Beyond the Holacracy Hype

Ethan  Bernstein; John  Bunch; Niko  Canner; Michael  Lee

Article | Harvard Business Review | July–August 2016

Beyond the Holacracy Hype: The Overwrought Claims—and Actual Promise—of the Next Generation of Self-Managed Teams

by Ethan Bernstein, John Bunch, Niko Canner and Michael Lee

Abstract

Holacracy and other forms of self-organization have been getting a lot of press. Proponents hail them as "flat" environments that foster flexibility, engagement, productivity, and efficiency. Critics say they're naive, unrealistic experiments. We argue, using evidence from a multi-year research agenda at several mainstream organizations that have adopted these forms, that neither view is quite right. Although the new forms (built upon a half-century of research on and experience with self-managed teams) can help organizations become more adaptable and nimble, most companies shouldn't adopt their principles wholesale. A piecemeal approach usually makes sense. Organizations can use elements of self-management in areas where the need for adaptability is high and traditional models where reliability is paramount.

Keywords: Self-Managed Organizations; Self-Managed Teams; reliability; adaptability; holacracy; organization design; organization structure; organizational design; Organizational Charts; organizational architecture; organizational forms; organizational structure; Organizational Design; Organizational Structure; Organizational Change and Adaptation; Performance Effectiveness; Performance Productivity; Management Practices and Processes; Management Systems; Managerial Roles; Human Resources; Apparel and Accessories Industry; Manufacturing Industry; Retail Industry; Public Administration Industry; Technology Industry; North America;

Format: Print

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Citation:

Bernstein, Ethan, John Bunch, Niko Canner, and Michael Lee. "Beyond the Holacracy Hype: The Overwrought Claims—and Actual Promise—of the Next Generation of Self-Managed Teams." Harvard Business Review 94, nos. 7-8 (July–August 2016): 38–49.

In early 2020, the world began what is undoubtedly the largest work-from-home experiment in history. Now, as countries reopen but COVID-19 remains a major threat, organizations are wrestling with whether and how to have workers return to their offices. Business leaders need to be able to answer a number of questions to make these decisions. Primary among them is “What impact has working from home had on productivity and creativity?”

In 2017, the Royal Bank of Canada (RBC), a Canadian financial icon, mandated a swat team of “enablers of collaboration” (their job description) to support the personal and commercial bank in the enterprise-wide RBC Cultural Transformation initiative. Historically, personal and commercial banks (P&CB) maintained long relationships with their clients who tended to do most if not all of their banking with one bank. However, by 2017, industry-wide change was well underway as switching costs had become negligible if not non-existent. New entrants were disrupting the banking industry as digitization allowed upstarts to break through long-standing barriers to entry. RBC’s Cultural Transformation, intended to reposition the enterprise for the “new normal” in the financial industry, included the creation of this team of collaboration enablers (called Operations Transformation or OT) to drive efficiencies across operations within the current fulfillment operating model and importantly to envision and enable a new digital operating model where people only intervened in a transaction when there was an exception, i.e., a transaction that fell outside the technology’s capabilities. OT was tasked with enabling—through collaboration and without radical surgery—the day-to-day optimization of P&CB fulfillment activities and facilitating major change in the way work was done. At the time of the case, eighteen months in, the team was seeing mixed results, which deeply troubled its leadership. Questions abounded: Was it foolish to try to enable major change through collaboration without upending the traditional RBC organization with more radical approaches? Or was the OT group not structured correctly to enable it—and if not, what changes should be made? Was a different collaboration model needed? Internally, some questioned whether the group was optimally located within the organization (as part of the back office organization structure), since the back office was often viewed as more of a servant to the front office. Others wondered if OT’s internal structure was getting in the way of its purpose. The case examines three major transformation projects that OT is collaborating on with colleagues from Banking Operations and Risk Operations to understand what contributed to less than hoped for results. With this information OT leadership needs to think about changes, if any, moving forward from a structural, organizational, and capability perspective.

Supplement | HBS Case Collection | June 2020

RBC: Transforming Transformation (B)

Ethan Bernstein, Francesca Gino and Aldo Sesia

Keywords: Service Delivery; Technology; Transformation; Change Management; Collaborative Innovation and Invention; Innovation and Management; Decision Making; Human Resources; Management Systems; Organizational Design; Organizational Structure; Groups and Teams; Management Teams; Banking Industry; Financial Services Industry; Canada;

Citation:

Bernstein, Ethan, Francesca Gino, and Aldo Sesia. "RBC: Transforming Transformation (B)." Harvard Business School Supplement 920-045, June 2020. View Details

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Beyond the Holacracy Hype: The Overwrought Claims—and Actual Promise—of the Next Generation of Self-Managed Teams

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