Author: Jurgen Appelo

Introduction

You don’t create a happy community by rolling in the tanks, toppling the dictator, installing a democracy, and pulling out. They tried this in Iraq. They tried this in Afghanistan. And some people have attempted this with Holacracy.

Conceived by Brian Robertson in 2007, Holacracy is a human-centric framework for decentralized management and governance. “Holacracy is designed for humans. [...] It embraces our individual humanity, autonomy, and creative problem-solving capacities.” The website suggests that Holacracy increases ownership and engagement, and “it transforms outdated command hierarchies into agile, self-organizing networks.”

Agile? Not really.

Fifteen years after Holacracy, I launched the unFIX model with a similar purpose (human-centric organization design) but a completely different approach. I only just got started, but I’m sure some people will be interested to know what the similarities and differences are—in my humble opinion, of course. 😁

And, gosh. These two couldn’t be more different.

Where to begin?

Circles

In Holacracy, a “circle” is a container for organizing roles and policies around a common purpose. There is no distinction between teams, departments, communities, or business units. They are all circles, and the circle concept makes the organization super-flexible.

Holacracy makes it easy and relatively friction-free to create new circles, rearrange people within them, tear it all down and start again. - Adam Pisoni, “Here’s Why You Should Care About Holacracy”

The approach is unFIX is different. There are four kinds of Bases, seven types of Crews, and four types of Forums. You could say that’s fifteen standard circles types.

I believe the typology in unFIX makes it easier for people to understand what a unit of people is for. Someone could say, “In our Fully-Integrated Base, I work on one of six Value Stream Crews, and I’m a member of the UX Forum and the Web Dev Forum.” I find that a bit easier to understand than, “I’m involved in four circles: the super-circle, a product circle, a UX circle, and a web dev circle”. When everything is a circle, it is harder to understand how things relate.

As I keep saying, I want unFIX to feel like LEGO. It’s like playing with different building blocks, each of which has a suggested purpose. Using Holacracy is like playing with LEGO bricks that are all the same color and size. Sure, you might build the same organization designs, but it probably requires more thinking and explaining.

I don’t like going around in circles. 😎 Using one term for everything is taking abstraction too far. It’s like having a programming language with only one root object called Object and leaving all derived classes to the programmers. Super-flexible, indeed. But I’m not so sure about the readability of the code.

Top-Down Disruption and the Subsidiarity Principle

In Holacracy, the broadest circle is the “Anchor Circle”. It holds all authorities that the organization controls and has no Super-Circle. And that’s usually where Holacracy starts: it begins with the highest/broadest circle; this circle creates sub-circles, and the sub-circles create their own sub-circles, and so on. In other words, in Holacracy, the organization structure is defined entirely top-down. It practically screams a software developer made this framework! 👨🏻‍💻

The Holacracy Constitution has no concept of bottom-up emergence or chaordic evolution. Article 5.2 specifically limits the scope of each circle to defining/removing rules, policies, and sub-circles (not super-circles or sibling-circles). Holacracy has no native support for local experimentation and upward/outward growth. It’s either all-in or not.

The top-down power distribution of Holacracy is in direct conflict with the Subsidiarity Principle, which is the foundation of EU law and embedded in the 10th Amendment to the US Constitution.

The principle that a central authority should have a subsidiary function, performing only those tasks which cannot be performed at a more local level - Wikipedia

Higher powers should play a subsidiary role: the lower levels can do anything they want except what is delegated to higher authorities. Holacracy is the other way around: lower-level circles can do nothing, except what is bestowed on them as specific authorities and policies.

In contrast, I made Delegation Levels a fundamental part of unFIX. I have yet to write more about this in the context of unFIX, but there is plenty of information about delegation levels and delegation boards available on the Management 3.0 website and elsewhere. The point is, delegation levels go both ways: downward and upward.

For example, it is perfectly reasonable to begin with one Value Stream Crew or one UX Forum in a traditional organization without changing anything else. Or you can start with one Base and leave other business units in the company untouched for a while. Start small first, grow big later. That’s the agile way.

