Stop Freaking Out About Holacracy: Here’s why it works

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By Geoff Campbell and Aleksandra Corwin of Round Table Companies

“Chief executive officers represent a single point of failure,” says Brian Robertson, a self-described “recovering CEO.”

Gary Hamel famously said that if you ‘give someone monarchlike authority… sooner or later there will be a royal screwup,’” he shares.

Robertson is founder of HolacracyOne, whose Holacracy framework decentralizes leadership to bring more consciousness to business. “The most effective way to achieve conscious leadership is to get everyone in the whole system thinking like a CEO.”

At first blush, Holacracy often freaks people out because it lends itself to two common misconceptions. First, many assume it means no structure, and second, they assume that all decisions are made by consensus.

“People either worry it requires everyone to lead everything, or that no one leads anything, but the key is to get everyone taking full leadership of the particular area that is their purview,” Robertson said. “It doesn’t mean everyone manages everything,” he said. “That doesn’t scale and it doesn’t work.”

Robertson once heard a Starbucks executive note that the person responsible for cleaning the floors should be able to choose his or her mop—which is exactly what Holacracy promotes.

“What Holacracy does is free people to lead their roles and more effectively influence other areas that impact them,” he said. “Holacracy results in more structure” because it focuses on consciously clarifying areas of responsibility and boundaries between them, “but that structure happens more dynamically” because there is a clearly defined system in place for empowering employees to affect change in their organization. Once a company has clarified who is responsible for specific functions, the result is more structure over a more spread-out decision-making tree.

In effect, Holacracy takes the wind out of the sails of the office politicking that fuels traditional hierarchies. The system empowers employees at every level—which leads to a tighter ship and a better bottom line.

What it doesn’t do is push HolacracyOne’s value system or purpose onto others. The program allows a company to organize effectively around whatever values or purpose it has.

“Organizations that want to be more conscious and responsive need a way to allow more people within them to be conscious, and that requires habit change,” Robertson said. “In a traditional business hierarchy, no one takes the CEO’s advice as advice; they take it as direction. Once they’re using Holacracy, people do take advice as advice, even if it’s from the CEO.”

It’s a structure designed to empower each individual to reach higher levels of consciousness for themselves.

“Now people tell me they will take my opinion into consideration as they make their decision, instead of passing the leadership buck,” says Robertson. “Which is exactly what I wanted.”

Zappos, the online clothing and shoe company based in Las Vegas, switched several years ago from a typical top-down management system to Holacracy. Why?

Tony Hsieh, Zappos’ CEO, explained that in general, innovation and productivity per resident increases by 15 percent every time a city doubles in size. “But when companies get bigger, innovation or productivity per employee generally goes down,” he said in an edition of Zappos Insights. “So we’re trying to figure out how to structure Zappos more like a city, and less like a bureaucratic corporation.”

He noted that cities are self-organizing and that Holacracy allows the company to mimic that by enabling “employees to act more like entrepreneurs and self-direct their work instead of reporting to a manager who tells them what to do.”

Recognizing Holacracy’s potential to help foster conscious workplace cultures, Conscious Capitalism, Inc. recently chose to adopt the self-management system.

“Holacracy is not an externally imposed approach,” said Alexander McCobin, the chief executive officer of the nonprofit organization dedicated to elevating humanity through business. “It’s an approach that emphasizes individual team members creating the system for governance, interactions, and accountability that work for them. Utilizing this approach, the Conscious Capitalism team has become more productive, efficient, and fun.”

Robertson said Holacracy enhances and expands consciousness in organizations. “A company is only as conscious as the ability of each of its members to express consciousness,” he said. “Holacracy helps to bring conscious leadership to everyone and to every role.”