Holacracy – from Feudalism to Fractalism

Three years ago I wrote this blog post expressing some doubts and concerns about Holacracy. Some time has passed since then and I think the time has come for Holacracy to start making a change in the world. My initial skepticism has vanished.

Hundreds of organizations are running on Holacracy already and there is a powerful and dynamic community behind it. It is going to grow fast in the following years.

People critisize Holacracy because it either threatens their business model or their beliefs. It reminds me of the initial years of Agile. You won’t understand Holacracy by reading the book or its Constitution. It is like learning Scrum by reading the Scrum Guide.

I recently attended Holacracy Certified Practitioner training. In this article I analyze the key aspects and I explain why it will be key to the success of many organizations in the following years.

Business Agility

Since I started with Agile many years ago there was always a loose end. We have been taking for granted management power structure. Holacracy is the missing part that Agile has been looking for many years. It deals with something Agile has never been able to deal with: power distribution in organizations. Even in the most agile companies there is still a paternalistic mindset.

Holacracy is the key to business agility. What we have been doing until now is putting Agile on top of hierarchical systems. Holacracy, means the end of discussion about hierarchies, flat organizations, leadership, management or power distribution in organizations.

Holacracy & Agile

 

Holacracy is not a participative democracy, it is governance of the organization, through the people for the purpose. Yes, you read right, “through the people” not “for the people”.

The goal of Holacracy is to achieve organization’s purpose by expressing different functions in roles played by people. 

Organize like a city

Imagine Holacracy as the new operating system for your business. An operating system which is based on distributed autocracy (or decentralized centralization if you want). An operating system that functions like a city or the human body. A new power distribution that replaces hierarchical power distribution.

There is no centralized decision taking unit in our body. Our cells organize into organs and organs decide autocratically within their domains with frequent and powerful communication and feedback loops with other organs. With a clear and compelling purpose: to keep you alive.

Adopting Holacracy is like going from Feudalism to a Federal Republic. The king can no longer dictate anything because he ceases his power to the constitution, and the Prime Minister or President has her power regulated by congress or parliament, and different powers are distributed: legislative, executive, judicial. And, there are federations that have almost as much power as the State, and those federations have similar power distribution structures.

If you like feudalism and monarchies fair enough. If you’d rather prefer a Federal Republic and real business agility, what you are looking for is Holacracy. 

Personal Growth

Perhaps, the main criticism to Holacracy comes from people arguing that it is not human and it is a difficult process designed by engineers.

With regards to difficulty I can say we do much more complicated stuff in organizations. Holacracy is easy, what is really difficult is changing your mindset and beliefs. Politics, buy-in and consensus are much more complicated to me.

After practicing and studying it, I can say it is the most human organizational structure I know. It is based on individual leadership. Everybody is a leader in Holacracy. It requires every human to develop a growth mindset and don’t rely on their manager, leader or coach to get things done. It is like a network of freelancers with a shared purpose. If you prefer to work with your mummy or daddy Holacracy is definitely not for you.

Organizational Structures

Holacracy is a framework that replaces hierarchical power distribution by distributed power. It completely removes the concept of management and allows an evolutionary development of organizations.

Hierarchical power structures served a purpose in 20th century, but context has changed and now organizations need speed, adaptability, responsiveness and anti-fragility. 

The real agile transformation and business agility happens when you integrate value delivery (operations) with formal and informal power structures (governance). And Holacracy does exactly that.

Org structures

Source: https://www.organizeforcomplexity.com

Holacracy distributes power, eliminates the hierarchical power structure, integrates informal structure and allows you to plug agile value delivery structures on top of it.

Constitution

Holacracy puts power in the process, not in individuals. 

Like any democratic country, Holacracy has a constitution. And the CEO of the organization adopting Holacracy is asked to cease his o her power to the Constitution first of all. In this moment we are moving from a feudalism to a federal republic, like when in 1787 United States signed its Constitution two years after achieving indepedence from Great Britain’s monarchy.

Holacracy Constitution documents the core rules, structure, and processes of the Holacracy operating system for governing and managing an organization. It provides the foundation for an organization wishing to use Holacracy, by anchoring the shift of power required in concrete and documented rules of the game, which everyone involved can rely upon.

As I’m writing this, Holacracy’s Constitution version 5.0 is underway. However, currrent version 4.1 has had significant improvements over previous versions and it is the first one that has received direct contributions from the community, using GitHub as a collaboration platform.

