Organization design and new ways of working

posted in: Resources | 0

This page has been republished following a nine month spell in my archives.

Further useful articles were published during that time.

I will update and extend the exposition during the coming months.

Jack Martin Leith
26 July 2017

Contents

Introduction

Holacracy, a generic self-organization operating system

Home-grown self-organization operating systems

Laloux’s Teal organizations

The OS Canvas

Emerging forms of organizational design

Operating models

“How to choose a model of self-organization that works for you”

Related topics

More quotes

More videos

Further reading

More articles with Governance theme

Introduction

This article started life during the latter part of 2015 as a small collection of links to articles about Holacracy, a topic that had aroused my curiosity. In the months that followed, it grew piece by piece into what you see here today.

As you continue reading, you may find yourself wondering about the terms operating system and operating model. Why use two different terms when they seem to be pretty much synonymous?

Let’s look at organizational operating system first. This term, based on the metaphor of a computer operating system such as Unix or Linux, is how some people refer to Holacracy and its home-grown alternatives. You are unlikely to find it in a glossary of traditional management terms, so here is my working definition:

Organizational operating system: A coherent and comprehensive set of protocols, procedures, roles, accountabilities and relationships setting out how work gets done in an enterprise, with an emphasis on structure, governance and day‑to‑day decision making.

In contrast, an operating model bridges the gap between an organization’s business strategy and its operational resources. Source of definition: PwC document Ending the Endless Reorganization: Building an Adaptable Operating Model (pdf).

Read more about operating models

In his Medium article Why you don’t understand Holacracy, Ruben Timmerman, Chief UX Officer at Holacracy adopter Springest, introduces the term self-organization operating system.

There is a certain amount of overlap between a self-organization operating system and an operating model, the extent of which will be determined by your preferred definition and chosen framework.

I hope these distinctions are clear and that you are now ready to dive into the deep waters of organization design and new ways of working.

Please be aware that I am agnostic regarding Holacracy, Teal organizations and other approaches mentioned in the material that follows. My role here is that of messenger rather than advocate.

92% of HR and business leaders surveyed by Deloitte cited organizational design as the top priority. See Deloitte Global Human Capital Trends 2016

Holacracy, a generic self-organization operating system

Brian Robertson developed Holacracy while CEO of Ternary Software. Working in partnership with Tom Thomison, he then created an enterprise called HolacracyOne to make the system widely available.

What is Holacracy?

Holacracy is “A comprehensive practice for structuring, governing, and running an organization” (view source) and “A complete system for self-organization” (view source).

The source of the following text is the Wikipedia entry for Holacracy.

Holacracy is a system of organizational governance in which authority and decision-making are distributed throughout a holarchy of self-organising teams rather than being vested in a management hierarchy.

The term holacracy is derived from the term holarchy, coined by Arthur Koestler in his 1967 book The Ghost in the Machine. A holarchy is composed of holons (Greek: ὅλον, holon neuter form of ὅλος, holos “whole”) or units that are autonomous and self-reliant, but also dependent on the greater whole of which they are part. Thus a holarchy is a hierarchy of self-regulating holons that function both as autonomous wholes and as dependent parts.

The Holacracy system was incubated at Ternary Software, a US-based company noted for experimenting with more democratic forms of organizational governance. Ternary founder Brian Robertson distilled the best practices into an organizational system that became known as Holacracy in 2007.

The name Holacracy is a registered trademark of HolacracyOne LLC. As such, anyone wanting to sell products and services using the Holacracy name must first get HolacracyOne’s permission. The trademark is not to be confused with a patent, however, as it does not limit anyone from using the Holacracy model—it only limits the use of the brand name for commercial purposes.

Mark Vletter, founder of Netherlands-based Voys and Spindle, says:

Holacracy is not a complete system; it doesn’t say anything about a company’s culture, onboarding people and so on. All it does is organize the work. But it does this really well. You could call it a method for getting things done in an efficient way in a company. I really like the metaphor about an operating system. Holacracy is an operating system for us. Getting people involved and helping them to become entrepreneurial is the most crucial and difficult part, in the long run.

Source: “Holacracy has brought us accountability, entrepreneurship, and faster evolution.”, by Energized.org, a Licensed Holacracy® provider, on Medium.
Holacracy model
An animated 90-second introduction to Holacracy


Holacracy: A Radical New Approach to Management | Brian Robertson | TEDxGrandRapids

View more videos: HolacracyOne—YouTube channel

Main features of Holacracy

  • Dynamic roles replace static job descriptions.
  • Distributed authority replaces delegated authority.
  • Rapid iterations replace big re-orgs.
  • Transparent rules replace office politics.
  • Tensions drive everything. A tension is a person’s felt sense that there is a gap between current reality and a potential future, between what is and what could be.

Source: Holacracy—How it Works.

Read more about tensions

Did You Get What You Need to Satisfy Your Tension? by Rashid Gilanpour, Partner, HolacracyOne, on Medium

Tip: There is always more than one way to process a tension. By Energized.com, on Medium

Influences

When designing Holacracy, Brian Robertson took inspiration from many sources, including:

Source: History of Holacracy®, by Brian Robertson, on Medium.

Users

Enterprises that have adopted Holacracy include The David Allen Company (Getting Things Done®), software development company Spindle, and—most prominently—Amazon-owned Zappos.

View a list of organizations currently known to be using Holacracy (about 70 in total), and former users of the system

List compiled and maintained by Martin Röll, Margaux Chiquet and Diederick Jans.

HolacracyOne maintains a list of Holacracy Case-Studies. (TY Structure & Process.)

Learn more about Holacracy

From the inside (Brian Robertson, HolacracyOne, and people who have experienced Holacracy in their workplaces)

Holacracy: The Revolutionary Management System that Abolishes Hierarchy, a book by Brian J. Robertson.

Read the foreword by Dave Allen and view some sample pages

A before-and-after look into Holacracy at Voys, shared by Joris Beltman, by Energized.org, a Licensed Holacracy® provider, on Medium

About the continuous evolution of her team, lowered stress factors, and more Holacracy-related topics. Debbie from Springest shares her story. By Energized.org, a Licensed Holacracy® provider, on Medium

Beyond the Holacracy Hype, by Ethan Bernstein, John Bunch, Niko Canner, and Michael Lee, in Harvard Business Review

Ethan Bernstein is an assistant professor of leadership and organizational behavior at Harvard Business School. John Bunch is adviser to the CEO and holacracy implementation lead at Zappos. Niko Canner is the founder of Incandescent. Michael Lee is a doctoral candidate at Harvard Business School.

Four common challenges when adopting Holacracy*, by Energized.org, a licenced Holacracy® provider, on Medium | * Meetings. Embrace the ownership. Think for yourself. Sensing reality vs. predicting.

