How the Implementation of Holacracy Appears Challenging

As we reported in a post about one year ago, a significant holacracy experiment is going on at Zappos. Lately reports have not been so favorable about the experiment as for example this Quartz post ‘Holacracy at Zappos: It’s either the future of management or a social experiment gone awry’.

holacracyBasically employees have no more title, they have temporary positions and they need to operate more like entrepreneurs on an internal market (quite contrary, by the way, to the traditional theory of the firm that states that companies are there because they minimize the cost of internal transactions compared to the open market – so why do we keep a formal organization?).

The funny thing is that it is the number of rigid rules in the holacracy concept that seem to stop employees in their tracks. Instead of having a fluid organization with increased freedom it seems on the contrary, to stop people’s creativity and engagement.

Finally, according to the article, “Zappos executives […] explain that Holacracy is, for now, a catalyst but may not be the long-term solution in moving toward self-organization.” At the same time it is a great source of positive PR for Zappos.

I doubt whether implementing strict rules (as developed by a technical person) can resolve all organizational problems. While developing people’s entrepreneurship they need to get more freedom and not be constrained too much by rules. Let’s continue to follow what happens!