A year and a half ago I first heard about Holacracy: “GTD for your organization”, or so I thought. Tracking the rise of holacracy means immersing yourself in the annals of philosophical thinking. ‘Many of the principles we value most about Holacracy are already embedded in the organisation through how we approach our work, collaborate, and instigate change’, he claims. ‘Not Everyone Wants to Be the Boss’, Justin Fox observes in a slightly more charitable, yet inaccurate, review in Bloomberg. Can the legal risks be mitigated? Digital technologies are enabling the shift to self-managing organisations. The point, instead, is that there is an increasing overlap between these communities on account of how entrepreneurs have adopted the experimental mindsets and methods of hacking. The other 80% is divided between the Rep Link, the system itself, and other role holders. Doyle puts this in perspective: ‘The management model that most companies employ was developed over a century ago. Self-organizing structures are not only more resilient, they become more innovative as they expand. Old habits are hard to get rid of. "I'm not surprised it was getting in the way for them." Medium and Zappos’ experiments are simply the tip of the transitional iceberg. Medium recently dropped Holacracy on the basis of its overbearing bureaucracy. 3. Thus, job descriptions are often imprecise and leave employees wondering what their responsibilities truly are. Teams are largely self-organized, and individuals operate with a fair amount of autonomy. The point here is not that startup entrepreneurs are hackers. But we’re also winning awards and get many applications because of Holacracy. We can all sleep more soundly knowing that the organisational forms of the 19th century are alive and well, unchallenged by the pretensions of the ‘bossless organisation’. In March 2016, Medium abandoned Holacracy. We choose to do that with Holacracy as the underlying operating system, and I think we can keep using that for quite a while since it’s so easily adjustable. The carnivores of the business press, who had been circling the blog publishing company since it started using the management ‘operating system’ three years earlier, closed in for the kill. Old habits are hard to get rid of. Nothing wrong with that! If you want to adopt Holacracy in your business, you must accept the fact that old habits die hard. In this piece, Tom unpacks his general criticism of Holacracy into a more nuanced point of view that addresses both the good and the bad. ‘In our view, there is something inherently contradictory about using authoritarian means to implement a management model aimed at enhancing self determination’, they claim. Holacracy doesn’t always work well for larger teams, and doesn’t allow for easy growth. The point that goes unappreciated is that it is in the nature of experiments to fail. Holacracy, an innovative company organization system that favors flat structures over a classical hierarchy, was all the rage a few years ago. For more articles about Holacracy, scroll down and follow the About Holacracy publication. It is completely the opposite of what agile, scalable organizations need in the 21st century. It reflects the way that hackers have organised their collaborative work for decades. 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". The best way to understand Holacracy is to get an experience of the practice. The disruptor is dead. Gary Hamel and Michele Zanini make this point in a recent article in the HBR. For one thing, Medium is considerably smaller than Zappos, even after 38% of Zappos tech team (and 18% of the company as a whole) quit after Holacracy was implemented. The organisations of the future are being invented today. Of course there are doubts and misconceptions, and they annoy us and sometimes put off potential hires. They will be companies that hack their way to structural innovation. Medium adopted the Holacracy model about a year ago. If Holacratic companies have drawn negative attention from the media, it is because of the way they have gone about implementing the system. Holacracy is a top-down, bureaucratic, big government framework. Often we don’t point at our structure, or at Holacracy, for the problem. Medium recently dropped Holacracy on the basis of its overbearing bureaucracy. Maybe they still are, but they just don’t want to deal with Holacracy as a term, which makes sense. Hamel and Zanini don’t use this term, but it is clearly what they have in mind: Imagine an online, company wide conversation where superfluous and counter-productive management practices are discussed and alternatives proposed. Information flows too quickly — and skills are too diverse — for it to remain effective in the future’. Medium founder Evan Williams, once among Holacracy’s biggest evangelists, abandoned the system earlier this year. This misrepresents Andy Doyle’s claim in his announcement of Medium’s decision. In that sense, I agree that you should move beyond it once you discover something better. In the purest expression of Holacracy, every team has a goal and works autonomously to deliver the best path to serve that goal. Ideally, this puts the work at the forefront and lets the company’s organizational chart form to support it, rather than the other way around. What we are seeing now is the same socio-cultural norms being driven into business organisations. If the task is too big for the individual to complete by themselves, the individual becomes the ‘Lead Link’ in a ‘Circle’ of employees that bands together to execute the task. This, in a large part, is how we