Holacracy—official website

Holacracy: The Revolutionary Management System that Abolishes Hierarchy, a book by Brian J. Robertson

Holacracy—How it Works

Holacracy Wiki

Holacracy glossary

Holacracy Constitution (version 4.1)

Holacracy, Managerless Offices and The Future of Work, Chris Russell interviews Brian Robertson, on CKGSB Knowledge

History of Holacracy®, by Brian Robertson, on Medium

“Holacracy has brought us accountability, entrepreneurship, and faster evolution.”, by Energized.org, a Licensed Holacracy® provider, on Medium

My experience with Holacracy: “What kind of impact can Holacracy have from an HR perspective?”—Energized.org, a licensed Holacracy® provider, in conversation with Annemieke Verhoeff, on Medium

My Takeaways From the Holacracy Practitioner Certification Training. By Gabriela Krupa, a partner at Energized.org, on Medium

Scrum on steroids: a Holacracy development process—Mark Vletter reveals how Spindle, “a shack full of nerds”, expedites software development projects

Tactical Meetings 101, by Jean Hsu, at Medium, on Medium

From the outside (analysis, comment and opinion)

Assessing the bold claims of Holacracy, by Corporate Rebels, who read Brian Robertson’s book, visited Voys (an enterprise that has adopted Holacracy), and took part in a Holacracy workshop hosted by Evolving Organization

At Zappos, Pushing Shoes and a Vision, by David Gelles, on The New York Times (July 2015)

The Audacity of Holacracy, by Theodore Kinni, in strategy+business

The Big Misconceptions Holding Holacracy Back, by Georges Romme, in Harvard Business Review

Complete Guide to Holacracy: Example of Zappos, by Martin, on Cleverism

The Fatal Gap Between Organizational Theory and Organizational Practice, by Bud Caddell, The Future of Work, on Medium

First, let’s get rid of all the bosses—a radical experiment at Zappos to end the office workplace as we know it, by Roger D. Hodge, in New Republic

Governance and Decision-making tools, a comparison of consensus, Holacracy, and Sociocracy, on the website of Social Compare

Here’s why you should care about Holacracy, by Adam Pisoni, in Fast Company

Holacracy and the Desire to Control, by Carmen Medina, co-founder, Rebels at Work

Holacracy supports the journey to Teal, by Dorothee Bornath and Gertraud Wegst, Die Wertschätzer (The Appreciators), on Enlivening Edge | Read about Teal organizations

Holacracy vs. Sociocracy, on Jan Höglund’s Blog

The holes in holacracy, in The Economist

How a radical shift sent Zappos reeling, by Jennifer Reingold, in Fortune (March 2016; good insights)

How To Decide Whether Holacracy Is Right For You, by Greg Satell and Alexis Gonzales-Black

Is Holacracy finally dead? By Felix Velarde, on Quartz

Jeff Fromm: Zappos Embraces Holacracy as Millennials Shape the Future of Work, by Jeff Fromm, founder and president, FutureCast

Making Sense Of Zappos And Holacracy, by Steve Denning, in Forbes

Medium’s Experiment with Holacracy Failed. Long Live the Experiment! by Tim Rayner, on Medium

The next big thing you missed: companies that work better without bosses, by Marcus Wohlsen, in Wired

Not Everyone Wants to Be the Boss, by Justin Fox, on Bloomberg View

People and Holacracy: Four Necessities for Success, by Sam Spurlin, The Ready, on Medium

The Secret Face of Holacracy®, by Sabrina Bouraoui, former HolacracyOne staffer, on Medium

Tony Hsieh’s Workplace Dream: Is Holacracy A Big Failure? By Laura Reston, on Forbes

Unlocking the Benefits of Self-Management Without Going All In on Holacracy, by Mike Arauz, co-founder of August, on First Round Review

“There’s one big problem with Holacracy—the vast majority of people either have an ill conceived view of what it is or don’t understand it at all.” This comes from a short Medium post by Bill Lewis from SpaceHQ.

Digital philosopher Tim Rayner responds in another short Medium post.

We Only Changed Everything—ARCA Adopts Holacracy, by Kevin Joyce, ARCA | Part 2: What Does Holacracy Change? by Kevin Joyce, ARCA

What Is Happening At Zappos? by Dan Pontefract, on Forbes

What Happened When This Major Company [Zappos] Got Rid Of All Its Bosses, by Shane Ferro, on The Huffington Post

What is Holacracy? by Michael DeAngelo, on Office of the Chief Information Officer, Washington State

Why Questioning Tried and True Management Systems Is Critical to Redesigning Our Work Environments, by Matt Frost and Emily Selvin, Deloitte Center for the Edge

You Don’t Need to Adopt Holacracy to Get Some of Its Benefits, by Greg Satell, in Harvard Business Review

The Zappos Exodus Wasn’t About Holacracy, Says Tony Hsieh, by Gregory Ferenstein, on Enlivening Edge

Zappos is struggling with Holacracy because humans aren’t designed to operate like software, by Aimee Groth, on Quartz


Outside meets inside

The following sequence of posts, in reverse chronological order, provides useful insights into the adoption of Holacacy by an enterprise.

1. Top-Down Solutions Like Holacracy Won’t Fix Bureaucracy, by Gary Hamel and Michele Zanini, in Harvard Business Review

2. Why you don’t understand Holacracy, by Ruben Timmerman, Chief UX Officer, Springest (a Holacracy adopter)

3. Hi Ruben, thanks for your post. by Michele Zanini, on Medium

4. Thanks for taking the time Michele! by Ruben Timmerman, on Medium

Actually, I think the focus on bottom-up vs top-down implementation is a distraction. They are just definitions to be interpreted, and I think the way many companies are implementing new SooS’s is actually much more bottom-up than you think.

Ruben Timmerman (4) in response to Michele Zanini (3) on Medium.

More Holacracy quotes

I have a theory that the most artful of all Holacracy implementations could be done without the word Holacracy ever being mentioned at all. The whole thing could just feel like very welcome help towards making things happen. This might also be useful since even the word ‘Holacracy’ has become somewhat tainted (a bit like its friend, ‘Teal*.’)

* See below.
Source: Good Holocracy, Bad Holacracy, by Tom Nixon, on Medium.

Conor O’Higgins: If I’m planning events, who puts me in the role? Do I just volunteer?

Brian Robertson: Nope, there’s another role whose job it is to interview people, figure out who the right fit for the right roles. And they can put people in roles, and they can swap them out. Now, they can’t tell the person what to do in a role; like I’m like a typical manager that can direct the action and micromanage. It’s a role that assigns people to roles, and that’s the extent of what that person does. They’re not telling them how to do the role; they’re looking for the right fit. And then there’s a governance process, that you can add extra expectations on that person or constraints, or whatever you need to make it work. The goal isn’t to have all the answers; it’s just to let you evolve and adapt your structure.

Source: Interview with Brian Robertson of Holacracy, on CryptoInsider.

As I reflect on it two months into our journey, there are a few things that I’m beginning to appreciate as the genius of Holacracy:

  • Power of anyone, any time to tweak the organization to move us towards our goals and purpose.
  • Distributing traditional leadership roles.
  • The power of transparency.
  • The separation between roles and people.
Source: Personal reflection on Future Considerations’ journey with Holacracy, by Mark Young.

“I couldn’t go back to the old way of working.” – Tyler Williams, Zappos employee.

Source: Banishing The Bosses Brings Out Zappos’ Hidden Entrepreneurs, by Alison Coleman, on Forbes.

In Holacracy, there are no parents and no children. The system operates on the premise that everyone in it is an adult that can make sensible decisions without having to ask for permission. There might be a small risk involved, but as we all know, all the managers in the world are also not always able to prevent terrible things from happening. Yes, I’m also looking at you Volkswagen.

Source: Holacracy is for grown-ups, by Devhouse Spindle, on Medium.

A holacratic organization knows its purpose. It is at the heart of everything that happens. It informs decisions on all levels.

The questions “What has this organization to offer to the world?” and “What does the world want from the organization?” spark the evolution of purpose.

Source: Holacracy supports the journey to Teal, by Dorothee Bornath and Gertraud Wegst, Die Wertschätzer (The Appreciators), on Enlivening Edge.

After its invention, many forms and styles of Linux-based operating systems were created, or forked as it’s called in open source lingo. The future will have to prove whether Holacracy is the Linux to the Unix of systems like Scrum, GTD and Sociocracy, or merely one of many “distributions” for self-organization like Red Hat was the most famous one for Linux. Maybe Holacracy turns out to be the Unix of self-organization. Or the Mac OSX that’s actually based on Unix and is universally loved inspite of it’s “ugly and un-usable” grandfather which was intended for mainframes and other non-personal computers.

Starting with Linus Thorvalds’ Linux, many “forks” of new distributions have been created. We are doing this for self-organization too in the next decades.

