Tag Archives: holacracy

The Dangers of Renaming Sociocracy

The impulse in consulting and study groups with a focus on sociocracy is renaming sociocracy: dynamic governance, dynamic self-governance, sociocracy 3.0, Circle Forward, Holacracy, etc. All include sociocracy with almost no variation except in changing the names and vocabulary.

I’m totally sympathetic with this—”sociocracy” in English isn’t a pleasant word. It has this awful “ock” sound in the middle that is harsh and too easily becomes nasal. And the association with the word “socialism,” which in the United States is anathema.

But Holacracy is not much better and I don’t see the Holacracy people breaking off with new names. Even with the impediment of Holacracy being trademarked and aggressively protecting their trademark, it could be migrated with a new name if people wanted to.

Renaming sociocracy further creates confusion and blurs the force of the movement. Perhaps even more dangerous, it separates all these seemingly unique methods, from the history and literature related to sociocracy and to that of “circular organization.”

Circular organization refers to organizations based on the feedback loops central to cybernetic study of organisms and systems, and essential in sociocracy. The concept of “circular organization” was first presented in 1981 by by Russell Ackoff and others prominent in early cybernetics and systems thinking. It was implemented in several dozen corporations and federal agencies, including Budweiser.

Sociocracy has more than 150 years of theorizing about a government that would act for all the people. It was led by leaders like the French philosopher and sociologist Auguste Compt and the American scientist and sociologist  Frank Ward. It has been implemented since WW II. Supposedly “new” ideas and names disassociates the ideas from history. These new-name methods are not sufficiently different  to warrant new names.  They artificially divide a field study that needs focus in order to grow.

It now takes longer to clarify the differences and non-differences between all the names than to explain sociocracy.
“Sociocracy” has a wonderful history that parallels that of science and the search for a better society. And it has a wonderful ethical base — the equal valuing of all people.

Branding Sociocracy in the United States

The letter S as a cattle brandSince sociocracy was introduced in North America, problems with the name “sociocracy” have hounded it.  Unlike European countries, Americans associate sociocracy negatively with “socialism,” sociocracy is harder to say in English than in many other languages. Unfortunately, the rejection of the word “sociocracy” and the use of alternatives continue to confuse the public and obstruct efforts to develop a cohesive image, a “brand” in the current marketing vernacular.

A Solution for Branding Sociocracy

Some of the various names for methods based on the principles fo sociocracy are  Dynamic Governance, Bio-Dynamic Governance, Dynamic Self-Governance, Holacracy, and most recently, Circle Forward. All are unique in emphasis and aim but share the same principles. One solution to unifying the field would for all to use a common phrase as a subtitle or in descriptive content.  “Implementing the principles of sociocracy” or “an implementation of sociocracy.” This would clarify confusion and  unify forces while allowing unique identities, business branding, etc.

Acknowledging a common methodological base would also encourage more dialogue about the nature if that base. This kind of dialogue about methods of teaching and practicing would be valuable to all. It would provide the kind of analysis that is necessary to the further development and application of sociocracy.

Introduction to Holacracy

The link below is to a webinar, Introduction to Holacracy, by Brian Robertson, the founder of Holacracy.  It is very well done, a good  introduction to Holacracy—very clear and not obtuse theorizing. Since much of the structure of Holacracy is the same a sociocracy, it will also help in the understanding sociocracy.

As a former software programmer, Robertson uses the operating system as an analogy. Holacracy is the operating system and the specifics of the products or services the organization provides are the applications. Microsoft Word enables people using the Mac OS or Windows operating systems to produce documents. Adobe Illustrator allows them to produce drawings.

Unlike sociocracy, Holacracy does not have a compensation system. The compensation policies and structure would be an application that each company would design for itself.

Holacracy does not use consent but it also seems not to override objections. Each proposal must have a tangible example of how it will enable or prevent something from happening. The adoption of a policy is based on how the proposed action will negatively affect the team or individual roles within the team. Such negative effects and all other descriptions have to be tangible well-grounded arguments, not abstractions or hypotheticals. When there are no further objections, the policy is adopted but there is no consent round, which is inferred to be a vote.

