Holacracy, the new kid on the block?

I recently attended a webinar by Brian Robertson CEO of HolacracyOne. I am really interested in their approach to organization design as lots of news has recently been circulating about Zappos and other organizations adopting this approach.

I’m really happy to see that their business is working and they have already some implementations successfully running. The world will be a better place if organizations implement ideas like Holacracy and I wish Brian a lot of success. However, it doesn’t seem to me something new and I there are several things I don’t understand.

As Jack the Ripper would say, let’s go by parts.

Foundation

The concept and principles behind Holacracy are not new to me, we can find them already in well established and successful businesses like W.L. GoreMorning Star, Handelsbanken or Statoil. These companies have been outperforming in their markets for years with similar approaches to Holacracy.

I would emphasize 6 concepts behind Holacracy model:

  1. Agility – Defined as the ability to quickly and effectively respond to market
  2. Clarity/Transparency – Everybody knows what is going on at all levels
  3. Purpose, principles, rules and boundaries instead of Management – Elimination of management and implementation of self-regulation mechanisms
  4. Teams – Circles of roles
  5. Peer Pressure instead of hierarchical control – No one tells you what to do, but there are expectations on your role’s accountabilities
  6. Roles instead of positions – Elimination of job descriptions and job positions, people perform different roles as part of different circles, defined by accountabilities.

If we look at these concepts people from the Agile and Lean world will say, “Hey, that sounds familiar to me!”, and they’d be right.

Besides, there are people, I personally know, working on similar models and helping organizations transform to adaptive self-regulating high-performing systems: like Niels Pflaeging with his “Organize for Complexity” model or the guys from Beyond Budgeting, not to talk about large Agile and Lean enterprise escalation projects that many coaches and consultants do around the world.

Implementation

First thing Holacracy consultants ask the CEO of the organization is to delegate her power to the Constitution. As we will see later, this a very powerful intervention in a system. So, in one shot, these guys transform an oligarchy into a “market-driven” democracy. Awesome!

Their intervention in the system follows three main lines afterwards:

  1. Organizational Structure – organize work, not people
  2. Governance Process – distribute authority and create organizational clarity
  3. Operations – tactical meetings to sync-up and triage

They build a system based on circles of roles organized based on self-regulation, rules, boundaries, transparency and distributed authority. Circles can be made of roles or other circles.

Brian says a normal implementation takes 6 months.

Systemic Perspective

It is when I look at this from a change management and systemic perspective that I start to have some concerns.

In her book “Thinking in Systems”, Donella Meadows describes the 12 leverage points to intervene in a system, and Holacracy actually intervenes in some of the most powerful, like information flows, rules and self-organization. However I miss the most powerful one in their model, which is “mental models”, or culture if you want.

I would like to know if this model has ever worked in organizations with a much different culture. I can understand how it will work at Zappos and other modern organizations, but I have my concerns with other types. And, assuming this model could be implemented, it’s difficult to believe that’d take 6 months only.

The underlying problem is that you cannot change culture in an organization unless you change individual behavior of people, and to do that you must change their mental models. If it works, it is the most powerful intervention you can make in a system, but it is also the most complicated and lengthy. John Kotter puts it very clear in his work; one of the reasons for change failure in many organizations is failure to stick into the culture. That’s when victory is declared too early.

If anyone out there can share some information in this regards, that’d be great!

Thanks for reading, sharing and commenting!

4 thoughts on “Holacracy, the new kid on the block?

  1. Hi Gerard, very interesting article and great questions. Before working with HolacracyOne, I was studying psychology and when I first discovered Holacracy, I had the same questions so I’m happy to give elements of answer.

    No doubt that if people in an organization don’t change their mental model of “how work gets done around here”, Holacracy won’t stick. It is a fundamental element of any organizational change. Before seeing Holacracy in practice, my conclusion was therefore that people’s mental model must be the leverage point where to focus our efforts. I don’t think it’s true anymore.

    Don’t get me wrong, I still think that people need to change their mental model for Holacracy to be sustainable, but I’ve experienced that it’s a result rather than a pre-requisite – an output rather than an input. It happens little by little through practicing Holacracy, without forcing anyone or trying to ‘manipulate’ them into thinking differently, just by them learning a new way of doing things. If it’s true that this new way actually works better, they will eventually prefer it and evolve their thinking around how the organization runs. It is a much more powerful (and respectful) stance, in my opinion, than trying to convince them upfront.

    It’s the chicken and egg question. I’ve experienced that the change in people’s mind happens together with changing the rules, through ongoing feedback from day to day experience.

