Q: Can you explain “holacracy” for those who don’t know about it?
A: Holacracy is an alternate way of running and structuring a company. It’s an alternative to management hierarchy for gaining control, alignment, and accountability—all of the things we need. We typically look to managers to provide those things in an organization to run a business. Instead of structuring a company with managers that theoretically break down the work, holacracy gets there in a different way.
Holacracy companies are managed, not by a manager and a management hierarchy, but by everyone having a stake in and everybody participating in it. Holacracy is a series of processes where every team and everybody in the team is part of designing work breakdown, alignment, accountability, and control.
Q: How did you come up with your vision and idea of holacracy?
A: It was through a series of experimentation, trial, and error. In 2001, I started a software company with a burning drive and sense that there had to be a better way. That company was my laboratory to find new ways of organizing. Over the years that followed, we tried every leading edge idea, theory, technique, and practice—anything we could find that might improve the way things function.
Through experimentation, we started finding better ways to structure the company rather than relying on a management hierarchy. Eventually, we ended up with a system where we realized we didn’t need managers anymore, because we had more reliable methods for getting clarity, alignment, and structure.
Q: Your website states, “With holacracy, there is a clear set of rules and processes for how a team breaks up its work, and defines its roles with clear responsibilities and expectations.” Can you elaborate on these points: roles, distributed authority, rapid iterations, and transparent rules?
A: Instead of job descriptions, roles are the fundamental organizing units of holacracy. In many organizations, there are static job descriptions that were written once by somebody who was removed from the work, and often didn’t know what was actually needed. Other companies hired someone to write the job descriptions, which then went in a drawer to collect dust, and were totally irrelevant for running everyday work.
Of course, clarity is good, and it needs to be captured somehow—ideally in a way that’s real and grounded. So, holacracy uses small, descriptive roles, each of which is needed to do the work of the company. Rather than one role per person, each person fills many roles. As with life, you may be the person who washes the dishes or pays the bills or fixes the plumbing. It’s the same thing in work. I fill a blogger role that I engage in once a month, yet it isn’t my only role.
The roles are updated regularly, but no one person is sitting down and defining the role theoretically. Instead, we come together and in a meeting process to harvest learnings and update the roles. We encode our learning into roles that clarify what we really need to focus on or expect from each other. This “governance process” happens once or twice a month, in every team in the company, not just the top.
Once we have these roles, we give them real authority. This is where distributed authority comes into place. When you have a role, you get the authority to do anything that makes sense to you to get the job of that role done, as long as you don’t break explicitly defined constraints. The operating norm within management hierarchies today is typically that you need permission to act, so you better make sure whatever you do is okay. With holacracy, it’s okay if your action creates tension somewhere else; we’re going to use that as a learning opportunity.
There are two levels where the defined constraints come in. The first level is the “Holacracy Constitution,” which states the fundamental rules of the game. One of those fundamental rules is about financial control. Although you have a lot of autonomy, there are financial controls built in. The rules we create together in the governance process are the second level of defined constraints.
An example at our company is we have a role that manages our website. One of the constraints we have is if anyone else wants to update the website, they need the permission of the website product manager. It’s a lot like we see in society, where we have a lot of freedom to live our lives as it makes sense to us, but we have to honor our neighbors’ property.
Next is rapid iterations. We update these roles in a very dynamic fashion. We reorganize every few weeks in micro-iterations and micro-restructures throughout the company. It’s a very different way of reorganizing. We can come up with an idea; we can try it; and we can learn from it.
Finally, there are transparent rules. In other words, how do we define and evolve all the rules and constraints we have? In most companies, norms exist in micro-agreements made between people within the culture, so if you want to influence the direction or expectation structure of the company, it’s very hard. You have to use personal relationships to get things done.
With holacracy, instead of leaning on the personal relationships and playing the politics of the system, you have a transparent rule set. Everybody can see what the rules of the game are, and how individuals can influence each other without having to play politics. You can go to a governance meeting and there is a tangible clear process to enact change.
Q: Our audience might be interested to know what you recommend companies do when holacracy becomes difficult to implement, such as resistance, decisions that get bogged down in numerous meetings, struggles people have learning the processes by which work is accomplished.
A: Those issues are a huge challenge. There’s a great quote from one of our clients who is in the business of nutrition and exercise. He said, “When most people look at the process of changing their diet and exercise, they overestimate the difficulty, but underestimate the time.” With holacracy it’s the same thing.
Holacracy is not massively hard, but it takes consistent effort by working at it for years. It’s doable, if people are committed to going through the effort. It’s fundamentally changing the behaviors people engage in to influence others, to set expectations, to learn together in a company, and that’s a huge change.
Look how common it is for people in a meeting to look at their boss to make sure he is comfortable with a course of action. Suddenly, all eyes will turn to one person to explain something and to get a sense if this person is on board with it. That’s a behavior that takes a while to die. It takes time and coaching to shift from that to a culture that’s more like a group of leaders, each of whom is leading his own part and not deferring to an authority.
If you’re going to undertake transforming your company to one that embraces holacracy, get a good coach. The best way to learn a new sport isn’t to sit down and read a book or study it in a classroom. If you want to play World Cup Soccer, no amount of reading is going to do it. You have to get onto the field, get sloppy and messy, and be around people who have played before. A coach can help you through this. Secondly, expect that it will take time; you have to practice it to get good at it. It takes effort to change habits--relearning and unlearning old habits.
You need buy-in from the top to start the change, but you also need the buy-in from a critical mass of the company to complete and sustain the change. You almost never get that latter buy-in upfront. For this change, buy-in comes over time through experience. You have to let people experience these new rules, because you’re not expecting them to do something simply from buy-in. You’re saying, here’s a new authority system, a new structure for how we divide power and decide who makes which decisions.
Q: Do you have any new insights into holacracy now that several companies have tried it? Are there any refinements or changes you would make or have made?
A: We are constantly learning how the fundamental “rules of the game” we have in our constitution could work better. The rule set itself—the Holacracy Constitution—is an open-source document. A broader community evolves it and there’s a rigorous process for that. There is a lot of vetting and testing, as the community learns together what works best to allow a self-organizing enterprise, where everybody helps govern and break down the work, instead of relying on a traditional management hierarchy to do that.
Q: Is there any performance data you can point you to?
A: We haven’t done any scientific data gathering. What we have is anecdotal, and although it’s been very positive, I discard most of that. Currently, the Harvard Business School is doing two studies, and I look forward to those results. We need more rigorous data and studies to see the full impact of this approach.
