Holacracy

Holacracy is a method of decentralized management and organizational governance, which claims to distribute authority and decision-making through a holarchy of self-organizing teams rather than being vested in a management hierarchy.[1] Holacracy has been adopted by for-profit and non-profit organizations in several countries.[2]

Origins

The Holacracy system was developed at Ternary Software, in Exton, Pennsylvania.[3] Ternary founder Brian Robertson distilled the company's best practices into an organizational system that became known as Holacracy in 2007.[4] Robertson later developed the "Holacracy Constitution", which lays out the core principles and practices of the system. In June 2015, he released the book Holacracy: The New Management System for a Rapidly Changing World, that details and explains his practices.

The term holacracy is derived from the term holarchy, coined by Arthur Koestler in his 1967 book The Ghost in the Machine.[5] A holarchy is composed of holons (Greek: ὅλον, holon neuter form of ὅλος, holos "whole") or units that are autonomous and self-reliant, but also dependent on the greater whole of which they are part.[6] Thus a holarchy is a hierarchy of self-regulating holons that function both as autonomous wholes and as dependent parts.[6]

Influences and comparable systems

Holacracy is one of several systems of flat organization. It has been compared to sociocracy, a system of governance developed in the second half of the 20th century.[7] Sociocracy had a significant early influence during the incubation of Holacracy,[8] though Holacracy has increasingly differentiated away from it since then.[9] Sociocracy particularly inspired the development of the circle structure and governance processes (described in more detail later) within Holacracy. Holacracy is designed for organizations and fundamentally differentiates the roles of the organization from the people working in it.[10]

Essential elements

Roles instead of job descriptions

The building blocks of Holacracy's organizational structure are roles. Holacracy distinguishes between roles and the people who fill them, as one individual can hold multiple roles at any given time. A role is not a job description; its definition follows a clear format including a name, a purpose, optional "domains" to control, and accountabilities, which are ongoing activities to perform.[11] Roles are defined by each circle—or team—via a collective governance process, and are updated regularly in order to adapt to the ever-evolving needs of the organization.

Circle structure

Holacracy structures the various roles in an organization in a system of self-organizing (but not self-directed) circles. Circles are organized hierarchically, and each circle is assigned a clear purpose and accountabilities by its broader circle. However, each circle has the authority to self-organize internally to best achieve its goals. Circles conduct their own governance meetings, assign members to fill roles, and take responsibility for carrying out work within their domain of authority. Circles are connected by two roles known as "lead link" and "rep link", which sit in the meetings of both their circle and the broader circle to ensure alignment with the broader organization’s mission and strategy.

Governance process

Each circle uses a defined governance process to create and regularly update its own roles and policies. Holacracy specifies a structured process known as "integrative decision making" for proposing changes in governance and amending or objecting to proposals. This is not a consensus-based system, not even a consent-based system, but one that integrates relevant input from all parties and ensures that the proposed changes and objections to those changes are anchored in the roles' needs (and through them, the organization's needs), rather than people's preferences or ego.[12]

Operational process

Holacracy specifies processes for aligning teams according to operational needs, and requires that each member of a circle fulfill certain duties in order to work efficiently and effectively together.[13][14] In contrast to the governance process, which is collective and integrative, each member filling a role has a lot of autonomy and authority to make decisions on how to best achieve his or her goals. Some have described the authority paradigm in Holacracy as completely opposite to the one of the traditional management hierarchy; instead of needing permission to act or innovate, Holacracy gives blanket authority to take any action needed to perform the work of the roles, unless it is restricted via policies in governance or it involves spending some assets of the organization (money, intellectual property, etc.)[15][16] Holacracy is thus highly biased toward action and innovation: it defaults to autonomy and freedom, then uses internal processes to limit that autonomy when its use in a specific way turns out to be detrimental.

Holacracy specifies a tactical meeting process that every circle goes through usually on a weekly basis. This process includes different phases to report on relevant data, share updates on projects, and open discussions where any circle member can add to the agenda.[17] A particular feature of this last phase, known as "triage", is to focus discussions on the concrete next steps needed by the individual who added the agenda item to address his or her issue.[18] The intention is to avoid large, unproductive discussions dominated by the louder voices.[19]

Contemporary practice

In the U.S., for-profit and not-for-profit organizations have adopted and practiced Holacracy. Examples include Zappos.[20] Medium used Holacracy for several years before abandoning it in 2016.[21]

Advantages

Holacracy is claimed to increase agility, efficiency, transparency, innovation and accountability within an organization.[22] The approach encourages individual team members to take initiative and gives them a process in which their concerns or ideas can be addressed.[3] The system of distributed authority reduces the burden on leaders to make every decision.

