Reference no: EM133204436 , Length: Word count: 200 words

Introduction to the Case: The Holacracy Decision at iQmetrix

As you will see from studying this case, the founder of iQmetrix, a software development firm that began by developing applications for the retail mobile (cell) phone industry, had a problem:  He wanted his company, which had grown to about 500 people, "to be a company of 500 people that runs and feels like a company of five people."  The reason he wanted this-again, as you will see from reviewing the case-was because his company had suffered some shortcomings and a couple of outright failures, due to the development of "bureaucracy."

The term, "bureaucracy" was coined in the 1800s, but was first given a formal analysis by the sociologist, Max Weber, in the early twentieth century.  A bureaucracy is a hierarchical arrangement of "offices" that are filled by incumbents who-according to theory-are appointed to their positions based on their qualifications-a combination of education, skill, and experience.  A defining feature of bureaucratic organization is that the office holders are constrained by formally stated procedures and policies-an example of the "rule of law," as opposed to the "rule of persons."This was an attempt to separate the work of management and administration from the "personal" idiosyncrasies of the person doing that work.  But over the past hundred years, since Weber wrote his analysis of bureaucracy,we have come to see that the existence of bureaucratic policies and procedures is not a guarantee of "fairness," the "rule of law," or separating the personality of the manager from the work of management.  First of all, the superior in a bureaucracy has God-like power over his or her subordinates:  The superior has the "last word" regarding

• Whether to hire or fire someone
• To determine what they do and how they do it while on the job
• The right to review and evaluate their performance
• ...And in many cases, the right to determine the size of the raises they receive.

This power may or may not be exercised in ways that is perceived as "fair," or in ways that makes subordinates feel appreciated or respected for their efforts and abilities.  There is an old saying in American corporations: "Rule 1 is: The boss is always right.  Rule 2 is: When the boss is wrong, see Rule 1."  It is not surprising that subordinates, who typically see their work as part of a life-long career, may (and usually do) put pleasing their bosses at the top of their priorities, since they want "good" reviews.  Good reviews are necessary for securing promotions.  Thus, the mission of the organization, depending on the capabilities and integrity of their bosses, may take second place to giving the boss whatever he or she wants, regardless of whether this is "good for the business."If a subordinate sees that something is needed for the good of the business, but doesn't know how their boss will react, they "kick the decision upstairs," and have to wait until the boss tells them whether it is OK to do it.  The organization may lose efficiency because of the wait time.  Sometimes, something needed by the company doesn't get done at all, because the boss doesn't see doing it (right now) as in his or her career interests.  If you have worked in industry or government for more than three years, you may have seen this dynamic at work. 

Because of the politics of bureaucratic careers, subordinates may fear taking on decisions themselves, for fear that they might draw criticism from their bosses, or from their bosses' rivals, or from their peers.  To avoid this, they spend a lot of time politicking in "back-stage" interactions, or spending a lot of time in meetings, hoping to attain consensus.  This can drain time and energy from performing activities that create value, relative to the organization's mission.  Work that is kept from getting done by these processes is-put simply-work that is not getting done.  This is inefficient. 

One of the benefits of bureaucracy is that it generates rules that make things orderly and predictable.  Without those rules, things can degenerate into a state of chaos.  However, when conditions change, these rules are still in place, and can get in the way of an organization's ability to adapt to those changing conditions.  The longer an organization exists and the bigger it becomes, the more such rules it has-and the harder it becomes to make changes in response to a changing business environment. 

"Holacracy"-a term created by Holacracy One founder, Brian J. Robertson (2015)-is an attempt to resolve these problems.  It is one of many approaches to "self-management" that have been attempted since the 1950s.(See the article by Bernstein et. al. [2016] for a concise summary of these approaches).  It is a pretty radical departure from "bureaucracy."  Holacracy, like other approaches to self-management, redistributes power to the people who actually do the work, and reduces the power of managers to "tell them" what to do and how to do it.  Since this project focuses on the Holacracy approach, please review the following video, before you engage the Experiential Exercises:

Vimeo video: Holacracy Intro Webinar with Chris Cowan (May 5, 2020)

After you have listened to the introductory video, please read the following article:

Frost, Ann, and Lyn Purdy (2017). Note on organizational structure and design. Ontario, Canada: Richard Ivey School of Business Foundation.  (This article is available on Canvas.)

It will provide you with a concise overview of different models of organization and their relationship to "holacracy."  It is suggested that you read the case, "Organizational Design at iQmetrix" after you have read the article by Frost and Purdy.  This case is posted on Canvas. 

As the project progresses, you will want to spend some time at the Holacracy website, holacracy.org. You will also want to search for articles on "self-management" and "autonomous work teams."

This course directly addresses the issues of leadership, change management, and work teams in Lessons 7-10, but don't wait until that late in the course to investigate self-management and autonomous work teams.  (And be sure to use LIRN for authoritative sources on these topics.)

As you go through the research and analysis associated with this case, be asking yourself the following questions:

(1) Given the kind of work I am currently doing, would I want to have more freedom to decide the best way to get my work done? Why or why not?  How would this benefit the organization I work for?

(2) If I were running my own business, what would I see as the advantages and disadvantages of holacracy (or some other approach to self-management)? 

(3) If I were a CEO and chose to be more conservative than this, where would my "happy medium" be, organizationally speaking? Why?

References:

Bernstein, Ethan, John Bunch, Niko Canner, and Michael Lee. Beyond the Holacracy hype. Harvard Business Review (July-August 2016). (This article is available on Canvas.)

Robertson, Brian J. 2015. Holacracy: The new management system for a rapidly changing world.  New York: Henry Holt and Company, LLC.

Weber, Max. 1947. The Theory of Social and Economic Organization. (ed. Talcott Parsons). New York:  The Free Press.