Source: Why you don’t understand Holacracy, by Ruben Timmerman, Chief UX Officer, Springest.

Hands down, Holacracy is the most audacious business book I have ever read, and I’m very impressed by the degree of thought and effort that have gone into developing this system. It’s on a par with the job the founding fathers did on the Constitution of the United States.

Source: The Audacity of Holacracy, by Theodore Kinni, in strategy+business.

Whether you decide to pursue Holacracy or not, you should take some time thinking about the issues that it brings to the fore and ask: If not Holacracy, then what?

Source: How To Decide Whether Holacracy Is Right For You, by Greg Satell and Alexis Gonzales-Black.

Organizations that are celebrated for their lack of hierarchy may downplay and reduce status differences, but they always have some people with greater formal and informal power than others—and associated pecking orders. And eliminating titles such as ‘manager’ or ‘supervisor’ doesn’t make the hierarchy disappear. For example, there has been a lot of talk lately about Zappos’ ongoing reorganization into something they call a ‘holacracy.’ Some headlines suggest that the company is getting rid of bosses—that isn’t quite right. While more power is being pushed down the hierarchy, it persists under the new structure. More responsibility is being placed as people are moved into ‘circles’ (which sound much like self-managing teams). Yet even though they have stopped using the word ‘manager’ for many roles, there are still be people who perform what sound like middle management roles to me: They are responsible for staffing teams and dealing with employee performance issues. And, while Zappos is getting rid of a lot of titles, note that Tony Hsieh is still called the CEO.

Source: Hierarchy is Good. Hierarchy is Essential. And Less Isn’t Always Better, by Bob Sutton, Stanford Professor and co-author, with Huggy Rao, of Scaling Up Excellence.

Undercurrent² [the company where the founders of August worked before its closure] adopted Holacracy in the Summer of 2013, and it made a huge positive impact on our business. Yet, as August looks ahead at the company that we want to build, we have decided to opt-out of Holacracy’s rigid system, and operate with our own lighter weight approach to self-management. While many of Holacracy’s underlying principles are incredibly valuable, it is possible to reap the benefits without formally adopting Holacracy.

Source: Unlocking the Benefits of Self-Management Without Going All In on Holacracy, by Mike Arauz, co-founder of August, in First Round Review.

The latest management craze is flat, leaderless organizations. Much has been made about Zappos’ recent efforts with holacracy, but as Tim Kastelle recently explained, the jury is still out whether the effort—and those like it—will be ultimately successful. My own feeling is that flat structures will work for some cultures, but not others.

The important thing is that an organization does not have to be flat to be networked. In his new book, Team of Teams, General Stanley McChrystal explains how he drastically reinvented how his forces operated, but didn’t changed the formal structure. The changes mainly had to do with informal structure, communication and forging a shared purpose.

Source: 4 Things You Should Know About Networked Organizations, by Greg Satell

The jury is still out on holacracy, and I expect it will evolve over time just as traditional organizations have done. Every enterprise will have to choose its own path. What’s clear is that the status quo is untenable; we all need to ask ourselves some hard questions and continually come up with better answers.

Source: You Don’t Need to Adopt Holacracy to Get Some of Its Benefits, by Greg Satell, in Harvard Business Review

Home-grown self-organization operating systems

Conway’s Law

Organizations that design systems are constrained to produce designs which are copies of the communication structures of these organizations.

Source: Melvin Conway via Lee Bryant, Post*Shift.
Listed below are some of the more prominent enterprises that have developed their own systems.

AES Corporation

Named as a Teal organization by Frederic Laloux in his book Reinventing Organizations

Global energy company, for profit, 21,000 employees.

AES website

AngelList

AngelList helps people find a great startup job, invest in a startup or raise money.

AngelList website

Automattic

Automattic, Inc. is a web development corporation founded in August 2005, based in San Franciso, California, USA. It is most notable for WordPress.com (a free blogging service), as well as its contributions to WordPress (open source blogging software). The company’s name plays on its founder’s first name, Matt.

The company has 430 employees. Its culture was the topic of a participative journalism project by Scott Berkun, entitled The Year Without Pants: WordPress.com and the Future of Work.

Source: Wikipedia.

Automattic website

BSO

Named as a Teal organization by Frederic Laloux in his book Reinventing Organizations

In 1993 BSO/Origin merged with Philips Communication and Processing Services. In 1996 Origin BV was established and was a member of the Royal Dutch Philips Group of Companies with 16,000 employees in 30 countries worldwide. In August 2000 Origin BV merged with the French company Atos, which led to the creation of Atos Origin. In August 2002, Atos Origin acquired KPMG Consulting in The Netherlands and the UK, now trading as Atos Consulting in both countries.

Source: Atos

Basecamp

Basecamp, formerly known as 37signals, is a privately held American web application company based in Chicago, Illinois. Its products are Basecamp, Backpack, Campfire, and Highrise. The open source web application framework Ruby on Rails was initially created for internal use at 37signals, before being publicly released in 2004.

Behind the scenes: How we organize our twice-a-year full-company meetups, by Jason Fried, founder & CEO, Basecamp, on Signal v. Noise

The tool we built to keep everyone in the loop at Basecamp, by Jason Fried, founder and CEO, Basecamp, on Medium

Basecamp website

Buffer

Buffer is a software application designed to manage social networks, by providing the means for a user to schedule posts to Twitter, Facebook and Linkedin. As of January 2015, Buffer has more than 2,000,000 registered users.

Seeking a flat structure was a misperception of what self-management means.

Hierarchy has once again become a central part of how we work again at Buffer.

People by nature have a unique place within Buffer that isn’t created equal.

Excerpts from What we got wrong about self-management: embracing natural hierarchy at work, by Leo Widrich, Co-founder and COO at Buffer.

This reminds me of the way circuses work as described in the book Ishmael by Daniel Quinn. In a circus, a boss is just another job that has to be done. An elephant trainer has his area of expertise and so does a clown. It’s assumed they all know their jobs and it’s also assumed they will all pull together to pitch the tent and tear it down. It’s not a hierarchy but rather it’s clearly understood roles, some of which are dependent on others, some of which are pretty independent. But everyone’s goal is to do their part to put on the best circus performance.

Source: Neil McKay, in response to What we got wrong about self-management.

Our journey to self-management hasn’t been a straight path. In fact, sometimes it looks more like a circle, pointing us back to where we’ve been and helping us recognize it in a new light.

Source: Self Defined Self Management: How Our Startup Is Figuring It Out Together, by Courtney Seiter, Buffer, on bufferopen.

From Startup to Scaleup: What We’re Changing As We Make The Transition, by Joel Gascoigne, on BufferOpen

Why We Have Paid, Paid Vacation and Give Teammates an Extra $1,000 to Take Time Off, by Leo Widrich, Co-founder and COO at Buffer, on BufferOpen

Buffer website

Buurtzorg

Named as a Teal organization by Frederic Laloux in his book Reinventing Organizations

Buurtzorg is entirely based on the principle of self organization. As a result, the care professionals can fully develop and use their talents. Managers, intakers and planners are not needed anymore. Small teams of nurses and other care takers, localized in the neigbourhood of their customers, decide according to their own judgement what care matches best. This is done in close cooperation with each customer and the social network around this person. In other words: context- and relationship-directed care is given. This resembles the way in which district nurses used to operate, but not everyone in a Buurtzorg team has the same role. Tasks are distributed across the team members in a natural way.

Source: The self-steering and care-driven teams of Buurtzorg, by Dr Jaap van Ede, on Business-improvement.eu.

Buurtzorg (Dutch for neighborhood care) is one of the companies studied by Frederic Laloux for his book Reinventing Organizations.

Buurtzorg Nederland is a Dutch home-care organization that has attracted international attention for its innovative use of independent nurse teams in delivering high-quality, relatively low-cost care.

