I was just poking around the Internet on Sunday AM and found a few articles on holacracy, which is a concept that intrigues me. (If you’ve never heard of it before, it’s essentially a looser, more informal management structure where traditional hierarchy is replaced by a series of interlocking circles. It’s in use at companies like Zappos and Medium, and it has a bunch of pros and cons.)
Specifically, I found this Harvard Business Review article by Greg Satell of Digital Tonto. It mostly talks about getting the benefits of holacracy without fully adopting the system, and it makes a lot of interesting points. Here are but a few.
According to this post, the key things you need to consider around all management decisions are:
- What’s your mission?
- How does work really get done?
- How would someone sell a transformative idea?
- How do you balance cohesion and diversity?
I agree with all these questions as guideposts. Let’s break it down a bit more.
The Mission: Words like culture, purpose, mission, etc. should always come before strategy in my mind. Organizations traditionally are not very good at defining purpose, and you can make an argument that they don’t even need to be, as the goal of a company-employee relationship is inherently transactional (work for a salary). This is why it’s important, though, in a non-balance sheet way: if your company doesn’t have a clearly-defined mission, then (a) when things shift in a marketplace, it’s hard to get everyone towards the same goal, and (b) it creates a lot of pockets where people are doing work here and there that doesn’t really matter. I think this is a Peter Drucker quote, but in modern business it’s less important to do things the right way, and more important to do the right things (focus on what matters). That’s where ROI lies, but it’s hard to get to the ROI if the fluffy, intangible things aren’t clear.
How work gets done: Nothing gets a senior manager claws up, fangs up more than saying to them in a meeting, “Well, I don’t completely understand what X, Y, or Z person does.” I’ve gotten in trouble for this. Remember: work is a complex series of relationships; oftentimes it’s not even about the work itself, it’s about how the people fit together. At most jobs, people have no idea what their co-workers actually do, and that’s fine. They don’t have to. It gets people in trouble when certain pockets of knowledge, from “Where is the good copier paper?” to “What are the cost center codes for luggage fees?”, are clustered with only 1 person, and then that person leaves. That can mean more than a CEO leaving, sometimes. I guess the other elephant in this room is process; companies often set up process as a way to manage how work is getting done in a supposedly effective manner, but then the process completely overwhelms the way we treat people, and that’s another set of problems in and of itself.
How to sell a great idea: Most places I’ve worked have this belief that great ideas, which is another way of saying “ideas that will make money,” can only come from the top, veteran, established people. This way of thinking is because those people are usually in meetings together all the time, so they come to think of themselves as this core group of players running the game and executing on the big-money ideas. In reality, senior teams are usually the furthest removed from how work gets done and the furthest removed from how a customer/client perceives the company. They’re the closest to the balance sheet and the partnerships that yield the benefits/perks. That’s the game and the way it’s played, but here’s the thing: business models shift a lot, market conditions shift a lot, things happen, and oftentimes you need new ideas. Some of your rank-and-file employees might be sitting on gold but have no idea how to float it up the chain properly. Organizational breakthroughs can come from anywhere. You gotta find a way to embed that in your company aside from “Here’s a suggestion box we have!” It’s gotta be more organic than that. Maybe managers actually walk around and talk to their employees about ideas and pain points?
Cohesion vs. diversity: This is a big one. I wrote about it once before as homophily in business, or namely how diverse your company is (in terms of experience, not necessarily racially) vs. if it’s all people that have been working together for 10 years already. The latter model is good for people knowing what’s what, but it can totally stagnate ideas. The former model is good for ideas and innovation, but it can make process points harder. Consider this, from HBR:
A study of Broadway plays shows this in action. Researchers found that if no one in the cast or crew had worked together before, then results were poor. However, if there were too many existing relationships, then performance suffered as well. Traditional organizations often inspire far too much conformity — but I suspect holacracy and models like it will only exacerbate the problem because, ironically, its reliance on informal ties rather than dictates make conformity that much more insidious.. In hierarchical organizations — whatever their failings — leaders can change direction and combat groupthink. It’s not clear to me how that kind of change would happen in holacracy, which is driven by informal relationships to a much greater extent.
So basically, you need a mix. This is obviously harder at senior levels — in good, perks-driven companies, senior people can become entrenched — but you gotta aim for a mix of “Always been here and always done it this way” and “Hey, maybe we could consider doing it this way.” And you gotta aim for that while avoiding a Cassandra Complex, which is hard.
I’d break it down like this:
- Start with what your mission/culture will ideally be
- Think about the parts you need to make that happen and push your primary product/idea
- Get those parts in place at a mixed experience level
- Think about how ideas can be escalated up a chain
- Realize nothing will be perfect
- Start managing and leading
It’s simplistic, but I’m just glad I didn’t open with “determine your margins in your vertical!” and “strategize off that!” At the end of the day, that stuff doesn’t matter at all and can change in a heartbeat.
What do you think?