Holacracy

CM2016_10_holacracy

Holacracy is often linked to a boss free work environment, a flat organisation structure,  and having the freedom to choose what to work on. The same characteristics are cited by those in favour and against the concept of holacracy. To me those characteristics sound good, I like having autonomy at work. When I studied organisational design we talked about entrepreneurial organisations, machine bureaucracies and ad-hocracies according to Mintzberg’s model. At that point Holacracy hadn’t been invented, but some of the ideas around self-management were evolving.

What is Holacracy?

Holacracy is a system of company governance that enables colleagues to self-organise around the work. There is still an organisational structure, but now it’s based on circles of work rather than a hierarchy. Roles are defined, and a person may have be part of more than one circle and fulfil a different role in each. The specific system was developed by HolacracyOne, and has been adopted by around 300, mostly small, organisations.

As with any new idea there’s a fair amount of hype, with supporters and detractors talking about it in equal amounts. There are numerous articles, explaining how it works,

it gets a fair amount of hyper and an equal amount of detractors.

There is a decrease in the bureaucracy of planning and approvals that you see in a standard hierarchy, instead there are monthly governance meetings and processes specific to maintain the holacracy.

Who is it for?

Every company sits somewhere on a continuum from reliability to adaptability. Holacracy enables faster decisions to be made closer to the customer, as a system it is probably going to work best in younger, smaller, creative companies at the adaptability end of that scale. Of course older, larger, regulated companies can (and do) adapt the ideas of self-management into their teams but I think would struggle to deploy a full holacracy at scale.

Advantages and Disadvantages.

Companies have reported specific quantifiable benefits from using various systems of self-managed teams; FedEx cut service errors by 13% in 1989 for example. But strong results on holacracy are harder to find, that’s partly because it’s early days – we’ve had a hundred years or more of business hierarchies, it’ll take a while to figure this out. Even one of the founders, Brian Robertson, predicts that it will take a few years for a company to embed the Holacracy system and move into working within it in a stream-lined way.

Benefits cited are; increased employee engagement, increased adaptability, decreased office politics (although one article regarding Zappos casts some doubt), increased transparency, increased focus on organising around work.

It also sounds good, so what’s the downside?

Medium moved away from holacracy earlier this year, and while they still embrace the principles behind holacracy they found that “the system had begun to exert a small but persistent tax on both our effectiveness, and our sense of connection to each other.”

HBR published an excellent article “Beyond the Holacracy Hype“, and they point to downsides relating to increased complexity particularly around doing work – if an employee is in multiple roles each with a set of responsibilities then it becomes hard to know where to focus their effort, Zappos went some way to solve this by evolving a “marketplace” that assigned points for work allowing the company to set priorities via the Lead Links (team leads).

When someone has multiple roles compensation becomes more complex, as does hiring – including internal hiring.

It becomes hard to scale up to complete initiatives that would go across several circles – it’s also hard to do this across departments in a traditional organisation, but it seems the effort of co-ordinating this becomes even steeper in a fully self-managed environment.

Who is using it?

The Holacracy site claims that over three-hundred organisations currently use their system, of the four on the front page the largest is Zappos – and they are now moving on to become a Teal Organization.

Given that both Zappos and Medium have moved away from using Holacracy, but still maintain the principles of self-management, I wonder whether the full Holacracy model will be seen as a stepping stone in the future, a transition to go through as you redesign your company or whether companies will evolve their own systems of self-management without spending time in a rigid holacracy

What’s the future?

The principles of self-management are good; positive for employees which has to benefit customers and the company. Holacracy as a system embeds transparency and forces a focus on the work, but seems to place a burden on the company in terms of added complexity, and it may limit scaling – or need to evolve to enable scaling.

However even large, older, regulated, dinosaur companies have been borrowing what makes sense for them and creating hybrids of hierarchy and self-management. It may be a slower track to the company of the future but they’re benefitting from the experiment as well.

Image: I made it

Simplify.

I went to a new cafe for lunch with my team this week. I can’t go there again.

The people were friendly and helpful, the premises are newly fitted out and rather designed looking. The food was good. But the organisation was so terrible I can’t go back. An example; the server took my order which was a takeaway order. Then took the orders of five other people. Then cleared some tables. Then sorted out drinks for another table. Then asked me to pay. I had been standing there with my wallet in my hand the whole time.

My guess is that this newly-opened cafe was started by a couple of people who like to cook, but have never run a cafe with high demand before.

There’s a cafe around the corner which serves hot food within about 3 minutes of reaching the counter. They’ve made the process as simple as they can; there’s a limited (but changing) selection, you pick up your own cutlery, the price is fixed. The result is speed – important to their clients who are on a short break from the office. It also means they serve more clients in the short lunch “rush”. That’s got to be better for business.

It got me thinking; how often do companies (or projects) start with the “beautiful picture” of what their business could be and ignore the reality? How is it that we can ignore what is really obvious to our customers?

Maybe it’s because we don’t ask – for example the data behind the “Perception Gap” infographic shows; 76% of social marketers feel they know what their customers want – although only 34% of them have asked customers what they want. So my restaurant problem scales up. Frightening.

 

 

 

 


image lunch

Numbers Game

How many friends do you have?

According to Professor Dunbar the number must be 150 or less. His research apparently shows we can’t maintain more relationships or friends than that in real life, and our online behaviour reflects that. I don’t think anyone things that Ashton Kutcher has a deep relationship with his 4,400,000 Twitter followers, or that Kim Kardashian’s 720,000 Facebook friends are all that close. But 150 seems way low.

It turns out that the number is derived by watching other primates and correlating their social network size to the volume of the neocortex region of their brain, and extrapolating that for humans. The number arrived at was 148, or anything between 100 and 230. He then looked at the size of villages over history and contemporary networks and seem to observe a natural limit in that range.

It’s interesting from an organisational point of view, I have worked in organisations of very different sizes and know something Mintzberg’s theory on organisational design. I’ve seen how as organisations grow they tend to hit some sort of natural limit at around 200 people. One company I worked for at as it hit 280 staff found that suddenly policies  and processes were needed where informal structures used to work.

Another company I know of has structured their formation documents so that they will be forced to split once they get above 150, their company culture is so important to what they do and they know it would be so hard to maintain it above that number.

Company culture does link to size and organisational structure, and maintaining it – or surviving a transition – is vitial.

But there could be a lower limit, I spoke to a guy last week who works in an “adhocracy“, their company is growing raising concerns about maintaining the company culture as they grow; to twelve colleagues.

image Spiekermann House Numbers /Stephen Coles/ CC BY-NC-SA 2.0