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Holacracy For Small Business, Another Name For Wearing Many Hats?

It seems when leaders with the level of influence of Zappos' Tony Hsieh and Evan Williams of Twitter fame embrace a new business model, the world stops and takes notice. Touted as the "hot management trend for 2014," by Mashable and dozens others, 'holacracy' seems to be the latest shiny new thing for 9-to-5ers to show the world that they too can push the envelope.

But is holacracy, or the "no titles, no managers" type of business practice - that features a flat organizational chart - really all that new? Just because spellcheck hasn't recognized it as a real word just yet, doesn't mean it's not something that hasn't been around for a while. And no, the term is not derived from the Spanish word halo or "hello" coupled with the Greek word-ending cracy which means "to denote a particular form of governance."

The derivation of holacracy is "holarchy," coined by Arthur Koestler in his 1967 book, The Ghost in the Machine. Composed of "holons" or units that remain autonomous and self-reliant at the same time, a holoarchy is also dependent on the greater whole of which it is a part. Entrepreneur Brian Robertson distilled the best practices into a organizational system that became known as holacracy in 2007.

In Corporate America, it's hard to believe that a "politics-free" enterprise can exist and thrive. Yet, in the world of small business, it's been alive and well for decades. Communication, multitasking and job descriptions have always been more fluid in an operation that has fewer employees. According to Aimee Groth who is currently working on a book about Zappos CEO Tony Hsieh, holocracy is "much more fluid and easy to discern" with smaller operations, "which makes these organizations great test beds."

The issue with larger business operations trying to adapt to holocracy has inherent hurdles. So entrenched and imbued with the world of competition, legacy management styles have a long history dating all the way back to the 2nd century BC. Sun Tzu's The Art of War is considered the most influential treatise on war, on and off the battlefield.

In essence, much of Tzu's instructions highlight how to fight wars without actually having to do battle. It's application as a training guide to "how to succeed in business" is fairly straight forward, as it has provided the world of commerce with tips as to how to outsmart one's opponents internally (aka fellow employees) and externally (aka business competitors).

Groth points to the differentiator. "CEOs (like Hsieh) who sign on to holacracy agree to cede some level of power." The advantage is they get to view their company like a small company, but the adjustment is monumental, since Zappos with 1500 employees will be the largest company to date to implement holocracy.

In a small business, employees are leading and working hand in hand with their staff in accordance with their strengths, not their titles. Titles are "nice to have's" in small business only when those small businesses have to deal with larger companies. Why? Larger firms will deem employees less worthy and opportunities with such companies will diminish when a staff member lacks a title. Small companies dealing with companies of their own size have less of a challenge in this regard - because in most instances - the common denominator that's recognized by both firms is that employees need to wear multiple hats and assume multiple types of responsibilities.

So, in order for small businesses to thrive, a flatter organizational chart is the most practical. It allows players to feel worthy of not only taking on one set of responsibilities but also those where a specific job role is vacant, most likely due to payroll budgetary considerations. In these instances, wearing multiple hats becomes the norm, and while frustrating at times for the small business operator, this holacratic business model produces greater transparency, accountability and faster resolution-solving while amplifying engagement, innovation and agility.

Hsieh and Williams might be able to apply these same principles to larger enterprises, but the strategy they deploy has to have a complete buy-in by all players to eliminate hiccups and those on board that may have a tendency to resort to old habits. If the Art of War has been our compass for over two millennia, teaching "old corporate dogs" new tricks is not going to come as easily as the current hype is making it sound. As Sun Tzu was quick to point out, "tactics without strategy is the noise before defeat."