How holacracy can make organizations more nimble and productive

Kindling - Holacracy Diagram

Holacracy, the short version

Under business as usual, our organizations operate with rigid hierarchies. Too often, this leads to bottlenecks, disengagement, and wasted talent and creativity. Holacracy is a social technology and organizational structure that unleashes autonomy and creativity within organizations in order to make them more nimble, adaptive, and ultimately more effective. It eschews hierarchies in favor of a series of interconnected yet autonomous “circles.”

Holacracy, the longer version

The modern workplace can be mind-numbingly sterile and deflating. We all have our stories of the soul-sucking corporate job or the non-profit job that failed to meet our high-minded ideals. You had that great idea, but it got chewed up and spit out by the bureaucracy or by a skeptical manager who wants to be the one with the good idea. This can have a number of damaging effects. Our organizations miss out on good ideas. As individuals, when we aren’t able to unleash our creativity or lose faith in our bosses, we disengage. Instead of looking to make a real contribution, we look simply to get by and get paid.

More and more, organizations are looking to holacracy to radically rethink how they manage and structure their work.

A breakdown in common sense

Last week, I went to a coffee shop up in the mountains. The books were all very carefully curated. The art on the wall was stylish and perfectly placed. The food and coffee all looked delicious. It had all the trappings of a well-run, happening place.

My partner Sara and I went to get some coffee and a bite. The employee at the cash register (or digital card slider thing, rather) was nice enough but clearly disinterested. That didn’t bother me. They were all out of coffee. We had to wait for them to brew a new pot. That didn’t really bother me either.

But as we waited, though my muffin was sitting right in front of me in the display, he didn’t grab it for me. Sara asked for her scone and he gave her a confused look and turned away. That wasn’t his job. We watched as he went about pacing around the cafe doing nothing in particular. And no one seemed to actually be brewing that new pot of coffee.

Sara asked again and he relented. He took out a huge to-go box, about 4 times the size of the scone, placed the scone in, and handed it to her. It was a huge scone and he gave her about a thimble’s worth of jam. He then took another huge box and put my small muffin in it.

The whole thing was comically uncoordinated and lacking basic common sense. It seemed like everyone was waiting around for someone else to do the thing that everyone knew needed to be done. With no manager available to call the shots, no one felt willing or able to step up.

Obviously, in the grand scheme of things, this doesn’t matter at all. We survived and even enjoyed ourselves. But the story captures so much of what’s wrong with many workplaces.

The employee was doing what he was told to do. Nothing more, nothing less. He was implementing the system as designed. He was asking himself “How can I do my job as cashier adequately?” He wasn’t asking “How can I most support the effectiveness of the coffee shop as a whole?” He wasn’t asking “How can this system be more effective?”

What if instead workplaces asked employees to sense problems and then use their creativity and judgment to solve those problems? What if everyone had the autonomy to serve the purpose of the organization how they saw fit, within their respective roles?

This, in a nutshell, is holacracy.

The soul-sucking modern workplace

In most of today’s workplaces, there is a protocol. There are rules. As an employee, you are expected to stick to the script. You operate the system as it was designed. If there’s a problem, you go to your manager. If she doesn’t have the answer, she goes to her manager. The plan comes from higher up in the hierarchy.

These conditions too often lead to deep frustration and disengagement, especially from those at the “bottom.” Though low-level employees often have the most in-depth knowledge on specific issues, they are often treated as if they are mindless peons. This mode of operation has a few predictable outcomes:

  1. People get promoted up the hierarchy until they reach their level of incompetence
  2. Once promoted to their level of incompetence, people with fancy titles (but relatively little knowledge of a situation) make critical decisions
  3. People with fancy titles are tasked with making dozens of decisions, causing delays
  4. “Low-level” employees get caught implementing solutions they don’t agree with
  5. “Low-level” employees become disengaged and disinterested

Does this sound at all familiar?

Introducing a new social technology: Holacracy

Holacracy is a social technology that has emerged in the last several years as a replacement for the typical hierarchical organizational structure.

Under holacracy, the typical hierarchy of decision-making is eliminated. There are no managers. Instead, decision-making power is distributed throughout the organization as much as possible. Everyone gets to make some decisions. No one gets ultimate authority over everything.

Source: The Pendolino Group

If you are the web designer, you make decisions about the website. You are empowered to make decisions and accountable for the outcomes of those decisions. You are responsible for engaging with the people who will be most affected by that decision. You use their feedback to make your plan better and more complete.

In other words, the organization believes and trusts that the person closest to an issue is best equipped to solve it. The organization believes people will be more motivated and productive when they have the autonomy to come up with and implement their own solutions. Each person acts as a sensor – deeply understanding and “owning” specific issues within the organization and finding creative responses to them.

What is the best visual explaining holacracy? - Quora

Under this model, instead of going through a massive company-wide reorganization, every part of the organization is constantly evolving itself. Orders don’t come from the “top.” Rather, each individual person and each individual component of the organization is sensing and adapting to problems themselves, autonomously.

How do all the various people coordinate themselves under holacracy? How does the organization ensure a coherent strategy? Does it devolve into madness without a “boss”?

Dilbert comic about holacracy

Holacracy in fact does have ways to ensure coordination.

First, the organization adopts a constitution with key rules that everyone must follow. So while the web developer, for example, has quite a bit of leeway to modify the website, there are certain foundational parameters she must work within.

Second, each employee is embedded in circles, which have their own governance structures. The web developer might be embedded in the marketing and technology circles, which both meet and coordinate regularly. In these meetings, everyone in that particular circle explores how they might, as a unit, adapt and evolve. And within every circle, there are roles dedicated to communicating with other circles. There are specific processes to ensure that all the circles understand one another and are moving in ways that build off one another.

Holacracy has many critics. Zappo’s, for example, has now become infamous for its implementation of holacracy. Many people cite that 29% of Zappo’s employees have left since the company adopted holacracy. While some employees feel liberated and empowered, others feel confused and lost. Many are quick to point out the difficulty in implementing holacracy. It is so foreign and novel that workers spend all their time simply trying to understand how it works.

But there are perhaps more compelling questions to ask ourselves than simply if it’s working right now: Do our current organizations really “work” now? Does yours? Are people having a hard time adopting holacracy because the model itself is unrealistic? Or is it because we are never actually been expected to solve problems ourselves? Can we begin building capacity that allows holacracies to work better?

Perhaps most importantly, what potential and possibility do we dismiss when we don’t allow people to make decisions on the issues that they are closest to? What great opportunity has your organization missed out on because it’s not asking everyone to be their best?

The workplace of the future

In my mind, organizations have an ethical duty to engage and inspire their employees and to set them free to do their best work. But putting ethics aside, I believe soon enough organizations simply won’t get by without doing so. Research shows that there are three key factors that lead to better performance in employees: autonomy, mastery, and purpose. Millennials demand purpose! The most successful workplaces of the future will need to find a way to keep Millennials engaged.

The three pillars of purpose: purpose, mastery, and autonomy

Traditional hierarchies fail miserably at this. For all its imperfections and unknowns, holacracy is asking essential questions about our workplaces: How do we maximize autonomy (and therefore engagement), while also staying focused on an organization’s core purpose? How do we build capacity so that employees can be trusted to dream up and implement strategic, creative solutions on their own?

Can holacracy or simply some of its concepts help your organization become more nimble, engaging, and productive?

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