5 Signs You’re Ready for Holacracy

Holacracy is often referred to as an ‘operating system’ for organizations. The premise is, I suppose, install the operating system and then build your structure and ways of working like apps based on that OS, and then everything will run smoothly.

Of course, the OS analogy implies that whatever your business goals, and whatever you build, they must fit within the rules of holacracy — obey the system protocols. Which in everyday ‘people language’ means limitations. After all, there are things we can do with iOS that can’t be done with Windows, and vice versa. Maybe that means that holacracy is better for some types of organization than others. Is it right for you?

Holacracy definitely carries some strict recommendations in its Constitution, laying down guiding principles (e.g. safe enough to try) and procedures (e.g. the structure of Tactical Meetings) but… my practical experience as CEO of Boldare, a newly-holacratic company, tells me that holacracy could work anywhere. The questions is, are you ready?

How do you know if you’re „ready”? I recently put the same question to a group of software development company CEOs. This article is the latest in a series chronicling Boldare’s journey into holacracy and outlines 5 key indicators that your company might well be ready for holacracy.

Company Culture

The big question first, underpinning everything else: what’s your company culture like? If you take a look at the matrix below, you’ll see that the broad categories of organizational culture can be expressed as, Collaboration, Control, Cultivation, and Competence.

If I was to come to your business and ask, How do you do things around here? what kind of answer would I get?

Schneider Culture Model

Holacracy requires a flat organizational structure, in which people work closely together and improvement is a constant goal. In other words, if you see yourself on the left hand side of the matrix (with a dollop of Competence, of course) then holacracy could be for you. And if you’re company that uses agile software development than it’s more than likely your software department is very much into a culture of self-organization already.

High levels of trust

Operating within a collaborative culture, holacracy is all about individual responsibility and in order for responsibility to be given, accepted, or used, trust is needed. Each member of a circle must know they can trust their colleagues to deliver, to contribute, to help. Most of all, they must trust themselves. Traditional, hierarchical organizational structures have encouraged us all to rely on managers to be responsible, to take and approve the decisions. However, a holacratic “candidate” company has a flatter structure, and what used to be called „managers” are no longer there to supervise everyone else. They are there to refine and improve the processes, help evolve the holacracy model to suit the business needs and as for organization and instruction, those come from within the teams.

The teams are trusted to organize their own work, make their own decisions, identify and tackle their own problems (known as „tensions” in holacracy). In fact, the team — through the various roles — take on the leadership skills previously associated with managers, like problem-solving, decision-making, planning, delegation, communication, and time management. What’s more, individuals within the teams trust each other.

How do you recognize this widespread trust? For us, one indicator can be seen in the fact that we have no executives in fancy corner offices. Management roles sit in the main space with everyone else. No status-heavy views from the window. No secretaries or personal assistants. No traditional trappings of management at all. And the result? The unspoken but clear message is that we’re all of value to the company, status and hierarchy are flattened out, and it’s much easier to communicate without ‘status barriers’ getting in the way.

If your teams are making their own strategic decisions, and receiving coaching and mentoring instead of direction from your managers, then you’re already part way to working holacratically.

Do you want to talk about your business?

Absolute transparency

Trust is more likely to thrive in a secret-free environment. If your organization operates on a need-to-know basis, holacracy still be some way off. Holacracy depends on everyone knowing what everyone else is doing (or at least, having access to the information). Yes, a holacratic company has very clearly-defined roles and accountabilities, but that doesn’t mean restrictions, just information: financial results, company structure, plans for the future, open hiring/firing processes, and so on. For example, at Boldare, we publish our financial results daily on the company Slack channel for everyone to see.Transparency gives everyone the context to make the right decisions. After all, if you limit information to selected people, only those people will be equipped to make decisions.

So, how open are you? How transparent are your dealings? We used to do the usual things: openly publish a quarterly summary of our past 3 months and a yearand the plans for the next… We also used to have quarterly planning sessions, pulling in our various ‘traditional’ departments: Customer Service, HR, Finance, Strategy, Sales… We used Atlasian’s Confluence to keep our knowledge and visibility about product planning nice and clear…

Thanks to Slack bot at Boldare everybody are updated daily of a financial context, so they can make better decisions promptly

In other words, we had a pretty good degree of openness already. But that just inspired us to see what could be done if we were prepared to go further. Now those classic shared services are covered by accountabilities within each team, or circle. Each circle has its own Slack channel to communicate on processes, progress, news, changes, and so on. To sum up, we used to be translucent, now we’re truly transparent. And that’s paying off in terms of trust.

With great power comes great responsibility

The biggest challenge of switching from traditional to holacratic mode is the transfer of power. In a classic hierarchy, the further you are from the day-to-day action of the business, the more responsibility and decision-making power you have (and almost definitely, the less well-informed you are). If this sounds backwards, it’s because it is.

In a holacracy, everyone has clear accountabilities and, within the bounds of those accountabilities, they are the decision-maker. A superior circle is responsible for setting each circle’s purpose and strategy, so it’s clear what decisions will suit the company and which will not. If it seems to offer a good chance of improvement and it’s ‘safe enough to try’ then do it! This can and should be very liberating, making for better-informed, more rapid decisions. But not everyone will find it comfortable, at first.

We were fortunate in that we already had a fairly simple structure of responsibilities (just three key ‘divisions’: Business, People, and Engineering, where very often decisions were made on a consensus) so we weren’t dismantling anything too complex. What’s more, as an agile organization, we were used to a Product Owner mindset. Even before holacracy, Boldare’s employees were effectively Product Owners in their own projects, keeping the ‘management interference’ to a minimum. If you’re the same, keeping the decision-making authority with the people best-placed to understand the situation (or maybe you just see the value in moving in that direction) then holacracy could be your best option.

Do you want to talk about your business?

A startup mindset

It’s no surprise that holacracy was developed by a software company with an agile approach to the world. And returning full circle to the first indicator: you’re probably half-holacratic already if you have a startup culture in your organization. Are you:

  • Constantly questioning the status quo?
  • Always searching for the next improvement?
  • Curious? — Let’s try it!
  • Open to change? — it’s always difficult but is it safe enough to try?
  • Open to failure?
  • Open to feedback?

In other words, open! This openness is all about a willingness to try new things, which in turn links back to the point about responsibility and decision-making. In a holacratic organization, everyone has the right to address a tension, make a proposal, if that tension is within their accountabilities and the proposal is safe enough to try, then the decision is theirs.

Of course, as in any other kind of business, failure happens. But for us, as an agile holacracy, failure means learning not punishment. In fact, we see failure as one of the best teachers, a key part of the learning and improvement process. If this sounds familiar, then you could be ready for holacracy.

A collaborative culture, trust, transparency, responsibility and a startup sensibility… these key ingredients will make it easier to transition to holacratic working. In fact, if you already have these factors in place, holacracy would seem a perfect fit for you.

But of course, the transition to holacracy will still be difficult — all change is. There have been several high profile cases of companies ‘converting’ to holacracy and then later abandoning it. It’s not for everyone. We’ve been working holacratically for six months now and I can tell you, people will complain, they will face barriers. As well as learning new principles, they have to unlearn the old ways too. Unlearn their natural reliance on managers as sole decision-makers.

Maybe the most important factor is enthusiasm, a willingness to make it work even when the going gets a little tough. After all, holacracy is just a tool (and operating system) and it’s not the tool that gets the job done, it’s the energy, attitude and mindset of the people using it.