Holacracy: A Book Review, Part 1
This is part one of a two-part review of Holacracy: The New Management System for a Rapidly Changing World, by Brian J. Robertson. Read Part 2 here.
In this post, I will be reviewing the foreword of the book as well as Part 1, which includes the first three chapters: “Evolving Organization,” “Distributing Authority,”, and “Organizational Structure.” To begin, I’d like to mention that this book is heavily influenced by and refers repeatedly to the book, Getting Things Done, by David Allen. If you haven’t already, I recommend adding this book to your reading list as a frame of reference.
Holacracy: The New Management System for a Rapidly Changing World (Holacracy), is, at its core, a book about authority within an organization. More specifically, it is about how this authority is taken, given, and governed. Where many books on organizational management propose new and different ways to run a business within a traditional, top-down hierarchy, Holacracy proposes that the traditional hierarchy itself isn’t necessary at all.
In my opinion, the most important decision the leader of a business could make within Holacracy is to adopt the system. After that, the system largely governs itself, leaving those in leadership positions to primarily focus on strategic initiatives, with only a minimal amount of time spent on administrative or personnel issues.
Ultimately, Holacracy is about distributing the authority to make decisions among the members of an organization. Instead of classic “positions” within a business, there are “roles,” and multiple roles can be filled by individuals. After the roles are clearly defined, the day-to-day operations are handled by the team members, who are responsible for those roles. It’s difficult to judge intent, but it seems like solving the ages-old problem of “responsibility without authority” was a significant factor in creating this philosophy.
In the foreword, the author speaks briefly about implementing Holacracy within his own organization. Before he gets into the details of how the system works or what’s involved, he’s quick to point out that not only is implementing this methodology a long-term project, but also that it is not a “panacea” that will cure all of an organization’s ills. Three years into implementing Holacracy; however, he touts the benefits the system has brought to his organization, and he seems optimistic about how it will continue to affect his business in a positive way.
So let’s dive in and see what this methodology is all about.
CHAPTER ONE: EVOLVING ORGANIZATION
Chapter one opens with a metaphor involving piloting a plane, and how ignoring a single warning light almost ended up causing disastrous consequences. The author maintains that this can be applied to listening to individuals within an organization—the idea being that individuals, regardless of their position, are remarkably good at sensing “tensions” within an organization, and that their position and perspective offer them a unique view of what is going on. “Tension” is a recurring theme in the book; it is defined as, “the perception of a specific gap between current reality and a sensed potential.” It is not considered a negative thing, but rather a way of identifying things which could be improved for the overall good of the organization.
The theme of this chapter is that the people who make up a business all possess a unique set of skills and talents, and that a business can thrive by finding a way to give those individuals not only the ability to voice their ideas, but also by implementing those ideas within their roles. Failure is absolutely a possibility under this system, but it is through the learning associated with both succeeding and failing at implementing new ideas that real change, or “evolution,” begins to occur within an organization. Evolution within an organization is touted as critical, due to the fact that, “Markets … are highly dynamic, but the ‘brutal truth’ is that the vast majority of companies are not.”
So, the question at the end of this chapter is: How do individuals get the power to make those decisions?
CHAPTER TWO: DISTRIBUTING AUTHORITY
This chapter begins by talking about running an organization more like a city than a business, since growing cities tend to show improvements in innovation and productivity, and growing businesses tend to show decreases in both. After the introduction, the chapter is divided into four sub-categories:
How do you Distribute Authority?
“How do you enable an organization to effectively self-organize?” This is the opening question of this section, and a poignant one. It compares a business to the human body, and how it’s important that each organ within the body be able to fill its role, with minimal (yet important) feedback from other organs. The stomach doesn’t ask the brain for advice on how to digest food; it just does its job. The stomach might tell the brain that it needs more food, and the brain might tell the stomach that what it’s craving isn’t very healthy, but for the most part, the stomach does what it’s good at: digesting food.
The postulation here is that roles within an organization are filled by people with the ability to do what they do at a very high level, and unless it explicitly involves working with another role, they are able to make decisions on how to fulfill that role on their own. Failures will happen, but ultimately, through experiencing both success and failures, they will only get better at fulfilling those roles. To use a metaphor of my own, my stomach stopped asking for Taco Bell years ago. I don’t let it file my taxes for me or drive my car, but my stomach has the power to do what it needs to do within the boundaries of its role.