learn from them. Experimentation and failure should be baked into the culture. If change is not cheap (see above…), and if people are not comfortable with the mechanism of individual action and processing tensions based on reality, then indeed pro-activeness and ownership can suffer. Good Holacracy, Bad Holacracy is no different. They also noted that the inaccurate media coverage of Holacracy created a … They are densely connected, human-centered, agile, and intrinsically innovative. I hoped Medium would remain self-managed, but this sounds like only certain people, with experience, can develop teams and be bosses. Holacracy is a radical departure from the way most companies are run. Holacracy is a top-down, bureaucratic, big government framework. And to make matters even more dire, as Holacratic systems implode, they take their client companies with them–names like Medium or the David Allen Company (ironically, itself a pioneer of an alternative management system ). This is what management is (in my words).Management fits into a larger structural system, which could be flat or hierarchical or hybrid. In spring 2016, Medium publicly stepped away from holacracy. Medium's head of operations, Andy Doyle, wrote in a post that holacracy exerted "a small but persistent tax on both our effectiveness, and our sense … people being able to feel this tension and solve it within Holacracy) because of a … But after rereading I went for calling it “dropping” anyway, see below why. Obsession with process was … Holacracy’s idealism, as well as its failure to grasp human nature, has led to serious flaws, ones which will only worsen as time goes on. I recognize this, because sometimes it feels hard to do “cross circle” projects. Andy writes they’re going “beyond” Holacracy and I first included that in my title. This has fanned speculation that Zappos’ experiment with Holacracy is on the rocks. Holacracy practice can work in any organizational context if the people are ready to commit to the change. But this comes at the price of implicit vagueness later, so scaling seems easier but you need more “managers” to keep everything in check. A few caveats to start off with: Our experience was that it was difficult to coordinate efforts at scale. As issues are surfaced and resolved, competitive innovation remains the greatest driver of change. Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Hamel and Zanini propose a bottom up strategy, taking their cue from hacker culture. So yeah, you still need leaders in various ways, and you can call them bosses if you want. Medium failed because it didn't fully commit to holacracy, said Robertson. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. This misrepresents Andy Doyle’s claim in his announcement of Medium’s decision. We started adopting it at my company Springest, … This is not to say that members of any circle are formally excluded from sensing a “Tension” from failure to meet customer needs of which they happen to become aware and then take action to resolve that “Tension”. While they do not drive (or ‘want’) openness and collaboration, these technologies makes self-organisation so simple, it is foolish not to explore it. Calling it “hands down, by far the best way I know or have ever seen to structure and run a company,” Stirman says. It’s certainly true that Medium and Zappos are different companies. Holacracy … For example. It distributes power to individuals, who get to choose what projects they work on and are granted full authority to execute tasks as they see fit. (Big misconception: Holacracy = Flat…it doesn’t. Technology and culture are evolving far too rapidly for companies to bank on maintaining their position without continuous self-reinvention. In a blog post on its platform, Andy Doyle, former head of operations for Medium, wrote that “the system had begun to exert a … "I'm not surprised it was getting in the way for them." The output of such a conversation wouldn’t be a single, elaborate plan for uprooting bureaucracy, but a portfolio of risk bounded experiments designed to test the feasibility of post bureaucratic management practices. Perhaps Zappos and Medium have at least partially been victims of Bad Holacracy. In my perception, Lead Links still do about 20% of what old school bosses did. No one will criticize you for a reasonable hypothesis failing, but you might get criticized for not trying. Plus it was a superb payout. And we value those more than the few we lose: those people probably didn’t make up their own mind based on data, so they wouldn’t fit here anyway. ‘Well, waddaya know?’ Paul Carr gloated in the tech journal Pando. Other organizations have decided it’s just too consuming to go all in. For example, a hack might propose that frontline teams be given the right to interview and select new hires — a task hitherto performed by department heads or HR staff. In an earlier post, I discussed how the methodological apparatus of startup culture — comprised of design thinking, agile development, and lean method — bears the hallmarks of the hacker way. It is playing out on the ground, however, through a host of hacker initiatives, as design replaces control, agility trumps process, and fast, customer-focused experiments replaces inefficient business planning. Daryl Koopersmith and Jean Hsu spoke about Holacracy, a system of tools Medium has used to create our organizational structure, and explored some of the challenges our engineering team may face as the needs of the team change with growth. One example of how we've kept culture and people top of mind while using Holacracy was by