The company is discussed in Building High-Performance, High-Trust Organizations: Decentralization 2.0, a book by Gerrit Broekstra, Professor Emeritus of Organization Behavior at the Nyenrode Business University, the Netherlands. View selected pages on Google Books

10 000 employees. No managers. Great results. by Sami Honkonen, on Medium.

Buurtzorg website

Evangelische Schule Berlin Zentrum (ESBZ)

Named as a Teal organization by Frederic Laloux in his book Reinventing Organizations

Founded in 2007 and located in Berlin, ESBZ is an evangelical Christian school that has attracted international attention for its innovative curriculum and organizational model.

Evangelische Schule Berlin Zentrum website

Favi

Named as a Teal organization by Frederic Laloux in his book Reinventing Organizations

FAVI is an SME employing 406 people, based in Hallencourt in the Picardy region of France. It is a pressure die-casting company specialising in copper alloys. FAVI is the undisputed market leader in the gearbox sector of the automotive industry.

Source: Work organization and innovation: Case study: FAVI, France (pdf).

Favi website

Fitzii

Fitzii is a wholly owned subsidiary of the Ian Martin Group, which is a certified B Corp with 125 employees across Canada and the United States.

Fitzii describes itself as “a free hiring platform providing easy access to expert tools and advice that increases the odds of making a great hire, and saves time and money along the way.”

In February 2015, 2015 Fitzii officially eliminated management functions and became a self-managing company.

Read more

The Good, Bad & Amazing of Six Months as a Self-Managed Company, by Edwin Jansen, on Fitzii Blog

Fitzii Blog

Github

GitHub is a privately-held web-based Git repository hosting service with 467 employees (2016), based in San Francisco, California, United States. Git is a widely used source code management system for software development. It is a distributed revision control system with an emphasis on speed, data integrity, and support for distributed, non-linear workflows. Git was initially designed and developed in 2005 by Linux kernel developers (including Linus Torvalds) for Linux kernel development.

Sources: Wikipedia—GitHub; Wikipedia—Git (software).

GitHub website

W. L. Gore & Associates

Gore is one of the most successful firms in the world. They have more than 10,000 employees, with basically three levels in their organizational hierarchy. There is the CEO (elected democratically), a handful of functional heads, and everyone else. All decision-making is done through self-managing teams of 8-12 people: hiring, pay, which projects to work on, everything.

Source: Hierarchy is Overrated, by Tim Kastelle, in Harvard Business Review.

A lattice organization is one that involves direct transactions, self-commitment, natural leadership, and lacks assigned or assumed authority. Every successful organization has a lattice organization that underlies the façade of authoritarian hierarchy. It is through these lattice organizations that things get done, and most of us delight in going around the formal procedures and doing things the straightforward and easy way.

Source: Bill Gore, quoted in The Lattice Organization (pdf).

Caveat emptor: it’s said that it takes six years for the average new employee to become fully operational inside their self-organizing system.

Clay Parker Jones, writing on Medium about W. L. Gore & Associates | View source

Read more about the W. L. Gore & Associates operating system in Maybe Hierarchies Are All About the Power, by Bruce Eckel, on Reinventing Business

W. L. Gore & Associates website

Haier

Haier, a Chinese appliance-maker, last year split its workforce into 2,000 self-managed teams that perform many different roles.

Source: The holes in holacracy, in The Economist.

Intimacy is a lot more complicated than responsiveness, and this third reinvention required employees to feel closer to their customers. Haier thus inverted its organizational structure into one based on self-organizing work units called ZZJYTs (an abbreviation for zi zhu jing ying ti, which translates to independent operating unit). Their three most critical functions — marketing, design, and manufacturing — were now supposed to work directly for customers. Instead of directing the employees who did that work, the ZZJYT managers became service providers to them, giving them the resources and guidance they needed to provide for customers. This minimized the decisions made at higher levels in the hierarchy, making the company more responsive to nascent market needs. Zhang went so far as to announce that this shift in organizational model would proceed even if revenues and profits showed signs of flagging, and even if it were necessary to use some of the returns from successful legacy offerings to make it work.

Source: The Haier Road to Growth, by Bill Fischer, a professor of innovation management at IMD in Lausanne, Switzerland; Umberto Lago, an associate professor of management at Bologna University in Italy; and Fang Liu, an investment analyst at Lombard Odier Asset Management; in strategy+business.

Read more

How chairman Zhang Ruimin transformed Haier Group, on The Telegraph. Excerpt of a speech given by Zhang Ruimin in November 2015.

Transformation at the speed of Haier, by Lee Bryant, on Post*Shift

Haier website

Handelsbanken

Svenska Handelsbanken AB is one of the major banks in Sweden with more than 460 branches. Since the mid 1990s Handelsbanken has been expanding its universal banking operations into the other Nordic countries, and also in the United Kingdom, the Netherlands, Latvia, Estonia and Lithuania.

Handelsbanken is discussed in Building High-Performance, High-Trust Organizations: Decentralization 2.0, a book by Gerrit Broekstra, Professor Emeritus of Organization Behavior at the Nyenrode Business University, the Netherlands. View selected pages on Google Books

Handelsbanken website

Medium

Established by Twitter co-founder Evan Williams in August 2012, Medium provides an online publishing platform. The company describes itself as “a community of readers and writers offering unique perspectives on ideas large and small.”

In March 2016 or thereabouts, the company replaced its Holacracy-based operating model with the principles listed below, which will evolve as Medium itself evolves.

  1. Individuals can always instigate change.
  2. Authority is distributed, though not evenly or permanently.
  3. Ownership is accountability, not control.
  4. Good decision-making implies alignment, not consensus.
  5. The system is designed to be adaptable.
  6. Corporate transparency, driven by technology.

So we’re off Holacracy. Not because it didn’t work, or because it’s “wacky” or “fringe.” We are a little wacky and fringe, and we’re okay with that. We are moving beyond it because we as a company have changed and want to make fundamental changes to reflect this. Many of the principles we value most about Holacracy are already embedded in the organization through how we approach our work, collaborate, and instigate change. Beyond that, the system had begun to exert a small but persistent tax on both our effectiveness, and our sense of connection to each other. For us, Holacracy was getting in the way of the work.

Andy Doyle

Source and full story: Management and Organization at Medium, by Andy Doyle, Operations at Medium, on Medium

Ruben Timmerman, Chief UX Officer at Springest, a Holacracy adopter, posted this response on Medium: Medium drops Holacracy: how we dealt with their challenges at Springest in the past 3 years

Medium website

Morning Star

Named as a Teal organization by Frederic Laloux in his book Reinventing Organizations

The Morning Star Company is a California based agribusiness and food processing company. Morning Star processes 25% of the California processing tomato production, and supplies approximately 40% of the U.S. industrial tomato paste and diced tomato markets. The company has attracted attention for its libertarian philosophy of no supervisory management. Instead, workers are encouraged to innovate independently, define job responsibilities themselves, and even make equipment purchasing decisions in consultation with experts.

Source: Wikipedia.

The Morning Star Company—Colleague Principles

In order to encourage, achieve and maintain an atmosphere of high integrity, trust, competence and harmony among all colleagues, customers and suppliers, each Morning Star Colleague commits to the following:

  • Mission.
  • Individual Goals and Teamwork.
  • Personal Responsibility and Initiative.
  • Tolerance.
  • Direct Communication and Gaining Agreement.
  • Caring and Sharing.
  • Doing What is Right.
View source and explanatory text

I, Tomato: Morning Star’s Radical Approach to Management, on Enlivening Edge

Morning Star Self-management Institute (membership is free)

Morning Star website

Patagonia

Named as a Teal organization by Frederic Laloux in his book Reinventing Organizations

Founded by Yvon Chouinard in 1973, Patagonia, Inc. is an American clothing company that focuses mainly on high-end outdoor clothing. Based in Ventura, California, the company is a member of several environmental movements and is a certified B Corp, meaning the company is beholden to public-benefit concerns (in this case environmental) alongside its profit motive. 1,350 employees.

