Holacracy: Work for Grown-Ups

“When you run after your thoughts, you are like a dog chasing a stick. Every time a stick is thrown, you run after it. Instead, be like a lion who, rather than chasing after the stick, turns to face the thrower. One only throws a stick at a lion once.” -Milarepa

I will start this on a personal note. I am nearly 40 years old, but it was only recently, 5 months ago, that I landed my first proper employment contract at my current company, Hypoport. In the two decades before that, I was very busy avoiding the corporate world. I excelled at school, but I wasn’t particularly eager to go working at some company, so I used my years at university to figure out what I wanted to do in this world, what really resonated with my core values, what this whole life thing is about. I ended up studying philosophy and it took me 8 years to finish it. I would frequently get questions like: “What do you want to do with it afterward?” — My standard answer was “Become a taxi-driver” — kind of a running gag. I guess finishing my degree was simply a socially acceptable way of procrastinating the decision of where to work. Needless to say, it freaked out my parents. So yeah, 8 years to become a taxi-driver. Not bad.

The whole idea of working in a corporate hierarchy, being told by some manager what to do and how to do it, in order to serve some mindless profit-maximization goal, while wrecking the environment didn’t make sense to me at all. I am a strongly meaning-driven and individualistic person, so I decided to live in precarious economic circumstances rather than selling out my convictions and values to a corporation. There seemed to be a forced choice between making a living and following your purpose. I chose the latter.

Through some fateful turn of events in 2006 I got to know Brian Robertson and learned about Holacracy®, a new way of organizing the work of a company. It immediately resonated. Since then I longed to work in such a company. It is so radically different from the way we are used to doing things in organizations that it is hard to know where to begin. Let’s start with the birds-eye-view:

Holacracy is a wholesale replacement of the traditional management hierarchy.

It fundamentally reorganizes the way power and decision-making works. In traditional companies, we’re used to looking to the boss or the manager to help us guide our work or know what to do. There are many downsides to that. Decision-making gets centralized, there’s usually some bottlenecks and it often takes a lot of time to wait on your manager to respond to your question, before you can act. It creates a lot of friction in the system. Work in conventional top-down management hierarchies is “parentalizing” managers while infantilizing workers. Outside of your work-context, you are a grown-up person that is perfectly able and expected to make his or her own decisions, but as soon as you enter your workplace you mysteriously lose all these capacities and need to go to “mommy” and “daddy” to get permission to act.

These parent-child- power dynamics in companies lead to inefficiencies and waste. We don’t treat each other as grown-up peers who work together –instead, we are being bossed around, often develop a “learned helplessness” and expect our manager to solve our problems for us. If he fails, we can play the blame-game. The manager, on the other hand, gets to feel like the heroic leader who saves the others who can’t help themselves. Even if he is open-minded, progressive, benevolent and “empowering” there is the underlying assumption that the others are “powerless” and in need of “empowerment” in the first place. The whole heroic leadership narrative is inherently flawed and produces what it seeks to overcome: dependency on the leader. Holacracy changes the entire context and thereby makes the need for empowerment itself obsolete.

The default assumption in a traditional company is that any non-standard decision about your work is forbidden except for what is explicitly allowed. In contrast, in an organization running with Holacracy, any action is allowed, except those things that are explicitly forbidden. This flips the situation on its head and changes the game dramatically.

In order to get there, everybody has to play by a new set of rules. There are many companies out there that pioneered methods of self-management or self-organization: Semco, FAVI, Morning Star, Buurtzorg, etc. Many of these homegrown systems of self-management work astonishingly well. But it takes a lot of work to forge your own path and it is not so easy to transfer it to other business contexts. What is special about Holacracy is that it was developed with the intention to be universally applicable in a variety of contexts and industries. It was first developed through trial and error in Brian Robertson’s company Ternary Software and later refined in the consulting company HolacracyOne. The “DNA” or “source-code” of Holacracy is encoded in a document, called the Holacracy Constitution, a 45-page document that defines all the rules of the game. It is an off-the-shelf package that you can use to kickstart a robust practice of self-management.

