Who's the boss? In a holacracy, there isn't one. It isn't as flaky as it sounds--even larger companies like Zappos are kissing hierarchy goodbye The first thing the advocates of holacracy would like to clear up is that, even though it's a management philosophy about getting rid of managers, this doesn't mean pushing a company into anarchy, or even hippy-dippy Montessori indulgence. Quite the opposite: They suggest holacracy is about companies growing up. Take Phil Caravaggio, the founder of Precision Nutrition, a 60-person Toronto firm specializing in tailored life coaching. As his firm grew past the point where it could be run informally on the strength of personal relationships, he went looking for a way to structure the company without setting up yet another deadening corporate hierarchy. His search led him to holacracy, a governance method that emerged from a software firm in Pennsylvania, of all places, over the last decade. Since then, holacracy has racked up a number of big-name adherents, most notably Zappos, the 1,500-employee, Amazon-owned online footwear store, and the chatter has been growing. "It's a system for giving everyone real clear autonomy without everything devolving into chaos," explains Caravaggio, speaking over sparkling water in a corner of the Soho club in downtown Toronto. Caravaggio might be said to head up the firm, though this is where things get fuzzy, because in addition to rejecting hierarchy, holacracy also eschews job titles. When pressed, he says he's technically the "lead link of the general company circle"; one senses that he's had a lot of practice explaining this to people. In a holacracy, the organization is grouped into a series of concentric, autonomous circles--say, a finance circle, a marketing circle that might contain a web-design circle, all within a big circle that represents the company itself. Every circle has a leader, who does many of the things a traditional boss does, like deciding on priorities and assigning who does what on the team. But no circle's leader is allowed to butt in on the decision-making process of any other circle--even the smaller ones. The way these circles speak to each other is one of holacracy's hallmarks. In a traditional organization, the team managers typically represent their teams in meetings. But this puts managers in a bind: On one hand, they have to champion their team's interests to the company; on the other, they have to be the ones to impose their superior's decisions on their team--two roles that can be completely at odds. In a holacracy, each circle elects a representative who's not the leader to sit in other circles, report on their team's progress, and express its concerns to the broader company. In fact, everything about the way a holacracy works is determined by a set of written rules. It's all laid out in a detailed, but surprisingly concise, 30-page constitution: who is allowed to do what, how meetings are run, how decisions get made, and how to mak ...

1. Who's the boss?
In a holacracy, there isn't one. It isn't as flaky as it sounds--
even larger companies like Zappos are kissing hierarchy
goodbye
The first thing the advocates of holacracy would like to clear up
is that, even though it's a management philosophy about getting
rid of managers, this doesn't mean pushing a company into
anarchy, or even hippy-dippy Montessori indulgence. Quite the
opposite: They suggest holacracy is about companies growing
up.
Take Phil Caravaggio, the founder of Precision Nutrition, a 60-
person Toronto firm specializing in tailored life coaching. As
his firm grew past the point where it could be run informally on
the strength of personal relationships, he went looking for a way
to structure the company without setting up yet another
deadening corporate hierarchy.
His search led him to holacracy, a governance method that
emerged from a software firm in Pennsylvania, of all places,
over the last decade. Since then, holacracy has racked up a
number of big-name adherents, most notably Zappos, the 1,500-
employee, Amazon-owned online footwear store, and the chatter
has been growing.
"It's a system for giving everyone real clear autonomy without
everything devolving into chaos," explains Caravaggio,
speaking over sparkling water in a corner of the Soho club in
downtown Toronto.
Caravaggio might be said to head up the firm, though this is
where things get fuzzy, because in addition to rejecting
hierarchy, holacracy also eschews job titles. When pressed, he
says he's technically the "lead link of the general company
circle"; one senses that he's had a lot of practice explaining this
to people.
In a holacracy, the organization is grouped into a series of
concentric, autonomous circles--say, a finance circle, a

