This week, we tackle chapter 2 of Holacracy: The New Management System for a Rapidly Changing World by Brian J. Robertson published by Henry Holt and Company in 2015. Chapter 2 tackles why the consolidation of authority is harmful to the ability to nimble, agile (small a), and productive and secondly, why the distribution of authority supports an organization’s ability to scale.  The argument in Chapter 2 is a central tenant of Holacracy.


Chapter 2: Distributing Authority

Concentrating the decision making in any single spot isn’t agile (small a) or scalable.  Holacracy distributes decision-making as close to the where the work is done as possible.  Robertson uses two metaphors outside of the typical workaday world to illustrate these points early in Chapter 2.  The first analogy centers around a discussion of why cities as they grow become more productive and innovative, while organizations become less productive and innovative as they grow. The conclusion is that work needs to emulate some of the attributes of cities, in particular how people are given a set of laws but within those constraints don’t have to wait for bosses/bureaucracy to make decisions and get things done. The second analogy provides a hint on how to make complex systems work.  The human body is a distributed system.  The system has overall rules, but each part runs separately with minimal input within those boundaries.  No single top-down decision-making process can keep as complex a system as the human body running.  

The metaphors illustrate that organic systems avoid top-down decision-making processes in practice.  There is significant evidence that even when strict top-down processes exist on paper, the real process is far different.  This “un” or identified decision-making process has its own problems making it difficult to know who is accountable or will generate friction.  In other scenarios, consensus decision making is used as a substitute.  Consensus decision making requires everyone’s input and is often slow, inefficient and unscalable.   

Holacracy addresses the problems in the typical organizational design by distributing the power to make decisions to the process which is defined the written constitution introduced in Chapter 1 (we will tie roles to the process later).  Using the city metaphor, the constitution represents the law and ordinances (or if you want a sporting metaphor to consider the constitution as the rulebook). The constitution the primary tool that distributes authority to the process and trumps everyone else, including the CEO, and those that wrote the constitution.  Power is ceded to the constitution. The constitution breaks the inferred parent-child relationships hierarchies are built upon.  Breaking the parent-child relationship creates an environment in which a team can self-organize to address the work they are presented with.  Determining how to change the organization to foster self-organization has been the single issue haunting the Agile movement since the term was coined. By distributing the decision-making into the process, Holacray provides people in the organization with the power to respond to issues locally within their domain without having to get everyone else to buy in. Empowerment!

Static decision making structures, whether distributed or not, rarely work well for long.  There needs to be a governance structure to provide the basis from which we can learn and improve the process.  Governance is an overused term with many definitions. For this book governance is defined as both who makes decisions and the limits under which those decisions are made. Robertson refines that definition by making a distinction between governance and operations.  Governance is about how we work, while operations are about getting work done.  A governance structure provides a decision-making process that allows the organization to change how it will work and make decisions based on the needs of the actual work.  Governance that is concentrated at the top of the hierarchy requires one or a select few people to make all of the decisions.  I have a number of friends that run “small” businesses (including my spouse), to a person they all had to learn the lesson that they need spend less time working “in” the business so they can work “on” the business. When that lesson hits home they learn how to distribute decision making.

Putting the concepts in Chapter 2 together, governance and the rules generated to implement the governance model define how the organization is structured.  That structure has only one goal, to bring about the organization’s purpose.  Operations delivers on the purpose.

Transformation Thoughts:  Changing an organization to be more able to quickly react to change or to speed knowledge work, requires pushing decision making down. Distributing the decision-making authority often means changing the organization’s structure.  This can rarely be done piecemeal.  Implementing Agile techniques in an effort to increase the flow value or increase speed to market without addressing distributed decision-making reduces the transformation effectiveness.

Team Coaching Thought:  All teams have a decision-making structure. Deciding on a governance model for the team that allows decision making to be distributed is as important as it is in larger organizations.   

Remember to buy a copy of Holacracy (use the link in the show notes to help support and defray the costs of the Software Process and Measurement Cast blog and podcast).

All entries in the re-read:

Week 1:  Logistics and Introduction

Week 2: Evolving Organization

Week 3: Distribution Authority

Week 4: Organization Structure

Week 5: Governance

Week 6: Operations

Week 7: Facilitating Governance

Week 8: Strategy and Dynamic Control

Week 9: Adopting Holacracy

Week 10: When You Are Not Ready

Week 11: The Experience of Holacracy

Week 12: Final Comments