With many eyes in the business world now watching the company-wide open experiment in next-generation business at Zappos that some have labelled a vital new management trend, we find it’s worth using this industry discussion to ask the question about how your organization is preparing the vital groundwork towards its future.
For his part, Zappos CEO Tony Hsieh is convinced that an emerging discipline known as Holacracy is a better, more modern way of running a business in the digital era, and so it may be. A surprising number of organizations apparently agree: Over 300 other companies in the last decade have taken up Holacracy, according to the Wall Street Journal.
However, in our work and conversations with organizations across a wide range of industries and geographies, we find most of them tend to be rather more incremental in their thinking of the contemporary workplace. Some might say bite-sized changes to our businesses are the most prudent. As I’ve noted before, the larger and more comprehensive a corporate transformation or restructuring is, the more likely it is that it will not succeed.
Thus, most organizations are not making wholesale, Zappos-style changes to the way they operate, even though most of them are badly falling behind the digital evolution curve. And yes, technology is perhaps the key enabler of the latest round of next-generation management practices such as social business, Wirearchy, podularity, and Holacracy.
So, even though the gap is widening between what’s possible and what most companies are actually doing, most organizations today are incrementally seeking to find their way forward towards an updated workplace and new operating models. Certainly, at Adjuvi, we are seeing many organizations embarking on efforts this year to carefully rethink their workplace to better incorporate the latest ideas and developments. How ambitious these efforts should be is the ever-present question.
Most frequently, we are seeing workplace rethinking that emphasizes the latest enterprise technologies — including new or updated collaboration tools, mobile devices and supporting applications, and digital engagement platforms of every description, backed by a growing array of analytics tools that create data that can be used to monitor and manage all of the activity within them. In this view, technology is the key lens to look at new possibilities of the workplace, though not the only one.
Less often, but in our view much more impactful and transformative to the average business, are organizations looking at changing how they work, adopting new workforce practices such as more agile, participative, and social ways of working, rapidly fostering today’s vital digital skills across the company so that workers can take advantage of the changes, and perhaps most importantly, genuinely laying the combined political and technological groundwork required for genuine and sustainable digital transformation.
Most Organizations Improve Either Technology or the Business: Not Both
Due to the famous IT/business divide, most organizations naturally tend to change a single dimension — either technology or the human components — of the way they work or the other, but rarely the two in unison, other than perhaps at a superficial level of technology automation. This is perhaps the largest challenge we see with organizations adapting themselves to today’s new operating environment: Companies are making meaningful changes very incrementally, in organizational silos, and with primarily — and often solely — a technological or business lens. To say this generates limited results would be an understatement. I am almost always surprised how many organizations measure simple adoption of new tools or ways of working, instead of measurable actual business impact. As a result, the efforts rarely get the fuller results they were seeking.
In response to the relatively poor results from these fragmented efforts to update the workplace, we’ve begun to see more comprehensive approaches for how organizations must change their structures, processes, and cultures to operate more efficiently, innovate better, and stay adapted to a world that’s changing ever faster.
Thus Holacracy itself is not so much a self-help approach to adopt in a piecemeal fashion some of the latest management practices, as it is literally a comprehensive ground-up vision for a new decentralized and self-organizing corporate operating system, with a blueprint for how the entire organization should be structured, how information is shared, how responsibility is partitioned, who does the daily work, who makes decisions, and even how to use digital tools to keep everything understandable, organized, and well-communicated.
Interestingly, Holacracy articulates new ways to do all of these things, yet it doesn’t prescribe how corporate fundamentals such as compensation, performance management, compliance, financial controls, budgeting, or even hiring is conducted. The person behind the approach, Brian Robertson, believes these should be redesigned into modern new incarnations by the those within the Holacracy itself, as an organizational form of “apps” that run on top of the fundamental organizational platform enabled by roles — people taking on specific types of tasks — that are self-organized into something called circles, which we’d formerly call departments.
The key motivation for this model and others like it is one of the most important factors in many highly decentralized systems: One of human interest and motivation. After studying self-organizing systems for many years, Robertson realized that the bigger and more bureaucratic an organization became, the more likely it would “crush the ability in people to actually contribute and use their gifts” and the less likely it would respond well or adapt as needed to the external pace of change.
Next-generation management approaches instead seek to tap into the way people will respond the most fully and openly, by unleashing them do what they do best while eliminating the overhead of everything else through technology tools combined with increasingly optimized and lightweight supporting processes that connect activities to meaningful business outcomes. This also allows organizations to tap into what digital networks of people can do like no other, such asymmetric value creation at scale that I’ve called ‘letting the work do the work.’
Another key motivation of these new digital age management models is the elimination of unnecessary waste and overhead. By all accounts from authoritative sources, this means virtually all of middle management. So too are time and resource consuming institutional practices like reviews of people, processes, and projects, status reporting, traditional corporate decision-making, change enablement, and many other support activities that were required before human activity and corporate information became ambient, distributed, automatically captured, trackable, and instantly manageable as a group entity.
Therefore, we believe the short answer to whether organizations should make the switch, is that most companies will inevitably tend to Holacracy-style models over time. It’s the natural, better way to work in today’s connected, digital organization.
New Ways of Working Have Arrived: What To Do
Will there be major issues and challenges for organizations to make the transition? Almost certainly. Are organizations better off getting there in several steps, or piecemeal? Sometimes, but faster is better, as long as the pace is sustainable. What are the consequences of failing to shift your organizational and technological landscape in a coordinated fashion? The ceding of significant levels of competitive performance to peer organizations that will ultimately put the company at existential risk.
Not that it will be easy to get there. Only corporate leaders can spur the transition fast enough for large organizations. For its part, the CIO and IT department has perhaps one last chance to help lead this effort.
The real underlying issue for most organizations is that there are at least two major misalignments in most organizations that will prevent them from making significant progress. One is that the business and technology teams are not well-aligned in most organizations, and second is that there are missing many key digital-era skills. Both of these issues can be addressed, but it represents the governance and leadership challenge of our generation in our opinion. For those strongly considering a move towards Holacracy or something like it, we strongly encourage you to make the initial steps, as they are vital to your future. You will learn a great deal, and you will make a difference, no matter how far you get.