Since roles and domains of decision-making are so clearly defined, it is easer to see that proposals “belong” to one person’s role or to a set of roles. It isn’t up to anyone else to decide whether a role needs this proposed action, only whether this action will negatively affect any other role.

Introduction to Holacracy by Brian Robertson

This is only a smattering of the concepts explained in the one hour video.  And there are illuminating questions at the end.

The Holes in Holacracy

An informed article by “Schumpeter” (no first name available), The Holes in Holacracy, included in the print edition as well as online. Schumpeter’s points are really about new branded methods failing.  They are gone in 10 years. (Sociocracy on which Holacracy is based has not failed in 40 years.)

EVERY so often a company emerges from the herd to be lauded as the embodiment of leading-edge management thinking. Think of Toyota and its lean manufacturing system, say, or GE and Six Sigma excellence. The latest candidate for apotheosis is Zappos, an online vendor of shoes and clothes (owned by Amazon), which believes that happy workers breed happy customers. Tony Hsieh, its boss, said last year that he will turn the firm into a “holacracy”, replacing its hierarchy with a more democratic system of overlapping, self-organising teams. Until Zappos embraced it, no big company had taken holacracy seriously. Indeed, not all of Zappos’ 1,500-strong workforce are convinced that it can work…

Tony Hsieh, CEO Zappos. Photo credit: Wikipedia.
Tony Hsieh, CEO Zappos. Photo credit: Wikipedia.

Will conquering Zappos help holacracy thrive in the brutally competitive market for management ideas? There is good reason to be skeptical. “Nine-tenths of the approximately 100 branded management ideas I’ve studied lost their popularity within a decade or so,” wrote Julian Birkinshaw of London Business School in the May issue of the Harvard Business Review. Among the latest cast-offs, it seems, is Google’s much-admired “20% time”, in which workers got a day a week to work on their own projects; the company is reported to be quietly sidelining it.

Laws and Policies: The Differences

Drop Cap Letter Q Won’t the prescriptive Norms in sociocracy and the Constitution in Holacracy impose the rule of law, which will quickly devolve into the rule of lawyers? The more arcane and opaque the law is, the more tyrannical that law becomes.

My response to this requires a distinction between laws and policies. Laws and policies are the same in that both govern future actions and decisions. Laws  are made by governments to govern the actions of citizens of countries or parts of countries—cities, states, etc. They are enforced by various branches of the government—agencies, courts, etc.

Policies are made by organizations to govern their own internal decision-making and operations. It is up to the organization and its members to enforce them. Unless the law specifically states otherwise, an organization’s policies must be within the requirements of the law.

A citizen can sue a government over unjust laws, or sue an organization over policies that are not  in accordance with the law, but cannot sue an organization for not following its own internal policies as long as those policies are within the law.

 Laws

The laws that lawyers’  address, are arbitrary and obscure. They are not necessarily based on what works and not regularly reviewed. Old laws, even 10 years old, can be based on out-dated conditions and don’t make sense, but they are still enforceable. For various reasons, they may not have made sense when they were adopted, or they made sense for one particular group but are applied universally.

The aim of a law is not always clear, and if not, the test is whether the law is still in force, not whether it has a purpose or achieves an aim .

Sociocracy & Holacracy: Testing What Works

The question about laws and lawyers was asked in the context of a comparison between sociocracy and Holacracy and the enforcement of their “laws.” This is where we get into the weeds.

The major influences on the sociocratic Norms are from engineering and physics, cybernetics, and mysticism. (Quaker faith on sitting together to reach consent). The major influences on Holacracy  are sociocracy, computer software design, and mysticism. (Ken Wilber on ego vs higher purpose).

All the respective languages and applications—electrical engineering, computer software design, cybernetics, and mysticism— are based on testable processes. They change when new information is available. Sociocracy and Holacracy use these languages to define the processes used to achieve aims or purposes. Both have an easy test—if a practice isn’t  working, the process either wasn’t understood or is being applied incorrectly.

