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Shadow Organizations

On the Interest in Hyperformalized Systems

  • Stefan Kühl
  • Wednesday, 6. March 2024

The book “Shadow Organizations” is about an organizational concept that the vast majority of an organization’s members have never heard of and probably never will. The concept of holacracy is touted as a solution to the crisis of hierarchy and silo formation in organizations caused by departments. Instead of occupying only one position in the organization, as is usually the case, members in holacratic organizations can take on a variety of different roles. Decision-making no longer takes place via instructions; instead, employees act independently in their roles. Instead of just being a member of a team, members can assign themselves to different circles. These circles, which operate largely autonomously, are only linked to one another via leadership and representation members, who no longer have anything to do with the classic hierarchies in organizations.  

The concept of holacracy has received some attention in the discussion among consultants and managers because it promised to translate the very general notion of agility into concrete guidelines for action within organizations (an important role was played by the popularization by ​Laloux 2014​). But even with generous estimates, one has to conclude that the concept has been introduced by a maximum of 0.0000001 percent of all organizations worldwide and abandoned by a number of these organizations after a few years. Why should we be interested in a management concept that perhaps a few hundred organizations worldwide have tried out and that quite a few have abandoned after a short time?  

At first glance, holacracy is one of countless models that promise, under the label of agility, to enable organizations to respond more quickly and flexibly to constantly changing environmental conditions. [1] On a superficial reading, holacracy looks like just another management fad in which consultants have stirred together almost everything that has been mentioned at one point or another in the discourse on new organizational forms. Because the ideas espoused in holacracy are, in most cases, several decades old and are rehashed in the discussions about new organizational forms that regularly resurface, it is easy to get the impression that it is just the familiar old wine in new skins.  

A second glance, however, makes it clear that holacracy differs fundamentally from other management concepts traded under the term agility. While the promoters of other management systems present at best a toolbox from which organizations can select the tools that are right for them, holacracy is propagated as a closed organizational concept in which the individual elements are precisely coordinated. The elements interlock so precisely, at least according to the concept’s promise, that a new type of organization can be created without silo formation and without hierarchy. 

[1] See, as just one example of the myriad proposals for supposedly new forms of organization, N. Wolfe 2011; Torbert 2004; W. C. Taylor and LaBarre 2006; Sisodia, D. B. Wolfe, and Sheth 2010; Kofman 2006; Mackey 2013; Hock 2005; Hamel 2007; Hamel and Zanini 2020; J. C. Collins 2001; Block 2013; Benefiel 2005; Barrett 2013.


Prof. Stefan Kühl

links in his observations the latest results from research with the current challenges of the corporate world.

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