A significant, disruptive change is the opposite of what many people believe to be agile. And yet, that is precisely what Holacracy requires: it’s a Big Change Upfront.

There are many steps along the path to a Holacracy adoption, and the process is far more complex than we can capture in a short guide. This checklist covers only a few of the major milestones in the pre-launch process. [...] Holacracy is intentionally disruptive. Adopting Holacracy will require CEOs, managers, and workers to radically change behaviors that they automatically, and unconsciously, enacted in a traditional management hierarchy. - “Holacracy Bootstrap Guide”

If, as the “Holacracy Bootstrap Guide” suggests, it takes at least three months (with consistent coaching support) to learn only the basics of Holacracy, I would pass. And many people report similar experiences.

In our case, I think it took three to six months of learning without any clear benefits. And we still spend a significant amount of time, especially with new hires, on training and teaching the holacracy ways of doing things. - Joris Janssen, “What I learned from three years or practicing Holacracy”

Holacracy as a framework should have helped us make our lives, and organizational governance, easier. It did not. Holacracy is anything but simple, and the holacratic road is riddled with pitfalls. - Michiel van Gerven, “Experiments with Holacracy: Why we stopped doing it, and what we learned along the way.”

unFIX allows organization designs to grow bottom-up, and it supports the Subsidiarity Principle. Holacracy does neither of these things.

Roles

In Holacracy, a role is an organizational construct that a person can fill and then energize on behalf of the organization. An organization is a collection of roles, not people. Traditional organizations conflate people and roles when they are two, and it makes sense to distinguish them.

Sometimes the conflicts we have in organizational life are actually clashes of the roles involved, but we mistake them for clashes between the people filling those roles. - Brian J. Robertson, Holacracy: The New Management System for a Rapidly Changing World.

This is an idea I can support. Many emotional arguments between employees are actually tensions between the roles they are trying to fulfill with their best intentions. The boundaries between functions, and the different goals they have, inherently come with tensions and conflict. That’s unavoidable. People should learn not to take that personally.

Holacracy takes this concept very far by making everything role-based. In each circle, there is a lead link, a rep link, a secretary, and a facilitator with specific descriptions of their powers. And that’s on top of any other roles per circle because circles don’t contain people; they have only roles. And people fill the roles. It’s (again) a software developer’s pattern: interchangeable objects that implement public interfaces. It’s a smart idea, but people are not objects.

Contrast that with unFIX, where I have defined only one role per unit: the Captain in the Crews and the Chair in the Forums. That’s it. Both are somewhat comparable with the lead link of Holacracy, but I leave much more to the local context, self-organization, and human interaction.

It is evident that Holacracy is more advanced in its role definitions. This can be inspirational and useful for anyone who would like to upgrade the roles in their Crews or Forums. Just look at the standard roles that Holacracy suggests and borrow the ideas. They’ve obviously been tested well.

However, in Holacracy, roles are mandatory for all circles. There is no other way! In unFIX, I don’t want to go that far. When three people volunteer to run a Machine Learning Forum, is it essential to define the lead link, the rep link, the secretary, and the facilitator? Does it improve the employee experience to apply the object-interface pattern to literally everything they do? I doubt it.

Governance

In Holacracy, the roles and policies within a circle make up its acting “Governance”. Every circle has its own governance. This is fundamentally different from unFIX, where I describe a Governance Crew that runs the Base. Managers are intentionally kept out of the Crews and Forums, and all else is left to self-organization, possibly constrained by delegation levels.

For example, imagine that the Product Owners and a Service Manager of various Crews think it is wise to form a new Experience Crew. They can simply do that right away unless the Governance Crew had communicated earlier that people need explicit permission for “crew formation”. (That’s the Subsidiarity Principle at work!)

In Holacracy, the members of various circles would have to pass their idea to their super-circle (via their rep links), wait for the next governance meeting of the super-circle, wait for that super-circle to discuss the formation of a new subcircle that’s focused on customer experience, vote on it, define the roles, assign the lead link, and get that lead link to invite other people into the new sub-circle. I find that approach somewhat bureaucratic. Not agile at all.

