PM Articles > Kimberly Wiefling > Holacracy Doesn't Mean Chaos! Designing Dysfunctionality Out of Our Organizations

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Holacracy Doesn't Mean Chaos! Designing Dysfunctionality Out of Our Organizations

By Kimberly Wiefling

The March 2015 announcement by Zappos that they were fully embracing holacracy, an organizational structure that they've been experimenting with since 2013, has renewed my interest in hierarchy-induced dysfunctionality.

Holacracy doesn't mean chaos. Instead people flex and adapt to the changing needs of the business.

In case you're not familiar with this approach for structuring teams, you should know that holacracy doesn't mean chaos. There is still an organizational structure and an org chart. There are still clearly defined roles and responsibilities for the positions in the org chart. The difference is that these roles, responsibilities and positions are NOT permanently associated with any one individual's name. Instead people flex and adapt to the changing needs of the business, which seems much more sensible to me than sticking to a structure that doesn't meet the business needs!

Here's what the founders of this movement have to say about it at HolacracyOne:

"Holacracy is a new way of running an organization that removes power from a management hierarchy and distributes it across clear roles which can then be executed autonomously, without a micromanaging boss. The work is actually more structured than in a conventional company, just differently so. With holacracy, there is a clear set of rules and processes for how a team divides its work, and defines its roles with clear responsibilities and expectations."

Based on this description you might guess that some disgruntled employee who'd been the victim of a poor manager invented holacracy. Perhaps! Bad management is more the norm than most managers would like to admit. One book on this topic, A Bias for Action, claims that only 10% of managers truly act purposefully to get the most important work accomplished. The other 90% waste time procrastinating, becoming emotionally detached, and distracting themselves with busywork such as email and meaningless meetings. And anyone who's been part of a merger or acquisition knows that enormous amounts of time are spent discussing who will get the coveted spots on the combined organization chart rather than exploring how the unified organization will benefit from potential synergies.

The Million-Piece Puzzle Challenge

Before we continue, imagine you are in Levi's Stadium, the new home of the San Francisco 49ers. In the middle of the playing field is an enormous pile of puzzle pieces, and there are 1,000 people in the stadium prepared to help you. The only other things at your disposal are the box that the puzzle came in and the infrastructure available in this 21st century stadium. How would you organize these people? What would you display on the two enormous HDTV scoreboards? An org chart with department managers for the various parts of the puzzle? I hope not! At the end of this article I'll tell you my solution, but first think about yours.

Fixed Hierarchies Are Dysfunctional by Design

I've always had strong objections to hierarchical organizations. Hierarchies concentrate power in the hands of a few individuals, and power corrupts. In the business world, Bob Sutton's famous "asshole research" has indisputably shown that people with power have less empathy and less impulse control, think the rules don't apply to them, and think of their own needs more than other people's needs. Although you might speculate that this kind of person is simply more likely to be promoted, Dr. Sutton's research has shown that these behaviors emerge as a result of obtaining power. Any one of these unattractive behaviors might be sufficient to cause employees to seek work elsewhere, but the fourth one -- "thinks of their own needs more than other people's needs" -- should call into question the whole concept of hierarchical organization design.

My own personal experience with hierarchies has been extremely negative, beginning with my family. At the age of 10 I was already beginning to question if it was wise to concentrate power in the hands of those who could not be trusted to wield it with restraint. Entering the military at the age of 18 (mostly to escape my domineering father), I experienced an entirely new type of hierarchical dysfunctionality in this explicitly "command and control" environment.

Later, when I worked for HP, I observed that being inoffensive for long periods of time appeared to be the most important criteria for promotion. Shouting something like "Take your severance package and shove it!" I tried my luck at a series of startups, only to find that even small organizations could be tainted by the stench of power poisoning. When I myself finally attained an executive title, the lure of indulging in my power was barely balanced by my enormous sense of responsibility to our organization and our people. I was repeatedly tested, and only the complete collapse of our company during the 2001 dot-com bust spared me from further temptation.

Does Hierarchy Really Improve Efficiency?

