Tag Archives: Organizational Structure

Square Peg for a Square Hole Inside of a Square

jehyun-sung-6U5AEmQIajg-unsplash.jpgEvery couple of weeks or so, Ben Thompson from Stratechery and James Allworth from Harvard Business Review sit down to talk tech and society. On their most recent episode, I couldn’t help but think of some of the parallel applications to the public service. At around the 30-minute mark of the podcast, the two start talking about the different kinds of organizations (functional and divisional) and how certain leaders are better suited to lead from the different structures.

For instance, they use the example of Steve Jobs — who, most regard as a very successful leader. At the time that he was in charge of Apple, the organization operated, mostly, in a functional structure. The two referred to Jobs as the ultimate “product manager” — all decisions ran through him. As organizations grow, it’s natural for them to shed the functional structure for a divisional structure.

In listening to Ben and James talk about this, the thing that got me excited was that we could almost draw up a 2×2:

  • Functional Leader
  • Divisional Leader
  • Functional Org Structure
  • Divisional Org Structure

Naturally, you’ll want a functional leader operating within a functional org structure and a divisional leader within a divisional org structure. So, it could be that the person who looked like they had potential to be a good leader might be mismatched in the type of role they’ve found themselves in.

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This episode also made me wonder if there needs to be more intentionality around, not only finding the right kind of leader suited for the org structure, but also being clearer about what kind org structure is best for the work being done in the organization. For instance, let’s say we’re in an area of a department that’s highly segmented for projects. OK — maybe that area should be setup in a ‘functional’ way. Or, maybe let’s say that we have a department where there are some clear delineations from one group to the next delivering on big programs. OK — maybe that area should be setup in a ‘divisional’ way.

Essentially, we want to make sure we put the square pegs in the square holes inside of squares and that we put the circular pegs in the circular holes inside of the circles.

Can an Holacratic Organization Be Successful?

Because of some of the work that I’ve done, one of the things that really interests me is organizational structure. I like peeking into the ways in which an organization functions because I think that we can learn a lot about how and why they succeed. As a result, when I heard that Zappos was going to be transferring over to an holacratic organization, I was very interested:

During the 4-hour meeting, Hsieh talked about how Zappos’ traditional organizational structure is being replaced with Holacracy, a radical “self-governing” operating system where there are no job titles and no managers. The term Holacracy is derived from the Greek word holon, which means a whole that’s part of a greater whole. Instead of a top-down hierarchy, there’s a flatter “holarchy” that distributes power more evenly. The company will be made up of different circles—there will be around 400 circles at Zappos once the rollout is complete in December 2014—and employees can have any number of roles within those circles. This way, there’s no hiding under titles; radical transparency is the goal.

Typically, when people think about organizational structure, three systems come to mind: divisional, functional, and matrix. [Note: as an aside, I wrote an answer for a question on Quora a couple of weeks back about how organizational structure can support an organization’s strategy.] A divisional structure is one in which there is a degree of redundancy to the organization (each division has their own HR, accounting, etc.). A functional structure is one in which there are “shared services,” such that there would be only one HR, accounting, etc. Lastly, a matrix structure is a hybrid of the two.

Now, Zappos is throwing all that out the window and is adopting a new kind of organizational structure: holacracy. To be perfectly honest, I have no idea if they’re going to be successful. I don’t think anyone can honestly say whether Zappos will be successful in this change and in fact, I don’t think we could definitively say that this organizational structure works (or doesn’t) based on how Zappos performs under this structure. However, it’ll certainly give us a window into how a bigger organization (1500+) functions in this kind of structure. From what I’ve read, this is the biggest organization to attempt to use a holacratic system.

One interesting tangent I find to this discussion about holacratic organizational structure is this idea of holons and who’s associated with this idea. I first heard about “holons” in conjunction with Ken Wilber. I’ve written about Wilber only a few times here, but he’s someone who’s certainly worth checking out, if you haven’t already. He presents some fascinating ideas on a number of topics. That’s not to say that he’s right or wrong, but he’ll certainly present a perspective that you likely hadn’t considered. And if you’ve been reading me long enough, you know that I’m a major proponent of perspective. With regard to Wilber, I’m, in particular, thinking about the work he’s done with Spiral Dynamics. That is, I wonder if, in order to ensure that an holacratic organizational structure is successful, would the “participants” of said organizational structure need to be from 2nd or 3rd tier of development or the “yellow” or “green” memes in spiral dynamics.