Holacracy, Liberation and Management 3.0

Everything should be lean and agile these days. But in an organization, as a whole leanness and agility are next to impossible to achieve or maintain over time. If the management model is in the way, no well-meant initiative to introduce “Design Thinking,” “Lean” or “Agile” Methods can ever be sustained over time.

It really amazes me how many organizations pay for consultancies for “Design Thinking Workshops” or hire them to do the next system implementation by an “Agile Method” instead of the classical Waterfall Model – only to end up with mediocre results, budget overruns and 6-month testing phases from supposedly “Agile” projects.

This is silly. All these methods need to be addressed holistically in the organization. Lean, Agile, etc. are not some new process that you introduce, these are whole new mindsets and values that need to be supported by an organization through changes to

  • People: A new management ideology, aka a new way to lead and manage
  • Organization: New structures, which are necessarily less hierarchical
  • Process: Insert your Kanban/ Scrum Boards, Your Design Thinking Sessions, your Agile Sprints here. But neglect the other 3 dimensions at your peril
  • Systems: Systems need to be agility enabled with automated testing, continuous delivery and the whole Stack of DevOps Techniques.  Putting on a tight fitting running shirt on your fat legacy systems won’t do the work: It won’t be a pretty picture nor will it enable your legacy systems to run agile projects all of a sudden

OMG – this is a lot to do. It will take years! 

It surely does. There are no quick fixes here. It is easier to hire some consultancy to run an agile project or build up a laboratory environment or run a Workshop on Design Thinking than to develop a master plan and start to work on all above dimensions in an orchestrated manner. A one-off action is undoubtedly easier – but ultimately fruitless.

Start at Root: The Management Model

You really need to start with the people dimension. Without a fundamental change to central values and beliefs – especially those held in management –  no strong convictions will lead to reshaping the organization, to build up the stamina to sustain, e.g., Agile practices and to invest millions in systems.

What are the modern alternatives to the classical hierarchical management model? 99% of the advice found in management literature is just patchwork: Organize a company on trust, Embrace Failure, Exponential Organizations, Digitalization guidebooks, etc. Good ideas, mostly, but not holistic ideas.

And that is understandable. To approach all 4 Dimensions, from the lofty, complex realm of people to the nitty-gritty of systems is very hard:

  1. Few people can grasp the whole complexity, especially as our education systems and our siloed systems are much better at producing specialists than they are in creating generalists
  2. It takes a long-term time horizon to tackle this problem at all
  3. It takes real conviction at top management to start this process

These three reasons are at the core of the puzzle why traditional companies find it so hard to mimic the success of start-up businesses and unicorns.

But there are companies of any sector that made a successful transformation of their management models into the digital age, and there are templates of modern management models available. I have found three – if you happen to know more, let me know!

Comparison of Management Models

All those three models provide viable, proven alternatives to hierarchical management models. On a superficial level they appear quite similar:

  • They reject the hierarchical management model as being inferior and outdated, both in its capacity to deliver excellent results for most organizations in the digital age as well as for the self-fulfillment of people
  • They are solutions designed to fit complex environments, as such environments can only be controlled by understanding the lessons of holistic systems theories
  • They rely much more on the autonomy of the individual. The decentralization of authority is the pre-requisite for getting people engaged, getting people to grow and to control a complex environment
  • They are backed up in theory and in practice, with real live successful companies that have implemented these management systems

But they are quite different in their values and prescriptions.


Liberated Companies

With Poster child’s such as Gore (Textiles),  Favi (Automotive) or Michelin (Tires, lately) this management model is not a new fashion, but one that has been around since 1960. One can argue that even as early as the 1960’s companies, like the car rental giant Avis under the Management of Robert Townsend, have been engaged in liberated leadership.

Within this management model, all managers are supposed to leave the center stage of a business and let employees do and decide. Management role shifts solely to build an environment that fosters the growth of the individual and organizational learning while keeping the overall mission of the company updated and communicated.

Companies are seen as an Organism, with a metabolism that is connects everything to everything, resulting in a complexity that can only be controlled by decentralizing control.

Authors Isaac Getz in ” Freedom Inc” and Frederic Laloux in “Reinventing Organizations”  (see sources) are both chroniclers as well as engineers of this Management Ideology. There runs a large streak of humanitarian good intent in this approach, with words as “Self-fulfillment,”  “Human growth” and “Ascendence to new types of consciousness,” especially in the Laloux’s work. This can make this ideology hard to swallow for hard-nosed business executives. Which is a pity, as this wording distracts from the excellent business results in growth and revenue that this Management Ideology is able to deliver. It is just that the language is sometimes so esoterical, that conventional managers are overwhelmed by all the humanitarian goodness.