Power to the Process
This may be one of the most groundbreaking sections of the book. The theme is simple in concept, but exceptionally complex in practice—leaders sign over their authority to a way of doing business. In theory, it’s simple: the leaders commit so strongly to Holacracy that they willingly give much of their authority to this new process. This could lead to a perceived loss of power, or worse, loss of control over the organization they’ve worked so hard to build. It’s the ultimate “trust fall,” leaving the vast majority of the day-to-day decision making to the members of the team and believing they will make decisions that are not only in their own best interests, but in the best interests of the organization.
This section introduces, for the first time, the rules of the Holacracy “game.” For now, it separates work into three separate realms: Operations, Tactical, and Governance. Operations is what many of us think of as “work.” It’s performing the duties associated with our roles. Tactical meetings are strategic meetings focused on specific work (Operations) and relieving tensions related to our trying to accomplish those operational goals. Governance meetings are the life-blood of the entire process; their purpose is to define roles and structure and maintain the organization as a whole and make sure everyone is playing by the same rules. As we go along, a familiarity with parliamentary process will be very useful, so I’d recommend doing some reading on that if you haven’t been involved with a local or civic organization that uses these types of rules to govern meetings.
The major theme is this section is discovering the purpose of an organization and separating the hopes and dreams of individuals from the potential that the organization has as a whole. The metaphor used is one comparing a business leader to a parent, with the business leader treating their business like a parent would treat their child. Ultimately, it is argued that, once a parent lets go of their pre-conceived notions of what a child should do with their life, the child can then discover their true potential. As an example, if I’ve decided my son should be a basketball player, my influence on him could prevent him from ultimately achieving what he would like to do Organizations can be seen the same way. The purpose of an organization can only be fully realized from within, not by being dictated from a figure of authority.
CHAPTER THREE: ORGANIZATIONAL STRUCTURE
Chapter three is where we’re introduced to the “guts” of Holacracy. Now that we’ve read about the concept of “tension” in Chapter One and the concepts of distribution of authority and purpose in Chapter Two, it’s time to dive into the mechanics of how Holacracy functions at a practical level. So far, this is the longest chapter in the book, and most certainly the most information-dense. For the purposes of keeping this review succinct, I’ll focus on the key concepts.
The chapter begins by postulating that what many of us think of as “corporate structure” not reflecting the reality of how businesses actually function. This is illustrated through the use of a traditional organizational chart which has been “augmented” with extra lines indicating not the professional, but the personal relationships that exist inside of a business (family members, rivalries, jealousy, etc.).
The purpose of this illustration is to show the difference between how we believe organizational structure to be and how it actually works. For example, if I technically report to a supervisor, but I have a history with someone higher in the organization, it’s possible that I could circumvent my supervisor on a regular basis with an implied level of impunity, since my supervisor would be unlikely to want to confront someone higher in the organization. This brings us back to the concept of “tension.” My supervisor would feel tension because the “ideal state” when it came to doing their job would not match the current reality.
In this section, the concept of “hierarchy v. holarchy” is explained. The example that is presented is that of organs within the human body. The brain, heart, and stomach are all critical components of the human body, but the stomach doesn’t ask permission to digest food, and the heart doesn’t ask permission to pump blood. Those organs have the authority to do their jobs as they see fit, and it would clearly cause an uproar if the heart or the brain decided they wanted to digest food.
Roles and Accountabilities
Here we see a discussion of the differentiation between traditional definitions of roles and accountabilities and how they actually exist within an organization. The argument is made that most people are not, in fact, accountable just to their boss or manager, but to their customers and coworkers, as well as management within the organization. They are accountable to their role, and that is separate from who they are as a person and any other relationships they may have outside of that. This discussion is continued in the next section.
Differentiating Role and Soul
“Holacracy focuses on clearly differentiating individuals from the roles they fill.”
This section can be summarized by this single statement. If one of my duties at work is “Training clients on financial software,” then when that duty needs to be performed, anyone with that role can be held responsible for it. It doesn’t matter if it’s Doug, or Cindy, or Alan; it only matters that the responsibility is taken on by someone with that role. The organization depends on the work being performed, so the possibility of something being overlooked or not fulfilled due to something personal between two individuals must be removed.
Look for Part 2 of this book review here. Are you familiar with Holacracy? Have you ever been in an organization that uses it? Let us hear from you. Leave us a message in the Comments section.