Progress is made in small steps because changes (such as the assignment of new responsibilities) take a long time. - Arturs Gedvillo, “Is Holacracy Agile? Explaining Holacratic Organizational Structures”

A second significant difference is that, in unFIX, the Governance Crew has Chiefs who are the line managers or everyone else in the Base. That makes it easy for traditional departments and business units to understand where the managers go: into the Governance Crew and nowhere else! It offers them a path for gradual change because the next step of the Governance Crew is to delegate responsibilities, one by one, to the self-organizing Base. This is less difficult for them because they can still call themselves managers of the entire Base.

Holacracy is much harder to adopt in an average organization because it basically says, “Poofff, all managers are gone.”

CEO’s and managers no longer have the authority to overrule the decisions of others. - “Holacracy Bootstrap Guide”

Good luck selling that to a traditional company with several layers of management. If you want autocrats to come out of the Dark Side, step-by-step is the easiest way.

Meetings

Holacracy defines two kinds of meetings. Tactical meetings are focused on a team’s operational work. Their purpose is to discuss issues and remove obstacles so that work can move forward. Governance meetings exist to modify the structure of the circle. The Constitution comes with rigid processes for how these meetings are supposed to be run. And because Holacracy explicitly defines meetings as the preferred way to resolve tensions, it induces a strong bias to bring every conflict, every disagreement, and every minor issue to these meetings.

Our meetings sometimes devolved into soul-sucking discussions. Especially when people felt strongly about issues, and personal tensions might get mixed up with professional ones or elevated to the level of team tensions. I have facilitated my fair share of our tactical and governance meetings and some of those rank among the most difficult sessions I have ever facilitated. - Michiel van Gerven, “Experiments with Holacracy: Why we stopped doing it, and what we learned along the way.”

I don’t believe meetings should be the preferred practice for resolving all issues. What’s wrong with asynchronous threads and polls on Slack or Teams? What’s wrong with an informal one-on-one over a cup of coffee? What’s wrong with ignoring problems for a while and instead focusing on bigger opportunities that make the less critical issues disappear all by themselves?

There are successful companies, such as Basecamp, that try to do away with nearly all meetings. Meetings are not the best way to solve the right problems. (See: “Meetings Are Toxic”.) This makes even more sense in a remote/hybrid working environment where synchronized meetings take a bigger toll on people’s productivity.

The unFIX model doesn’t prescribe meetings. It’s up to you to have them or not.

Process Over People

In Holacracy, the processes don’t stop with the meetings.

The meeting formats only comprise a fraction of the rules in the Constitution. - “Holacracy Bootstrap Guide”

The Holacracy Constitution is sometimes described as the rulebook for a game: The game of work. And there is no way of ignoring those rules.

Holacracy is equal to the rules in the Constitution. They are the same thing. Therefore, an organization (and anyone in it) wishing to practice Holacracy, MUST follow the Constitution’s rules. - Chris Cowan, “Holacracy Basics: The Intention to Adhere”

The issue is, “Process over people” makes perfect sense when the people have bad intentions.

The Holacracy Constitution acts as the core rulebook for the organization. Its rules and processes reign supreme, and trump even the person who adopted it. Like a constitutionally backed congress defining laws that even a president can’t ignore, so too does the Holacracy Constitution define the seat of authority for the organization as resting in a legislative process, not an autocratic ruler. - Brian J. Robertson, Holacracy: The New Management System for a Rapidly Changing World.

The main reason the United States, on January 6, 2021, survived a full-blown attack on its democracy is because, as a country, it valued the process more than the people who wanted to ignore it. Process over people works when you can’t trust the people.

