Consider the egg drop engineering project that most children are assigned at some point in school. Youthful thinking is pitted against a borderless canvas. Everyone starts with the same materials, and the only difference between a yolky pile of broken junk and a craft fit for a NASA mission is how the pieces are put together. The experiment is not intended to turn all students into engineers. It’s a metaphor. Egg drop problems are everywhere. Life’s winners succeed by spotting opportunities to do things differently where most others assume the only option is to continue suffering with suboptimal precedents.
Management is an egg drop problem with galactic room for improvement. There are no constraints in management and everyone starts with the same resources. The only thing that changes the outcome in managing people are the hands that build the egg parachute. Most organizations are run via a hierarchical structure of managers above managers – but there’s no reason people need to be organized that way. And it’s from a search for a different way of managing people conducted over the last 10 years that Holacracy was born.
Holacracy is an organizational model that has no managers in the traditional sense. Instead, there are “lead links,” people who communicate between self-governing “circles” of employees who meet based on their various “roles,” as there are no job titles. Frequent meetings are needed for workers to resolve “tensions,” plan projects, and perform the organizational tasks traditionally reserved for managers. Employees choose which projects they want to work on, which roles they have, and which circles they belong to. Holacracy attempts to take the best parts of startup culture and scale them to larger organizations.
If this all sounds like an effete New Age pinko jerkaround, that’s because it might be. Holacracy hasn’t proven itself yet, but the zeal of its proponents is alluring. A few organizations have adopted Holacracy in recent years and they include Medium, the David Allen Company, a small volunteer team at the Washington state technology office, and most notably, Zappos. On July 17, The New York Times published a profile of Zappos’ transition to Holacracy and the subsequent struggle that the company continues to face in embracing the new work style.
Holacracy originated as a means for organizations to stay nimble and connected with their employees as they grew. Zappos adopted Holacracy because management didn’t want to see the company’s collaborative and quirky startup atmosphere devolve into the same bland and immobile hierarchy found in so many large American companies. And yet after adopting Holacracy, some Zappos employees found themselves without enough time to complete their work for the five hours of daily meetings. The New York Times published an example of a tension relief dialog that opened a typical meeting:
“I’m a little sleepy,” said a wiry man.
“It’s warm out,” was the next reply. “I’m also sleepy.”
“I’m doing a Zumbathon for three hours this afternoon,” one woman said.
With no official job titles or precise means of tracking work, the company struggled to pay its employees fairly, the Times reported. Earlier this year, 14 percent of the Zappos staff – 210 employees – left the company following an ultimatum from Tony Hsieh, the company’s CEO: Embrace Holacracy or be paid handsomely to quit. Though things have been bumpy since taking on Holacracy, Hsieh isn’t giving up, because he knows the conviction of his intrepid disciples could pay off big.
Public-Sector Holacracy?
If a sprightly private organization like Zappos is struggling with Holacracy, the conservative world of government would seem the last place willing to upend centuries of hierarchical management for something experimental, but at least one government agency is trying it. Since February, 10 employees at Washington Technology Solutions (WaTech) have been participating in a Holacracy pilot. The results, said E-Government Director Michael DeAngelo, have been more than encouraging – Holacracy could prove a solution to some of government’s most difficult problems.
“Government has an increasingly difficult time trying to articulate a value proposition to prospective employees,” DeAngelo said. “It used to be you get better benefits and you get longevity. Well, the first one’s no longer true and the second is no longer relevant. So why would you want to work for government? ‘Well, it’s a cool place to work.’ No, it’s not. You walk in here and it looks like a graveyard. It looks like death. And our competitors are Google, Apple, Microsoft, Disney, Amazon.”
People who could work anywhere but choose to work for government usually do so because of government’s mission. They want to give back to their communities and improve the world.
What the pilot has shown, DeAngelo said, is that Holacracy enables a work environment where people are empowered to pursue that mission without restraint. In a traditional work environment, ideas are held back, people feel controlled and afraid to fail.
“[They] finally have a forum where they could raise issues where there wasn’t really a forum where they could raise issues before,” said DeAngelo. “We had weekly staff meetings, but the nature of those staff meetings is they’re not really intended to get into some deep organizational sorts of issues. They’re intended to talk about operational things, things coming up, so when there were organizational issues, it’s not comfortable to talk about those in that group for the most part. Certainly they don’t get resolved in that group.”
In a hierarchical work environment, it’s the boss’s responsibility to identify and resolve organizational issues, and so it’s uncomfortable for employees to raise those issues, so they don’t. They don’t want to appear as if they are stepping outside their role or being critical of their boss or the company. But self-governing systems like Holacracy depersonalize organizational issues, DeAngelo said – everyone is equal and shares responsibility for how things work.
Helping Employees Help Themselves
Even though it’s just an experiment, DeAngelo knows a lot of people think what they’re doing is crazy. And he almost didn’t pursue the idea when it came time to take a week for training, he said. But something about Holacracy stuck with him since first hearing the word and writing it down.
“I probably held that Post-it note for a month or so, and then I was reading a book, Reinventing Organizations [by Frederic Laloux], and they mention Holacracy in there," he said. "So I started looking into it, and I wasn’t sure it was going to work at first. I thought, if there are no managers, then who do the employees complain about?”
With any change, particularly a radical one, there will be detractors. Many managers feel threatened by the concept of a system in which they perceive their own importance to be diminished. And employees may also struggle to adjust to a system in which they have more power. In the pilot, employees have experienced two challenges, DeAngelo said. The first and less common challenge is an employee becoming drunk with power.
“It’s the first-year manager kind of reaction,” DeAngelo explained. “But that’s been minor. The biggest challenge has been with people really embracing the newfound power. And so there are legacy behaviors we still fall back on.”
Like an institutionalized ex-con who forgets he doesn’t need to ask permission to use the bathroom, pilot participants had trouble embracing their power and remembering that DeAngelo, who took a role of lead link, had no more power than they did. Some managers, including DeAngelo, also struggle with the change.
“There are times I want to jump in, but it undermines the system by jumping in to ‘help,’” he said. “I’m a manager because I want to try to help people. But that, in some respects, disempowers people because it implies that they’re not positioned to help themselves.”
A few snags aside, DeAngelo said the pilot is going great – one employee even reported that Holacracy ruined him for other ways of working. Of course, it’s not much of a challenge for 10 people to govern themselves. That’s why the second phase of the pilot, which started June 30, will expand the group from 10 employees to 100.
The first phase was just to prove that Holacracy could be executed in government legally, said DeAngelo. The second phase of the pilot, which will span one year, will build data that shows how Holacracy changes employee output. Harvard Business School will help the state conduct the experiment scientifically. Armed with that data, DeAngelo said, he will be prepared to ask his authorizing environment if Holacracy is something that can be taken more seriously.
A lot of people get hung up on the concept of no managers, but that’s not what Holacracy is about, DeAngelo said. Holacracy attempts to shift the focus of an organization away from the management of people toward the management of work.
“It may not work. But what if it did? What if it does work? That’s what I’m trying to set up,” he said. “We could go back to flex Fridays and teleworking as our big idea, but if you really think that’s going to make a difference, you’re on crack.”
Michael DeAngelo, e-gov director at Washington Technology Solutions, blogs about his Holacracy experiment at ocio.wa.gov/holacracy-blog.