Holacracy: the extreme among New Work models

Imagine your teams are so strongly set up that it doesn't matter at all who the boss is.

That, more or less, is how you could summarize holacracy. A form of organization still relatively unknown in Germany, but one that offers great potential for the future leadership of companies.

Covid, the war of aggression in Ukraine, inflation, climate crises – in recent years, one profound change has chased the next.

Each one of these events, and many more, presents organizations in Germany with major challenges. Because it feels like the pace at which political, social and economic conditions change is continuously increasing.

For companies, that means: those who want to last in the long run under these volatile and fast-paced conditions have to adapt in order to react just as flexibly.

Not least for that reason, agile and dynamic New Work concepts are gaining ever greater importance. Holacracy is one of the most radical among them.

In this article, we present the holacracy approach in more detail and show why this unconventional way of running companies could soon be the new norm.

How a near plane crash led to holacracy

The term holacracy comes from ancient Greek. The word „holos” stands for whole or complete. The ending „cracy” means rule or government.

Put together, the two parts form the name of a management system coined by the American entrepreneur Brian Robertson.

A major inspiration was a near-accident Robertson experienced during his pilot training. A tiny warning light had alerted him to a defect in the machine. He relied, however, on the rest of the aircraft's instruments, which showed no problems whatsoever. The result: there really was damage, which almost led to a crash.

Brian Robertson took this incident as a reason to question the decision chains in his own company. How could he ensure that leaders don't override their employees when they point out a problem? How can the risk be reduced that people with expertise are ignored in decision processes?

To avoid such organizational blindness, he introduced the holacracy principle in 2007 in his software company, Ternary Software Corporation. In doing so, Robertson took inspiration from other agile methods like Kanban and Scrum, which in his judgment, however, didn't go far enough on questions of responsibility. So he continuously developed the concept further and documented his experiences.

What began as an experiment was finally published in 2010 as the so-called „Holacracy Constitution”. In this set of rules, Brian Robertson explains his theses, experiences and principles that make up holacracy. By now, the guide has been revised several times and is available under an open license.

Which doesn't mean, however, that the idea of holacracy as an organizing principle is already final and rigid. The further development is ongoing, especially now that the approach is gaining more and more attention internationally too.

What is holacracy and what's special about it?

Holacracy is a modern working model in which conservative hierarchies are dissolved. Instead of regulating action and decision processes vertically, responsibility is transferred to all members of an organization.

The responsibility for decisions is no longer transferred only to one person in the company, but distributed across all members of the organization.

This happens in the form of a decentralized structure:

• Roles – Employees are no longer placed in classic positions like team lead, manager or similar. Instead, they're assigned one or more roles that match their abilities.
• Circles and sub-circles – Several employees in their respective roles are organized in so-called circles. Within a circle, tasks, authorities and a say are clearly distributed so they function independently. At the same time, circles can belong to other, superordinate circles, which then makes them sub-circles. That also means an employee in their role can be a member of several circles.
• Meetings – Alignment within the individual circles happens through governance meetings, which deal with the structure of the company, and tactical meetings, which are devoted to operational business. During these meetings, a strict procedure is kept with the help of a facilitator, to avoid unnecessary digressions and discussions. Individual topics of the participants are addressed briefly and efficiently in so-called check-in and check-out rounds.

The 4 pillars of holacracy?

For the dynamic and hierarchy-free organizational system to work, holacracy rests on 4 fundamental guidelines:

Double-linking

To ensure that the individual sub-circles don't work past each other, one or more representatives are elected in each circle to represent it in the next larger circle. This double link can occur both vertically, that is into superordinate and subordinate circles, and horizontally into neighboring circles. This way, the different circles stay in exchange and can take the respective interests into account.

Separation of operational and steering meetings

As just mentioned in structuring holacracy, the approach distinguishes between governance meetings (steering meetings) and tactical meetings (operational meetings). This allows the respective circles to organize themselves independently.

For example, during the steering meetings, topics like responsibilities and ways of collaborating are clarified, among other things. Aspects like time, staff or finances are deliberately left out so as not to slow down ideas and strategy development early.

At the operational meetings, by contrast, mainly current questions of day-to-day business are on the agenda.

Distribution of roles

Probably the most characteristic feature of holacracy is that the classic hierarchy within an organization is completely replaced by employees' self-responsibility. So that tensions or even conflicts don't arise here, the distribution of roles is clearly regulated. That doesn't mean, however, that it's also set in stone. In the governance meetings, tasks and responsibilities can be reflected on regularly and, for example, redefined depending on the project. This agile dynamic helps everyone know exactly, at any time, what they have to do. At the same time, this better accounts for the personal and professional development of individual employees. By not being bound to rigid positions, they can deploy their individual abilities flexibly and as needed. For example, an employee can also hold several roles in several circles.

Dynamic steering

Decision processes in holacracy are similarly adaptable and equal. Here, so-called integrative decision-making takes place in each circle. That means every employee's voice matters for making a shared decision. Here too, value is placed on acting as objectively and success-oriented as possible. Solutions don't have to be ideal, but serve a purpose. If a decision later turns out to be suboptimal, it can be corrected or completely reworked by the members of the circle in subsequent feedback rounds.

Holacracy lifts New Work to a new level

What's special about holacracy is that it's probably one of the most radical concepts from the New Work universe.

Because, unlike other approaches, it doesn't just touch individual sub-areas or management strategies. Instead, a company's leadership style changes fundamentally, from structure through organization to mentality and vision.

In doing so, classic hierarchies and all the management strategies connected to them are thrown completely overboard. Rather, holacracy is at its core built on an aspect that's especially relevant in New Work thinking: the free development and self-responsibility of employees.

What advantages does holacracy bring companies?

• Employee motivation – The chance to continuously develop and contribute with one's own abilities massively fosters employees' motivation and the unfolding of their potential.
• More innovation – The dynamic of the holacracy model and the strict separation of steering and budget questions help new ideas be pursued more easily and intensively. Unconventional decisions aren't ruled out from the start, but can be made by majority. So more innovation is possible than in conservative forms of organization.
• Efficiency – Both the structure of a holacratic company and the processes in day-to-day business are designed to function as efficiently as possible. The goal is to keep digressions, unnecessary tensions and other disruptive factors that lead to blockages and loss of resources as minimal as possible.
• Dynamism – In holacracy, basically nothing is fixed. Be it the distribution of roles, the circles formed, strategies or structures. This way, organizations can react agilely and quickly even under volatile conditions.

Holacracy – a solution with a future or just another hype?

On the question of whether holacracy is THE revelation or just another of many New Work models, the answer probably lies somewhere in between.

As a form of organization, holacracy is still relatively young and is continuously being optimized. It will probably take a while until its level of recognition in Germany rises and enough experience is gathered about its practical suitability in the new world of work. But that doesn't diminish the great potential holacracy offers SMEs and large companies.

Certainly, the approach isn't suited to every company. Often, especially to traditionally oriented organizations, the step of completely abolishing conventional leadership styles and role patterns seems too extreme. That's one of the reasons why, at present, it's rather startups, NGOs and young firms that are inclined to try out holacratic systems.

Start-ups, NGOs and young firms are business models that tend to try out holacratic systems.

But it doesn't have to stay that way for long. Because with the right mindset and the openness to create your own interpretation of a holacracy, larger companies too can book lasting successes with this New Work concept.

If you're wondering whether holacratic structures would be possible in your organization, or what the implementation could look like, feel free to contact us.