Holacracy

Holacracy® is a social technology or system of organizational governance in which authority and decision-making are distributed throughout a fractal holarchy of self-organizing teams rather than being vested at the top of a hierarchy. Holacracy has been adopted in for-profit and non-profit organizations in the U.S., France, Germany, New Zealand, Australia, and the UK.

Origins

The term holacracy is derived from the term holarchy, coined by Arthur Koestler in his 1967 book The Ghost in the Machine. A holarchy is composed of holons (Greek: ὅλον, holon neuter form of ὅλος, holos "whole") or units that are autonomous and self-reliant, but also dependent on the greater whole of which they are part. Thus a holarchy is a hierarchy of self-regulating holons that function both as autonomous wholes and as dependent parts.

The holacracy system was incubated at Ternary Software, an Exton, PA, company that was noted for experimenting with more democratic forms of organizational governance. Ternary founder Brian Robertson distilled the best practices into an organizational system that became known as holacracy in 2007. Robertson later developed the Holacracy Constitution in 2010, which lays out the core principles and practices of the system, and has supported companies in adopting it.

Influences and comparable systems

Holacracy has been compared to sociocracy, a system of governance developed in the late nineteenth and early twentieth century. Sociocracy had a significant early influence during the incubation of holacracy, though holacracy has increasingly differentiated away from it since then. Holacracy is designed for organizations and fundamentally differentiates the roles of the organization from the people working in it.

In its emphasis on iterative governance, adaptive processes, and self-organization, holacracy draws inspiration from agile software development principles and the lean manufacturing process. Holacracy is highly compatible with stakeholder theory as its board structure allows for multiple stakeholders to be represented in the governance of an organization and for multiple organizations with shared interests to be linked at the governance level.

Essential principles

Energizing roles

The building blocks of holacracy's organizational structure are roles. Holacracy distinguishes between roles and the people who "energize" them in order to express certain capacities or potentials, perform certain functions, and/or pursue certain results on behalf of the organization. A role is not a job description, as one individual can hold multiple roles at any given time.

Circle structure

Holacracy structures the various roles in an organization in a system of self-organizing circles. Each circle has the authority to create, execute, and measure its own processes in achieving its aims. Circles conduct their own governance meetings, elect members to fill roles, and take responsibility for carrying out work within their domain of authority. Circles are connected by roles known as links, which sit in multiple circles and ensure alignment with the broader organization’s mission and strategy.

Governance process

Each circle uses a defined governance process to create its own roles and policies. Holacracy specifies a structured process known as integrative decision making for proposing changes in governance and amending or objecting to proposals. This is not a consensus-based system but one that integrates relevant input from all parties.

Operational process

Holacracy specifies processes for aligning teams around operational needs, and requires that each member of a circle fulfill certain duties in order to work efficiently and effectively together.

Holacracy in contemporary practice

Holacracy has been adopted and practiced by for-profit and not-for-profit organizations in the U.S., including productivity specialists the David Allen Company, Twitter co-founder Evan Williams' Medium, Precision Nutrition, and Whole Foods Market CEO John Mackey's nonprofit, Conscious Capitalism. Zappos, the online shoe retailer which is part of Amazon, announced its adoption of holacracy.

Advantages

Holacracy is claimed to increase agility, efficiency, transparency, innovation and accountability within an organization. The approach encourages individual team members to take initiative and gives them a process in which their concerns or ideas can be addressed. The system of distributed authority reduces the burden on leaders to make every decision.

Criticisms

In a January 2014 post on Forbes online, management and leadership author Steve Denning warned against viewing holacracy as a panacea, claiming that instead of removing hierarchy, decisions are funneled down from circle to circle in a clear hierarchy, with each subsequent circle knowing less about the big picture than the one above. He also claimed that the rules and procedures laid out in the founding documents of holacracy such as Robertson's originating article are very detailed and focused on "administrivia" Lastly, Denning added that the voice of the customer was missing from the holacracy model, concluding that for agile and customer-focused companies such as Zappos, holacracy is a way to add administrative rigor, but that holacracy would not necessarily work well in an organization that did not already have agility and passion for the customer. These criticisms have been responded to point by point by HolacracyOne partner Olivier Compagne in an article on the company's blog. He maintains that Denning's criticisms misunderstand holacracy, and proceeds to explain how the rules of Holacracy address or avoid those alleged pitfalls.

See also

• Emergence
• George Henry Lewes
• Holistic management
• Participatory management
• Ricardo Semler
• Systems thinking

External links

• Holacracy: How It Works