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 why Holacracy is not new and not an improvement, and how we’d know what truly is an improvement.
Examine the various ways that Holacracy is not different from traditional hierarchical businesses.
Critiques of Holacracy from Harvard Business Review to Strategy & Management
- The most surprising revelation is how the evaluations are each offered from an old mindset that clouds what is really missing.
- They seem to be trying to pull efforts like Holarchy back toward the traditional systems rather than critique them against what could be even more effective.
- There are just two choices: self-managing versus top-down management.
- To go somewhere truly innovative, you have to ask what third choice is available.
- If you assume the problem is hierarchy itself then you focus on two questions: How do we get rid of levels? How do we organize to get the work done without oversight?
- Hierarchies can be problematic, particularly when they are conceived of as layers of people focused on getting work done by breaking it down into smaller and smaller pieces.
- The issue here is that makes it hard to see the whole, with the assumption that some people are better at making decisions and solving problems.
Principles of Work Design
- Connect the business, and everybody in it, directly to the world (industry, market, global dynamics). For example, when we help businesses redesign their work systems, we put together an overarching Core Team which is rotating in membership but reflective of the whole of the organization.
Responsibilities and Composition of the Core Team
- It is responsible for setting and delivering corporate direction.
- They keep global imperatives from social justice and planetary vitality embedded in their work and in the front of their minds.
- Meet on a recurring basis and work with focused consideration on the organizational choices and the impact they are having on financial, market, technological, and organizational effectiveness.
- Metaphorically rides the boundaries of the business and makes sure there are fences and gates to keep the flow working for their stakeholders with very clear guidance.
- They are made up of respected leaders from all levels and functions, and are thrilled to learn and build more.
- There are fiduciary leaders on the team so that quick decisions can be made without exporting power to a top layer.
- This is an auxiliary role which is one of four that the organizational members can take on for a set period of time.
2. Ensure that business is working with wholes and not parts.
- The machine era broke businesses and work systems down into smaller and smaller pieces.
- Holacracy does not change the work itself except as individuals or problems call for it. The small chunks persist, but they are now managed and carried out by the people close to the work without a boss directing or evaluating.
- Our work designs are organized around customer groupings based on the core characteristics they share.
- Move from organizing around the work itself and the people doing it to organizing around the customer nodes in your market. Market Field Teams are drawn from those who’s work directly impacts a given node.
Market Field Team Responsibilities and Composition
- Strategize for outcomes and carry their ideas directly back to work teams.
- Are the strategy as well as research and development team for that set of customers.
- Everyone is on a team and all teams are drawn from the whole organization so it is easy to have every team know within 24 hours what is being launched, revised, evaluated.
- They can immediately connect in their natural work teams and evaluate the role they can play.
- It requires no hand off from one layer to another with the risks of losing understanding as in a game of “telephone.”
- Challenges can likewise move back out into each Market Field Team, as they are identified.
- This is a secondary role that every member of the organization takes on and tends to stay with a customer focus indefinitely, although movement is supported and not uncommon.
- Third role beyond their day to day work is to build “innovation in support of customer evolution” into the requirements of everyone’s job.
Concepts of How People Work Together — Daniel Pink
- Daniel Pink explains in his book Drive how incentives have very little value or effectiveness in motivating people.
- If you pay people by “piece work” (for each piece they make or task they complete) incentives do work.
- But for anything complex that requires discernment, incentives work against employee effectiveness.
- Pink explains why and what to do instead. In doing so, he introduced some grave class one errors into work design, but at least gives us a way to assess Holacracy’s choice.
- He advocated giving feedback to people instead, which we spoke to extensively in Business Second Opinion episode #108 and in my new book The Regenerative Business. Feedback is not only not helpful, but it undermines most of what makes humans innovative and alive.
- But he also formed ideas about what is important to humans, far more so than incentives and rewards.
Pink’s Ideas on What Drives Humans
- According to Pink, three things drives humans: autonomy, mastery, and purpose. Although they are related to what really drives humans, it is not precise enough and has led to much misunderstanding.
- Research instead suggests that three these three things drive humans:
- Contributing uniquely, alongside others, to real outcomes in which we can experience our role in making it happen.
- Developing ourselves and becoming more able every day, with places to apply our newfound ableness.
- Experience significance through affecting others’ lives meaningfully.
- Pink’s three concepts have been framed as something for an individual to have access to, as a separate being.
- It actually structures a reactive organization, rather than a regenerative one.
- Most critical idea: The customers’ outcomes become the reconciler, rather than the person close to the work or the boss in the old system.
- You have people step into the shoes of the customers they know from being on their market field team, in order to generate better ideas.
- The purpose is not an individually contained experience, but something we serve that others are also pursuing.
- We commit to help everyone in the organization to achieve their purposes. It is not about our purpose as individuals or as a business, but the goals and ambitions of the people we serve.
- Mastery is unachievable and in fact not worth pursuing. It fosters perfectionism rather than continued growth over time into what we are committing to serve.
- In our next episode, #114, we will look at a better alternative.
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 May 8, 2018.