Question: Is it possible to run a small business without managers?

Big companies like Zappos are adopting the innovative Holocracy management style.

This new approach replaces the top-down traditional management style with a peer-to-peer approach with flexible organizational roles that encourages teams to manage themselves.

Have you successfully implemented Holacracy in your business or client's business? How do you determine which business may be a good candidate for this model?

2 Expert Insights

In my role as a governance professional, I’ve been advocating for flatter org charts for the better part of a decade; I recently posted the new edition of the Holocracy Constitution* to my FB page**.

The key features of a holocratic implementation are that:
• people’s activities are determined by the work to be done, rather by job description, and are thus more fluid;
• decision-making authority shifts to those roles or teams charged with accomplishing the work;
• teams self-organize and nimbly iterate;
• a pre-established set of rules guides transparent behavior

These characteristics are not unlike other, more familiar models that have existed – some for a century or more. Models include those guided by a constitutional/democratic/parliamentary system of governance, as well as co-ops, worker-owned enterprises and The Commons, each of which guarantees that leadership is elected by members, who receive relevant information about their organizations and have a voice in the day-to-day management of them.

A study first published in 2012 and updated in 2014*** demonstrated “how meso-level structures support effective coordination in temporary groups.” Information flowed; relationships improved. Accuracy, efficiency and accountability increased. “Huggy” Rao and Bob Sutton (Stanford) gathered still more data and supplied a blueprint for implementation of such systems in their book Scaling Up Excellence****. They advocate for adoption of “two-pizza teams” (no more than five or six individuals) able to cut through bureaucracy, reduce cognitive load and cascade “right behaviors” throughout the organization.

Many of these practices are familiar to people; they may have employed them on a more limited or temporary basis in the past. It may intuitively resonate, in part due to the democratic component. I have encountered very little resistance to it from the majority. To the contrary, I recently worked with an organization where the employees – without realizing it – instituted a holocracy on their own. The chief executive stepped down and the board was indecisive; the organization had to continue to run. Staff stepped up, self-organized and carried on without them.

I can think of no sector that cannot employ Holocracy principles at least at the business unit level; the only people I’ve heard express hesitancy were members of upper management fearful that relinquishing power/authority would result in chaos or somehow diminish them. There is a lot of untapped “wisdom at the bottom,” as I call it, and granting autonomy to people – effectively making them CEOs of their jobs - results in innovation, achievement, employee satisfaction and retention.

*My F B page:

**Holocracy Constitution:

***Valentine, Melissa and Edmondson, Amy C., Team Scaffolds: How Meso-Level Structures Support Role-based Coordination in Temporary Groups (June 10, 2014). Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 12-062. Available at SSRN: or


While I recognize that some companies have pursued this type of organizational hierarchy, I'm not convinced that it works well for every business.  The role of management is to set the course for where the business goes, how it gets there and who is responsible for various assignments along the way.  While I greatly support the idea of teams collaborating to get the best outcome, I realize that most people are more comfortable knowing that someone utlimately is in charge.

In the small business community, most businesses end up running without a manager.  This is not the intended outcome but it's what happens when the owner is the defacto manager and retreats from this responsibility for a variety of reasons.

In order to get the typical small business to operate in a flat (mangerless) environment, it would take a dedicated process of establishing how people work together, communicate, resolve conflicts and make decisions to get the work done.  Organizations that traditionally don't work this way or haven't planned to operate this way would need a lot of foundation work and a varification of cultural support to pull this type of hierarchy off.