Many people believe that without a hierarchical company structure, there is no structure at all. Check out this article for some rebuttals to the most common critiques of Holacracy and other self-operating organizational models.
Since its founding in 1970, Sun Hydraulics, a 900-person Florida-based global producer of hydraulic cartridge valves and manifolds, has been a radically self-managed company. Sun has no quality control, scheduling, or purchasing departments and there are no standard production times, time clocks, or quotas. Yet, the publically-traded company has not taken a loss in over 30 years and its profit margins are staggering.
What accounts for this success? How can a company run without middle management or without a clear hierarchy of people? Frédéric Laloux, a former consultant with McKinsey & Company, answers these questions in his new book Reinventing Organizations. He suggests that companies like Sun Hydraulics are successful precisely because of the self-organized governance not in spite of it.
However, anyone who is following this trend knows that these findings have not been universally accepted. Both Laloux and Brian Robertson, founder of Holacracy®, which is featured in Laloux’s book, have fielded a wide-range of questions and critiques. In the following video interview, Laloux and Robertson discuss five common critiques of self-organized or self-managed operating models and provide substantive responses to each.