The business world has been going through an overhaul for quite some time. The introduction of the world wide web in 1993, coupled with the rapid growth of tech since then have shaken organizations in all industries across the business spectrum.
From marketing and customer acquisition to the actual products and customer service, businesses have had to adapt and pivot to the needs of an ever changing market.
One of the most interesting and notable areas of change has been the evolution and revolution in the management style and types of organizational structures. Since the beginning of time, businesses have been ran using very traditional organizational structures, usually a centralized structure, where the chain of command is clearly identified.
The traditional structure is usually based on a very clear distinction between the layers of management, the people who have the decision making power and the different business units. Whilst this type of structure has its merits and has served organizations for a long time, it has been going through a radical change over the past few years.
Businesses are not what they used to be not only in the way they produce, market and deliver their products but also in the way they operate internally.
Startups and this new wave of young entrepreneurs have changed the way we see and understand business. The workplace is not what it used to be 10 years ago neither is the relationship people have with their manager. The dynamics, roles, relationships and management of human resources is going through an unprecedented shift that seems to be allowing people and ideas to flourish.
From large organizations to small business, everyone seems to be trying to reinvent the way a company is meant to work and communicate with its parts, aiming to reach the optimal and most functional organizational structure possible. Just have a small read at Elon’s Musk interview talking about innovations in the production process. If that’s not engaging enough could we interest you in Mark Zuckerberg describing how Facebook’s internal structure is one of the company’s biggest assets? Good!
Now that we’ve established that the most influential and bright minds of our time see value in changing the traditional organizational structure, let’s take a closer look at these changes.
Sounds familiar? No? Good! We didn’t expect it to sound familiar as this concept only traces its origins back in 2007. This form of decentralized structure was developed at Ternary Software, an Exton, Pennsylvania company that was experimenting with more democratic forms of organizational governance.
The first characteristic of holacracy circles around roles instead of job descriptions. People are assigned with responsibilities and are accountable for a certain “territory” at work. Their role might span over two or three departments and these accountabilities are updated regularly according to the needs of the organization.
Before we go on to describe more of its characteristics, let’s give you the official definition as it is stated by the founders:
“Holacracy is a new way of structuring and running your organization that replaces the conventional management hierarchy. Instead of operating top-down, power is distributed throughout the organization, giving individuals and teams more freedom to self-manage, while staying aligned to the organization’s purpose.”
As you can clearly see, job functions and project management gain a much different meaning under holacracy. A predefined set of rules and processes empower employees to take on more responsibility and initiative to innovate and perform at the peak of their capabilities.
Holacracy is different to hierarchical organizational structures with its “integrative decision making”, taking into consideration the input and opinions of almost every member of the team instead of just senior management. When it comes to operational process, the key drivers for decisions are quick actions and autonomy. The goal is to avoid the slow, painstaking divisional structure method and reach conclusions and actions much faster and in a more effective way.
This new regime has been up and running for the past few years and one of its biggest advocates has been Zappos.
Embrace the present, celebrate the individual
Departments and teams have always been named and managed the same way: a manager heading the team and members being assigned with incoming projects and tasks. This kind of structure has proven to be limiting for individuals, restraining them to very specific tasks and not allowing their ideas or creativity to surface through the ranks and hierarchy.
Things are shifting though and this structure has been brought to the ground and built up again with the individual at its core. Companies nowadays understand the importance of letting employees express themselves, share opinions, ideas and have a prominent role in projects. Teams now have a leader instead of a manager, decisions are made on the basis of consensus and remote working is an option in order to give team members autonomy and freedom.
The entire principle and reasoning behind forming a team is also changing. Teams are now constructed on a project per project basis. Team members are chosen based on their roles and skill-sets and this “task force” gets disbanded once the project is completed. This approach creates an organizational structure that’s both adaptable and empowering for the individual.
This new approach has been adopted by social media management software Buffer dating back in 2015, with some incredible insights and details on how it works.
When all else fails, write a handbook
This might sound basic but if the results are anything to go by, Basecamp have got it right. The project management and team communication software have taken the simple approach of writing down a handbook that outlines, explains and demonstrates the organizational structure, ideology and best practices of the company.
The best part about it? It’s free for everyone to read.
From project length and life cycles, to remote working and good work-life balance, the key component fueling this unique structure is the happiness of the individual. Once again, employees are treated as the key to a successfully-ran business and their involvement in how the business operates is of paramount importance.