The Boundaries Between Managers and Employees Are Disappearing

The conventional Command&Control organizational system is taking its toll: burnout, depression, long sick leaves, high employee turnover, lack of an innovation culture and adaptability… these are the problems organizations face today. Changes began with the introduction of an organizational structure where employees are entrusted with increasing responsibilities and creativity.

For nearly two hundred years, organizations have been conceived to offer space for people to work together and achieve common goals, šwhich has given rise to an immeasurable number of invaluable inventions for all humanity – whether in economics, ecology, technology, social aspects, health, and a range of other areas. Organizations are a means for human cooperation and rješavanje problems of humanity; without them, ništa of the above would be possible. The world has become a vast network in which currently available information reshapes the future at the same speed necessary to comprehend it. Driven by technological innovation, this accelerated connectivity has created an exponential rhythm of change in društvu and organizations. It is therefore becoming increasingly evident that the way we lead organizations is stretched to its limits.

For several years, research has repeatedly shown that people at work do not feel identification with their job, purpose, motivation, and passion. At lower levels of the hierarchical pyramid, work seems futile, and even at the top, where decision-making power resides, things are not significantly better. Although they are expected to project an image of success and strength, for many corporate leaders, life is demanding to the point of suffering and is accompanied by a deep sense of emptiness. The conventional Command&Control organizational system has begun to take its toll: burnout, depression, long sick leaves, high employee turnover, and the fruitless search for younger employees, as well as the lack of an innovation culture and strategic and structural adaptability to a rapidly changing world are the most important problems organizations face today. In the world of organizations, we have become perfectly aware that the time for fundamental change is not coming; it is already here, now.

Long live uncertainty!

However, most organizations still rely on a way of working designed for the industrial age. Their operational models have hardly changed since they were invented over a hundred years ago. On the other hand, a select group of companies operates quite differently. These companies are designed to thrive in uncertainty. Instead of trying to carefully plan and predict the path to success, they anticipate and adapt to the ever-changing world around them.

It started with Semco, Gore, and Nordbank over 20 years ago, and now it is powered by IT and revolves around dynamic management technology and SCRUM. Some companies have based their entire operations on SCRUM, such as Spotify and Valve. All of them are strongly inclined towards action and risk tolerance, expressed in frequent experimentation and constantly new versions of products. They embrace the unknown. So who are the true pioneers? Let’s name just a few: Zappos, Netflix, Kaospilots Bern, Oerlicon, Soulbottle, Patagonia, FAVI, Buurtzorg, Sun Hydraulics, and Morning Star. You have surely heard of new or even radical management and leadership approaches, but which of them work in practice? We at dwarfs and Giants embarked on a study trip to the USA in July 2015 and visited several companies that employ various agile or dynamic management approaches.

Without commands

One of these practices is holacracy. Thanks to its rapid spread around the world and more than 500 companies that have switched to this practice of self-organization and dynamic management, holacracy acts as the most promising new way of organizing. What exactly is it about? Holacracy is described as a self-managing organizational operating system, as a comprehensive practice for restructuring, managing, and leading an organization. Brian Robertson, the main creator of this practice and author of the book ‘Holacracy: The New Management System for a Rapidly Changing World’, also calls it ‘a radical new way of organizing power’. This radical new way has developed from the actual practices of successful growing companies (first Ternary Software, then Holacracy One) over the past 16 years.

Personally, tribe, role

The entire practice is described in a clear set of rules outlined in the ‘Holacracy Constitution’, in which this fundamental shift is anchored. The ‘Constitution’ describes a new system that renders organizations based on prediction, control, and hierarchy obsolete. Clearly, the shift from the Command&Control system to holacracy has significant implications for people in organizations. During our study trip, we visited Zappos, the largest organization to have implemented this system so far, to learn from its experience. Tony Hsieh, the founder and CEO of the company, describes it as follows: ‘Organizations today need people who are comfortable with ambiguity, who have a strong sense of curiosity and emotional intelligence. These are the traits of employees who, in our opinion, will thrive in self-management, self-organization, and holacracy.’

