- Joe Benesh is a senior architect with Shive-Hattery and president + CEO of the Ingenuity Company, a strategic planning, diagramming, framework development, and design thinking consulting firm.
In my last post, we discussed the differences between leadership and management: finding the proper balance between the two and the problems that arise if they fall out of balance. In this post, I would like to explore that concept further in the context of organizational design. In his book, "Exponential Organizations" (a book I highly recommend), Salim Ismail talks about a company called Holacracy. Holacracy has taken frameworks from the start-up world (such as Agile and Lean) and applied them to its organization in a broad-based way. As he describes it:
Holacracy is defined as a social technology or system of organizational governance, in which authority and decision-making are distributed via fractal, self-organizing teams, rather than being vested at the top of a hierarchy. (Ismail, p.104)
How does this relate to our earlier conversation about the lever arms of leadership and management? Ismail has the answer to that as well:
…hierarchies tend to be competence-based hierarchies, relying more on peer accountability than on authority-based accountability…(Ismail, p.105)
To me, this describes the nature of how healthy businesses can operationally adjust to balance the needs of management with employees. The management-based structure of organizations will inherently resist this, as there will be a loss of control. But, as stated in the last post, the accountability will increase.
Companies with the courage to self-organize based on competencies with direct peer accountability align with the emerging workforce of millennials, who have grown up as the products of social networks and rapidly accelerating technologies and modes of communication. Management-modeled authority structures tend to slow down innovation, as they are mired down in policy frameworks and defined by boundaries.
Inversely, holacracy in leadership structures allow there to be reduced latency in the adaptability of employees to take on new projects, innovate, and self-regulate. The fractal nature of these teams that Ismail refers to creates an environment conducive to rapid protoyping, failure learning, and optimized product or service delivery models.
I am not advocating for the elimination of all management structures, but I do feel that things in the organizational development ecosystem are evolving. Those in the marketplace that are able to be responsive to build upon the strengths of the emerging workforce are the companies that will continue to grow, increase their curb appeal for potential employees, and produce better products for clients.
Valve Corporation is a video game development company that was founded by former Microsoft employees in 1996. Valve is almost completely run as a flat organization, run by its employees. Individuals select/create their own projects, there are no managers, and employees can also hire employees to work on their projects. During Valve’s 19-year history, they have been responsible for creating not only some of the most innovative modern video games, but an Internet-based distribution system for online gaming. The company was estimated to be worth close to $3 billion in 2012. (Image to right is from Valve's employee manual)
I included Valve as an example to illustrate that holacracy truly works. I would argue that it may not work for every corporation or organization, but combining this model with the balance argued for in the last post between leadership and management, you can produce a formula for success in the modern organization. Every organization has an equilibrium point. One with responsive, engaged, and self-starting employees, ready to interact in an environment where leadership and accountability are dynamic and innovation can flourish with almost zero latency.
Please follow: @ingenuitycmpny