As soon as a company decides to play this game, the current top-management, the owners, the board, the founders or the CEO, formally sign and ratify the Holacracy Constitution. This is a simple but incredibly profound step. It signals publicly to everybody that power has now officially shifted from people into an objective process. This is comparable to a monarch ratifying a state’s constitution and thereby confirming that from now on he is bound by the same laws as everyone else. He is no longer above the law. As long as the top management doesn’t revoke the decision to play by the rules of the constitution, they will be held to it, like everyone else.

Purpose is the new boss

If personal power is no longer the main organizing principle we need something else to bring alignment across the company. That’s why the purpose is central in Holacracy. The entire work of the company gets organized around its purpose, its “raison d’être” as the French would call it, its WHY. The purpose tells us why this organization exists in the world, what its deepest evolutionary potential is pointing to. For example, Google captures its purpose as follows “To organize the world’s information and make it universally accessible and useful.” That is simple, concise and elegant.

The purpose of the organization then gets translated into an evolving, organic holarchy of circles and roles which replaces the classical org chart. Holarchies are nature’s way of organizing complexity. It organizes them into wholes that are simultaneously parts of larger wholes, Holons, that are nested in hierarchies of wholeness — “Holarchies”. A “Hola-cracy” then is the “rule” of this organizational holarchy, like demo-cracy is the “rule” of the “people”.

Differentiation of “role” and “soul”

Holacracy-powered organizations break the fusion of individual person and job title. I no longer “am” “VP of Marketing”, “UX Designer”, or “Chief Financial Officer”. Instead, in Holacracy, individuals usually “fill” a variety of “organizational roles”. The language-shift is subtle, yet profound. It forces us to differentiate “role” from “soul”, organizational function from person. A role is like a uniform you temporarily wear. It belongs to the organization. The person does not belong to the organization. That’s why the organization cannot govern its people. It can only govern its roles. Instead, the person freely chooses to “energize” certain organizational functions, “roles”, based on a mutual agreement between the organization and the individual to act as a role-filler. Holacracy gets rid of the coercion. Nobody can be forced to take on an organizational role against his will.

In contrast to classic job-descriptions that are often already obsolete by the time they roll off the printer, the role descriptions in Holacracy are highly relevant for the day-to-day work and spell out crystal-clear accountabilities that others can expect from you. The cool thing in Holacracy is that accountabilities on a role are equal to authorities. In other words: you actually are allowed to do the things that are expected of you. You have the full authority to enact these accountabilities as you see fit without having to ask anybody’s permission. Use your best judgment and act.

Autonomy

We have a phrase for this in Holacracy: “Be a Ferrari”. If the road is clear you can drive as fast as you want. No need to wait. Just go. Big companies go to great lengths to re-ignite entrepreneurial spirit with all kinds of superficial change initiatives. The secret sauce to unlock drive and creativity is to actually encode this decision-making power into the core authorities of any role-filler. But it doesn’t work half-assed. You can’t hand off authority AND micromanage people. You can’t be “half-pregnant” with self-organization. Either, or.

Processing tensions

Once you have an organization full of Ferraris that are driving fast, you may run into some kind of trouble. People start to step on each other’s toes and it creates some tensions in the system. “Tension” is a core concept in Holacracy. Despite the negative connotation, the system thrives on tensions. In fact, “tensions” are the essential driver for continual improvement and progress towards purpose. They signal the gap between “what is” and “what could be”. We humans are excellent sensors for tensions. We tend to want to close the gaps. Holacracy gives us a ton of tools and pathways to process our work-related tensions. It is an organizational operating system that is entirely powered by processing tensions. This makes it “anti-fragile”, to use a term by Nassim Nicholas Taleb.

Governance

So back to our image: what happens if one of the Ferraris rushes by at the crossing without stopping and this creates tensions for you? Well, you might want to put up a stop sign. Good news is that there is a defined process how anyone in the organization who feels a tension can process it into a change of expectation. It is called Governance and is done at the circle level. There are regular Governance Meetings that follow a clear process and are led by a so-called “Facilitator”.