According to Zappos's CEO Tony Hsieh, Holacracy makes individuals more responsible for their own thoughts and actions.[23]

Criticisms

Steve Denning warned against viewing Holacracy as a panacea, claiming that instead of removing hierarchy, decisions are funneled down from circle to circle in a clear hierarchy, with each subsequent circle knowing less about the big picture than the one above.[24] He also claimed that the rules and procedures laid out in the founding documents of Holacracy such as Robertson's originating article[4] are very detailed and focused on "administrivia."[24] Lastly, Denning added that the voice of the customer was missing from the Holacracy model, concluding that for agile and customer-focused companies such as Zappos, Holacracy is a way to add administrative rigor, but that Holacracy would not necessarily work well in an organization that did not already have agility and passion for the customer.[24] HolacracyOne partner Olivier Compagne replied to those criticisms on the company's blog, claiming that Denning's criticisms misunderstand Holacracy.[25]

In moving away from Holacracy, Medium noted that "for larger initiatives, which require coordination across functions, it can be time-consuming and divisive to gain alignment" and that Medium believed that "the act of codifying responsibilities in explicit detail hindered a proactive attitude and sense of communal ownership". They also noted that the inaccurate media coverage of Holacracy created a challenge for recruitment.[21]

At Zappos, about 14% of the company left voluntarily in 2015 in a deliberate attempt by Zappos to only retain employees who believed in holacracy.[26]

Other criticisms include a "one-size-fits-all" approach,[27] layers of bureaucracy and more psychological weight.[28]

Trademark and open source

The name Holacracy is a registered trademark of HolacracyOne LLC.[29][30] The model itself, as defined by the Holacracy Constitution,[31] is released under a Creative Commons Attribution ShareAlike 4.0 license.

See also

References
  1. Rudd, Olivia (2009-04-24). Business Intelligence Success Factors: Tools for Aligning Your Business in the Global Economy. John Wiley & Sons.
  2. Röll, Juliane (2015). "Organisations running on Holacracy". structureprocess.com. Retrieved 8 July 2020.
  3. Badal, Jaclyne (April 23, 2008). "Can a Company Be Run as a Democracy?". Wall Street Journal.
  4. Robertson, Brian (June 2007). "Evolving Organization". Integral Leadership Review. 7 (3).
  5. J., Robertson, Brian (2 June 2015). Holacracy : the new management system for a rapidly changing world (First ed.). New York. p. 38. ISBN 9781627794282. OCLC 895500921.
  6. Koestler, Arthur (1967). "The Ghost in the Machine". Psychiatric Communications. Penguin Group. 10 (2): 45–8. PMID 5735264.
  7. Steele, Robert David (June 5, 2012). The Open-Source Everything Manifesto. North Atlantic Books. p. 47.
  8. An Interview with Brian Robertson on Holacracy (2006): https://web.archive.org/web/20060630101107/http://www.ternarysoftware.com/pages/downloads/BrianRobertsonInterview2006-02-08v3.pdf
  9. "Holacracy and Sociocracy". adeeperdemocracy.org. 2010. Retrieved January 9, 2014.
  10. "Sociocracy & Holacracy". holacracy.org. 2013. Retrieved January 9, 2014.
  11. "Holacracy constitution, definition of a role". holacracy.org. 2015. Retrieved May 29, 2015.
  12. "Holacracy governance meetings". holacracy.org. 2015. Retrieved May 29, 2015.
  13. "Partner duties in Holacracy". wiki.holacracy.org. 2015. Retrieved May 29, 2015.
  14. Röll, Juliane (2014). "Energizing Project Roles (Holacracy Basics, Part 1)". structureprocess.com. Retrieved 8 July 2020.
  15. Work, Daniel (2015). "Part 2: Permission Cultures". medium.com. Retrieved May 29, 2015.
  16. "Holacracy constitution, definition of a role". holacracy.org. 2015. Retrieved May 29, 2015.
  17. "Holacracy tactical meetings". holacracy.org. 2015. Retrieved May 29, 2015.
  18. Compagne, Olivier (2015). "One Thread at a Time". medium.com. Retrieved May 29, 2015.
  19. Meade, Kristy (2015). "Holacracy: A Step Toward Equality". medium.com. Retrieved May 29, 2015.
  20. Groth, Aimee (2013-12-30). "Zappos is going holacratic: no job titles, no managers, no hierarchy". Quartz. Retrieved 2013-12-31.
  21. Doyle, Andy (2016). "Management and Organization at Medium".
  22. James, Michelle (2012). Navigating the New Work Paradigm. Center for Creative Emergence.
  23. Hsieh, Tony (April 8, 2015). "A Memo From Tony Hsieh". Zappos Insights. Zappos. Archived from the original on October 4, 2018. Retrieved June 6, 2015.
  24. Denning, Steve (2014-01-15). "Making sense of Zappos and Holacracy". Forbes. Retrieved 2014-02-21.
  25. Compagne, Olivier (2014-01-21). "Holacracy Is Not What You Think". HolacracyOne's Blog. Retrieved 2014-02-21.
  26. Groth, Aimee (2016-01-13). "Zappos has now lost 18% of its employees to its radical buyout offer". Quartz. Retrieved 2016-12-30.
  27. Culen, Julia (2016-04-03). "Holacracy: not safe enough to try". Retrieved 2016-12-30.
  28. Groth, Aimee (2016-12-21). "Zappos is struggling with Holacracy because humans aren't designed to operate like software". Quartz. Retrieved 2016-12-30.
  29. "Holacracy Legal Info". 2016. Retrieved December 30, 2016.
  30. "Trademark Filing 85535496". 2013. Retrieved December 30, 2016.
  31. holacracy.org/constitution
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