    It’s counter-intuitive at first, but it is very intentional that Holacracy does *not* include any rule or mechanism for changing the culture, changing people’s minds, or any other way of influencing people at the personal level. Holacracy has no mechanism for “governing” people – it is only about governing the organization. After working with Holacracy for 2 years, this distinction seems to me absolutely critical. It even strikes me as really odd that an organization would want to shape my thinking – what a violation of boundaries! You can read more about this topic in “Differentiating Organization & Tribe” https://medium.com/about-holacracy/2bc0190bf1c5

    Now, although the rules of Holacracy themselves have no mechanism for directly changing the culture or people’s mind, when we at HolacracyOne help a company adopt Holacracy, we offer a lot of coaching. There is an art to deploying Holacracy in an organization, the transition itself involves challenges and obstacles. That’s why we highly recommend that companies interested in Holacracy get some help from someone with expertise in the method. But the coaching is not about persuading people to change their mind, it’s more akin to helping them use new rules of the game, so they can play effectively in this environment.

    Imagine introducing a modern traffic code in a country that only had rudimentary rules for how driving together works. People would find it challenging to accept to stop at a red light – it might even seem stupid at first, when there is no other car going the other direction. And yet paradoxically, even though those new rules look like they’re in your way, they allow much more speed and flow. Coaching companies adopting Holacracy is like helping people respect the new rules – not teaching them a different philosophy. When they realize those new rules are actually more effective, people will shift their mental model on their own, from their own initiative. Or they might choose they don’t like it, and they ultimately have the choice to not stay in this environment.

    I hope this helps clarify. Understanding Holaracy in depth without actually trying it is difficult, it’s like trying to learn karate from a book. It’s much easier to try it in practice, then and only then to theorize about it.

    All the best!

  2. Hi Olivier, thanks for taking your time to reply. You certainly answer most of my questions.

    Obviously, as you said, I’m theorizing based on a 60 minute webinar. I’m still puzzled about your approach to organizational change without considering culture in the process. My background is related to technology and Agile, and in this world we see many failed adoptions due to culture clash. Actually, principles of Agile, Lean and Holacracy are quite the same, also in Agile implementations no one tries to shape anyone else’s thinking, but I think there are two differences that make Holacracy approach successful in comparison with Agile and Lean implementations.

    The first one is having the CEO sign the Constitution, that gives people a strong message from the beginning. And second, Holacracy is for the whole organization, while Agile&Lean are mostly on the production side, so there will be still mindset and behavioral conflicts.

    On the personal side of things, I think behavior can shape our thinking, but the change is stronger in the other direction. I think Holacracy works because it can quickly demonstrate quick wins to people and they can see things from a different perspective. That might in the end cause a change in their beliefs. It works as a kind of reinforcing feedback loop.

    Could you say something in regards to the time it takes to implement Holacracy in organizations and the type of organizations you have been working with so far? Is 6 months the average time? Do you see differences based on the type of “organizational culture”?

    I was thinking on taking the certification program in Amsterdam on March, is there anything you could say to convince me? If I go I must make sure it is worth what it costs 🙂

    Gerard.

    1. Sure, I’m happy to share some more thoughts.

      I think the reasons you suggest for why Holacracy might “stick” more than other lean approaches are accurate. After the CEO signs the Holacracy constitution, the entire organization is agile, not just the production teams. There will likely still be “conflicts” between the different units, since they a different focus; that’s normal and healthy. Holacracy is an engine to process these conflicts – or “tensions”, as Holacracy labels them – into organizational evolution.

      Now, we don’t want ALL tensions to be processed into organizational change – people’s personal issues are important, but they should not dominate the organizational space (even the CEO’s…). The really cool thing with Holacracy IMO is that it differentiates between personal issues and organizational issues. Many of the conflicts we have at work are actually conflicts of “roles”, they’re not really personal. Holacracy processes the former, not the latter – better yet, it offers processes that disentangle the two because they often come in a mixed bag.

      So tensions will still arise, especially early when adopting Holacracy, because many tensions that had no channel for being processed before now have a way to be processed. But the system is designed to process them, and it’s great learning material. The help of a coach is really useful in that phase.

      Regarding your question about the time it takes to implement Holacracy, yes it’s about 6 months to reach a state of self-sufficient practice, more or less depending on a lot of various factors. I like to compare it to getting your driver’s license; when you get it, it doesn’t mean you’ll be a formula one pilot, but you know enough to drive alone and develop your skills from there.

      We’d be happy to welcome you at the Holacracy Practitioner training in Amsterdam if you decide to join us. It’s an investment so I understand if you need to think twice about it. I keep hearing from past participants that it is well worth it, but of course this is a very personal assessment. If this time is not the right time, maybe another time? Either way, it’s always a pleasure for me to share about Holacracy. Thanks for the stimulating questions.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s