Building Blocks

Holacracy building blocks are roles, circles, purposes, domains, accountabilties and policies.

  • Role = organization’s function or process
  • Circle = a role composed by more than one role
  • Domain = role’s ownership
  • Purpose = your ultimate goal
  • Accountabilities = what you should do. An ongoing activity
  • Policies = what you shouldn’t do

Role

A role is a function of the organization, not a person or a position. It is something the organization needs to do in order to express its purpose.

Circle

A circle is just another role, but it’s purpose is so big that needs to break down into multiple roles.

Domain

Domain is the terrain where a role can decide autocratically, without asking any other role. The role is the owner of that terrain, and no other role can do anything there. It is like my car. My car is my domain, I can do all I want with my car as long as I don’t break any higher rule, but I cannot do anything with my neighbour’s car.

Accountabilities

Accountabilities are those things that other roles can expect one role to accomplish. Those things that a role is responsible for doing on a ongoing basis and others can expect from them. For instance, as Web Designer role I can have Web Site as a domain or as an accountability. If Web Site is my domain, no other role can update Web Site but mine. However, if I am accountable for updating the Web Site, other roles can expect that from mine, but they can also update it.

Running Holacracy

In Holacracy there is a clear separation between Governance and Operations.

The Governance Meeting is where circles define their power structures. Decide what roles can do what and in what domains.

The Tactical Meeting is a meeting where circles take decisions on operations

That’s it. Everything else is business as usual, but with many fewer meetings. All the meetings you typically do to get buy-in, create consensus or navigate the sewers of politics make no sense anymore. You just meet to create value or to restructure power.

Four Key Roles

Lead Link

An elected role that holds the purpose of the broader circle. The Lead Link is responsible for assigning people to roles that have been created through Governance meetings. The Lead Link also allocates resources and defines priorities, strategies and metrics within the circle.

Lead Link is not a manager, it cannot dictate actions, it cannot hire or fire, it doesn’t have a say in compensation, performance appraisal or any of those hierarchical things.

Rep Link

An elected role used to represent the interests of a sub-circle to its super-circle. Rep Link allows tensions from the sub-circle to be processed by the super-circle when the issue seems to extend beyond the sub-circle’s current authority.

Facilitator

An elected role with the purpose of facilitating the circle’s governance and tactical meetings in accordance with the rules of the Constitution.

Secretary

An elected role with the purpose of aligning circle governance and operations with the Constitution through maintaining circle records, scheduling meetings, and interpreting governance upon request. The Secretary works actively and collaboratively with the Facilitator during Governance and Tactical meetings.

Evolution Engine

The evolution engine of Holacracy is called Tension. Which is the gap between your fully expressed purpose and your current situation. 

Holacracy is a purpose-driven operating system, and requires that all roles and circles monitor their tensions and use Governance meetings in order to help the organization evolve towards its purpose.

Agile

Holacracy is agile governance for organizations.

There is not a single agile framework that tackles governance and this has been the source of many conflicts and failed agile transformations. For years, agilists have been trying to connect a value structure with a hierarchical power structure, causing a lot of friction and frustration.

The way we do that in Agile adoptions of all kinds is through delegation. Someone delegates their power to someone else or a group. “You are empowered unless you screw up”, or “I have the power but I give it to you”. We are still in the same paradigm, no matter what name you put to it: servant leadership, management 3.0, agile management, agile coaching. It is patternalistic and promotes a culture of victimism. It is Bureaucracy 2.0.

Holacracy is the missing part that Agile has been looking for many years. It deals with something Agile has never been able to deal with: power distribution in organizations. Even in the most agile companies there is still a paternalistic mindset. We have been installing agile on top of hierarchical structures.

Holacracy tackles this from the foundation. Holacracy’s core process is governance meeting, which allows the organization to define what roles can decide what, in which domains and with what accountabilities.

There is no management or leadership whatsoever. What Holacracy expects from you is that you are an adult human being that can work autonomously in a highly interconnected environment.

Profoundly Systemic

What I like most about Holacracy is that it is profoundly systemic. I don’t know if by design or by chance. The truth is that Holacracy makes your organization function like a city or a human body.

