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Adhocracy

Updated on March 21, 2024
Article byAswathi Jayachandran
Edited byAswathi Jayachandran
Reviewed byDheeraj Vaidya, CFA, FRM

Adhocracy Meaning

Adhocracy is an organizational management model that deviates from traditional management principles and adopts innovation, communication, and collective decision-making practices. This organizational style does not endorse dictating rules or systems. It empowers individuals and teams, enabling them to make decisions based on their expertise and skills. Such decentralization promotes creativity, adaptability, and responsiveness.

Adhocracy

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Adhocracies typically employ flexible forms of governance, making it easy to create or discontinue them. They are adaptable and characterized by a flexible and non-hierarchical structure, making such systems well-suited for tackling complex and ambiguous problems within a given environment. An organization that follows this management style may face challenges as clear guidelines or formal levels of authority do not exist.

Key Takeaways

  • Adhocracy is an organizational type that deviates from traditional management principles by relying on communication and coordination. 
  • In the business context, a culture of adhocracy embodies a corporate philosophy that emphasizes decentralized leadership, individual initiative, and organic decision-making. 
  • It is frequently observed in high-tech companies in the private sector, particularly new ones that deal with fierce competition. 
  • Distributed decision-making is a key component of adhocracy, in which people or small teams are given authority based on their knowledge of the relevant problems. It promotes autonomy and innovation in the decision-making process.

Adhocracy Explained

Adhocracy is a management approach characterized by the absence of a rigid formal structure, allowing for easy adaptation to various situations. The term may also refer to a company that embraces this style of management. In business, an adhocracy culture embodies a corporate philosophy emphasizing decentralized leadership, individual initiative, and organic decision-making. It diverges from rigid systems of authority or procedures. Instead, it prioritizes adapting to creative methods by empowering employees with firsthand knowledge and experience to perform tasks. It encourages them to address challenges in the way they deem most suitable.

Adhocracy can be observed in various project firms or matrix organizations. It is frequently observed in high-tech companies in the private sector, particularly new ones that deal with fierce competition. These businesses rely on agile decision-making to foresee significant market changes and quickly create the necessary technology and strategies. Sometimes, in larger organizations with various divisions, some units may follow an adhocratic working style, while others with more standardized or fixed responsibilities continue to operate under a hierarchical framework.

It can also be found in the public sector, but compared to the private sector, it is less common. The public sector comprises several government agencies or departments that often deal with challenging and complex issues. These matters may be related to technology, innovation, or policy development.

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Examples

Let us study a few examples to understand the system and culture better.

Example #1

Assume a public sector agency that deals with aeronautics and space administration in XYZ country decides to implement an adhocratic way of governance within its departments. The government gives them $200 million to go on an expedition to Mars.

The government plans to send a rocket to Mars. However, with the freedom it was given to make decisions, the agency proposes sending an astronaut. It quickly organizes a few teams: one that could build the rocket, one that could train cadets, another to handle technical components, and so on. All teams are assigned adequate manpower, with experts to guide them at various stages. Each team has a designated duty to perform, and they are asked to solve the challenges they face independently without intervention from higher-ups.

In such a setup, regular communication between the teams helps keep the agency updated about their projects, and they plan their deliveries accordingly. Work done in this manner is likely to offer better outcomes and prove more efficient, as they can experiment and reach better solutions by trying different approaches. Through this approach, the agency achieves targets easily without bureaucracy or red tape.

Example #2

In 2021-2022, the healthcare sector in Kenya needed drastic measures to improve the delivery of healthcare and patient services in the country. A study was conducted across hospitals, and about 20 level-five hospitals were considered the sample size. The goal was to check if adhocracy could boost performance in a flailing environment.

Various statistical methods were employed, including questionnaires, to obtain primary data. Previous research has shown that organizational culture and company performance are linked. Through this study, researchers reached similar conclusions. It was found that employee performance was closely linked with enterprise performance.

Hence, when adhocracy was implemented to bring rapid yet effective changes across each hospital, employee involvement, accountability, and performance improved. As employee performance improved, it elevated the efficiency and productivity of these hospitals. Researchers noted that adhocracy positively impacted hospital performance.

Advantages & Disadvantages

The adhocracy organizational structure brings with it several advantages and disadvantages. Let us discuss these in the section below.

Advantages

  • It enables quick decision-making by encouraging people to take risks and pay no heed to hierarchical structures, which boosts productivity.
  • The processes and systems in adhocracy are flexible or easily adaptable, as solutions are derived rapidly through judgment and experimentation based on changes in internal and external conditions.
  • It fosters innovation. This is because hierarchy is absent, making interacting, collaborating, and exchanging ideas easier.
  • It empowers employees by providing a comfortable work culture that encourages growth.

Disadvantages

  • The adhocracy organizational structure may introduce certain inconsistencies and reduce accountability, especially when large teams make decisions together.
  • Communication may not always be smooth, and coordination can be a problem without authority.
  • Finding and recruiting a suitable candidate with adequate knowledge and expertise to lead such an organization may be challenging.

Adhocracy vs Holacracy vs Bureaucracy

The differences between adhocracy organizational structure, holacracy, and bureaucracy can be seen in the table below:

Key Points AdhocracyHolacracyBureaucracy
ConceptAdhocracy is an organizational model that stresses individual initiative, easy decision-making, and adaptability. A flexible and decentralized structure distinguishes it from other forms of management.Holacracy is a type of organizational structure that eliminates traditional management hierarchies in favor of teams or circles. These are typically self-organizing teams that share authority and decision-making power.Bureaucracy is a term used to describe a formal organizational structure. It is distinguished by hierarchical authority, standardized procedures, clearly defined roles & responsibilities, etc.
Decision-making methodOne of the ways in which decisions are made under this system is experimentation. Trial and error methods are also applied here.In this system, decisions are made in groups or circles, but traditional hierarchy may also be considered.In a bureaucratic structure, decisions are made through the hierarchy.
Roles and AutonomyDistributed decision-making is a key component of adhocracy, in which people or small teams are given authority based on their knowledge of the relevant problems. It promotes autonomy and innovation across the organization, especially in terms of the decision-making freedom it offers.Holacracy strongly emphasizes clearly defined responsibilities. It gives people in various roles the freedom to make autonomous decisions within their scope of authority.The foundation of bureaucracy is a distinct hierarchy of power, where decision-making authority works its way from the top to the bottom. It focuses on clear reporting lines, reduced autonomy, and the division of tasks.

Frequently Asked Questions (FAQs)

1. What is adhocracy culture?

Adhocracy culture often refers to an organizational setup where the corporation follows a decentralized leadership style. The decision-making process is led by experts or leaders who encourage team or employee participation through non-rigid, non-authoritative norms or procedures. It fosters innovative thinking and encourages rapid decision-making to arrive at a solution.

2. What are the features of adhocracy?

Some features include emphasizing authoritative norms less and encouraging individual initiative. Focus on innovation is encouraged, which also promotes risk-taking. It helps build an organic structure where procedural compliance is given far less importance than flexibility and creativity.

3. What companies use adhocracy culture?

Modern-day companies operating in several fast-paced sectors are known to employ this approach. Most startups and tech companies have this culture. Giants like Google, Meta, etc., are known for employing adhocratic organizational styles.

4. Who introduced adhocracy?

Warren Bennis first used the phrase in his book “The Temporary Society” in 1968. Alvin Toffler popularized it in his 1970 book Future Shock.

This article has been a guide to Adhocracy and its Meaning. We explain its examples, advantages, disadvantages, and comparison with holacracy and bureaucracy. You may also find some useful articles here –

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