2. marketing circle that might contain a web-design circle, all
within a big circle that represents the company itself.
Every circle has a leader, who does many of the things a
traditional boss does, like deciding on priorities and assigning
who does what on the team. But no circle's leader is allowed to
butt in on the decision-making process of any other circle--even
the smaller ones.
The way these circles speak to each other is one of holacracy's
hallmarks. In a traditional organization, the team managers
typically represent their teams in meetings. But this puts
managers in a bind: On one hand, they have to champion their
team's interests to the company; on the other, they have to be
the ones to impose their superior's decisions on their team--two
roles that can be completely at odds. In a holacracy, each circle
elects a representative who's not the leader to sit in other
circles, report on their team's progress, and express its concerns
to the broader company.
In fact, everything about the way a holacracy works is
determined by a set of written rules. It's all laid out in a
detailed, but surprisingly concise, 30-page constitution: who is
allowed to do what, how meetings are run, how decisions get
made, and how to make changes to the rules themselves--which
can be easily done, as long as the rule-changing itself follows
the rules. Once a company signs up, the agreed-upon written
tenets are the highest authority--not the founder or erstwhile
CEO.
It's as if, after centuries spent listening to complaints that
government should work more like business, somebody decided
that business should work more like government. Managers still
have power in a holacracy, but it's diffused and limited by the
rules. "You can compare it to the way a society is run," says
Olivier Compagne, a partner at HolacracyOne, the consultancy
founded by holacracy pioneer Brian Robertson. "You can have a
dictator at the top, or a constitutional system that distributes
authority. Executives have limited authorities, and they cannot
trump it."

3. As the story is told, Robertson developed holacracy after years
spent running up against management as a software developer,
only to start his own company and discover he'd replicated the
exact same system he had once railed against. After sampling
ideas from other management philosophies popular in the
software world, like Agile and Getting Things Done, Robertson
founded HolacracyOne in 2007 to promote the concept and offer
software to support it.
The extent to which it will make a dent on the corporate world
remains to be seen. Observers suggest that, predictably enough,
it will be a better fit for some companies than others. "It tends
to work well in situations where problems are difficult to
define," says Kenneth Goh, an assistant professor of
organizational behaviour at Western's Ivey Business School--for
instance, he says, creating interactive media out of an alchemic
combination of graphics, music, writing and programming.
"Because the end product could be dominated by any of these
elements at different times, team hierarchy needs to be flexible
to respond effectively and promptly to feedback," he says.
"These are scenarios that are likely to thrive under holacracy."
Conversely, businesses that attack well-defined problems might
benefit less, especially if they already have bureaucratic
processes that might not embrace constitutional re-engineering.
For Caravaggio, the system's value hit home in 2012, about a
year after Precision Nutrition adopted it. The company was set
to launch its professional certification program--which normally
would have required oversight from senior executives. But the
timing coincided with a few trips out of the country. Having a
governance system in place that can grow and change according
to its own rules freed up employees from the overhead of
organizational bickering and the need for managerial
interference. "We did $1.5 million in one day. It was the
smoothest launch we'd ever done, and nobody missed me," says
Caravaggio. "To me, it was the demarcation point between
being a collection of heroic individuals, and having a system
that is trusted by talented people to do what needs to be done."

4. Associated Graphic
Illustration Alessandro Gottardo
PHOTOGRAPHS (TAN) JOE TABACCA/AP; (RACHMAN)
RANDY QUAN/THE GLOBE AND MAIL
Word count: 970
© 2014 The Globe and Mail Inc. All Rights Reserved.
Careers: Radical New Idea: Middle Managers --- When
experiments in self-management fall flat, companies give bosses
another try
This spring, employees at tech firm Treehouse Island Inc. got
something they hadn't had in years -- a boss.
Since 2013, the Portland, Ore., online coding school had been
something out of an office drone's fantasy. Under co-founder
and CEO Ryan Carson's leadership, staff worked four-day
weeks, pitched in only on projects they felt like doing, rarely
had to send email and had no direct bosses.
But as the business grew, enrolling upward of 100,000 students
for its online courses and employing about 100 workers, some
projects weren't being completed and employees were unsure of
their responsibilities. While it wasn't weighed down by
bureaucracy, Treehouse was stalled. And Mr. Carson, one of the
most vocal cheerleaders for managerless companies, was forced
to re-evaluate his allegiance to an organizational approach he
had espoused in blog posts and interviews.
"That experiment broke," Mr. Carson says. "I just had to admit
it."
For founders of upstart companies, reinventing management is
often another way to prove that they can do business differently.
Companies like Web retailer Zappos.com Inc. have made big
bets on systems that allow workers to manage themselves
without the aid of middle managers, while software-
development methods like Lean and Agile place rapid problem-
solving and empowered teams over traditional work hierarchy.

