Story:
Upgrading the Core Organizational Operating System

I will summarize Holacracy briefly, but a more in-depth write up is available here:  Organization Evolved: Introducing Holacracy (Brian J. Robertson, 2009. http://www.holacracy.org/resources/organization-evolved).   Holacracy is a complete system and there are a lot of moving parts, though I’ll try to summarize key pieces from the article here.

As MIX’ers well-know, most modern leadership and management techniques are based on a “predict-and-control” paradigm.  This mindset asks those in leadership roles to anticipate and design the best path to achieve pre-defined goals in advance, and then control for any deviations to the prescribed plan.  In today’s environment, steering an organization with predict-and-control methods is akin to riding a bicycle by pointing in the right direction, then holding the handlebars rigid and pedaling, eyes closed.  Holacracy helps an organization find more dynamic methods for steering its work, to gradually shift the company from predict-and-control, to experiment-and-adapt, and finally to true sense-and-respond – what Holacracy calls “dynamic steering”. 

In a sense, Holacracy is a sense-and-respond  change engine, a whole operating system that supports continual surfacing and testing of innovations, or “hacks” in the MIX language, and embedding those that work – based on the real-world issues that an organization is facing in its day-to-day operations.  From the article:

 “Holacracy is a complete and practical system for evolving our fundamental approach to organization and management.  It embeds dynamic steering principles into the core of the organization, and installs a more organic structure of semi-autonomous, self-organizing teams.  It distributes governance across all teams, and adds bi-directional double-links to carry feedback and control across organizational layers.  It distributes authority using an integrative decision-making process that gives everyone a voice, without the tyranny of consensus, while still allowing for autocratic control and individual action.  It reframes operational processes around rapid action and dynamic responsiveness in tight feedback loops, with regular tactical meetings focused on quickly identifying next-actions and removing obstacles.  And it aligns the organization around a larger evolutionary purpose beyond ego, anchored at the board level and then broken down and distributed throughout the company and its culture.  Each aspect of Holacracy supports and is supported by the others.  Taken together they offer not just an incremental improvement but a fundamental transformation, a vertical leap to a new tier of organization.”

In Holacracy, an organization’s structure is built of semi-autonomous “circles”, where each circle has a specific scope of work within the organization.   Thus, a circle might wrap a specific project, product, department, business line, or a general function of the organization.  Each circle has the autonomy and authority to define and evolve the roles, accountabilities, policies, and processes needed to organize and govern its operations in service of its purpose.

These circles are not fully independent of each other: they are organized together into a “holarchy” – a natural hierarchy of increasing scope.  Thus, more broadly focused circles can encompass multiple sub-circles.  For example, a department circle might include multiple team sub-circles, and multiple department circles might themselves integrate together in a yet-broader whole-company circle.

Each circle within this organizational holarchy is linked to its broader circle by two individuals who work within both connected circles.  One of these links, called a “Lead Link”, is appointed by the broader circle to carry its needs to the sub-circle.  The other half of this double-link, called a “Rep Link”, is elected by the sub-circle to represent the context of the sub-circle within the broader circle.  Both links take part in the governance and operations of both connected circles.  This double-linking structure continues throughout the organizational holarchy, one layer at a time, creating bidirectional pathways for alignment and feedback

Holacracy then provides a concrete governance process for each circle, at every level, to effectively self-organize and continually innovate.  Governance is about how a team will structure itself and work together to achieve its aim – it’s about roles, accountabilities, policies, and processes. Governance decisions use Holacracy’s Integrative Decision-Making process to give everyone a voice and rapidly integrate multiple perspectives.  However, this group process isn’t used to resolve tactical issues or to make specific operational decisions in the normal course of business.  Integrative decision-making in Holacracy defines space for autocratic control and individual action in specific areas, along with appropriate boundaries on such control, so that execution can happen safely and swiftly without the need for a whole-group process.  Whenever this delegation of authority needs updating, the team falls back on the integrative process to update its governance.

To truly steer dynamically, each circle also needs operational management and meeting practices that are fast, efficient, and lightweight.  These must stay grounded in real data and next-actions to help everyone involved face reality at every moment and adapt rapidly.  Holacracy provides an operational management system and a separate meeting process for a “tactical meeting” which helps shift each circle’s operations to Holacracy’s sense-and-respond paradigm.

To ground all of this in the formal structures at play, HolacracyOne has developed and published formal bylaws which establish Holacracy as an entity’s legally-enforceable governance system.  Adopting them makes Holacracy’s unique board structure and purpose-driven paradigm a legal reality, not just an espoused ideal.  It also encodes Holacracy’s organic structure, distributed governance, and integrative decision-making systems into the formal power structure of the company.  With this in place, the formal seat of authority in the company shifts from the manager to the circle’s governance process – no longer does the manager have the authority to define authority, or to violate the self-organization process of each circle.

There are now a variety of companies running with Holacracy; see the “Benefits and Metrics” section for more about that.