Holacracy

Holacracy is a specific social technology or system of organizational governance developed by HolacracyOne, LLC in which authority and decision-making are distributed throughout a holarchy of self-organizing teams rather than being vested in a management hierarchy. Holacracy has been adopted in for-profit and non-profit organizations in Australia, France, Germany, New Zealand, Switzerland, the United Kingdom, and the United States.

Origins

The Holacracy system was incubated at Ternary Software, an Exton, Pennsylvania, company that was noted for experimenting with more democratic forms of organizational governance. Ternary founder Brian Robertson distilled the best practices into an organizational system that became known as Holacracy in 2007. Robertson later developed the Holacracy Constitution in 2010, which lays out the core principles and practices of the system, and has supported companies in adopting it. In June of 2015, Robertson released a book, Holacracy: The New Management System for a Rapidly Changing World, that details and explains the practices of Holacracy.

The term holacracy is derived from the term holarchy, coined by Arthur Koestler in his 1967 book The Ghost in the Machine. 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. Thus a holarchy is a hierarchy of self-regulating holons that function both as autonomous wholes and as dependent parts.

Influences and comparable systems

Holacracy has been compared to sociocracy, a system of governance developed in the second half of the twentieth century. Sociocracy had a significant early influence during the incubation of Holacracy, though Holacracy has increasingly differentiated away from it since then. 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.

In its emphasis on iterative governance, adaptive processes, and self-organization, Holacracy draws inspiration from agile software development principles and the lean manufacturing process. Holacracy is highly compatible with stakeholder theory as its board structure allows for multiple stakeholders to be represented in the governance of an organization and for multiple organizations with shared interests to be linked at the governance level.

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. 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.

Operational process

Holacracy specifies processes for aligning teams around operational needs, and requires that each member of a circle fulfill certain duties in order to work efficiently and effectively together. 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.) 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. 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. The intention is to avoid large, unproductive discussions dominated by the louder voices.

Misconceptions about Holacracy

Holacracy suffers from several misconceptions propagated by the media, such as the following:

The "generic" misconception

Holacracy is a specific branded system with a specific rule set, and is often confused for any flat structure/system or any generic system that uses a holarchy or a rule set instead of a management hierarchy. The specific rule set of Holacracy is defined in the Holacracy constitution developed by HolacracyOne, LLC. Other systems such as the ones developed by Valve, W. L. Gore, or GitHub, are not associated with Holacracy.

The "flat" misconception

Holacracy is often portrayed as a system without hierarchy (i.e. "flat"), whereas in reality it is a hierarchical system. The system is designed to create clear roles and circles organized as a holarchy, which is a type of hierarchy.

The "no structure" misconception

Holacracy is often portrayed as a system without structure. In fact, it is a very structured system where roles are defined in writing, with a lot more specificity than a job description.

Trademark and open source

The name Holacracy is a registered trademark of HolacracyOne LLC. As such, anyone wanting to sell products and services using the Holacracy name must first get HolacracyOne's permission. The trademark is not to be confused with a patent, however, as it does not limit anyone from using the Holacracy model—it only limits the use of the brand name for commercial purposes.

The model itself, as defined by the Holacracy Constitution, is released under the "free culture" Creative Commons Attribution ShareAlike 4.0 license. The model can be considered "open source". HolacracyOne has placed the Holacracy constitution on GitHub to encourage others to contribute to its development. Holacracy thus follows a model of trademark with open source license similar to other brands like Mozilla, Linux, and Wikipedia.

Holacracy in contemporary practice

In the U.S., for-profit and not-for-profit organizations have adopted and practiced Holacracy. Examples include productivity specialists the David Allen Company, Twitter co-founder Evan Williams' Medium, Precision Nutrition, and Whole Foods Market CEO John Mackey's nonprofit, Conscious Capitalism. Other lower-profile companies have adopted Holacracy, such as Integrity. Zappos, the online shoe retailer which forms part of Amazon, announced its adoption of Holacracy in 2013.

Advantages

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

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

According to Zappos employee Kristy Meade, Holacracy helps prevent typical gender-biased behaviors. It "provides protections that create an environment in which some actions based on unconscious bias are not possible."

Criticisms

In a January 2014 post on Forbes online, management and leadership author 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. He also claimed that the rules and procedures laid out in the founding documents of Holacracy such as Robertson's originating article are very detailed and focused on "administrivia." 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. These criticisms have been responded to point by point by HolacracyOne partner Olivier Compagne in an article on the company's blog. He maintains that Denning's criticisms misunderstand Holacracy, and proceeds to explain how the rules of Holacracy address or avoid those alleged pitfalls.

See also

• Agile software development
• Getting Things Done
• Lean software development
• Sociocracy
• Holistic management
• Participatory management
• Systems thinking
• Emergence
• Open source governance
• Collaborative e-democracy
• Workers' self-management

External links

• Holacracy website
• Holacracy Wiki
• Holacracy book
• HolacracyOne Facebook
• HolacracyOne Twitter
• HolacracyOne Youtube