In 2012, the managing partners of a Viennese-based, 30-year-old consulting company decided to adopt the Holacracy Constitution as the new operating model. I was one of those partners. One year later, I left the company, and I was not the only one. And while I can’t say it was due to Holacracy, I can’t say it was not either. This chapter is not meant to explain what Holacracy is but rather to provide a reflection on it. In case you are not familiar with Holacracy, an operating model based on sociocracy and repackaged by an US-based company, please have a look at the attached links.

There is something very appealing about Holacracy, as it seems to address all or almost all pain points which organizations are dealing with today. Lack of speed, engagement, innovation and leadership. One of the main claims is to replace leaders with a system and process-based self-organization. And there are some examples for useful contributions, such as:

  • A strong focus on the core purpose of the organization and basing everything an organization does on the question: (how) does this serve the purpose?
  • Basing decisions on two questions (“Is it safe enough to try?” and “Is it good enough to start?”) to get things going and done.
  • The tool of a standard agenda for “tactical meetings”
  • To work in circles with a dedicated facilitator
  • Holacracy irritates old thinking patterns and evokes new perspectives. This is a highly-valuable contribution.

The problem with Holacracy is not so much in the details, but rather with the approach of implementing a top-down operating model. A “one-size-fits-all approach” not taking into consideration that there are humans working in organizations.

If organizations were machines, Holacracy would work.

  • Organizations can’t be designed – they need to be created, out of a new thinking, a different need and transformational insights.
  • Holacracy was designed by engineers and being in it felt that way. I felt like being part of a code, operating a code, being operated by and within an algorithm that is optimized for machines but not for humans.  Instead of feeling more whole, self-organized and more powerful, I felt trapped. The circles I was part of did not feel empowering but rather took away my natural authenticity and feeling of aliveness. It was fully unnatural, and we were disciplined by rigorous protocols and procedures.
  • Holacracy exclusively focuses on internal processes and keeps the organization busy with organizing itself.

We got completely caught up with implementing and learning how to function in/operate with Holacracy. The system is ridiculously complicated without reason, and very challenging to learn.

I increasingly felt that we had totally missed the point! Today, I would say that our operating model was not our root problem. As a result, even if Holacracy does work, it would not have helped us. A new operating model/organizational design/structures and procedures are not the only solutions to today’s most burning questions.

I felt more disempowered than ever, although I was the Lead Link of the Company Circle, one of the most central positions.  Holacracy implementation used up all of our energy that we should have used to work on our actual pain points, such as lack of innovation, unclear strategy, critical market feedback and declining internal morale. The worst thing was the fact that all of our dysfunctional behaviors, that had developed over decades, immediately found their way within and beyond Holacracy’s working formats. It was not the quick fix we had hoped for.

Holacracy was a perfect distraction from what we really should have talked about. As it mainly focuses on the operating model, not on beliefs, culture, strategy, behavior or anything else that really matters and could possibly have made a positive difference for our future, the old patterns survived.

So, why do I think that Holacracy is not safe enough to try? 

Because no “ready-to-implement-one-size-fits-all-off-the shelf” solution is safe enough to try.

On the contrary, the process of developing new models and ways of working is exactly the process necessary to create an operating model that works, one that is accepted and well-adopted internally. Don’t try a shortcut, it is not short!

For a long time, I thought this was maybe my individual bad experience, until I met Bud Cadell, founder of the US-based consultancy NOBL, which is focused on the future of work. He clearly states that, based on his personal experience, Holacracy was “dogmatic and rigid without a reason, and so complicated!” It had some good ideas from sociocracy, that he studied altogether with other operating models. “You can’t just buy something”, “my big fear is that Holacracy puts meaningful organizing models back 5 years” and “Holacracy feels like playing a game of Management Dungeons & Dragons. Models like Holacracy were created by people who tend to enjoy complex processes – the rest of us are different.”

Bud was called in to Zappos during the Holacracy implementation by the Holacracy Coaches as a “voice of sanity.” He talked to desperate people and collected their feedback, input and ideas, with the strong desire to develop their own operating model. Nevertheless, Holacracy was implemented, with no evidence that it has helped the company. On the contrary: years later the tech department still has not adopted Holacracy. An HBR article by Gary Hamel says: “While the goal was laudable — to eliminate managers and organizational politics — the all-or-nothing implementation of this new and mostly untested management model left Zappos in turmoil. Staff turnover jumped to an unprecedented 30%, and many of those who remained were confused and demoralized. In 2016 Zappos fell off Fortune magazine’s Best Places to Work for the first time in eight years.“

It is said that Holacracy broke the company that invented Holacracy itself. I just heard about this, I don’t have details.

Don’t get me wrong, I don’t think organizations should not develop new practices, or learn from what is working. Just the contrary! But I would highly encourage organizations not to be seduced by an appealing sales story and great marketing.

Please keep that enthusiasm for an innovative approach, take whatever you think works for you and go the extra mile to develop your own practice and way of working. It won’t cost you more time and turmoil than a Holacracy implementation, but most likely will yield a genuine and working result. And before you implement any new model, make sure you know exactly WHY you want to change something and WHAT. Maybe a new operating model is the wrong answer to your most burning questions.

Vortrag bei der LKCE 2016 in Hamburg: slides

Why did Holacracy fail?

HBR: Beyond the holacracy hype

HBR: Top-Down Solutions Like Holacracy Won’t Fix Bureaucracy

Bud Cadell: Why self-organizing is so hard

Der Standard: Was passiert, wenn Hierarchie schwindet?