People who were part of the implementation process wrote about what it means to go through the shift towards self-organization within holacracy. The hardest part for them was understanding the most important aspect of holacracy – the separation of ‘role and ownership’. Holacracy manages the organization, not people, and therefore the meeting processes, which are key to the practice, are spaces for organizational tensions, while personal tensions must be resolved outside the holocratic meeting format. Tom Thomison, co-founder of HolacracyOne and leader of implementation in many large clients, noted in his own practice some key differences arising from ‘the four spaces that become visible in the context of holacracy practice: personal, tribe, role, and organization’. With the definition and clear differentiation of these four spaces, a useful picture is obtained for communicating this important aspect of the practice, making it more understandable and accessible.

The language of space

Dwarfs and Giants, an organization based in Vienna for organizational design, strategic partner, and provider of holacracy, has further developed this picture into what it calls ‘the language of space’ and uses it as a useful tool in implementing holacracy with its clients. David Allen, founder and former head of the David Allen Company and author of the bestseller ‘GTD, Getting Things Done’, decided to implement holacracy a few years ago. His greatest discovery after going through the shift was the realization that ‘it is inappropriate to use love and care to get something’. This statement clearly shows how the separation of the four spaces increases clarity for accomplishing what really needs to be done compared to the clarity of what the real needs of people and social systems are. Holacracy calls this the separation of ‘role relationship’ from ‘relationship’. Learning how to make this distinction and how to process one’s tensions appropriately is part of the essence of practicing holacracy.

A new mindset

For people employed in an organization that practices holacracy, the shift and cultural transformation can sometimes be a challenge. It does not only bring a new way of organizing; it is also a shift to a completely new mindset. Processing tensions in a distributed authority system enables and requires truly collaborative, collegial work with a high degree of responsibility in the roles that people have. With practice, it allows people to understand their specific contribution to something greater than themselves and leads to true identification with the organization’s purpose. Laura Groten, a member of the Dutch company Concept7, is one of the people who wrote about her experience with holacracy. She represents people for whom the shift was quite easy. The title of her article immediately shows that ‘it may sound exaggerated, but I truly believe that holacracy has helped free me on certain levels’. In the article, she continues with interesting quotes: ‘Although I am young, I feel that I receive the same respect as everyone else, even the founders of the company.’ Speaking about the freedom she feels at work, she says: ‘People who work here are more entrepreneurs than employees.’ Holacracy clearly helps advance an entrepreneurial culture. Implementing holacracy is a journey. It can begin when a person with power at the top of the organization realizes that Command&Control structures hold the company back from realizing its full potential. The person in power then signs the ‘holacracy constitution’, a crucial step for leaders towards distributing power throughout the organization and informing everyone about the need to commit to ‘playing by the rules’ defined by the ‘constitution’. The purpose of the organization must be defined to allow the entire organization to align in fulfilling it.

The initial circle

After the necessary initial training in holacracy, the organization can begin defining the ‘initial circle structure’, the starting point for actual practice. The organization is then structured around real work, not people. From then on, holacracy will enable the organization to continuously evolve based on the feedback that reality provides about the work being done. People fill roles with defined responsibilities and act as sensors of the organization. Whenever the owner of a role feels that something in the organization can be improved, there is always space to take that tension and process it for meaningful change in the organization. We define ‘tension’ as the perceived discrepancy between what is and what could be in the future. Processing tensions is a key practice and foundation for dynamic self-organization with holacracy. Everything relevant to the organization must become explicit. This marks the end of dealing with implicit expectations, micropolitics, and power games of a few.

Ev Williams and Jason Stirman are the founders of Medium, a successful digital publishing platform and one of the most successful adopters of holacracy. Stirman calls holacracy ‘definitely by far the best way I know to structure and lead a company’. Implementing holacracy is certainly not an easy undertaking; it is a shift in culture, the DNA of the organization. The path to full implementation requires time and attention from all members of the organization. First and foremost, it requires everyone to forget what they learned from childhood about organizing. Fundamental beliefs such as ‘planning and controlling’ as core management functions or ‘climbing the career ladder’ as proof of individual success no longer work in holacracy. After forgetting a number of such beliefs, new learning begins: how to live the separation of role relationship and relationship, the ability to feel and process tensions, as well as in which ‘space’ to process which tension, levels of responsibility in each role, and living with the level of clarity and transparency that holacracy brings to the organization.

But only when the organization has achieved self-sufficiency in practicing holacracy can the benefits be fully realized; the entire organization is aligned with fulfilling its purpose. It becomes extremely adaptable and can evolve at the necessary speed for today’s business context. At that moment, people learn to process their tensions, feel responsibility, and identify with the purpose of their role and the organization.