I think that is an inherent sales problem that this approach has. It’s a pity that humanitarian values don’t sell to a conventional business, capitalist audience, but so is life.


Holacracy (a word created from the Greek “Holons,” i.e., roughly speaking autonomous units) is the brainchild of Brian J. Robertson, an American Software Engineer, who invented the idea in 2007 and put it in a book in 2015. The most prominent company running the organizational model of Holacracy is the US Shoe Retailer Zappos.

As prescribed by the Liberated Companies approach, the usual company hierarchy is dissolved, and autonomy of teams is propagated.  But in contrast to liberated Companies it is replaced with a somewhat rigid set of rules which constitute an operating system for a company, e.g.:

  • Organizational Units become loosely coupled “circles.”
  • Circles are autonomous, they organize themselves in every aspect including setting their own goals and hiring
  • Roles are standardized to get multiple circles to work in a coordinated fashion
  • Strict process discipline is imposed on conflict (called “tension”) resolution and who to solve “operation” and “governance” issues
  • Meeting procedures are crafted in great detail and are to adhere too

Basically, people become a part of this Operating System. They need to learn the system for the organization to succeed. They need to comply with the system. Where liberated companies can be so widely different in their organizational structures and procedures, holacracies claims that there is one right way of operating which needs to be there. Companies can be specialized in this or that respect (e.g., HR procedures, Expense management, etc.), like Apps being installed on an Operating System.

Holacracy received a lot of press attention and is well organized – as one would except for an “organizational” operating system.” Just take a look at Holacracy.org to get an impression. For me Holacracy seems like the rule-bound Roman Catholic Church, while Liberated Companies or Management 3.0 seem more like flexible Buddist beliefs, to stay in that metaphor.

Management 3.0

I do not think that it is by chance that another former Software Engineer, Jurgen Appelo, invented another streak of nonhierarchical Management which he named “Management 3.0“. Coming from a similar, Agile Software Engineering background as Brian J. Robertson, Jurgen felt that there is one component missing in Agile: The governance structures of companies and especially the way of managing these structures.

Being an eager student of complexity theory, Jurgen came up with the conviction that Management is a craft to let companies achieve optimal results in complex environments. For this, it is essential, that the wisdom of employees is entirely used in a system of distributed control.

So Jurgen wrote a couple of books about his convictions and – not to be outdone by Holacracies Brian J. Robertson – decided to do a business out of that, licensing Management 3.0 as a trademark to trainers and selling workshops.

The advice given on Management 3.0 is much more detailed as in liberated companies and much more flexible than in Holacracy.  Best of all, the Management 3.0 Model offers detailed instructions on how to incrementally move towards flatter hierarchies and does not a revolutionary big bang of change, that both Liberated companies and Holacracy require. It is, therefore, a much more practical approach.

Oh yes, I like this approach. It is so close to what I called “Management Digital” in previous posts.

Is it worth changing to a less hierarchical model?

Where is the evidence that it is worth to adopt a nonhierarchical organization of any form? All authors and proponents of the above-mentioned management systems come up with the following evidence:

  • A rising number of companies adopted nonhierarchical models and some having worked with them successfully for decades
  • The need for innovation and knowledge-based, learning organizations, is more urgent than ever, with all the mega-disruptors and unicorns around that uproot ever more industries
  • The scientific evidence is substantial on the benefits of all the key components of autonomy and decentralized control, especially in the fields of systems theory and Innovation Science

But hard scientific evidence on the performance benefits on company level is really not there: there are simply too many factors influencing a companies performance than just its organizational model. The organizational model is an important influence on a companies performance –  there is evidence for that in empirical organizational research. But as a predictor of success, it is just not enough. Market Position, Competition, technological or demographical trends or simply pure luck (e.g., that one special deal) are all factors at least as important.

That is the way it has ever been. But now with the rise of hyper-competition, ever-changing environments and a knowledge-based world of possibilities hitherto unknown, creating a learning, “generative” company is more important than ever.

After all, Learning is the only sustainable competitive advantage there is.

In the next couple of posts, I will dive deeper into Management 3.0, Holacracy and Liberated Companies. It is an exciting ride into some real alternatives to get organizational learning going and make the workplace a better place for everyone.