The Agile Holocracy
The word holocracy popped up in Dilbert this week, used incorrectly as a synonym for both a flat organizational structure and, as the pointy haired boss says, "wander[ing] around." Nonetheless, full-on agile organizations have many of the characteristics of a holocracy, so I think it's worth exploring the concept.
The term holocracy was coined by Artur Koestler in his 1967 book, The Ghost in the Machine, which is actually a discussion of the human brain. Koestler's thinking applies to social organizations as well, however. A holocracy is made up of autonomous, self-reliant units called holons (from the Greek word for "whole"). The holons are simultaneously independent from and dependent on the organization that they comprise. That is, a holocracy is simultaneously a whole and its parts.
Kosetler uses our own brains as an example. The cerebellum (the "reasoning" brain) is largely independent on the amygdala (the so-called "lizard brain"). These two sub-brains operate independently under their own rules, but interact in a way that allows the whole system to behave both coherently and in a way that you couldn't predict from looking at a single subsystem. This is a kind of emergence; the coherent behavior that arises from the complex interactions of the rules and strategies of the independent holons is more sophisticated than behavior of the parts. The ghost is the thing that you can't predict just by looking at the parts.
Koestler also points out that when one subsystem dominates, the whole system can become pathological. When your lizard brain hears a loud noise and says "panic!," your cerebellum counters with, "no, that's just an electric guitar and a gazillion-watt amp" and overrides it. The synthesis is a feeling of excitement that the concert's starting. If the lizard brain wins, everybody in the stadium gets trampled.
The notion of holocracy works well in agile organizations. In fact, I'd say that some level of holocratic structure is essential. Independent units — teams or individulals — are responsible for specific organizational roles, and interact with one another in a synergistic (to use an overused word) way. A person is holon, and so is a team. Each holon is both independent and part of the whole. Each holon is responsible for itself, but is also responsible for the success of the whole organization. The holons carry out well-defined roles, and are responsible for doing whatever they have to do to succeed in those roles. Nobody orders anybody around. The teams and the people are responsible for defining and executing their own tasks.
Getting back to Dilbert, holocratic organizations do have a flat hierarchy. They are peer-to-peer networks, not trees, and there's no place for any sort of "middle management." The executives are the organization's lizard brain: They set the direction and support the broad culture. The teams are the cerebellum: Thinking out the details and getting the processes to work. The synthesis of those roles yields a functional agile organization. If either holon is dominant (that is, if agile practice exists without a supporting culture, or if the executives perpetuate command-and-control, or if the teams get to do everything they want without regard to budget or scope), everybody gets trampled.
There isn't even a "CEO" in the captain-of-the-ship sense. Instead, the holons (both people and teams) communicate with each other in order to tune what they're doing. In the same way that people talk to each other, teams interact horizontally. For example, teams can "inject" members into other teams. Spotify, for example, has a "guild" system. All the database folks from all of the teams get together occasionally for Database-Guild meetings, and so forth. Think of this arrangement as a database-guild holon that injects members into the development-team holons.
Holocratic organizations aren't fantasies. Probably the most well known is W.L. Gore, Inc., as described in Malcolm Gladwell's Tipping Point. There are no formal titles and no hierarchical structure. People have "sponsors," but nobody reports to anybody.
The main objections to the viability of a holocracy seem to come from people who confuse holocracy with anarchy — everybody doing whatever they want. That's not what I'm describing. A holocracy is highly disciplined. You take your responsibilities seriously, and work hard both to be effective and to make everybody else successful. Communication and collaboration are central to both functions, so everybody does that.
Similarly, holocracy is not Communism. The people who contribute more are rewarded accordingly. However, compensation has to be transparent and rational. Secrets undermine the collaborative nature of the system.
Dysfunction happens when one holon becomes dominant. An out-of-control "executive" holon, for example, can destroy the agility of the organization. I've seen teams, departments, and whole companies brought to their knees by pathological "leaders" intent on dominating, who think that somebody has to "run" things. The mandates that come from these people do nothing but add dysfunction. I'm not talking about micromanagement, which is also a sort of disease. Dysfunction happens any time somebody can't do something because they need permission, or won't do something because they're afraid of some repercussion. The holons (teams and individuals) must be empowered to fulfill their roles.
Of course, there's no reason for some of the holons not to be tasked with the health of others. For example, one responsibility of the "executive" holon is to assure that that company has an effective internal culture. If a team becomes dysfunctional, the "executive" holon's job is to help the team heal, not by ordering people around, but by providing training, mentorship, etc. If that doesn't work, though, the "executive" holon could act like an antibody. The immune system is part of a healthy brain. The core value in a holocracy is trust. Hierarchical command/control organizations are built on mistrust. They assume that nobody beneath you in the hierachy is truly self sufficient and competent, so they impose paternalistic governance practices that force these assumed-incompetent players to behave. A holocracy trusts everybody to do their work in the best way possible.
Since trust and assumed competence are also firmly ingrained in the Agile Principles, there's a good match here. Everybody's got to be a grownup, though. I once heard Aliestar Cockburn answer the criticism "your methods won't work in the real world because they require nothing but A players" by saying that making good software always requires A players, regardless of your process. I agree.
As a final note, Holacracy.org adapted Kosteler's notions into a social/organizational milieu, and serves as an interesting example of another functional variant of an holocracy. Everybody in the Holacracy.org is literally (in the legal sense) a partner. There are no bosses, and there is no CEO. I'm not a huge fan of Holocracy.org's formalization, but they're prominent enough to deserve mention. For one thing, I'm offended by the way that Holacracy.org has trademarked Kosetler's term. The trademark isn't enforceable, given prior use, but they have no right to set themselves up as the arbiter of somebody else's idea. It's like somebody trademarking "agile." Moreover, I don't particularly like their fixed rules (documented in a Constitution), which seems to me to fly in the face of the core principle of self organization.
I've said this before, but agile is a culture, not a set of practices. It is upper management's job to establish that culture, and then let it work. A holocratic organization is one of the better ways to do that.