integrating our Oath of Employment into our Holacracy practice. …every role requires a set of responsibilities. It’s great that such a visible company was so open about both adopting and dropping it. Also, hiring “bosses” like Andy writes, surely creates problems because they might be used to create ad-hoc jobs in a top down fashion, which indeed is faster than processing the tension by doing it and codifying it later. But God is in the details. The most powerful companies to emerge out of this period of transition will be companies that attend to how they implement organisational change. The company wasn't doing it right, he said. As issues are surfaced and resolved, competitive innovation remains the greatest driver of change. In Holacracy you can’t boss around. Assumption: Medium never reached this level of Holacracy learning and consciousness (i.e. Confronted with protracted resistance, Hsieh told employees to accept Holacracy or quit. Not everyone wants the responsibility. A 2015 Deloitte survey of more than 7000 companies revealed that the majority of companies are moving away from top down, command and control structures towards flexible structures based in teams. They are paid by click and competing against viral videos, so it is in their interest to scandalize and taunt, speaking to the prejudices of the mass market. Doyle’s actual point … In the end, 260 employees (roughly 18% of the company) accepted Hsieh’s redundancy offer and left. But software hacking communities provide a cultural reference point for the transformation, and so it makes sense for the transformation to proceed with a hacker sensibility. And we have bosses — people who have the experience of scaling companies, leading through hard challenges, and developing teams. The question for business leaders is not if they should shift to a more flexible, self-organizing structure, but how. Such an idea could be quickly tested in a small corner of large organisation. When Medium abandoned Holacracy, the status quo rejoiced. We look at how to improve communication, via strategy or metrics or clearer project outcomes or explicit accountabilities. If you never fail you’re not trying hard enough; you’re not being bold enough. Many of Hsieh’s employees failed to see the upside. So, we've evolved how we use Holacracy to find ways to layer our culture, core values, and focus of people into the system in a way that works best for us. If you want to adopt Holacracy in your business, you must accept the fact that old habits die hard. Zappos CEO Tony Hsieh shifted the entire company to Holacracy in 2013. Hsieh half jokingly suggests that, given the size of the redundancy package, ‘the headline really should be “82% of employees chose NOT to take the offer”’. Adding new accountabilities or entire roles or circles based on a sense of ownership isn’t hard to do. I also recognize this, especially when new people enter the company, or when big initiatives are run by people with less Holacracy experience. Long may the experiments continue. How might such an approach be used to defeat bureaucracy? […] for larger initiatives, which require coordination across functions, it can be time-consuming and divisive to gain alignment. Holacracy flattens organisations, getting rid of hierarchical power structures. ‘Medium drops Holacracy, because Holacracy is “time consuming and divisive”’. It tends to produce superior results as compared to those with weaker cultures. Experimentation and failure should be baked into the culture. Does it boost team morale? Doing my due diligence on Holacracy, started deliberately looking for the negative sentiments. But if you’re hiring you better make sure those people understand they can’t just do what they’re used to. Much workplace conflict occurs when employees move beyond the bounds of their job description or refuse to do so. No one will criticize you for a reasonable hypothesis failing, but you might get criticized for not trying. Holacracy tells you exactly how to run your organization. While this provides helpful transparency, it takes time and discussion. Also, it’s up to the proposer, the person who feels the reality based tension, to define how explicit a responsibility is defined. 3. The Lead Link heads a circle, but doesn’t manage it. In this piece, Tom unpacks his general criticism of Holacracy into a more nuanced point of view that addresses both the good and the bad. Undeterred by this detail, Fox reflects that being the boss is a thankless task. Good Holacracy, Bad Holacracy is no different. Andy cited 3 specific reasons for dropping it, I’d like to reflect on them based on my own experience with Holacracy at Springest in the past 3 years. people being able to feel this tension and solve it within Holacracy) because of a higher hiring pace or lower learning investment. Holacracy honors each person’s sovereignty, seeing them as perfectly capable of managing themselves, driving their projects, staying motivated, and taking care of their own needs. Entrepreneur Brian Robertson first introduced holacrarcy in 2007 and Twitter founder Ev Williams has implemented it with his new company, Medium. We found most of how OKRs are usually done doesn’t conflict with Holacracy, although so far we mostly define them on circle and not role level. Cultural change is both a condition and an enabler of technological change. Every employee has a job, with boundaries listed in the job description. Journos will be journos. Management is meant to facilitate the best use of people and their skills/talents toward productivity in pursuit of an organization’s objectives. The Linux