Main source: Wikipedia.

Patagonia website

Reaktor

Founded in 2000, Reaktor is a creative technology company with 360 employees based in offices in Helsinki, New York and Tokyo. Reaktor creates digital services for clients in the finance, retail, media, telecommunications and air travel sectors, and in the public sector.

No hierarchy! An outsider’s view to one of the world’s coolest companies, by Niclas Kristiansson

Reaktor website

Red Hat

Red Hat, Inc. is an American multinational software company providing open-source software products to the enterprise community.

Red Hat website

Semco Partners

Semco Partners is a Brazilian company best known for its radical form of industrial democracy and corporate re-engineering. Its CEO and majority owner is Ricardo Semler. In 1980, Ricardo Semler’s father Antonio Semler resigned as CEO and vested majority ownership in his 21 year old son. On his first day as CEO, Ricardo Semler fired sixty percent of all top managers, and began work on a diversification program away from the struggling shipbuilding industry.

Source: Wikipedia.

Semco Partners is an active portfolio manager for a variety of corporations doing business in Brazil. Its mission is to seek out new businesses, oversee existing businesses, and promote synergies among them.

Source: Semco Partners website.

How to run a company with (almost) no rules
A TED Talk by Ricardo Semler | Runtime 21:42

Spotify

Spotify is a Swedish commercial music streaming, podcast and video service that provides digital rights management-protected content from record labels and media companies. Its operating system is based on Agile.

Spotify's Tribes, Squads, Chapters and Guilds

PO: Product owner.
Squad: A development team with a long-term mission.
Tribe: A collection of squads working in related areas.
Chapter: People with similar expertise.
Guild: A cross-tribe community of interest.
Scaling Agile @ Spotify with Tribes, Squads, Chapters & Guilds (pdf), by Henrik Kniberg & Anders Ivarsson

Spotify Rhythm – how we get aligned (slides from my talk at Agile Sverige), by Henrik Kniberg, on Crisp’s Blog

Spotify’s Self-Managing Engineering Culture, by George Pór, on Enlivening Edge

Spotify website

Suma

Suma, a workers’ co-operative, is the UK’s largest independent wholefood wholesaler and distributor, specialising in vegetarian, fairly traded, organic, ethical and natural products.

Suma delivery vehicle and staff

The business was founded in 1975 and is based in Leeds, West Yorkshire. Its turnover in 2015 was £42m. Today, it has 161 fully-fledged employees (known as members) performing multiple roles, and 50 short-term workers.

Everyone receives the same salary: £11.98 per hour for a five-day contract of 40 hours, amounting to a gross salary of £31,981.

The worker-owned cooperative has a flat structure with a roster of people elected to sit on the management committee for two years. There is also team of coordinators who are similar to heads of department.

Main source: Who needs bosses? Not the company that pays everyone the same and gives workers free meals, by Julian Cole, in the i newspaper.

Suma website

Sun Hydraulics

Named as a Teal organization by Frederic Laloux in his book Reinventing Organizations

Valve manufacturer, 900 employees.

Sun Hydraulics website

Treehouse

Treehouse Island, Inc. is an online interactive education platform offering courses in web, mobile and business development. Its courses on web development and programming are aimed at beginners looking to start a new career, while its courses in business education and marketing teach students how to start and market a business in the technology industry.

Source: Wikipedia.

Treehouse website

Valve

Valve is an entertainment software and technology company founded in 1996. Valve develops award-winning games, the Source® game engine, and Steam®, an online gaming platform.

In my own paraphrase, Valve’s way of operating is anchored in four ideas:

  1. Complete self-organization on all levels, with no formal hierarchy.
  2. Peer accountability, reinforced through a stack ranking system in which peers establish one another’s value.
  3. Tremendous focus on hiring (“when you’re working on hiring, everything else you could be doing is stupid and should be ignored!”).
  4. Ensuring all other design parameters reinforce these (e.g., 100% self-funding).
Source: When Is No Hierarchy Best? by Niko Canner, incandescent.

Rather than taking from the Valve case the principle of “no hierarchy,” the most powerful lesson here is the principle of designing a way of operating to fit a vision of what it will take to be extraordinary.

Source: When Is No Hierarchy Best? by Niko Canner, incandescent.

Valve website

The OS Canvas

Version 1.0, by The Ready

The OS Canvas, version 1.0, by The Ready

This is not a mutually exclusive or comprehensively exhaustive (MECE) framework. From a systems thinking perspective, reducing an organization to its independent parts is a mistake. Rather, these are overlapping and interconnected fields that our research tells us are in a state of flux.

Each field asks us to consider certain aspects of our organization more deeply than we typically would. For example, what is authority, how should it be distributed, and how does that manifest (or not) in your culture? The canvas forces us to confront the delta between our assumptions, our beliefs, and our reality.

Source: Aaron Dignan, Co-founder, The Ready (see Note 2)

Read more about The OS Canvas

Laloux’s Teal organizations

Frederic Laloux and his book, Reinventing Organizations

Teal organizations is a concept originated by Frederic Laloux, a Belgian former consultant with McKinsey & Company, and introduced in his book Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness.

For an overview of the book, I recommend Reinventing Management, Part 1: What Color Is Your Organization? and Part 2: What Happens When No One Is In Charge? by Rod Collins, Director of Innovation, Optimity Advisors, on Huffington Post.

The kind of organization described by Laloux is just one variety of Teal organization. Others are at liberty to consult his research sources, draw different conclusions and introduce another Teal species. And so, in an attempt to provide clarity should this state of affairs come to pass, I am referring to the Laloux species as Laloux’s Teal.

Fundamental characteristics of Laloux’s Teal organizations

Self-management Teal organizations operate effectively, even at a large scale, with a system based on peer relationships. They set up structures and practices in which people have high autonomy in their domain, and are accountable for coordinating with others. Power and control are deeply embedded throughout the organizations, no longer tied to the specific positions of a few top leaders.

Wholeness Whereas Orange and Green organizations encourage people to show only their narrow “professional” selves, Teal organizations invite people to reclaim their inner wholeness. They create an environment wherein people feel free to fully express themselves, bringing unprecedented levels of energy, passion, and creativity to work.

Evolutionary purpose Teal organizations base their strategies on what they sense the world is asking from them. Agile practices that sense and respond replace the machinery of plans, budgets, targets, and incentives. Paradoxically, by focusing less on the bottom line and shareholder value, they generate financial results that outpace those of competitors.

Source: The Future of Management Is Teal, by Frederic Laloux, in strategy+business.
Go to the Reinventing Organizations wiki to view more characteristics of Laloux’s Teal organizations.
Reinventing Organizations references a developmental theory of human consciousness developed by Ken Wilber and Don Beck, who built on Spiral Dynamics, a framework for tracking the evolution of worldviews that grew out of the work of Clare Graves.
Ken Wilber & Don Beck - development of human consciousness
Laloux has also incorporated the work of other developmental theorists such as Susanne Cook-Greuter (pdf), Robert Kegan and Jane Loevinger.

In describing the pattern of organizational evolution, I draw on the work of a number of thinkers in a field known as “developmental theory.” One of its basic concepts is the idea that human societies, like individuals, don’t grow in linear fashion, but in stages of increasing maturity, consciousness, and complexity. Various scholars have assigned different names to these stages; philosopher Ken Wilber uses colors to identify them, in a sequence that evokes the light spectrum, from infrared to ultraviolet. I borrow his color scheme as a convenient way to name the successive stages of management evolution.

Source: The Future of Management Is Teal, by Frederic Laloux, in strategy+business.
Red, Amber, Orange, Green and Teal organizations

The original graphic comes from a video overview of Reinventing Organizations created by Peter Green at Agile For All. Warm thanks to Peter for his permission to include it here.