Making Laws and Policies

The international sociocratic center has a process for certifying individuals and organizations but has no control over the use of the word sociocracy. The principles of the sociocratic circle-organization method have been adapted and modified in many ways in organizations that call themselves sociocratic. And are also used pristinely in organizations that don’t call themselves sociocratic. They are used by many management consultants who may call it by other names. As long as they do not imply that they are certified by the international organization, they are functioning lawfully.

It is not the same for the word Holacracy. Holacracy also has a certification program, but it is also a registered trademark. Individuals and organizations have to be certified or given approval to say they use Holacracy. Since trademarking is a law, the use of Holacracy without permission can bring in the lawyers and the case taken to court. The test is whether permission was given, not whether an organization is properly following the constitution. Here we are back to laws, lawyers, and judges. It is a violations of the law or isn’t it? Did the use happen or not? The question is not “did the use achieve a positive result?”

Some have suggested that this is the reason the Holacracy Constitution is so dense and written in legalese—so it can be used in litigation. Certainly a lawyer was involved because the language had to have been studied for years to be used so obscurely. An easier basis for legal action, however, is simply the use of the word in any way that might confuse Holacracy with other methods of governance or imply connections without permission.

The Tyranny of Laws

Only certification and trademarking are protected by law. Then disputes can be argued in court and the government enforce the decision.  Lawyers will make the arguments.

When the aim is to govern organizations that are effective and harmonious, the law has no place, but policies do. Policies are agreements within organizations. Members of organizations work more effectively and harmoniously if they have expectations that are shared and understood, and based on what works to help them work effectively.  Effectiveness and harmony require resilience, the ability to adapt to new situations, and full control over self-organization.

I think no one will argue that neither laws nor lawyers encourage self-organization.

For extra credit:

The word holarchy was  created by Arthur Koestler in , published in 1967, to describe a hierarchy of holons, self-organizing units that are both a part and a whole. There is no trademark on holarchy.

 

Worker Cooperatives Correcting Wealth Distribution

Cooperative ownership doesn’t guarantee that a cooperative will be a worker cooperative, nor do they necessarily correct inequities in wealth distribution.

Shaila Dewan titled her New York Times Sunday Magazine article on worker co-operatives, “Who Needs a Boss?”, undoubtedly reflecting the publicity from Zappo’s recent decision to try Holacracy, a governance method developed from sociocracy. A flurry of articles that included some variation of “no more bosses” or “no titles” became very popular. The problem with “no bosses” is that most co-operatives, like sociocratic and holocratic organizations, do have bosses. In cooperatives they can still function quite autocratically.

All organizations need leadership. Better than eliminating leaders or pretending to, is organizing sociocratically as collaborative, self-owned, and self-governed.

Worker Co-operatives

Arizmendi Bakery entrance

At the Arizmendi Bakery in San Francisco, a co-operative business of 20 or so bakers, the $3.50 for a latte and the $2.75 for their sourdough croissant go to the workers. Each baker makes $24 an hour, more than double the national median, and receives health insurance and paid vacations. While most co-operatives are small, the largest co-operative in the United States, Co-operative Home Care Associates in the Bronx, has more than 2,000 employees. Mondragon Corporation, a Basque co-operative that has more than 60,000 employees and €14 billion in revenue. They have 189 centers in 97 countries, a university for their employees, and sells products in over 150.

In worker co-operatives, the workers own the business, as opposed to consumer co-ops that are typically owned by members who shop at a discount. Historically, the number of worker co-operatives has increased when labor is distressed as it is now.

Correcting the Economy

Dewan reports that internationally, leaders are recognizing that our extremely inequitable income distribution, with its plummeting wages and depletion of low- and middle-income jobs, has no solution in the current capitalist economy. They believe the co-operative business model can correct the economy without a long legislative process or large-scale regulatory reforms.