development model is a kind of primitive organisational operating system. It can be comforting to have a manager perched one step above you on the corporate ladder. Not so fast. #1: Share Vulnerable Check-ins The rules for the Check-in and Closing Round don’t limit you to only sharing what’s on your mind at the moment. Other organizations have decided it’s just too consuming to go all in. No surprise why adopting Holacracy is challenging for corporate hierarchies that put a lot of emphasis on power and control! If you never fail you’re not trying hard enough; you’re not being bold enough. We should celebrate failures as much as successes. For another, Medium began using Holacracy from day one, rather than … The answer is: through culture hacking. Medium failed because it didn't fully commit to holacracy, said Robertson. Zappos is still using Holacracy and we currently have no plans to change that. Users of social media, for example, are accustomed to identifying conversations they can contribute to, and problems to which they can apply their talents and skills. The culture of a company is crucial and plays a key role in its success or failure. More importantly, we found that the act of codifying responsibilities in explicit detail hindered a proactive attitude and sense of communal ownership. Assumption: I guess they couldn’t stand the heat anymore, so they got out of the kitchen :) Changes are always met with skepticism and self-management of course isn’t the end all of management, at least not within a few years. Also, our Governance meetings happen weekly, allowing for even more iterations in our organisational structure. It’s not about Holacracy, it’s about discovering better ways of running organisations. Zappos, admittedly, continues to struggle with Holacracy. Holacracy’s system has evolved to make it easy to evolve, so “our Holacracy” will not resemble Medium’s. Holacracy is designed to move companies away from rigid corporate structures and toward decentralized management and dynamic composition. Digital technologies make it absurdly easy to share information and coordinate collaborative work. The idea of a self-managing, organisational operating system didn’t spring out of nowhere. He’s especially drawn to the strategy’s crystal clear minimalism and logic. According to Doyle, Medium’s problem with Holacracy was functional rather than philosophical. In a post released today, Medium announced it will no longer use the “self-management” system trumpeted by the likes of Zappos and other companies as the antidote to traditional hierarchy. It is completely the opposite of what agile, scalable organizations need in the 21st century. The other points feel very valid, but this one baffles me. Effectively, they are primed for self-management and collective self-organisation through their use of these tools. ‘Medium drops Holacracy, because Holacracy is “time consuming and divisive”’. Just because it failed at Medium, they’ll argue, doesn’t mean it will fail at Zappos. There is a manifest incongruity in a top-down solution to bureaucratic management. This is the crux of the matter. Rather than try to implement systems change from above, a culture hacking strategy enlists the changemakers and intrapreneurs in the organisation, inviting them to participate in a process of collaborative innovation. Assumption: Medium never reached this level of Holacracy learning and consciousness (i.e. You Have To Get Rid of Old Habits. These technological and cultural developments are enabling the emergence of horizontal organisations. You can leave it up to them to be visionary and entrepreneurial. Suddenly, they’re hiring “bosses” and they care about mainstream media? We should celebrate failures as much as successes. Assumption: Training / coaching / learning / onboarding might be the bottleneck for Medium. In The Netherlands, 80% of the press we get is positive or at least inquisitive. Doyle’s actual point is that Holacracy was problematic ‘for larger initiatives, which require coordination across functions’. A Lead Link is not a boss. Something similar is happening in large business organisations. ‘Well, waddaya know?’ Paul Carr gloated in the tech journal Pando, Doyle’s actual point is that Holacracy was problematic ‘for larger initiatives, which require coordination across functions’. Realistically, any company concerned to be around in ten years time should be exploring new organizational operating systems. Medium is currently moving forward by articulating these principles and assembling a team ‘to translate [them] into a functional system’. Early traces can be found in the 17th century writing of German polymath Gottfried Wilhelm Leibniz, who suggested that the world was reliant on people developing … Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. I guess a lot of companies adopting something like Lean or Six Sigma or at some point claim their own flavor. In Holacracy you can’t boss around. Startup entrepreneurs may or may not subscribe to the core elements of hacker ideology, but they have embraced key practical elements of the hacker way. Often, they’re deliberately open for the role holder’s interpretation. In spring 2016, Medium publicly stepped away from holacracy. So what is the alternative? Which can very well be people that used to be a boss, but now have explicit roles explaining their boss-like accountabilities. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Of these companies, 92% cite organisational redesign as ‘the top priority’. As issues are surfaced and resolved, competitive innovation remains the greatest driver of change.