Some people argue that hierarchies are important to inspire collaboration and efficiently achieve results in teams. Unfortunately for that argument, an HBR article by Zenger & Folkman showed that the 16 most common areas of weakness among senior managers in FIXED hierarchies included:

  • Collaboration and teamwork
  • Inspires and motivates others
  • Solves problems and analyzes issues
  • Takes initiative
  • Drives for results

Looking at the full chart of all 16 fatal flaws (below), I find it particularly disturbing that the #1 weakness of the worst senior managers is their failure to develop others. And I'm not comforted by flaw #5 -- failure to develop themselves. These two combined signal to me that hierarchies contain within themselves the seeds of their own destruction.

Column 15-06-30 kwiefling 1

A Simple Hierarchy Exercise

Copyright Kimberly Wiefling, Wiefling Consulting, Inc. Use with Attribution.
You might be thinking "Hey, we can't have a body without a head! We need executives to set the direction and managers to manage the work!" Yeah, I thought so, too. This makes sense in theory, but an exercise that I've done hundreds of times over the past 10 years with people from 50 different countries demonstrates quite the opposite. In this 10-minute experiment with a simple hierarchy, people are asked to sit in the configuration shown here, with allowed communication paths represented by the red arrows. This organizational structure simulates the chain-of-command communication common in hierarchies. This exercise is done silently, using only post-its for written communication, in order to simulate the primarily email-driven work environments typical in many organizations.

At the start each team member receives a set of symbols. The team's goal is to identify the common symbol among all team members.

The catch: Only team member A is given the team's goal in their instructions. Team members B, C and D just receive a set of symbols. Unfortunately team member A rarely shares the team goal with B, because they assume that all members have received the same information.

This is disturbingly similar to the all-too-familiar scenario where executives feel they've been incredibly clear about their organization's goals and strategies, while those lower down in the organization chart are positively bewildered -- or at least foggy -- about the goals. Equally alarming in this exercise is the lack of curiosity among B, C, and D team members about their team's goal. Although confused, team members C and D often sit through the entire experience without ever asking B the purpose of the exercise. And, even if B is asked about the team's goal, "Busy B" is usually too occupied reading and organizing their blizzard of post-it emails to respond.

In the end even teams that are successful in completing this exercise report that they felt uninspired -- in fact, people in each position say that they felt as negatively as the unsuccessful team members did during this experience!

  • A reports feeling frustrated with their team. ("What's wrong with my people??!!")
  • B reports feeling overwhelmed by the communication demands of their role. (Maybe B stands for "Bottleneck?!"
  • C and D report feeling confused, or even lonely. ("What's wrong with our manager??!!")

Other Alternatives to Hierarchy

Given the negative feelings that a lack of shared goals and stifled communication precipitate -- even among successful teams -- it's no wonder that organizations like Facebook and Google are experimenting with alternatives to traditional hierarchy-based communication, as this image playfully shows.

"Org charts" comic by Manu Cornet. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

Program and Project Teams Are Less Hierarchical

The concept of holacracy sounds a lot like a project team organization. Here's an example of a team organization chart that I used for one of my projects over a decade ago, well before the 2007 invention of holacracy. I based this concept on Michael McGrath's Setting the PACE in Product Development, originally published in the last century.

Copyright Kimberly Wiefling, Wiefling Consulting, Inc. Use with Attribution.

Rather than focusing on position, title, and hierarchical power, these kinds of project team charts are relationship diagrams and communication maps among members who may not even work for the same company. A map of this type vividly illustrates stakeholders and relationships regardless of hierarchy, position or organizational affiliation. This makes it particularly well-suited to situations where the key players do not report to one leader, or even into one organization. Where chain of command is uncertain, such a map is vital to defining how to strategically manage communications in order to get results.

Here are a couple of areas where I've found this tool particularly useful:

  1. Programs and projects with stakeholders that cross organizational boundaries -- development of products and services that include alliance partners, joint venture partners, vendors, clients, university researchers, contractors, government, regulatory agencies, and various other third parties.
  2. Non-profit organizations -- these often include volunteers, donors and community stakeholders with no reporting relationship to key players within the non-profit.
  3. Professional associations -- these often are entirely volunteer-based, and each person tends to function with a high degree of autonomy.