Under dictators, the rules are at the whim of the leader. In a democracy, we write the rules down and make our leaders beholden to them as much as anyone else. Democracy functions because we shifted power from an authority figure to a process we’ve all agreed to follow. - Adam Pisoni, “Here’s Why You Should Care About Holacracy”

The PROBLEM with this principle is that this approach is in direct contradiction with the first value of the Agile Manifesto:

The way to resolve this paradox is by looking at the work of Robin Dunbar. He found that humans can form meaningful, stable relationships with up to (roughly) 150 people. This is called Dunbar’s Number. We can trust everyone in a tribe of 150 people. But trust doesn’t scale! Humans don’t have the mental capacity to trust 300 million people. THAT’s why we have written rules and processes: to manage peaceful communities at larger scales.

For this specific reason, I suggest the concept of the Base, a unit of not more than 150 people. I have personal experience of being able to trust everyone in a group of that size. We didn’t need formal policies and rules and meetings to discuss trivial things with each other. We valued people over process. We self-organized!

On a small scale, the self-organization of people trumps policies, procedures, and constitutions. We have a term for non-value-adding processes in the agile world: WASTE.

The enforcement of strict regulations and documenting of decisions takes time and skills that could otherwise be devoted to improving the quality of work. - Arturs Gedvillo, “Is Holacracy Agile? Explaining Holacratic Organizational Structures”

By using Holacracy we sometimes ended up trying to address an issue by assigning a new responsibility to a role or changing a company policy. Sometimes there is another way; simply solve the problem. - Michiel van Gerven, “Experiments with Holacracy: Why we stopped doing it, and what we learned along the way.”

Granted, Holacracy does allow for individual action:

“In some cases you are authorized to take “Individual Initiative” by acting beyond the authority of your Roles or by breaking rules in this Constitution. You may only take Individual Initiative when all of the following are true: [...]” - Holacracy Constitution

Imagine that! Even breaking the rules is subject to several regulations.

In Holacracy, self-direction is the exception. In unFIX, it is the norm.

People I have spoken to in a wide range of positions in for-profit and nonprofit organizations have reported that holacracy is mechanistic and dehumanizing, and that the model does not, in fact, have the potential to create the kind of workplace and world they want to see. - Simon Mont, “Autopsy of a Failed Holacracy: Lessons in Justice, Equity, and Self-Management”

Where’s the Customer?

One point of criticism regarding Holacracy is the absence of the customer. Even after fifteen years, in the entire Holacracy Constitution, there is no mention of the customer.

In holacracy, the only explicit feedback mechanisms alluded to in the Holacracy Constitution are vertical. There are no explicit feedback mechanisms from the customer i.e. the people for whom the work is being done. [...] The explicit focus of the Holacracy Constitution is entirely internal. The customer is simply not in the picture. - Steve Denning, “Making Sense of Zappos and Holacracy”

This doesn’t mean that you literally should have a picture of the customer in your organization’s design. Of course not. Looking at an organization design and asking, “Where’s the customer?” doesn’t make sense. You also don’t look at the blueprint for a church or mosque and ask, “Where’s the picture of God?” The point is, people need reminders that the entire structure is there to serve. Picture or no picture.

Indeed, one major difference between Holacracy and unFIX is that I include the Innovation Vortex as a fundamental element, which is a simple mash-up of PDCA, Lean, Agile, Design Thinking, and Lean Startup. Every Crew, Forum, and Base must continuously evaluate how their work will benefit their users or customers. Somehow, the seven streams of the vortex have to be covered. Holacracy has its focus on the process, not on any customer.

The Power Game

After all previous observations, one issue remains: You don’t create a happy culture by rolling in the consultants, toppling the autocratic managers, installing a democratic system, and pulling out. It doesn’t work for countries, and it doesn’t work for companies.

Adopting the Holacracy practice will require a deep and fundamental rewiring of power in your organization. - “Holacracy Bootstrap Guide”

Holacracy distributes only formal decision power. It ignores the power we use when, for example, we incentivize people (reward power), when we use our talents (expert power), when we force something onto someone (coercive power), or when we withhold specific knowledge (informational power). In other words, Holacracy replaces the hierarchy but leaves the culture in place. And then, it simply assumes that an engaged, empowered, human-centric, problem-solving community will somehow emerge out of the rulebook.