In his best-selling book on economics, Capital in the Twenty-First Century, Thomas Piketty argues that the rich will continue to receive the largest share of income, and nothing in our current system will stop it. In support of cooperative efforts, the author of Democracy at Work: A Cure for Capitalism, Richard Wolff, says, “Don’t distribute income unequally in the first place.”

In February of 2014, a commission in Wales announced that conventional approaches were insufficient for economic development; it needed co-operatives, and the New York City Council held a hearing called “Worker Co-operatives — Is This a Model That Can Lift Families Out of Poverty?”

If worker co-operatives can address the root cause of economic disparity, what will encourage growth in their number and success?

Sociocracy: Co-operative Governance

Diwan reports that research on employee-owned compared to investor-owned businesses have found that they are as good or better. Co-operatives are “more productive, less susceptible to failure, more attentive to quality, and less likely to lay off workers in a downturn.” The employee-owned British retailer John Lewis has almost outpaced its corporate rival, Marks & Spencer.

But these are large well-established co-operatives. Most co-operatives in the United States have about a dozen employees. Because there are few organizations that will loan co-operatives money, growth is often slow and limited to labor-intensive industries with low start-up costs. Banks doubt co-operatives viable business models.

The Working World Logo

An exception is the micro-finance company Working World  that loans money to co-operative organizations in Latin America and the United states. Founder Brendan Martin, instead of seeking quick returns, accepts no loan repayments until the borrowing co-operative is on its feet. “We create the real economy, which is slower but it has less risk,”

Often co-operatives struggle because they are unable to pay consultants for management and financial advice or are suspicious of such advice. This suspicion is often warranted because the consultant’s training and experience are likely to come from autocratic, top down, corporations in which investors and top-level management are more important than workers. This bias is often subtle and unrecognized by consultants but is embedded in their assumptions and advice.

The advantage of sociocracy for co-ops is that it provides a fully developed method of co-operative governance, excellent business practices, and a respect for the spirit of co-ops, which value workers as equals.

In sociocracy, each worker is self-organizing and works as a member of a semi-autonomous, self-organizing team. Leaders guide daily operations but work as equals to make the policies that guide them. The decision-making methods and structure of representation prevents an autocratic hierarchy from developing. Financial records are readily available. Transparency is the norm.

By adopting sociocracy, co-operatives can grow beyond a small number of workers and still avoid the autocratic devaluing of workers and the drop in effectiveness that too often increases with the size of the organization.

Data is from an article, “Who Needs a Boss?” by Shaila Dewan, economics reporter at the New York Times. It appeared on the New York Times website on 25 March 1914 and a version will appear on 30 March 2014 in the Sunday Magazine. Accessed 25 March 2014.

The Six Problems With Holacracy, and Others

William TinCup on the Fist Full of Talent website
William TinCup on the Fist Full of Talent website

My disclaimer… (1) I am NOT an expert in holacracy, (2) I love new stuff, and (3) I absolutely love people and concepts that challenge the status quo. That’s that.

Why am I discussing a commentary on Zappos adoption of holacracy that begins with that particular picture of the author and that particular quote from the author? Because the picture is fun and the comments are good. When he says he knows nothing he means nothing more than he has read at the Holacracy, “Holacracy” at Wikipedia, and the Medium websites. And then to watch this video of Brian Robertson explaining Holacracy. While this isn’t direct experience and Tincup hasn’t become a HolacracyOne graduate, that is pretty much all there is to know. I encourage you to read them too.

What Tincup does is present the confused response to the issues that Holacracy, sociocracy, dynamic governance, and other forms of circular organization will have to conquer before they will be accepted. Every governance method has to address these misunderstandings and prove itself capable of addressing, even democracy.

What happens when things go badly? To quote Tincup, The answer to all these questions is… a resounding… I don’t freaking know… and neither does anyone else. And that should terrify you.”

My response is “the same thing they do everyday.” Making decisions is hard even when things are going right—everyone has to make choices. The same people make decisions in “bad” times as in good times.

Who will and won’t thrive in Holacracy? “(1) people that have a problem with authority, (2) people that can consume ambiguity, and (3) independent thinkers and doers.”