The process makes it really easy for you to throw in your tension and generate a starting proposal. Anything that would help you to solve it is fair game. It doesn’t have to be perfect and you can ask for help from the group. Others can raise objections if they see reasons why it would cause harm to the organization. But the rules disallow you to “rescue” others by raising objections on their behalf. Everyone is expected to process their own tensions. The process holds up a ruthless mirror to any attempt to paternalistically “save” others or solve problems for them. If no objections surface, the proposal is adopted right away. In case there are valid objections, these objections are integrated during the “Integration” step by amending the proposal in a way that solves the tension of the objector while still solving the original tension of the proposer.

The Governance meeting process is very rigorous and effective. The outputs are re-definitions of our mutual expectations towards each other as role-fillers for the organization. Anyone can create a new role or create a new policy without having to ask for permission from a manager. We end up with a clear map of our shared expectations, the organization’s Governance records.

An organization full of CEO’s…

This map, in turn, enables the role-fillers to become the “CEO’s” of their roles and lead them with autocratic decision-making power. Holacracy is a form of fractally distributed autocracy. Getting rid of managers doesn’t mean it becomes “flat” and “leader-less”, quite the contrary: it is “leader-full”. Everyone becomes a leader. There is still a hierarchy, but not the old people hierarchy. Instead, it is a hierarchy of wholes, a hierarchy of work-functions needed to express purpose. The purpose of each role links back to the overall purpose of the company as a whole, which helps to align everybody’s efforts.

It is quite a relief that Holacracy enables you to disentangle the role from the person. Now you don’t have to lean on personal relationships anymore to get things done. You don’t ask ‘Peter’ for a project, let’s say “website navigation bar is redesigned”, technically you ask his “Webmaster” role to take on work. If there is an accountability on his role for a certain kind of work that you can expect from that role, he has a duty to take on the work, regardless of whether he likes you as a person, or not.

But if no accountability for “designing the navigation bar” is spelled out clearly on his role, you cannot expect him to do it, even if you think it fits his role. In Holacracy implicit expectations carry no weight. He may do it, or not. This may create a tension for you. You can then process your tension in a Governance meeting by proposing to add an accountability “designing the navigation bar” to your colleague’s Webmaster role. From then on you have the right to expect that he takes on that kind of work. Processing your tension just evolved the authority structure of the company to be more adequate to what is needed.

Obsoleting the drama triangle

Holacracy is a catalyst for personal development. It gives you all the tools and pathways to process your own tensions into meaningful change. If you chose to complain about your problems, that’s your choice. This becomes painfully apparent in such a system. It makes a lot of the human drama between “victim”, “perpetrator” and “rescuer” obsolete. It shines a light on it. It is not for the faint-hearted, for those that prefer to receive orders. “Tell me what to do” doesn’t work anymore, since no-one actually has the authority to do that in Holacracy.

When you bring up a tension in a meeting, the facilitator asks you “What do you need?” This question cuts directly through all the complaining, bitching and moaning that we otherwise tend to get stuck in. It prompts you to solve your own tensions.

You have to make your own decisions in your roles and take responsibility for your successes and failures. This makes working with Holacracy incredibly more meaningful than a standard job in a standard organization. You get to interpret the purpose of your role and your accountabilities. You can do anything that would serve it. Anything — unless there is a stop sign somewhere in your Governance records or in the rules of the constitution. This amount of freedom may feel scary at first, but soon it feels second-nature. Working the old way suddenly looks extremely childish. Holacracy is truly “work for grown-ups”.

I am now leading the implementation process of Holacracy as an internal coach at Hypoport, a large fin-tech company in Germany with around 1500 employees. What is most exciting for me is that I get to help create the conditions, so that others can experience it, too. Being able to work under these premises of clear authority, autonomy and purpose helped me to overcome my allergy against working in a corporate environment and to sign an employment contract. Now my parents can finally relax. 🙂

I hope you can find an equal level of fulfillment at your own workplace or create one where that is possible.

Note: This text is based on the first version of the script for a TEDx Talk that I held on Nov 9th, 2018 in Deggendorf, Germany. You can find the clip below.