Businesses can be managed in many ways, with varying structures and styles. Most traditional models are hierarchical, with decisions made by leaders at the top. But have you ever considered a business without a primary leader? Today, let’s explore Holacracy, a decentralized management model.

Holacracy is a system introduced by entrepreneur Brian Robertson. It uses a decentralized structure to address common issues in traditional hierarchical organizations, such as poor communication, low decision-making efficiency, and unclear responsibilities.

In this structure, traditional management layers are replaced by distributed power and responsibility. Tasks are allocated to clearly defined roles and teams, each responsible for specific areas of work and decision-making. This clarity minimizes overlaps and confusion. Employees can operate independently within their roles, reducing the need for excessive oversight and improving efficiency.

A classic example of Holacracy in action is Zappos, the American online retailer famous for selling shoes. Zappos adopted this management model in 2013. Under Holacracy, employees could no longer rely on instructions from supervisors. Instead, they had to devise strategies based on their responsibilities, organizational needs, and goals, while actively collaborating with other teams.

To enhance communication, Zappos pursued a high degree of internal transparency, including publicly sharing salary data and detailed decision-making processes.

For employees accustomed to traditional management structures, Holacracy was challenging to adapt to because it demanded a high level of individual capability. Policies created by different teams are interconnected, and successful execution requires collaboration among multiple groups. Employees must understand market demands and coordinate with others to deliver high-quality services. For untrained employees, this can be difficult.

Recognizing that not everyone could adapt, Zappos encouraged those who couldn’t align with the new culture to leave, offering financial incentives to ensure that only those fully committed to the company’s values remained.

Is Holacracy Suitable for All Businesses?

Holacracy, with its high demands on communication and individual responsibility, may work well for startups with fewer employees and clear goals. Startups can quickly adapt to changes and market dynamics under this model.

However, decentralization presents challenges. Even with a strong corporate culture, aligning the development of every team with the overall market direction is difficult. As companies grow, it becomes harder to ensure that all employees meet the necessary skill requirements and practice strict self-management. Without leaders to coordinate, a decentralized structure can lead to inefficiency and hinder expansion.

Zappos, for example, began adopting Holacracy in 2014 but gradually shifted toward other management models by 2018 after years of implementation.

The Hybrid Approach

Although Zappos has not entirely abandoned Holacracy, it has combined it with other management practices. Employees who survived the decentralization process are now highly capable individuals who understand the company’s operations and can translate them into market strategies. These employees, fully integrated into Zappos' corporate culture, have become the company’s pillars of strength.

In conclusion, while Holacracy has its limitations, its focus on decentralized decision-making and collaboration can still inspire businesses to rethink how they empower employees and structure their organizations.

Simon So

Chief Experience Officer of Hantec Group