Transformational Leadership and the Flat Hierarchies of Holacracy

Hi everyone! I was intrigued by what Prof Audrey said during our class on Leadership and OB; it was a comment about transformational leadership and how it is usually associated with central positioning within social networks. This makes sense, since to have the combination of the four factors transformational leadership (idealised influence, individualised consideration, intellectual stimulation, and inspirational motivation) you would need to have a wide reach, and a sufficient amount of influence. That got me thinking: with a flatter hierarchy in organisations, and as “open concept” offices become more and more popular, can transformational leadership still work? Or does it have to change? On some reflection, I think it does.

That’s how I ended up looking up holacracy, a new kind of flat organisational structure invented by programmer Brian Robertson. Robertson’s explains holacracy as “regrouping around a 
profoundly deeper level of meaning and capability, so 
that we can more artfully navigate the increasing 
complexity and uncertainty in today’s world, while more
 fully finding and expressing our own highest potential” (Robertson, 2007). You can also try watching this video:

It flattens the tree-like hierarchical system that causes bottlenecks at leaders who are node points, and converts it to circular systems that overlap each other, called holons.

So, from this:

holacracy tree

To this:


Zappos, as Chek How has earlier noted in his blog post on flat hierarchies, has adopted holacracy. The great thing about this system is that individuals have more power to take initiative and to assume leadership. Ideally, organisations become more flexible and maximise their talent pool. The response has been good thus far in Zappos, although the controversy has been primarily over how difficult it is for an organisation to teach the rules and ideas behind holacracy, and restructure itself. There will be no more CEOs in a holacracy. Change is brought about organically, and not through the transformative or visionary force of one person. People who naturally practice the affiliative, democratic, pacesetting, and coaching leadership styles are more likely to do well in a holacracy than those who naturally practice coercive and authoritative leadership styles. Generally, though, and as we agreed in class, one should practise having a mix of several of these.

The main concern I raise is that transformational leadership may not be able to thrive because individuals will be less likely to hold central positions in social networks, and so cannot exercise the 4 I’s. On the one hand, intellectual stimulation does not require initialisation from a leader since the nature of circular systems is to encourage all to participate actively. However, on the other hand, idealised influence involves followers seeing a particular trait they admire embodied in their leader; or what we also call referent power, which is tied usually to the personality of a specific individual. In a holacracy, this is less possible since people will usually only see those in their own circle, and there is no one person who is in every circle (see diagram above). Furthermore, due to varying group dynamics across circles, it may be very difficult to enforce one set of unified inspirational values across the organisation as a result of different group dynamics. Individualised consideration is not guaranteed; although employees are more able to ask for help in smaller circles, if there are conflicting concerns and needs, there is no designated individual who is obligated to be impartial from the start, as roles are always switching in a holon.

We also have seen in the Haier case how transformational leadership can be essential in cases where companies need help being turned around for the better. The power of such a leader, however, can be diminished in a holacratic system for the reasons above, and also because of the danger of groupthink.

All that said, however, it is not all gloom and doom for transformational leadership in this era of flattening hierarchies. An organisation, I imagine, can take the important 4 I’s of transformational leadership and encourage all circles to practise at least the three that do not require a singular personality: intellectual stimulation, individualised consideration, and inspirational motivation. Circles appoint rotating leaders, keeping to a set of practices agreed upon and shared by all employees (e.g. all employees must collaboratively ensure that everyone’s needs are met; shared inspirational values are agreed upon). These values, when practised across circles, can still enable companies to make the sort of vital transformations when required, such as those catalysed by Zhang Ruimin in Haier. Idealised influence may have to go, but this is part and parcel of the network shifts in a flatter system.

Thus, as holacracy calls for groups to “lead themselves”, transformational leadership can evolve and be adapted to suit such systems. I guess that comes as a relief – our leadership theories remain relevant after all!

[800 words]

Reference Cited

Robertson, B. J. (2007). Organization at the Leading Edge: Introducing Holacracy™. Retrieved 04 02, 2015, from

Meaning and Motivation versus The Sunk Cost Fallacy

Hi class! I have been reflecting on what we discussed in Week 4 about meaning and motivation. I’m referring specifically to the TEDTalk Prof Audrey shared with us by Dan Ariely, “What makes us feel good about our work?” While Ariely’s idea was inspiring I also wondered: “Should the effort one has already put into a project, and thus the meaning that one attaches to it as a result of these efforts, be the primary motivator of a person’s actions?” In my blog post, I bring up an alternative perspective in the form of the sunk cost fallacy, in which attaching meaning as a function of previous effort or hard work might, in fact, be harmful rather than helpful.

At first blush it seems like a beautiful idea, that we not only work harder on our projects, but grow to love them, in the same way a parent does a child. For instance, if we have worked on building the foundations of a new social entrepreneurship initiative (a meaningful direction) for two years (persistence in efforts), with no financial renumeration (intensity of efforts), we would be triply disappointed and crushed if we find that, due to some unforeseen circumstance or obstacle, our project cannot come to fruition. This is because “meaning”, in Ariely’s sense, is crushed.

So what, then, if we find that our efforts have been washed down the drain? Ariely suggests that recognition of effort, as well as the redirection of efforts into some kind of productivity (using an abandoned project somehow to benefit other projects) is a good way of mitigating the loss of meaning. We should still salvage the project, so that we can prove that there was still some meaning in the two years’ of blood, sweat, and tears we have poured into the project. And this would reduce workers’ loss of motivation to try again on future projects.

I would like to contrast this approach with an alternative view, as articulated by Julia Galef on digital knowledge forum Big Think. Galef argues that we tend to attach false – or rather, excessive, or spurious – meaning to a project or thing based on the amount of effort or resources we have poured into it. This is the sunk cost fallacy. To use an example closer to home, we have spent 2000 CORS bid points – and many hours of anxious bidding – to attain a place in a very popular module. You take it, but later find out that the class is not very enjoyable (the curriculum, let’s say, is explored in a way that does not appeal to you). You have the opportunity to drop it and take another class for just one bid point. But something stops you. If you do this, all that effort you expended would go down the drain. And frankly, you do feel a special connection to this seminar, now that you are finally here and have worked so hard to get in.

Galef would say: Drop it! The bid points and effort you’ve spent getting the module are part of a sunk cost, which you should ignore completely.

But what Ariely, on the other hand, might say: Keep the module, because the effort and points you have spent are likely to make you more motivated to work harder for the module and learn as much from it as possible.

Or that might not be what Ariely would say at all. He might say: Drop it, but use your experiences from bidding this round as a lesson for future bidding experiences.

In any case, I think this example unearths a dimension of complexity to the concept of meaning and motivation: how do we quantify and weigh meaning, especially if we are caught between two or more decisions that each bear seemingly equal meaning to us? Is meaning only generated by previous effort, or can it also be based on future, expected returns? What if learning to grow attached to our projects makes us, in turn, rigid and unwilling to give them up when presented with alternative options that might be more meaningful in future?

My personal answer to these questions is that meaning should not be only determined by personal effort thus far, but also by a spectrum of other things like personal values and convictions, and future possibilities and benefits. For instance, one failed attempt at social entrepreneurship could lead, in future, to an enlightened perspective in taking on a banking job in developing countries; though at the point of disappointment one can only see failure, or the crushing of meaning.

Thus, one should learn to look at the big picture, rather than our present or past efforts. In this way, perhaps, meaning – as measured by the fruits of our cumulative efforts over time – can be maximised in the long run.


Referenced Source: