How Mercedes-Benz addresses digital transformation using Holacracy

Abstract

PurposeFirms are challenged by digital transformation, as their organizational design is not up to par. Mercedes-Benz.io, a 100% subsidiary of Mercedes-Benz AG Daimler group, employs Holacracy, a self-management framework that abolishes traditional hierarchies in order to be more responsive to changes. This paper aims to explore how Mercedes-Benz.io utilizes Holacracy in order to address the challenges posed by digital transformation.Design/methodology/approachUsing qualitative expert interviews, the authors show that organizational life becomes more meaningful but also more engaging and demanding. The authors highlight that agile principles can be embedded in the organizational structure, a strong contrast to conventional management design. Decision-making authority and accountability is decentralized toward employees who face operational realities. This fosters commitment but might prolong the decision process. Leadership seems to be fairly contextual, and career paths are fundamentally different; development avenues are rather functional.FindingsThe authors conclude that Holacracy seems suitable for industries where the need for adaptability outweighs the need for reliability. It leads to increased transparency and accountability but is not a ready-made solution and requires ample resources.Originality/valueThis study is one of the first that qualitatively assess the changes, implications and outcomes of organizations that employ Holacracy.