Read more

Creative entropy — a killer problem with Laloux’s evolutionary purpose, by Tom Nixon, on Medium

Enlivening Edge | Edited by George Por, this is a website and newsletter focused on Laloux’s Teal and other forms of ‘next-stage’ organization

Frederic Laloux: ‘there is something in the air’, by Lee Bryant, Shiftbase Research

Going teal — two stories from two agencies, by Lisa Gill, on Medium

“While there may or may not be merit in the many prescriptions that Laloux offers, it’s very hard to get to them. The intellectual trick at the heart of this book means the core of Laloux’s practice is buried under many layers of good intentions, New Age beliefs, and polemical spin. It’s all very unfortunate because the question at the heart of Laloux’s book is a timely one. Alas, we will have to look elsewhere for a convincing exploration.”

Source: Is Teal The New Black? Probably Not, A review of Federic Laloux’s Reinventing Organizations, by Zaid Hassan, on Social Laboratories website.

Planting the seeds of new possibilities: the journey that led me to Reinventing Organizations—Matthew Kálmán Mezey interviews Frederic Laloux for Enlivening Edge

Reinventing Organizations—official website

Reinventing Organizations wiki | Established by Frederic Laloux and Chris Clark, the wiki provides extensive Creative Commons resources for those who want to create a Laloux’s Teal organization

So what’s this “Teal” organizations thing? by Jon Freeman, Future Considerations

Why Our Purpose Is Evolutionary, by Edwin Jansen, on Fitzii Blog


Emerging forms of organizational design

  • Heterarchy
  • Situational Hierarchy
  • Dual Operating System
  • Autonomous Business Units System
  • Circle Structure
  • Zeus Model
  • Agile by design (example: Spotify above)

Credit and exposition: What are the emerging forms of organizational design? by Lee Bryant, Shiftbase Research.

Operating models

An operating model bridges the gap between an organization’s business strategy and its operational resources.

Source: PwC document Ending the Endless Reorganization: Building an Adaptable Operating Model (pdf).
Operating Model definition and graphic, by PwC

Operating model components

Source: PwC document referenced above.

Areas
Leading practices and key success factors promoting adaptability

Business capabilities

  • Resource management processes effectively match business capability talent supply with demand.
  • Cross-selling opportunities to customers through multiple channels are captured.
  • Assignment of profit- and loss-centers evolves, based on changes in the external marketplace.

Governance and decision rights

  • Decision-making responsibilities are clearly assigned, and there is a clear path for issue escalation and resolution.
  • Local leaders are empowered for market/customer
    decisions, while responsibilities for areas such as risk management and capital investments are centralized.
  • Decision-making styles adapt to market needs (e.g., shifting from consensus to command and control for urgent, important initiatives).

Organization model

  • Broad-based design of job roles and responsibilities enables flexibility and rapid reconfiguration to respond to business strategy changes (e.g., mergers, entry to new markets, development of shared service centers).
  • Teaming across functions, business units, and geographies facilitates a matrix reporting structure.
  • Group and individual performance metrics are aligned through all levels of the organization.

Process and technology

  • Business performance reports are effectively collected and disseminated to support timely decision-making.
  • Continuous process improvement is part of the organizational mindset.
  • Technology investments support business capabilities driven by customer and market demand.

Talent strategy

  • A diverse range of incentives and reward mechanisms are designed to meet workforce needs.
  • Hiring and employee development processes enable development of both generalists and specialists.


Research carried out by Accenture Strategy reveals that more than 80% of executives agree that advanced operating models are a driver of stategic growth, yet only 22% say their company’s operating model is helping them put strategic growth initiatives into action. Few organizations have a clear and consistent definition of what an operating model is, and the core capabilities needed to enable it.

Source: Is your operating model holding you back from growth? on Accenture Strategy website. Download infographic (pdf).

An Introduction to Operating Models

by Luciano Romano, a consultant in the Operating Model & Performance Improvement capability of Capgemini Consulting UK
Runtime 4:05 (audio has brief delay)


Tips for designing target operating model, business architecture and processes

by Andrew Campbell, Director, Ashridge Strategic Management Centre, and Mark Lancelott, Senior Consultant, PA Consulting
Runtime 6:45


Nine tests of organization design that can be used either to evaluate an existing structure or to create a new one.

1. The Market Advantage Test. Does your design direct sufficient management attention to your sources of competitive advantage in each market?

2. The Parenting Advantage Test. Does your design help the corporate parent add value to the organization?

3. The People Test. Does your design reflect the strengths, weaknesses, and motivations of your people?

4. The Feasibility Test. Have you taken account of all the constraints that may impede the implementation of your design?

5. The Specialist Cultures Test. Does your design protect units that need distinct cultures?

6. The Difficult-Links Test. Does your design provide coordination solutions for the unit-to-unit links that are likely to be problematic?

7. The Redundant-Hierarchy Test. Does your design have too many parent levels and units?

8. The Accountability Test. Does your design support effective controls?

9. The Flexibility Test. Does your design facilitate the development of new strategies and provide the flexibility required to adapt to change?

Source: Do You Have a Well-Designed Organization? Andrew Campbell, Director, Ashridge Strategic Management Centre, and Michael Goold, in Harvard Business Review.

The fundamental task of organization design is, as it always has been, helping a leader move from defining strategy to putting in place an organization that enables the strategy to be executed predictably. An effective organization design model guides a manager in answering five fundamental questions in a thoughtful and well-integrated way.

  1. What is the business’s value proposition and it sources of competitive advantage?
  2. Which organizational activities directly deliver on that value proposition—and, by contrast, which activities can the company afford to perform in a way equivalent to competition?
  3. Which organization structure should we choose, and how do we overcome its inherent downsides?
  4. What type of leadership and culture are required to achieve the value proposition?
  5. Which organizational practices are required to reinforce the organizational intent?
Source: Five Questions Every Leader Should Ask About Organizational Design, by John Beeson, Principal of Beeson Consulting, in Harvard Business Review.
Read more

Ashridge on Operating Models

Operating Models: What are they? by Andrew Campbell, on LinkedIn

“How to choose a model of self-organization that works for you”

How to choose a model of self-organization that works for you, by Aaron Dignan, in Medium

Exposition: How to choose a model of self-organization that works for you, by Aaron Dignan, The Ready², on Medium.

Related topics

Wirearchy

Wirearchy, a term coined by Jon Husband in 1999, is defined as dynamic flows of power and authority based on knowledge, trust, credibility and a focus on generating economic and social value, enabled by interconnected people and technology.

The four pillars of wirearchy are:

  • Knowledge, which is freely shared.
  • Trust, which emerges through transparency and authenticity
  • Credibility, which is earned through collective intelligence and developed through active questioning of all assumptions, including our own.
  • Value-creation, which is enabled through collaboration and cooperation, including the furthest possible distribution of authority.

Source: Book Review: Wirearchy, by Jan Höglund (citing JH).

See also:

Push Hierarchy? Pull Hierarchy? Holacracy? Holarchy? Heterarchy? Wirearchy? by Jon Husband

Wikipedia: Wirearchy

Your Organization Is Already A Wirearchy, by Jon Husband

More quotes

We have to face the fact that any change program that doesn’t address the architectural rigidities and ideological prejudices of bureaucracy won’t, in fact, change much at all. We need to remind ourselves that bureaucracy was an invention, and that whatever replaces it will also be an invention—a cluster of radically new management principles and processes that will help us take advantage of scale without becoming sclerotic, that will maximize efficiency without suffocating innovation, that will boost discipline without extinguishing freedom. We can cure the core incompetencies of the corporation—but only with a bold and concerted effort to pull bureaucracy up by its roots.

