Controlled chaos or holacracy with applied bureaucracy in enterprises

Anton Mozgovoy
Mar 25, 2017 · 6 min read
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In 1911 Mr. Taylor wrote a monograph “Principles of Scientific Management”. He was going after the workers with a stopwatch, was building graphs of the degree of their fatigue and based on the collected data was trying to show how to increase labor productivity. What Taylorism was for the “blue collar” was Weber’s model for the “white”. But from here the ways of the two systems diverge. Taylorism won a convincing victory, as evidenced in particular by the fact that the very concept is now considered not quite decent.

The truth is that a century later the real bureaucracy — well, it does not at all resemble the results of activities that can be recognized as rational. Even Wikipedia provides a description pervaded by an undisguised negative connotation. I am persuaded that smart bureaucracy is not only needed for company growth but is yet to be the most efficient way to operate on a large scale.

It is important to start with the term EQ — (EI) Emotional Intelligence. It is still a fairly new concept since the term itself was truly coined only in 1990 by John D. Mayer and Peter Salovey. But ever since the EQ as a concept was discovered it became fairly obvious what significant role it is playing in our lives and business. By the way, I highly recommend reading “Emotional Intelligence” by Daniel Goleman if you are interested in learning more about EQ.

The reason why I started addressing managing systems with EQ is straight forward: in a startup, with ten people onboard empathy, self-awareness and motivation levels are very different from a large enterprise with dozens if not hundreds of departments and thousands of employees. It is very important to understand that holacracy without a proper level of self-awareness of employees is practically useless and even harmful.

Large teams naturally lack empathy within the group and that threatens the core nature of holacracy. When we are talking about companies like Zappos, Lending Club, AirBnB or even Medium we are talking about highly motivated individuals working on great products forming strong team interconnections. What brings the misconception further is that even according to the holacracy manifest, which is now version 4.1, it cannot be adopted partially: the only way is to change the mindset of the entire team and dive in fully.

Let’s take a closer look into why proactive participation in a holacratic community is a must have. In a sample SMB in IT sphere holacratic organizational chart would be very close to following:

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It turns out that in the holarchy information does not fall from heaven to earth in the form of directives and does not move chaotically between all participants in the process. Suggestions, decisions, and questions move freely along previously laid paths and fall into the hands of those for whom they are important, and those who are simply interested. Holarchy is not directed from below upwards but works in both directions along orderly channels. In fact, the role of the manager is performed by a process that does not ask for money and does not treat you biased.

However, when a company starts growing and adds on departments, systems, and platforms it becomes obvious the inefficiency of the following approach due to the number of tentacles and noise growing exponentially.

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VS a sample organizational chart in a company with a traditional vertical hierarchy.

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The holacracy encourages a violation of rules if it brings more benefit than damage. Everyone is free to do whatever he or she likes if this helps the company develop. This is called “individual action”. Holacracy replaces the personality with a role but does not deny the personality itself, provoking and disciplining the employee not only to be responsible for his or her actions as well as for the company’s actions but also training the skills of critical thinking and creative approach to solving unusual and complex tasks. After this, “personal facilitation” disappears. In the troubles, it’s not the developer who is to blame but the role and the process. This is demagoguery, but it allows you to get rid of emotions and improve processes, instead of hunting for witches. However, as you may have guessed at this point, the holacracy does not answer the most important questions: “What exactly should I do?” And “What decisions should I take?”. It regulates the approach to the organization of processes, but does not set tasks and does not describe the solutions. Holacracy is an operating system for business that requires the installation of different applications.

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And that is where smart bureaucracy is required. It establishes key terms: structure, rules, standards, metrics and principles. During critical times clear connections are being formed between “boss-subordinate” and “task-maker-performer-responsible”:

Organizing information flow—In a small organization any person in the company can approach the CEO, ask any uncomfortable question and even get an answer to it. Holacracy slightly limits this possibility, offering to solve important issues through the process of management and rallies. But, with the growing number of tentacles, it becomes harder to maintain information flow. Then the company should establish a set of dogmas on the type, criticality, and urgency of the information to make a decision on further actions.

Maintaining employee self-organization process — many people are good in their work, but they still need a mentor who will lead them into a bright future. Usually this role is performed by the manager, however at the same time manager provides direct instructions to the employee, in every possible way to influence his or her life and morale. In a holacratic company, a lead-link can inspire, carry a banner and adjust expectations from a role, but cannot adversely affect what an employee knows how to do better than him or her self. In addition, no one canceled the collaboration and other activities designed to do the job as efficiently as possible. In other words, lead links have to exercise mentor and management skills.

Combating the delusions of grandeur inherent in every person — that’s another task. Power-hungry man, who was caught in a misunderstanding in the role of a lid-link can weave intrigues and use his or her position. Holacracy gives mechanisms of influence on such characters but does not exclude their appearance. With rep-links, the situation is even worse: they are chosen by the people, thus expressing the deepest piety and virtually raising the status. A strict code of conduct is there not to fix the after problem, but to eliminate it even before it begins.

The roles of facilitator and secretary are necessary for an integrative decision-making process. However, the management process itself, with all the tactical and strategic rallies prescribed by the Constitution looks entertaining but will require too much of time and effort for implementation. Every team should examine the most efficient agile methodology applicable specifically to a conjunction of business and conditions of the technology would it be daily scram meeting, living on prescribed iterations and meanwhile keep reforming the retrospectives and representations. In other words, trying to solve this problem by adapting Agile within the Holacracy.

The enthusiasm for structural issues can prevent from eliminating “stress points” — being caught by realizing that the teams are immersed in the restructuring of the organizational structure will demolish all germs of progress. Instead, an organization should pay more attention to the roles of lead-links and rap-links, so that the magic machine of the holacratic communications would work properly. Without this, it is impossible to create a constant flow of information necessary to identify and eliminate problems (stress points). Meanwhile, it is this process that drives the whole company into a bright, holacratic future.

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