Holy Holacracy ®! First Twitter, now Zappos. By now you have heard, read, discussed, commented on, (and if you are a Zappos “disco ninja” even participated in) Vegas-headquartered Zappos’ recent dump of job titles, managers, leadership hierarchies and adoption of a flat, self-governed corporate structure where everyone is a leader. It’s called holacracy, in case you care about the technical term.

As described by its founder, Brian Robertson, holacracies are influenced by nothing and something at the same time. Holacratic design didn’t emerge because of theory, research or principles. Rather it is dynamic concept that emerged from asking this question: What prevents organizations from creating and optimizing performance and business results? Depends who you ask, but the responses wreak of the outputs of the Dreadful Drama Triangle – the DDT: unproductive meetings, bureaucratic processes, poor communication, little accountability, no empowerment, complex organizational structures, too many ivory tower leaders, and disengaged employees.

The DDT, defined originally in the 1960s by psychologist Stephen Karpman, describes the relationship between three roles:

  • the persecutor
  • the victim
  • the rescuer

We have seen this 3-way relationship play out in fairy tales. Consider Little Red Riding Hood. The Big Bad Wolf (the persecutor) takes advantage of innocent Little Red Riding Hood (the victim) who relies on the Lumberjack (the rescuer) to keep her from harm’s way.

The same three scripted roles prevail in our workplaces. The persecutor is an evil manager who assigns work and resources. The victim is the voiceless employee receiving the work and already has too much to do. And the rescuer is a heroic peer to whom the victim goes running with the  “help me, help me” plea. The rescuer stops the persecutor from taking advantage of the victim.  The underlying problem is that scripted roles facilitate emotional reactions, focus on why the work can’t be done, pass responsibility for execution of the work, and don’t embed accountability for work completion.

Holacratic organizations escape the Dreadful Drama Triangle by eliminating scripted roles and encouraging an exploration of options among all stakeholders. Consider the ‘evil manager’ scenario just described. In a Holacratic organization, the manager is not evil. She simply identifies a piece of work that needs to get done. The employee is not voiceless. She simply engages peers to discuss viable options and settle upon an approach to getting the work done. The peer is not expected to solve the problem and save the day, but rather to participate in defining options and participate in taking actions to execute on the work.

Holacracy eliminates the drama that DDT creates, erases positions of ultimate supremacy, and spreads power to make decisions and get work done evenly and fairly across employees. It assumes that CEOs cede some level of their authority and control but doesn’t mean that Holacratic organizations are leaderless. Even in Holacratic organizations, some hold greater levels of responsibility for the organization’s business results than do others. But Holacratic organizations distribute leadership into each and every role.

At Brandon Hall Group, we regularly write about and publish research on high-performance leadership development. In organizations that implement high-performance leadership development, “all employees are leaders” and all leaders participate in target leadership development. For whatever reasons (e.g. lack of executive engagement, inflexible culture, change management struggles, little communication about organizational goals beyond the executive level, etc), few organizations have been able to adopt this level of maturity and thus sacrifice the business impact that high-performance leadership development could enable.

Holacratic organizations do not have this problem. They subscribe to the notion that everyone is expected to lead and influence business results and empower employees to pursue what they are passionate about in alignment with business goals.

One of the first organizations to embark on holacracy was Twitter, and now Zappos, unveiling their holacratic environment just a few days ago. With a current employee count of 1,500, Zappos is the largest employer to date to implement holacracy. It is likely that holacracy won’t come easy at the online retailer. It will feel unnatural for the Zappos “disco ninjas.” That doesn’t come as any surprise. Change, particularly of this scope, presents challenge and pushback before opportunity and gain. To accelerate the opportunity and gain phases, Zappos’ biggest “disco ninja”, Tony Hsieh, is leveraging mentorship circles. A circle is a self-organizing team with a specific purpose and the authority to assign its own accountabilities. Some circles focus on specific projects, others on managing a business function and others on overall business operations. But regardless of the circle’s focus, the circle makes its own policies and decisions; it produces work, and measures its own output in alignment with real business issues.

At Twitter and Zappos and others planning to join the ranks of holacratic organizations, mentorship circles replace traditional hierarchy organizational charts.

It seems to me that holacracy is one of the greatest inflection points for leadership that we’ve seen in a long time. This structure, when practiced well, has the potential to radically transform how we manage and engage talent, how we share knowledge and resources, and how we operate as a coordinated and cohesive talent function. Therefore, it has the power to profoundly advance business performance.

Laci 1-9-2013

Aside from my optimism in the value of holacracy for unparalleled business performance, it is in a fledging state with the number of organizations actively practicing it countable on one hand and empirical data on its impact not yet available. Although still new and unproven, the interest in holacracy is growing.

Will Zappos emerge as an early winner? Are you in?

Until next time….

Laci Loew, Vice President Talent Management Practice, Principal Analyst laci.loew@brandonhall.com

Laci Loew

A principal talent analyst and consultant with Brandon Hall Group, Laci is expert in all areas of human capital management particularly talent management, leadership, leadership development, and succession management. She has worked in the public and private sectors consulting global and matrix Fortune companies across all industries on integrated talent initiatives. Laci holds a bachelor of science from the University of Illinois Urbana-Champaign; earned her MBA from Keller Graduate School of Management; and is currently a PhD candidate in organizational psychology. Laci’s hometown is Chicago and she is based in Las Vegas.

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