also say it gives employees more psychological ownership in the company and their jobs. Of course, it probably also increases the chances for the teams to make mistakes.

But before you react in horror to the freedom to screw up, remember that CEOs and top executives make mistakes all the time. And isn’t there some value to be gained by people in the trenches making mistakes and learning from them?

So there you have it, a new word for your vocabulary and possibly an idea for the future of your company.

How about it, boss?

To reach Keith Chrostowski, business editor of The Star, call 816-234-4466 or email Twitter: @keithc3.

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