Source: Bureaucracy Must Die, by Gary Hamel, in Harvard Business Review.

Until we challenge our foundational beliefs, we won’t be able to build organizations that are substantially more capable than the ones we have today. We will fail to build organizations that are as nimble as change itself. We will fail to make innovation an instinctual and intrinsic capability. We will fail to inspire extraordinary contributions from our colleagues and employees.

Most organizations are still feudal at their core, with a raft of institutionalized distinctions between thinkers and doers—between the executive class and everyone else. And most leaders still over-value alignment and conformance and under-value heterodoxy and heresy. Until this changes, our organizations will be substantially less capable than they might be.

Source: The Core Incompetencies of the Corporation, by Gary Hamel, in Harvard Business Review.

Top-level managers in many of today’s leading corporations are losing control of their companies. The problem is not that they have misjudged the demands created by an increasingly complex environment and an accelerating rate of environmental change, nor even that they have failed to develop strategies appropriate to the new challenges. The problem is that their companies are organizationally incapable of carrying out the sophisticated strategies they have developed. Over the past 20 years, strategic thinking has far outdistanced organizational capabilities.

Source: Matrix Management: Not a Structure, a Frame of Mind, by Christopher A. Bartlett and Sumantra Ghoshal, Harvard Business Review, July – August 1990 Issue.

Even if you don’t call him or her a manager, there always has to be someone at the top. Even in a workplace where all employees are equal, there’s always someone who naturally steps up to lead a team or project. A workplace without manager-type positions is nearly impossible. Turning manager into a bad word in the workplace doesn’t change the fact that there still needs to be someone who is the face of the company, who answers questions, and who signs the paychecks.

Source: When Did Manager Become A Bad Word? by Jacob Morgan, on The Future Organization.

In order for things to change, individuals need to become aware of their current operating system: what it is, why it is, and how it does (or doesn’t) fall short. For this process we often confront a team with these 7 questions:

  1. How does everyone know what to do?
  2. What are the rules?
  3. How do individuals and teams make decisions?
  4. How is authority distributed?
  5. What happens when someone has an idea?
  6. How are conflicts resolved?
  7. How does the system learn and change over time?

As the team answers these questions we ask, “What assumptions are present in these answers? What do these answers say about your culture? Do you like your answers? Are your answers consistent from person to person? Do you have answers at all?”

Source: The biggest obstacle to the future of work, by Aaron Dignan², on Medium.

12 keys to the workplace of the future

  1. Initiative.
  2. Tolerance for ambiguity.
  3. Consciousness.
  4. Contribution mindset.
  5. Low power-distance sensitivity.
  6. Natural leadership.
  7. Connectivity.
  8. Noncognitive skills.
  9. Nurturing networks.
  10. Nurturing the learning organization.
  11. Capitalizing on the power of weak ties.
  12. Locus of control.
Read more: 12 keys to the workplace of the future, by Doug Kirkpatrick, author of Beyond Empowerment: The Age of the Self-Managed Organization, on Morning Star Self-management Institute website.

Individual effectiveness will ultimately dictate organizational results whether the governance system of choice is holacracy, teleocracy, sociocracy, workplace democracy, ROWE, agile management, horizontal management, self-management, wiki management, radical management, lattice management or any other approach.

Source: 12 keys to the workplace of the future, by Doug Kirkpatrick, author of Beyond Empowerment: The Age of the Self-Managed Organization, on Morning Star Self-management Institute website.

We sit at the precipice of a completely new world. Unknown and unknowable. From exponential technologies that will transform our economy, to generational differences that reveal new ways of working and organizing, the changes that are coming are seismic and sudden. Dramatic and brave work must be done to reinvent nearly every institution and process that touches our lives.

Source: TheReady.com².

The Building Blocks of Self Management

  1. Autonomy of execution.
  2. No “people managers.”
  3. Autonomy of role selection.
  4. No explicit mechanism for setting enterprise-level strategy and objectives.
Source: The Building Blocks of Self Management, by Niko Canner, Incandescent, on Medium.

The Building Blocks of Self-Management

  1. Commit to a clear collective Purpose. A true and compelling purpose becomes the ultimate trump-card that everyone can use to break through bureaucracy and inaction and move the company forward.
  2. Digitize your org to tap your network and blow up the hierarchy. Having our organization expressed in this transparent way builds trust and empowers team members because our commitments to each other are explicit and open.
  3. Distribute authority and embrace total self-management. In a truly self-managed organization, each member is trusted to use their best judgement to determine the best path forward in service of the team’s collective purpose¹.
  4. Never stop iterating. The need to continually test and learn is not limited to the discipline of software engineering. Bring this same agile approach to all aspects of your work and your organization itself.
  5. Work in public. Any document you’re creating or information you’re sharing should at a minimum be accessible to all members of the organization and ideally be directly shared with the entire organization (and beyond).
Source: Unlocking the Benefits of Self-Management Without Going All In on Holacracy, by Mike Arauz, co-founder of August², on First Round Review.
¹ My understanding is that the team’s collective purpose is the enterprise’s purpose in miniature.
Holacracy’s constitution captures many productive, good rules for self-governance, but it’s too long to be useful. At August², we’re starting with this four-sentence alternative:

Governance is recorded as either Roles or Policies. All of it is changeable with data on a cycle-by-cycle cadence, at open, facilitated Governance Meetings. Policies apply to teams that create them, and to any sub-teams. Everything else is up to your best judgement.

Source and more info: Our Starter Governance Kernel, by Clay Parker Jones, August², on Medium.

The concept of no bosses, no mentors, and no managers is a fairly new one, so it’s not yet well understood by many people. Be prepared for questions from employees, like:

  • How will promotions and pay raises work?
  • How will dismissals work?
  • How will conflicts between teams work? Who will be the decision maker?
  • What about information flows and project management in general? How will all that get handled?
  • Who will onboard employees and be responsible for their mentorship?
  • Who will I go to to answer any concerns or issues I may have?
Source: Myths of companies with no management, by Romy Misra, in Fast Company (with minor edit by JML).

For functional purposes, networks have two salient characteristics: clustering and path length. Clustering refers to the degree to which a network is made up of tightly knit groups while path lengths is a measure of distance—the average number of links separating any two nodes in the network.

We often hear about the need to “break down silos” to create a networked organization, but this too is a misnomer. Silos are functional groups and they need a high degree of clustering to work effectively and efficiently. The real problem in most organizations is that path lengths are too great and information travels too slowly, resulting in a failure to adapt.

Source: What Makes an Organization “Networked”? by Greg Satell, in Harvard Business Review.

Ironically, one thing that seems to kill off the move to self-management is bureaucracy—an organizational blight that self-management is designed to tame. Many of the executives who’ve traveled to Morning Star, for instance, go back to their companies excited about what they’ve seen. But rather than act, “they have to do reports and presentations, and then they have to do more reports and presentations,” Green says. Eventually, the momentum dies.

Source: If Self-Management Is Such a Great Idea, Why Aren’t More Companies Doing It? by Rick Wartzman, in Forbes

In theory, organizations are meant to enable us — to make us faster, stronger and more effective than we’d be on our own. And yet today, in listening to my clients, it feels as if the exact opposite is true — as if the organization is actually getting in their way. The symptoms of this are many and may sound familiar: Siloed teams with misaligned incentives; bureaucratic processes governed by inflexible policies; paralyzed decision-making strewn across way too many meetings. The list goes on.

Source: 8 Symptoms Of Organizations On The Cusp Of Change, by Mark Raheja, co-founder of August², on Medium.

More videos

Responsive Organization Development

A talk given by Mike Arauz, co-founder of August, February 2016

Download presentation slides—pdf document

Further reading

The $3 Trillion Prize for Busting Bureaucracy (and how to claim it)—pdf document by Gary Hamel, London Business School and The Management Lab, and Michele Zanini, The Management Lab

4 Things You Should Know About Networked Organizations, by Greg Satell

The 6 Building Blocks of Organizational Structure, by Erik Devaney, on HubSpot blog | The author describes six forms of top-down organizational structure. Useful for comparison purposes.

