You Should Care About Holacracy
Holacracy is a radically different management system that changes how an organization is structured, how decisions are made, and how power is distributed. 300+ organizations are already running with Holacracy.
Holacracy is a distributed authority system – a set of “rules of the game” that bake empowerment into the core of the organization. Unlike conventional top-down or progressive bottom-up approaches, it integrates the benefits of both without relying on parental heroic leaders. Everyone becomes a leader of their roles and a follower of others’, processing tensions with real authority and real responsibility, through dynamic governance and transparent operations.
Governance & Governance Meetings
With Holacracy, regular governance meetings structure and evolve how the work gets done – everyone leaves with clarity on who is accountable for what, with what authority, and what constraints. These change dynamically with every meeting, based on the real tensions sensed while doing the work. A structured process ensures the organization’s purpose is at the center. Governance Meetings:
Generate explicit and light-weight role definitions that are actually meaningful (e.g. HolacracyOne’s governance)
Give everyone a voice, without the tyranny of consensus
Apply clear rules that prevent egos or politics from dominating
Focus a team on fast, incremental improvements in light of real data
Continually restructure the organization, one tension at a time
But what do we call the framework used to run a whole company? Most academics call this an “operating model” — the approach an org takes to structure, planning and process. What’s especially interesting, is that while all companies run slightly differently, they effectively all use the same operating model invented over 100 years ago. For example, almost all companies use the same hierarchy that places managers under directors under executives, where decisions come down from the top and action lives at the bottom.
‘Command & Control’ (or C&C) is the widely recognized term for this type of organization. And it gets at least one thing right: It creates a common language to describe operating models that everyone can understand. For the first time in over a century, we’re beginning to see credible alternatives, and most of them point to this idea of ‘responsiveness’ — that an organization should be built to learn and respond rapidly by optimizing for the open flow of information; encouraging experimentation and learning in rapid cycles; and organizing a network of employees, customers and partners motivated by a shared purpose.
One of these Responsive methodologies is Holacracy, defined as “a comprehensive practice for structuring, governing and running an organization. It replaces today’s top-down, predict-and-control paradigm with a new way of achieving control by distributing power.” Right now, this system is being used to the advantage of companies like Zappos, Medium and more.
Humans generally want to maximize predictability and eliminate surprises.
Creating rigid, long-term plans doesn’t work when the solution to a problem is unpredictable. The thing is, unpredictability isn’t just affecting software anymore. Now we want all kinds of products and services to move with our rapidly changing wants and demands. We want grocery services that recommend what we need before we know it. We want clothing brands that keep up with the current style. The old C&C (COMMAND & CONTROL) way of doing business falls short of these goals. But until now, people thought that was their only choice — C&C or chaos.
Holacracy is simply the first fully-formed alternative to C&C that real companies are using successfully.
What makes Holacracy different?
Companies with traditional hierarchy can only change as fast as their leaders can handle it. Bringing on better leaders or simplifying the business will buy time, but they’ll still be outpaced by the rate of change.
Seeing this limitation, responsive organizations aim to distribute authority and decision-making to all of their employees — even if it makes them less predictable and efficient in the short run. The goal is to increase their capacity to learn and respond to change by empowering more of them to do so.
Chaos is still the enemy.
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A lot of people assume that responsive companies have very few rules about who decides things and why. The most surprising aspect of Holacracy may be how much it relies on rules and process. To avoid chaos, it actually forces you to define roles and accountabilities far more rigorously than the old C&C system.
To make this happen, Holacracy requires each team to have a regular (let’s say monthly) Governance Meeting, where people can suggest changes to teams, roles, policies, accountabilities, etc.
By constantly iterating, Holacratic companies can relieve new tensions caused by changes so they can learn and adapt fast.
Holacracy fixes this problem by decoupling “role from soul.” Roles are defined based on logical groupings of accountabilities or areas of expertise, ignoring the physical number of people at your company. You can have more roles than employees, and it’s expected that people will fill multiple roles within several circles. In fact, it’s common for one person to handle multiple roles in the same circle. This makes it easy to move accountabilities from person to person without changing titles or hurting egos.
The most effective way to solve any problem is to put together all of the people with the skills required to solve it. We call this a cross-functional or multi-disciplinary team. Sounds obvious, but as anyone who’s worked at a large company will tell you, it’s rarely done in practice.
To address this, Holacracy makes it easy and relatively friction free to create new circles, rearrange people within them, tear it all down and start again. As we saw before, these teams are unconstrained by a long outdated org chart.
The Committees inside a Board of Directors could represent the new circles in the Holacracy mode !