Holacracy - The Self-Organizing Enterprise

Posted by Deborah Hartmann Preuss on Sep 11, 2006

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The fit between Agile teams and traditional enterprise structures can be complex and challenging.  Rollout of an Agile software approach may highlight or even exacerbate pre-existent dysfunctions, in areas a project manager may not be well-placed to address. In some organizations, the change to Agile is so positive that other managers, outside of IT, express a desire to also try self-organization.  For these and other reasons, leaders involved in Agile implementations are talking about how to extend self-organization throughout the enterprise.  One of these is Brian Robertson, who has recently been making presentations and doing interviews in Agile venues, like the Agile2006 conference, the Cutter Consortium website, and Bob Payne's Agile Toolkit Podcasts site.

Robertson has frequently been found at the leading edge: he started programming at age six, launched his first software-related business at age twelve, and says he was pioneering Agile software development processes before the term “Agile” was coined.  And now, in addition to leading Ternary Software, one of the "50 fastest growing" privately-held companies in the Philadelphia region, he's been developing and practicing a new approach called Holacracy.

As founder and CEO of Ternary Software, Inc., a leading provider of software development services to emerging technology companies, Robertson and others knew early on that the traditional approach to decision making would not fit them well:

"Power officially flows down from above, while accountability officially flows up from below, and those governed have virtually no voice in the governance.  Even when the worst is avoided this structure still tends to be both inflexible to change and incapable of artfully navigating the complexity most businesses now face.

"...but here’s the rub – what do you replace it with? Decisions need to be made and they will be made. If there is no explicit power structure in place, one will implicitly emerge, and the best you can hope for at that point is the typical autocratic structure (more often, you end up with something far more insidiously dominating and ineffective than that). So, perhaps you try running the organization via consensus? That doesn’t scale at all, and the time and energy required is often so impractical that the system is bypassed for most decisions, leaving you with the same problems as having no explicit structure; sometimes even worse, as consensus can pull people towards a very narcissistic space."

To meet the need of his own organization, Robertson and his colleagues have developed Holacracy, a governance approach which is a synergy of various ideas on organizational governance, including sociocracy and Ken Wilber's work on holarchies. 

Sociocracy is defined by the Sociocratic Centers as “a way of producing and leading organization on the basis of equivalence in decision making through the principle of consent”.  An important aspect of Sociocracy is its organic nature: the Sociocracy Resource Circle says that

"Sociocracy was developed specifically to address human needs. It resembles and is specifically designed to mimic living organisms and is not based on a mechanical model. In a mechanical model a mechanic runs a machine. This is analogous to managers running their employees. Living organisms run themselves. Not only does sociocracy address human needs, but it allows for the most responsive organization and uses a minimum number of levels of hierarchy."

Holacracy’s governance aspects also heavily integrate the work of Elliott Jaques’ on Requisite Organization, plus a few additions and changes pioneered at Ternary Software.  While this may sound esoteric, Robertson has developed these theoretical ideas into a practical approach to organizational self-governance, currently in use at Ternary.

The four main tenets of sociocracy, and therefore of holacracy, are:

1. Decision Making by Consent: Consent is a method of decision-making whereby the arguments presented in discussing a decision are of paramount importance, and the result of the discussion is that no one present knows of a paramount reason to continue discussion before proceeding with the proposed decision. Note: this is consent, not consensus.

2. Circle Organization: The organization is built of a hierarchy of semi-autonomous circles. Each circle has its own aim, given by the higher-level circle, and has the authority and responsibility to execute, measure, and control its own processes to move towards its aim.

3. Double-Linking: A lower circle is always linked to the circle above it via at least two people who belong to and take part in the decision making of both the higher circle and the lower circle. One of these links is the person with overall accountability for the lower-level circle's results, and the other is a representative elected from within the lower-level circle.

4. Elections by Consent: People are elected to key roles exclusively by consent after open discussion (this is not a democratic majority-vote election!). Most notably, the election process applies to the representative elected from a lower-level circle to a higher-level circle.

(Taken from the February print interview (pdf) with Brian Robertson)

Worth noting: the essential difference between consensus and consent is that with consensus, everyone needs to agree, ‘whereas consent requires that no one know of a reasoned and paramount objection to making the decision'. Consensus is necessarily personal, involving emotions and ego-based politics, while consent is impersonal, considering the functional value of the decision; a major difference is in the quality of the interactions. Robertson discusses these issues in his February interview.

A writer on the ScrumDevelopment list recently wrote: "Holacracy appears to be a system whose highest value isn't "people", but rather 'the organization'.  I find this troubling."  In reply Robertson wrote:

"The people issue ... is an interesting and extremely deep topic... Creating an environment extremely honoring and embracing of people is deeply important to me, and one of my most significant motivations in all of my work with Holacracy.  Yet it’s also not something you notice as overtly in the work, and there’s a very conscious reason for that; this is a topic I’ll write more about when I have a chance, and I would be happy to cover it in one of my Holacracy classes or teleconferences if asked."

For those interested in Holacracy’s governance aspects and its links to Agile, the Cutter Consortium has made their full Executive Report on Holacracy available online.

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