The holacracy system focuses explicitly on distributing formal power and expects the distribution of formal power to create more equitable workplaces. It leaves the other sources of power unmentioned, and that is a big oversight, especially when we are trying to be intentional about creating a world where everyone is safe enough to live a vibrant, expressive, and meaningful life. - Simon Mont, “Autopsy of a Failed Holacracy: Lessons in Justice, Equity, and Self-Management”

Granted, unFIX doesn’t directly change an organization’s culture either. However, I consider the Employee Experience (EX) just as important as the Customer Experience (CX). It’s what the X in unFIX stands for. The way I approached this is by making the Base (or “tribe” or “home”), as a community of no more than 150 people, the most fundamental building block. No guarantees, of course. But I firmly believe a place of belonging and recognition is a better starting point for a human-centric organization than a rulebook.

On top of that, the Holacracy Constitution comes with a strong bias toward individualism, formal rules, structured meetings, and complicated jargon. Some people do well in such an environment. And other people don’t. As said before, Holacracy defines the rules of the game: the game of work. And some are better at playing that game than others.

Holacracy seeks to empower individuals for the sake of individual autonomy and operational efficiency, but those aren’t the only values in the universe. A wise organization will balance these with values like establishing equitable power relations and fostering a sense of community. - Simon Mont, “Autopsy of a Failed Holacracy: Lessons in Justice, Equity, and Self-Management”

Not everyone thrives in a holacratic environment. Individualism, formal rules, structured meetings, and complicated jargon are typical attributes of the traditional while male-dominated hierarchies that Holacracy is supposed to replace. And technical jargon such as lead link, rep link, triage, tensions, policies, and tactical meetings carry specific cultural baggage and associations. Some people really dig that shit. They love it! And others don’t.

Ignoring this offers an unfair advantage to those who were already doing well in the old system. And then, why bother? It’s practically the same people maneuvering themselves into the best lead link positions.

Our workplaces are made up of much more than just their organizational structures and governance processes: they are complex ecosystems of people, relationships, cultures, mindsets, and systems that exist within the social/political/economic/spiritual context of the broader world. To achieve the kind of workplace that holacracy and like systems promise to enable, we must be mindful of the implicit biases, explicit prejudices, intergenerational/historical traumas, microaggressions, and multiple other forces at play in most workplaces. - Simon Mont, “Autopsy of a Failed Holacracy: Lessons in Justice, Equity, and Self-Management”

That’s why I say, start with a healthy Base and its people, not with a Constitution and its rules. Don’t roll in the tanks.

Conclusion

I don’t think a Constitution is a good way to define how a small community of people should do great work together. I mean, try to read this:

Serving as a Role Lead also means serving as a “Circle Lead” within that role’s internal circle, and thus filling the “Circle Lead Role” within. The Circle Lead Role holds the overall Purpose of that broader Role, and all Accountabilities on that role to the extent they are not covered by other Roles or processes within the circle. - Holacracy Constitution

I read it seven times. I gave up.

Enough said.

1. Holacracy has Circles; unFIX has Bases, Crews, and Forums of various kinds.

2. Holacracy only works top-down; unFIX works both top-down and bottom-up.

3. Holacracy requires a significant, disruptive change; unFIX allows local experiments.

4. Holacracy requires roles for everything; unFIX suggests just a few roles.

5. Holacracy requires governance meetings for all changes; unFIX does not.

6. Holacracy makes the manager’s job obsolete; unFIX gives managers a place.

7. Holacracy requires meetings for problem-solving; unFIX does not.

8. Holacracy is process over people all the way; unFIX is people over process.

9. Holacracy does not mention the customer; unFIX is all about the experience.

10. Holacracy is biased toward structure; unFIX is biased toward belonging.

If you’re a fan of Holacracy, and you’ve been able to put it to good use for your company, congratulations! Hats off to you. This says more about you than about the framework.

But I’m not touching a tool that’s so fundamentally flawed.