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How To Decide Whether Holacracy Is Right For You

2015 November 4
by Greg Satell

Brian Robertson never felt quite at home in a traditional company.  As he describes in his book, Holacracy, he felt the bureaucracy, politics and long, painful meetings made getting anything done an uphill battle, wasting not only time, but energy and motivation.  He found it soul crushing.

So when he started his own company, he vowed to do things differently.  Rather than try to “predict and control” things from the top, he set out to create an “operating system” for his organization, which would be directed by rules and processes, rather than managerial whim.

The result, also called Holacracy, is now a growing management movement and hundreds of companies are thriving under it.  Others, however, have been less successful.  It’s estimated that about 50% of the organizations who have adopted the system have abandoned the effort. Given the great disparity in results, how should you decide if Holacracy may be right for you?

What Kind Of Leader Are You?

Different leaders have different approaches and preferences. Some, Alfred Sloan and Jack Welch come to mind, thrive on the leadership challenge of building a great organization. Others, such as the ones William Thorndike describes in The Outsiders, are masters at allocating resources effectively, leaving day-to-day management to others.

Some firms also invest heavily in developing leaders.  GE’s management campus at Crotonville has not only created leaders internally, but has made the company a recruiting ground for other companies to hire CEO’s.  McDonald’s Hamburger University not only grooms its own leaders, but those of its partners.

Yet these require enormous investments of financial and managerial resources and, for many managers, it’s not worth it.  Tony Hsieh of Zappos and Evan Williams, a founder of Twitter and Medium, thrive on developing new ideas, but are less sanguine on expending energy on day-to-day governance issues.  Both have adopted Holacracy and rave about its advantages.

So the first question you need to ask yourself when considering Holacracy is where do your passions lie?  Do you thrive on shaping an organization and its people?  Or would you rather focus on other important areas, like serving customers or developing the next big idea?  If it’s the latter, Holacracy might be right for you.

You’re Constantly Reorganizing

Today we live in an age of disruption.  It used to be that you could begin a career in an industry, progress your way up the ranks and retire without things changing very much. Yet these days business models don’t last. New technologies and competitors, as well as shifting consumer tastes are continually reshaping industries. Change has become a constant.

For many firms, this has meant that they often feel misaligned with customers, partners and even employees. Before long, tensions begin to seem insurmountable and result in a reorganization of the enterprise. These are sometimes necessary, but also drain resources and can even throw the entire organization into disarray.

Holacracy introduces a process called governance meetings that produces structural change on a much faster timeline in response to new developments. During these meetings, teams use a step-by-step framework to surface proposals, invite reactions, and integrate objections. This governance process is central to how Holacratic firms operate.

On any given day, governance meetings are being used to produce hundreds of changes in Holacratic organizations, ranging from small tweaks to major process changes. Each one of these changes evolve the organization to better reflect what is needed to achieve objectives. Because change is constant, there is no need for disruptive reorganization efforts.

The Size, Age And Scope Of Your Organization

Another thing to consider is the structural aspects of your organization. While there is no perfect profile for a Holacracy implementation, the size, age and scope of your organization are important factors to consider when determining the challenges you will face during implementation.

Clearly, any change is easier to undertake in a smaller enterprise because you can build mindsets and influence a critical mass to operate in a wholly different way.  In a smaller group, success stories travel faster, reinforcing the transition.  In a larger organization, it’s much harder to build strong mechanisms to drive change.

Young organizations that are just beginning to codify governance structures often find the switch to Holacracy easier because formal operating procedures have not yet solidified.  On the other end of the spectrum, the more tenured workforce at an older firm is often able to work more independently and can adapt more readily.

The scope of your enterprise is also something you’ll want to take into account.  Teams spread across cities and continents pose a challenge to any change initiative.  Yet some large firms find that Holacracy can be implemented at the division level without disrupting the greater organization.

Even If You Don’t Adopt Holacracy, You Should Be Thinking About It

To date, hundreds of companies have signed on to holacracy and many see it as an emerging standard for how businesses will be run. Still others see it as yet another management fad that will pass away soon enough. Certainly, we don’t see Google or Apple adopting it. Whatever side you are on in the debate, there is plenty of ammunition for your case.

However, perhaps the debate itself is misguided.  The organizations who rave about holacracy do so because it provides them with a clear operating system for their enterprise and creates connectivity among the people who work in it.  So a more sensible question would be If you are not adopting holacracy, then how are you achieving its aims?

For example, regular governance meetings are heavy investment in time and resources that many firms do not want to make.  Others find the idea of Holacracy’s constitution constricting and overly formal.  Still others prefer a linear organization chart and consider the interlocking circles of Holacracy bewildering.

Yet these aspects of Holacracy are not contrivances, but solutions to real problems. Governance meetings compel employees to take active leadership roles and build leadership skills. The constitution creates clarity around roles and procedures. The structure of interlocking circles enables holacratic organizations to be more agile.

Holacracy is not the only way to achieve these objectives—and it is certainly not right for every organization—but more conventional approaches, like the management training campuses at GE and McDonald’s and corporate reorganizations are no less time consuming and resource intensive.

So whether you decide to pursue Holacracy or not, you should take some time thinking about the issues that it brings to the fore and ask: If not Holacracy, then what?

– Greg

 

Contributor’s Note: This article was co-authored by Alexis Gonzales-Black, a Holacracy expert and consultant.  Learn more at thoughtfulorg.com and follow her on Twitter @Gonza2ax

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