Holacracy - Systems and Structures Examined

This post is part of a podcast and blog series called Business Second Opinion, where I give a contrarian view on ideas presented in publications like the Harvard Business Review. This time, we’ll be looking at the history of work design by reviewing the individuals and paradigms responsible for the state of work today.

You can listen to the corresponding Business Second Opinion podcast episode #112 and subscribe to future shows on iTunes, Sticher, Audio Boom, or Google Play.

Carol’s Lesson

Examine the recent search for new work designs (particularly Holacracy) that practitioners can implement to get different results for workers.

Holacracy was invented by Brian Robertson, a software engineering company founder who used his own software company to coalesce principles and practices, then wrote a book about it.

How to Reflect on Holacracy

What is a paradigm?

  • The paradigm you use to examine a set of practices, and the hidden premises and beliefs that paradigm holds, will determine what you can see.
  • The paradigm ends up framing your interpretation of what you observe both in others’ words and actions, and even in outcomes you perceive.

Harvard Business Review Article: “Beyond The Holacracy Hype”

  • Authors start with the assumption, without justification, that the purpose of all work design is to walk a line between reliability and adaptable in the face of change.
  • They critique the Holacracy system in these terms without ever noticing or explaining that this is their foundation, and therefore they do not show why this is the appropriate frame for assessing it.
  • This idea of the purpose of work design is drawn from a machine worldview of work, where humans are cogs or wheels.

Paradigm of Living Systems

  • The First Principles of Living Systems can be applied to human systems like businesses and give a different interpretation of Holacracy’s paradigmatic views.
  • To help in the endeavor, we offer a free paper on the modern four paradigms which we believe are in a struggle for dominance of our minds, particularly in democracies and the organizations that exist there. We use it to examine Holacracy.
  • A Living Systems Paradigm, explained in the paper, is the framework on which we base our design principles and assessment of the work of others.

Regenerative Business Interpretation of Living Systems Principles

  • Business structures and systems are designed to pursue innovation in market effects measured by non-displaceability of a business.
  • Human capacity is the focus of work design used to grow the business by growing people.
  • The first principles of human capacity to be fostered are increasing ableness for internal locus of control, growing connection to what they can consider their effect on the world (external considering), and shifting the source of agency from personal external demands to motives for improving the lives of customers, the working of society, and Earth’s vitality—bringing our agency, our own essence expression, to bear on these outcomes.

Endeavors of Holacracy - Three Lines of Work

  • Holacracy is focused on a much smaller set of endeavors. It is missing what we call the “development approach” taking on three lines of work. This context, which we consider vital to work design, is not considered in Holarchy.
  1. The first line is the ongoing growth and development of individuals in the system and their ability to interact in teams and as a community.
  2. The second line is how people and other stakeholders work together to achieve this work and to contribute to specific endeavors in great systems.
  3. Third is beyond the business but what the business serves. Customers, society and Earth, as well as the specific aims we have to actualize systems in those areas.

This is what work design needs to take into consideration. And the design is organically created so that every time something on the outside of the business (the third line) moves, it starts up the living growth process of change.

Moving from Holacracy to Regenerative Business endeavors and ways of working. What is required?

  • It requires a great deal of context and development of the mind of workers to be able to work developmentally. It is less about seeking to change structures (like creating alternative forms and roles like flat organizations). They are not needed in the developmental organization or else happen organically with using change in form to change things.
  • Carol Sanford tried many of the ideas in Holacracy thirty years ago (even called it Holographic Teams), without understanding much of what is now known about how living systems work; caused a lot of chaos for a couple of years for Carol’s students and clients. But learned why Holaracy is different, but not better much less the best system.
  • Carol learned to start with changing the business processes first, from top to bottom, and only much later to move structure if at all.

Stated focus of Holacracy

  • It is about teams and their ability to work autonomously based on understanding that the intelligence of teams can deliver results without being directed by others.
  • The hierarchy is seen as the problem to be solved and is the source of most difficulties of work design.
  • The solution is to create a flatter organization.
  • It is not flat really except in the production and delivery process since strategy work is done outside by others and there are leads still seen as necessary for some work.
  • They miss the real meaning of self-management, seeing it as an external process (outside of our thinking); it is an action of managing one’s own tasks/work or working in a circle with others to manage the work without hierarchy. This excluded the most important part of self-managing which is the inner work in one’s thinking and how one thinks.