The relationship map process, in brief:

  • Review the purpose that brings these stakeholders together.
  • Identify all relevant stakeholders regardless of their organizational affiliation.
  • Group stakeholders together with others with similar interests.
  • Diagram stakeholders in relationship to the core project team, and to each other.
  • Explore stakeholder interests for each group.
  • Imagine what each group might say when wildly successful results are achieved.
  • Prioritize stakeholders based on the importance of those judging your results.
  • Create a scorecard of the measurable success criteria through the eyes of the highest priority stakeholders.
  • Create a communication strategy based on the relationship diagram.

Using a highly interactive, graphical facilitation style in creating these charts enables people to visualize relationships, so I recommend lots of wall space, flip charts and post-its as shown below.

Copyright Kimberly Wiefling, Wiefling Consulting.

Holacracy Isn't for Everyone!

As dysfunctional as hierarchical relationships might be, children need parental guidance and civilized societies need political leadership. While I doubt if a pure "holacracy" is ideal for most organizations -- or even possible (everyone knows who the founder is, even if they don't hold an official title) -- experience has convinced me that we need to move beyond hierarchical organizational structures.

At Zappos, 210 of their 1,500 employees chose to quit the company when offered the "embrace holacracy or get out" three-month severance package. That's one in seven people! Were those people performing useful roles? I certainly hope so because I'd hate to think that 1/7th of Zappos employees were merely taking up space. Holacracy isn't a good fit for every situation or every human being, but it might be worth exploring how holacracy works, and considering how you might redistribute the power in your own organization to avoid the dysfunctionality designed into hierarchical power structures.

In a previous column I wrote about self-organizing systems and emergent behavior. Anytime I see a flock of birds flying together I shout "There is no CEO bird!" Flocks fly in formation by following simple organizing principles. This morning I watched dozens of ants walking along a pipe in my garden. There were no signs set up by executive ants saying "Walk on the pipe!", and no manager ants assured that the ants walked there. I imagine that the ants walked on the pipe because they found it easier than walking on the rocky surface of the ground. If you are going to have hierarchical power structures, you might want to think about these ants. Should the people in positions of power spend their time telling people where to walk, or creating paths that make it natural for their people to walk where they want them to walk?

Structure strongly influences the behavior and capabilities of a system, and the results that you will get from the system. If you create a hierarchy where power is based primarily on position and title, you will have an organization that fails primarily for entirely predictable and avoidable reasons such as a lack of clarity around shared goals and communication breakdowns. And, just like in the ABCD exercise, even when your organization succeeds you run the risk that your executives will feel frustrated, your managers will feel overwhelmed, and your employees will feel confused and lonely.

Fifty years ago a career spanned about 40 years and economic cycles far exceeded that in length. Today economic cycles shift much more frequently, and our working lives are far longer, so one person's career spans several economic cycles. How might organizations adapt to the reality of rapidly changing economic cycles while honoring the need to support the human beings who make our businesses successful? I think the million-piece puzzle challenge holds some clues for those of us willing to wrestle with this question. My solution is to for the person chartering the project to refer to the puzzle box, project the image of the finished puzzle on the stadium HDTVs, map out the dimensions of the puzzle on the playing field, indicate which is the "top," and then get out of the way of the 1,000 people.

So how will YOU solve the million-piece puzzle challenge in your organization? Write me your thoughts! I'm looking forward to learning from you about this fascinating topic.

- Kimberly

Kimberly Wiefling, founder of Wiefling Consulting and co-founder of Silicon Valley Alliances, is the author of Scrappy Project Management (published in English and Japanese), and the executive editor of the "Scrappy Guides" series. Kimberly helps managers become leaders and groups of people become true teams that can achieve what seems impossible -- and would be for any individual acting alone. "Impossible" just means we haven't figured out how to do it yet!

©Copyright 2001-2015 Wiefling Consulting. All Rights Reserved.

Not all comments are posted. Posted comments are subject to editing for clarity and length.

If you are looking for a starting point for complete beginners to understand the details of how holacracy works I would recommend starting with
focusing on chapters 2-5

Thanks for this tip, Daniel! Awesome!

Thanks for the tip, Daniel! Great flipbook!

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