This is nowhere indicated except in the headlines saying there will be no bosses. Circular organizations are very structured and in particular have feedback loops that guarantee that everyone stays on target, even the Board.

Holacracy has well-defined roles. Sociocracy has log books for each member of the organization with job descriptions; circle responsibilities; vision, mission, aim statements; organizational charts, notes of circle meetings, etc. Ackoff’s Circular Organization is well-charted and clear.

“A clever attempt to create homogeneity—likeness… and I’m not talking about white people. I mean people that are really similar to one another. They will argue that it’s an efficient system, a lean system, and it will be at the expense of diversity.”

No sure why this would be true except that people tend to hire people like themselves. If a central authority were hiring everyone would tend to be like them. Instead, the understanding that poor performance affects the outcome of everyone else’s work the more likely scenario is that the circle would understand that they need someone different from themselves to bring a broader perspective and complement, not duplicate, their own strengths. This leads to diversity, not homogeneity.

What happened to my values—our values? “They have been replaced by holacracy. That’s the value system. That’s the code. Kind of seems cultish, right?…Again for holacracy to have a fighting chance, you have to hire to it, fire to it, live it… each and every day. Bye bye values.”

There are times when any new method of any kind sounds like a cult, but to say that an organization has to abandon its values in order to reorganize is rather strange. The Vision, Mission, and Aim statements express the unique values of an organization. Those are unaffected by holacracy.

How will it scale? “At the end of the day, holacracy might be great for 20 programmers in Silicon Valley. But will it work in retail in Tampa? Will it thrive at a hospital in Duluth? Light manufacturing in South Texas?”

Circular organization methods similar to holacracy are currently work in hundreds of organizations and businesses around the world. Some are very large and others very small. Ackoff become famous when he implemented one at Anheuser Busch in the late 1970s, a rather large and complex organization. Sociocracy is being used in a large agricultural firm in Brazil. Semco, also in Brazil uses a similar system in several factories. Many organizations in Europe and the United States use sociocracy including small businesses, corporations, university departments, housing complexes, healthcare facilities, and schools. There are many companies using part or all of the principles and methods and they have been doing so for decades.

How do I manage my career? “Wait, the churched up version of that is a term called career pathing. Holacracy is about flatness What I do know is that we all—all as in every single one of us—think about the next thing. So, in an extremely flat organization… What the hell is next? Darkness floats about.”

Here I have to resort to my knowledge of sociocracy. Salaries are set by the market for particular skills. From hiring on they are determined by across the board increases and performance increases, just like other organizations. To remain competitive salaries also have to compete. There are many jobs within the organization. The janitors are unlikely to be paid the same salary as the software programmers. One can develop new skills, assume a higher level of responsibility, etc. In holacracy, these are defined as “roles” and each role has a job description that won’t be the same as another person’s. That all jobs are the same is not what “flat” means.

How will they manage bad apples? “How will they identify these rotten apples and, more importantly, get rid of said apples? Group think? Call a tribal council meeting? Sounds bureaucratic and slow. If you are thinking of adopting holacracy, dig in and ask tough questions regarding the treatment of bad apples.”

My experience it is that management rarely gets rid of bad apples and they are totally unreliable in their judgement of who is a bad apple. Management wants to avoid the issue as long as they aren’t drowning in low performance. Even then they are more likely to reorganize than get rid of people.

“Make no mistake about it, this is a new religion.… If you understand what holacracy is all about, then you are one of us. If you don’t then, re-join the cavemen and cavewomen.”

I agree that some of the literature and speeches on this do sound messianic but so does campaign literature, school brochures, promises for every new diet, mouthwash ads, etc. It’s enthusiasm for something the speaker has mastered or is selling plus a good deal of marketing. That doesn’t mean it doesn’t work.

It also doesn’t mean it’s based on blind faith. There is good research and demonstrated performance data on the principles and methods of sociocracy. Holacracy is much newer but to the extent that it has incorporated the principles and methods of sociocracy, and uses them appropriately, it is based on the same research and demonstrated performance.

