Holacracy in Practice: 3 Major Challenges and Solutions for Effective Implementation

01-The aesthetic of the first position has replaced the rule of law and the feasibility of implementing business in the Holacracy system.

Essentially, Holacracy is a more “advanced” organizational development system that replaces human governance with the rule of law. To truly leverage the Holacracy system, organizations need a deep understanding of the rule of law. However, many proponents of the first position only see the “liberal” spirit of Holacracy, which bears a striking resemblance to the Taoist principle of “non-action.” Of course, there may be various reasons behind this phenomenon. It could be a reluctance to exert too much control, a desire to compensate for deficiencies in management capabilities through a self-governing management model, or a genuine belief in the inherent potential for human growth.

The essential operating mechanism of Holacracy is that all rules for organizational operations and governance are based on the Holacracy Constitution. However, it is not simply about giving the top-level organization free rein to do as they please. It requires a more assertive approach to “legalize” Holacracy, and this process is often misunderstood by many people. Some may think that signing a “Charter Authorization” is enough.

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At the same time, Holacracy should not only exist in the imagination of the top-level organization. If it cannot align well with the organization’s strategic coordination system, lacks talent readiness, and lacks strong organizational culture as a safeguard, its implementation may only be halfway completed.

02- Using organizational mechanisms and process systems to compensate for organizational capabilities and cultural development.

I have to say that the design of the Holacracy framework is very ingenious. If it is strictly followed, the organization will definitely undergo significant changes within six months.

However, an organization is not a machine, and the people within the organization still have their own inertia. The larger and more mature the organization, the stronger this inertia becomes. Let’s take a simple example: “How can we propose a good tension?”

This matter is not so simple! Behind a good tension is self-confidence in one’s expertise, understanding of the business, and systematic thinking.

On the other hand, if most of the middle and senior managers in the organization are from the 1960s and 1970s and deeply influenced by Confucian “ruler-subject” culture, it would be difficult for them to immediately embrace a “culture of everyone” and provide each other with honest and direct feedback.

Regarding how to propose good tensions, Holacracy provides a meeting tool called “Huddles” to address tensions within the organization. Huddles are short, regular meetings designed for team members to share the tensions they are facing and find solutions. In Huddles, people can raise questions, share perspectives, and provide feedback to facilitate organizational learning and progress.

The Huddles meeting tool helps the organization establish an open culture of communication and feedback. Through regular meetings, team members can better understand each other’s expertise and business understanding, thereby increasing trust and collaboration. This helps break away from the traditional “ruler-subject” culture and encourages people to treat each other with equality and openness.

Therefore, based on my personal experience, I would suggest that before tearing down the old house and building a new one, it is important to assess the organization’s capabilities and culture, and whether they can support the change. It is not advisable to rely solely on good mechanisms and processes to compensate for organizational capabilities and cultural development. As the saying goes, “What goes around comes around.” It is better to address these issues sooner rather than later, as it provides an opportunity to build a future-oriented organizational capability system and culture.

03-Lack of effective awareness of change, Over-reliance on tools and methods

A true organization, fundamentally speaking, is a group of people working together towards a common goal, doing something meaningful.

I have found that some leaders have an “organizational obsession.” They identify a new organizational model, study it themselves, make changes as they see fit, and then implement it without considering other factors. Or after reading “Reinventing Organizations,” they become enamored with the concept of teal organizations and make drastic changes within the organization.

As a leader of a company, if you only push forward based on personal desires and imaginations, then it can only be a matter of “good luck.” In the process of driving organizational innovation, if you can “achieve” the following three points, at least you can avoid some detours on the path of change:

  • Achieve a balance between the past, present, and future.
  • Take a holistic approach and start with small steps to have a broader impact.
  • Encourage participation, empowerment, and enablement.

Author: Leona Smith

Certified Global Holacracy Coach

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