5. But as they hit growing pains, some firms are rethinking the
way they work.
Without managers to coordinate projects and supervise workers
-- cheering a job well done or doling out blame for missed
deadlines -- Treehouse employees weren't as productive as they
could have been, executives said. For a company that delivers
courses in programming languages like PHP and Python to
students interested in becoming software developers, that meant
losing ground to competitors.
"There's no real reason to push hard because no one knows
about it," Mr. Carson says. "We almost had some of our best
people sort of getting used to the fact that not as much was
expected of them."
Dave McFarland was initially excited about Treehouse's flat
structure when he joined in March of 2014 as a teacher of
JavaScript programming. Since the company allowed employees
to pitch projects to the staff, he eagerly proposed things that
interested him, such as a tool to evaluate what students had
learned in their courses. Too few workers wanted to tackle the
project, though, and without a champion in management, it went
nowhere.
He ultimately stopped proposing ideas. "You just kind of felt
like, 'I can't get these things done,'" says Mr. McFarland, now
one of the company's new managers.
Endless discussion sank other decisions, in part because
employees on the company's chat system weighed in on
initiatives outside their area of expertise.
Questions about which subjects to teach would spark plenty of
analysis and chatter but resulted in few answers or plans, says
Michael Watson, the company's finance and operations chief,
estimating that decisions about things like Treehouse's website
design took twice as long as they should have. Mr. Watson adds
that constant questions from staff on small-bore issues like
expenses -- questions they would have asked a direct boss, had
there been one -- ate into his time for strategic work.
Middle managers are often vilified as symptoms of corporate

6. bloat, but things fall apart without them, according to Quy Huy.
A professor of strategy at Insead's Singapore campus, he's
studied middle managers at over 100 organizations and found
that midlevel bosses deliver employees the resources they need
for work and keep staff motivated and on task in uncertain
times.
Employees "want people of authority to reassure them, to give
them direction," he says. "It's human nature."
Not all forays into self-management go awry. California tomato
processor Morning Star Co. has no formal management, and
employees rely on data points such as tons of tomatoes
harvested per man-hour to remain assured that employees are
doing their jobs, according to Paul Green. A longtime Morning
Star employee, he now studies organizational behavior at
Harvard Business School and observes the company for
research.
Morning Star's bossless workers are happy, according to Mr.
Green, who adds that "it would be a stretch to say [it] has this
perfect organizational system worked out."
During a recent visit, he observed employees hesitating about
shutting down a clogged machine; they sought input from more
colleagues until someone seen as an important decision maker
made the call, he says.
Treehouse's executives say the company's new bosses have
brought benefits. Revenue has increased since Mr. Carson made
the switch, as has the number of minutes of video courses the
company produces, according to the CEO. Mr. Watson says the
time it takes customer support employees to respond to students
who have questions has dropped to 3 1/2 hours from seven
hours. (Employees still work four-day weeks.)
Shifting to different forms of communication from the
company's homegrown messaging system has also cut down on
what Mr. Carson describes as "black hole" discussions about
decisions. With roles now defined and managers tracking
assignments, email is proving useful.
Craig Dennis, a teacher at the company, says he likes having a

7. manager to give him direction and praise for a job well done.
He sometimes misses pitching colleagues on a cool project, but
says life with a boss is "light years better."
Credit: By Rachel Feintzeig
Word count: 887
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