Circular organizations have a clear performance path since the 1960s in businesses and decades old performance paths in community organizations.

Oh, and the marketing of holacracy is about to take over our HR worlds.

This is certainly true. Brian Robertson is an expert in marketing but that isn’t necessarily bad. If he has all his T’s crossed and his I’s dotted, he can take the pressure. He’s done a professional job of developing, teaching, and promoting his specific application of sociocracy and the concepts of a circular organization.

Consent

The issue that Tincup didn’t discuss is the guarantee of consent decision-making. This is essential if all members of the organization—not just the managers—have control over their working conditions. In sociocracy, each circle has a defined domain, or in holacracy a role. Within that domain, their area of responsibility, everyone must be equivalent. If a decision is being considered that will affect their ability to do their job, to fulfill their responsibility, they have the right to object. Their objection must be resolved before the proposal can be implemented.

This is a very important assurance when people are expected to take on the responsibility of self-organization. How can I do a good job if decisions are made that screw up my ability to do that job? I would rather have a manager responsible in that situation. I would become much more passive and resistant, as many or most workers are.

The original Tincup post is here:  Six Problems With Holacracy, and Other

WILLIAM TINCUP, SPHR, is the CEO of HR consultancy Tincup & Co and one of the country’s leading thinkers on social media application for human resources, an expert on adoption of and HR technology. He has been blogging about HR related issues since 2007. He’s a contributor to Fistful of Talent, HRTechEurope andHRExaminer and co-hosts a daily HR podcast called DriveThruHR. Tweet him@williamtincup and check him out on Facebook and LinkedIn. He serves on the Board of Advisors for InsynctiveCausecastWork4Labs,PeopleReport, Jurify, TrackMavenSocialEarsAppLearn, StrengthsInsight, The Workforce Institute,PeopleMatterSmartRecruitersAjax Workforce Marketing and is a 2013 Council Member for The Candidate Experience Awards. He also serves on the Board of Directors for Chequed and is a startup mentor for Acceleprise. Tincup is a graduate of the University of Alabama of Birmingham with a BA in Art History. He also earned a MA from the University of Arizona and a MBA from Case Western Reserve University.

Zappos Goes Democratic

An article by Jena McGregor In her column, “On Leadership,” appeared in the Washington Post today on Brian Robertson’s contract with Zappo’s, “Zappos Says Goodbye to Bosses.” Zappos is owned by Amazon but runs independently and has long been known for its unusual employee-responsive culture.

The unusual approach is called a “holacracy.” Developed by a former software entrepreneur, the idea is to replace the traditional corporate chain of command with a series of overlapping, self-governing “circles.” In theory, this gives employees more of a voice in the way the company is run.

John Bunch, Zappos “As we scaled, we noticed that the bureaucracy we were all used to was getting in the way of adaptability,” says Zappos’s John Bunch, who is leading the transition.

The article is not particularly clear in explaining holacracy and doesn’t make the connection to sociocracy or other egalitarian organizational methods like Ackoff’s circular organization or  Semler’s round pyramid. McGregor is also confusing when explaining the change from “managers” to “lead-links.” Holacracy’s lead-links are described very much like managers. No mention of policy setting by all members of the circle to guide the actions of the lead-link.

The article reports that “Twitter cofounder Evan Williams uses it at his new company, Medium, and time management guru David Allen uses it run his firm — but Zappos is by far the largest company to adopt the idea.”

Robertson began his first company, Ternary Software in Exton PA, in 2001 based on the unique model of forming partnerships with many of the companies for which it developed software. This gave Ternary a vested interest in the performance of the software they designed and allowed promising but still developing companies to access to quality software. In 2006 and 2007, Robertson published two articles on his use of sociocracy at Ternary: “The Sociocratic Method,” in the 2006 strategy+business issue of Booz Allen Hamilton’s internal newsletter,  and in 2007 in the Wall Street Journal, “Can a Company Be Run as a Democracy?”.