It’s your first day at a new job. You have no boss. You have no title. The word ‘manager’ is not to be found. You do have an employee manual but the first page reads, “Handbook for new employees: A fearless adventure in knowing what to do when no one’s there telling you what to do.” This might sound crazy but it’s a new reality for office workers across the world.

The blurb above is from Valve Corp‘s employee manual, a video game company, that touts Holacracy, their unconventional organizational structure as a cultural perk. Holacracy, was formally developed by HolacracyOne, LLC in 2007, as an organizational system where decision-making is distributed throughout the company instead of resting solely in the manager-level roles. It’s not a flat organizational structure where everyone is equal. Rather it’s a collection of individual contractors who work in self-driven teams. Those teams have domain knowledge leads—that coworker who is really good at data analysis—and they work together as equals. ”.

Holacracy is not a flat organizational structure where everyone is equal. Rather it’s a collection of individual contractors who work in self-driven teams.

In the same manual, Valve describes Holacracy simply as, “Our shorthand way of saying that we don’t have any management, and nobody “reports to” anybody else. We do have a founder/president, but even he isn’t your manager. This company is yours to steer—toward opportunities and away from risks.”

The triumphs and traps of Holacracy have been hotly debated since its introduction. And two companies, Medium and Zappos, recently shared their stories at SXSW 2016 at a panel called, The Bossless Company: How Zappos and Medium Work.

Medium: from poster child to reformed holacratic

Medium adopted the Holacracy model shortly after it was founded in 2012. The initiative was lead by Jonathan Stirman, one of the early employees at Twitter, and later a creator of Medium. Stirman explored Holacracy as a way to encourage all the employees—not just managers—to share important ideas. At SXSW, Stirman talked about how he also viewed it as a tool to increased transparency between ranks, something lacking in many corporate hierarchical systems, “At Twitter, there was this common power dynamic where my reports felt accountable to me to get their work done and I felt accountable to the guy above me. It would have been good to be more forthcoming."

Instead of a more traditional structure, Medium focused on these Holacratic tenants:

  • No people managers. Maximum autonomy.

  • Organic expansion. When a job gets too big, hire another person.

  • Tension resolution. Identify issues people are facing, write them down, and resolve them systematically.

  • Make everything explicit — from vacation policies to decision makers in each area.

  • Distribute decision-making power and discourage consensus-seeking.

  • Eliminate all the extraneous factors that worry people so they can focus on work.

And for about three years, the Holacracy dream was alive. The employees took more ownership over their contributions, people got to delve into multiple skill sets at work, and employees who would never have worked together in a traditional model got to collaborate. Then in 2015, after being the poster child for a bossless company, Medium left Holacracy behind.

Medium released a post explaining why, citing these challenges:

  • “It was difficult to coordinate efforts at scale. For larger initiatives, which require coordination across functions, it can be time-consuming and divisive to gain alignment.”

  • “We found that the act of codifying responsibilities in explicit detail hindered a proactive attitude and sense of communal ownership.”

  • “For us, Holacracy was getting in the way of the work.”

The last point is particularly important for any company contemplating Holacracy. You have to answer the question, That is the question that Zappos Inc. asked itself before embarking on the holacratic journey that they are still on today.

Zappos: a holacratic heyday

Zappos started moving towards a Holacracy model in 2013 after being inspired by the book, Triumph of the City. The book talks about how every time a city doubles, productivity per resident doubles. But the opposite is true for businesses. So, Zappos crew asked how it could operate more as a city and less like a traditional company. For them the answer was an organic system, like Holacracy. Before making the change though, Zappos offered employees a year-long severance package if Holacracy wasn’t for them—18% of employees took the offer.

The evolving Zappos holacratic effort is being lead by John Bunch, who outside of Zappos, is known as the “Advisor to CEO and Holacracy Implementation Lead at Zappos”. Of course, inside Zappos, he is just John Bunch, fellow employee and dude who knows a lot about a good many things—including how Holacracy works in a giant company. At SXSW John answered a few questions about how Holacracy is working at Zappos today:

    What has been the toughest part in adopting holacracy?

    Zappos: The time and energy it took to set up. Hearing “Just make decisions” from a CEO made people uncomfortable. It’s hard to get people to stop deferring the decision-making power.

    What was the biggest potential benefit?

    Zappos: Seeing people do things they had never done before. Say you are in accounting but have an interest and other skill sets--you are free to pursue your own passion. That will bring about lots of engagement.

      We look at three things:

    • What you are good at

    • What you are passionate about

    • What makes sense for the company to pay you

    If you have investors and boards, the want to see a CEO, CFO, etc. How do you hire for C “blank” O?

    Zappos:Well, you can still have external titles. They just aren’t used internally. It’s valuable to bring in C ” ” O because they have domain knowledge. But that is mostly about their skills, not their title.

    How to do you post a job externally and assess their fit in the structure?

    Zappos:We still hire people into traditional job functions. And then they evolve over time. We’d like to evolve to knowing more what the needs that the company has and find the skills that match those needs.

    How do you scale this system globally? What about in cultures like Japan where hierarchy is so important?

    Zappos:It’s all about how you launch it and get it going. We used a snowball effect, started small and let it grow in the company. It took a long time and that’s one of the challenges. 18% of people took the deal at Zappos but now we have buy-in across the company.

    What if you are owned by a company that is not holacratic? Amazon owns Zappos and that has a different culture? Has Zappos received any feedback from Amazon?

    Zappos:Yes. We retained independence. There is a strong boundary line. In that barrier, we get clear about what our commitments are for that quarter. Once those commitments are made, it’s up to us on how to pursue those commitments. We do that through Holacracy.

Currently, Zappos is happy with Holacracy but only time will tell if it works for both the employees and the business. If you are curious about bringing in holacratic ideas into your organization, see documentation on this Holacracy website. When asked how to make incremental changes at work, Stirman and Bunch both suggested changing your meeting structures to be more holacratic. Drop the titles at the door and let everyone share the floor. See if this increases collaboration across the table. You never know, maybe your business is ready to embark on a “fearless adventure”.

What do you think about Holacracy? Have you worked in an office with no boss?

Chelsea Larsson is a content marketer for Zendesk and a frequent contributor to Relate. She believes any problem can be solved with a pen, paper, and Pimm's cup. Find her on Twitter: @ChelseaLarsson.