Class One Errors of Holacracy

  • Start with defining the problem as a hierarchy of power.
  • In traditional systems, some people are seen as smarter and lead others who need guidance. The flat organization is an intended solution to this problem we all agree exists.
  • The restraint is that there is a hierarchy of power in the mind and the externalization of that is only one manifestation.
  • There is no foundation for ongoing development based on discernment or critical thinking skills based in living systems (rather using computer systems as the model).
  • If the problem is at the bottom of the organization and the stacking of authority over them, then the place to change is seen as the form or structure.
  • Holacracy, as defined, leads to fragmentation of work and internal focus (not focused on customer and broken into discrete tasks not organized with strategy for market change)
  • People look to one another to find the best path with no real pull toward external understanding of markets or the way to move in a compelling new direction forward with their day to day work. It is second line work without connection to the first or third line using our earlier framework.
  • Work is assumed to stay the same but without a hierarchy to direct it.
  • The time needed to coordinate and make sure people are on the same page is a common critique by many observing and working in it.
  • Manipulate the results by manipulating the form of the work, not the internal processing of the people. They seek to change the problem with new structure and do not develop a new mental capacity work with the mind of a CEO, seeing the effects on markets.
  • It is assumed you can define some perfect work system that is independent of the corporate direction and a dynamic market and world.
  • Robertson claimed he had created the perfect work system but it gives no consideration to its marketplace connection.
  • There is no perfect form. But there are principles and systems you can use to make the system able to change rapidly (but not to be adaptable, that is too late.)
  • People will change when the structure is changed.
  • The same behaviors that plague the traditional model they are fleeing, also plague holacracy including power over others. Some are able to dominate with or without a title.
  • Holarcracy is drawn from a very old paradigm, the machine paradigm. You move people as parts and it moves the machine and it works forward.

Alleviating Holacracy Errors With the Regenerative Business Model

  • Start with creating a compelling and higher risk/return strategy to create a pull
  • New demands are placed on the organization as a whole and it becomes a focusing point. It also attracts opportunities to contribute.
  • The business defines a new corporate direction that includes global imperatives (social and planetary changes) and marketplace redefinition.
  • Focuses all interest and stops fragmentation of endeavors, which happens when you have individuals at the bottom of the organization working on improving primarily existing processes.
  • The new strategy is a cross-functional/level core team and is composed of leaders from across the organization.
  • It offers the building of capability to work a different way.
  • That is in service of particular customer nodes or buyers. Everyone is involved in only 4 roles and most are only in 3. Not 6–8 as in Holararchy. This is about the same as in a traditional organization.
  • One is their work on delivering day to day in their function. The second is on a team that is market facing with a charter to be the research, development, and strategy for a particular customer node. And they generate new and evolved offerings (some small and some take years).
  • Everyone is on a market team, and participating in the assessment of the program for the targeted customer set.
  • Third, maybe the Core Team or strategy, or short-term task teams commissioned by the Market Field Teams.
  • Instead of getting rid of supervisors, their roles evolve to that of resources to teams.
  • They are measured on the success of the teams that they bring expertise to and develop capability for.
  • They are not mentors or coaches because this evokes a power relationship still.
  • They are not embedded in teams where the old mindset of how we relate to them emerges as they are in a hierarchy. They are a set of resources teams call on and have a regular interface to see what is needed.

Read more blogs and show notes on www.BusinessSecondOpinion.com. Join the newsletter and get a background paper. Follow us on Twitter @businesssecondopinion. Suggest topics and HBR articles on which you want Carol’s Second Opinion. And finally, pick up a copy of The Regenerative Business, by Carol Sanford, with much more about how to build a regenerative work design at www.carolsanford.com.

Originally published at carolsanford.com on April 9, 2018.

Sr Fellow Social Innovation, Babson | Best Selling/Multi-Award Winning Author | Regenerative Paradigm Educator

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