8 Reasons Flat Organizations Don’t Work, According to a Turnaround CEO, by Minda Zetlin, on Inc.

8 Symptoms Of Organizations On The Cusp Of Change, by Mark Raheja, co‑founder, August², on Medium

10 Principles of Organization Design, by Gary L. Neilson (Strategy&), Jaime Estupiñán (Strategy&), and Bhushan Sethi (PwC Advisory Services), in strategy+business

The 10 principles:

1. Declare amnesty for the past.
2. Design with “DNA.”
3. Fix the structure last, not first.
4. Make the most of top talent.
5. Focus on what you can control.
6. Promote accountability.
7. Benchmark sparingly, if at all.
8. Let the “lines and boxes” fit your company’s purpose.
9. Accentuate the informal.
10. Build on your strengths.

A Beginner’s Guide to Org Design: The 8 Words We Encounter The Most, by Oday Kamal, The Ready², on Medium

Beyond hierarchy & holacracy: Truly responsive organizations love authority, by Tom Nixon, on Medium

The biggest obstacle to the future of work, by Aaron Dignan, The Ready², on Medium

The Building Blocks of Self Management, by Niko Canner, Incandescent, on Medium

Building High-Performance, High-Trust Organizations: Decentralization 2.0, a book by Gerrit Broekstra, Professor Emeritus of Organization Behavior at the Nyenrode Business University, the Netherlands. View selected pages on Google Books

Bureaucracy Must Die, by Gary Hamel, in Harvard Business Review

The Core Incompetencies of the Corporation, by Gary Hamel, in Harvard Business Review

Democratizing work through participative design, by Merrelyn Emery, on New Unionism blog

Don’t Let Outdated Management Structures Kill Your Company, by Vineet Nayar, founder, Sampark Foundation, and former CEO, HCL Technologies, in Harvard Business Review

The Feeling of Organization, by Dara Blumenthal and Nathan Snyder, Nature of Work²

Gary Hamel’s $3 Trillion Prize For Killing Bureaucracy—Steve Denning’s Gary Hamel interview published in Forbes

Getting organizational design right, by Steven Aronowitz, Aaron De Smet and Deirdre McGinty, in McKinsey Quarterly

Good Organizational Design is Destructive, by Sam Spurlin, The Ready², on Medium

Hierarchies in Perpetual Beta, by Harold Jarche, on Medium: “The future of work is in temporary, negotiated hierarchies connected through human and digital networks”

Hierarchy is Good. Hierarchy is Essential. And Less Isn’t Always Better,
by Bob Sutton, Stanford Professor and co-author, with Huggy Rao, of Scaling Up Excellence

Hierarchy is Overrated, by Tim Kastelle, in Harvard Business Review

How to choose a model of self-organization that works for you, by Aaron Dignan, The Ready², on Medium

How Self-Managed Companies Help People Learn on the Job, by Ethan Bernstein, Niko Canner and Charlotte Dobbs, in Harvard Business Review

If Self-Management Is Such a Great Idea, Why Aren’t More Companies Doing It? by Rick Wartzman, in Forbes

Is the meaning of work about to change? by Rick Goings, Chairman & CEO, Tupperware, on World Economic Forum website

The Last Re-Org You’ll Ever Do, by Aaron Dignan, The Ready²,on Medium

The Leaderless Organization, by Greg Satell

Stanley McChrystal: What The Army Can Teach You About Leadership, by Dan Schawbel, in Forbes

Misperceptions of Self-Management, by Frederic Laloux, on Morning Star Self-management Institute website

Myths of companies with no management, by Romy Misra, in Fast Company

The New Model for Scaling a Company, by Clay Parker Jones, co-founder, August²

The Office Hierarchy Is Officially Dead, by Rebecca Greenfield, on BloomburgBusiness

The OpenSpace Agility Glossary, by Dan Mezick

The Operating Model That Is Eating The World, by Aaron Dignan, founder, The Ready², on Medium

The Org Chart Is Dead. By Aaron Dignan, founder, The Ready², on Medium

The Organization is Broken. How do we fix it? by Clay Parker Jones, co‑founder, August², on Medium

Organize for Complexity, a book by Niels Pflaeging

Organizing for the future, by McKinsey’s Aaron De Smet, Susan Lund, and William Schaninger, in McKinsey Quarterly, January 2016 | “Platform-based talent markets help put the emphasis in human-capital management back where it belongs—on humans.”

People Want Power Because They Want Autonomy, by Julie Beck, on The Atlantic (reporting on a study conducted by researchers from University of Cologne, University of Groningen, and Columbia University)

The problem with future of work discussions, by Ted Bauer, on The Context of Things

The Problem with Organization Design, by Dara Blumenthal and Nathan Snyder, both at Nature of Work², on Medium, in six parts:

Part 1—The Root of the Problem

Part 2—Getting Before and Beyond The Firm

Part 3—Laboring While Human

Part 4—The Need for Deliberately Developmental Organizations

Part 5—Human Centric Management

Part 6—The Nature of Work

Reinventing Management, Part 1: What Color Is Your Organization? and Part 2: What Happens When No One Is In Charge? by Rod Collins, Director of Innovation, Optimity Advisors, on Huffington Post

Resolving the awkward paradox in Frederic Laloux’s Reinventing Organizations, by Tom Nixon, on Medium

Team of Teams: New Rules of Engagement for a Complex World, a book by Stanley A. McChrystal, a retired United States Army general who led the Joint Special Operations Command in Iraq during the Persian Gulf Wars and was top Commander of American forces in Afghanistan

Top-Down Solutions Like Holacracy Won’t Fix Bureaucracy, by Gary Hamel and Michele Zanini, Management Innovation Exchange, in Harvard Business Review

Type 2 Organizations, by Clay Parker Jones, August², on Medium

Type 2 Organization—a working definition by Clay Parker Jones

A decision system built to break down big decisions and jobs into smaller pieces that can be processed much more rapidly, replacing the illusion of top-down control over the future with realtime, active control over the present. It’s an organization where very few decisions are made for others, but many more decisions are being made in the open.

Unlocking the Benefits of Self-Management Without Going All In on Holacracy, by Mike Arauz, co-founder, August², on First Round Review

What Happened When We Ditched Our Flat Org Chart, by Chris Savage, co-founder and CEO of @wistia, on Medium / ReadThink

What Makes an Organization “Networked”? by Greg Satell, in Harvard Business Review

What we got wrong about self-management: embracing natural hierarchy at work, by Leo Widrich, Buffer

Why is it so hard to change how we manage ourselves? by Rebecca Greenfield, Bloomberg, in Chicago Tribune—a critical look at Holacracy and other ‘alt-management’ approaches

Why more companies are looking at alternative management structures, and why you should too, by Belle Beth Cooper

Why we cannot learn a damn thing from Semco, or Toyota, by Niels Pflaeging, author of Organize for Complexity. How to get life back into work to build the high-performance organization, on LinkedIn

Why We Still Need Bosses, by Steve Tobak, on Fortune

Why Workers Can Suffer in Bossless Companies Like GitHub, by KLint Finley, on Wired

Note 2: Undercurrent, an early adopter of Holacracy, was a pioneering organizational design and strategy firm founded by Josh Spear, Rob Schuham and Aaron Dignan. The firm folded in August 2015 after being acquired by Quirky the previous April.

Read more in Undercurrent: An autopsy of a once-hot agency’s demise, by Shareen Pathak.

On closure, several former Undercurrent people formed their own consulting firms, notably August, The Ready, and NOBL Collective (pronounced no-bell).

Leave a Reply