Consensus

First of all, it distributes power in a fractal way and eliminates need for consensus. I don’t know of any complex system that evolves by consensus or decides by consensus. Imagine, the liver asking for buy-in to the kidneys and heart before turning glucose into fat? 🙂

Meetings

It introduces two key roles, that have a strong impact: Facilitator and Secretary.

Alain Cardon, a Systemic Coach and reference author in the field of Systemic Coaching, stresses the importance of having roles like facilitator, time keeper or agenda keeper in meetings, and the importance of time, space and geography, in order to change organization’s culture or team dynamics. Well, Holacracy does that by design, and it has a powerful and deep effect on underlyng organization’s culture.

Structure

Holacracy has a strong impact on culture. It is foundational. Culture eats strategy for breakfast, yes. And, structure eats culture for dinner.

Design

For a complex system to evolve it must have clear purpose, boundaries and rules. And, Holacracy makes that very clear. Every circle and role have a purpose, and whenever they have a problem to express that purpose they bring a tension to their circle or to the broader circle.

Clear boundaries and rules help complex systems evolve and allow emergence. You don’t expect the liver to be doing the work of the kidneys, but look at what happens in most organizations, even those so-called Agile. You have to use the dirty and obscure path of politics if you want to get something done, like in “House of Cards”. There exists a hierarchy, but real power is distributed in a different way.

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Solution Focus

Purpose-driven evolution (tensions to express your role’s purpose or your circle’s purpose). It is not about looking for problems and root-cause-analysis. It is a solution focused approach. Tension when you perceive a gap between what is and what could be. It is about creating and evolving not moving from the problem.

Functions vs Positions

In his book “The Fifth Discipline” Peter Senge explores the seven learning disabilities. One of which is “I am my position”. Learning disabilities are tragic when they go undetected.

When people in organizations focus only on their position, they have little sense of responsibility for the results produced when all positions interact. Moreover, when results are disappointing, it can be very difficult to know why. All you can do is assume that “someone screwed up”.

We are trained to be loyal to our jobs – so much that we confuse them with our own identities. When asked what they do for a living, most people describe the tasks they perform every day, not the purpose of the greater enterprise in which they take part. Most see themselves within a system over which they have little or no influence. They do their job, put in their time, and try to cope with the forces outside of their control.

Consequently, they tend to see their responsibilities as limited to the boundaries of their position.

Transparency

Feedback loops and free flow of information are key for an anti-fragile system to evolve. It is also key in order to change the underlying culture of politics, consensus and buy-in that perverts most organizations

Values

Holacracy doesn’t say anything about values. But, I think it creates an ecosystem based on the next five key values:

  • Transparency
    • Everything is public in Holacracy, from individual tasks and projects to governance structures, metrics. As a consequence, many companies adopting Holacracy have public salaries and compensation policies
  • Practicity
    • Get shit done!. Don’t look for consensus or buy-in. Don’t get trapped in political and power negotiations. Be bold, use your authority to go fast and create tensions
  • Accountability
    • It is clear what roles are accountable for that. And if you feel a tension you can always change that in the governance meeting
    • Everything is public and accessible to everyone else
    • Holacracy’s constitution makes it very clear that all roles have to keep a public list of actions and projects they are working on, and that any other role within their circle can inquire about that, and they have to be able to explain
  • Autonomy
    • Within your domain you have the power. Don’t expect anyone to tell you what to do or how to do it, and don’t look for buy-in or consensus. Just do it and improve based on tensions
  • Trust
    • Structure of Holacracy and processes like Governance and Tactical force you to trust other people, you have no other option but to trust other roles getting their stuff done within their domains

Holacracy Apps

You can view Holacracy as an operating system for running your business. And like any other OS you need to install applications in order to perform certain tasks or processes.

Holacracy doesn’t provide any application for compensation, hiring & firing, professional development, salaries, etc. You have to develop those or install someone else’s.

But there is a dynamic comunity of Holacracy adopters and coaches that are developing Apps for Holacracy. Some examples:

Holacracy is not for everyone

Like Agile, Holacracy is not for everyone one. Many people don’t like an environment of autonomy and accountability. They want to be told what to do and rely on a paternal figure to solve their organizational issues. Well, in Holacracy you are responsible for expressing your roles’ purposes and for bringing up any tensions that prevent you from expressing your roles.

You will need people with a growth mindset. People that not only recover from set backs but improve and develop when something goes wrong.

References

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